The Indian economy is presently facing a big hit from the towering inflation figures. Controlling inflation happens to have become one of the prime concerns as well as requirement. With Reserve Bank of India raising policy rates for the 11th time in a year's span, banks in the country have been bound to give a northward trend to lending rates.
As a resultant of all this, deposit rates are also on a rising trend. The situation prevalent thus seems good for investment in these high return offering fixed deposits.
Many people have large amount of funds parked in their savings account. Savings account pays a generic 4% interest to all customers irrespective of how much funds he/she has in their accounts. A facility whereby the excess funds in savings account if could be transferred into a fixed deposit with higher interest rate could thus prove to be a beautiful way of earning.
Catering to this very idea, banks have come up with the ‘auto sweep facility'. This facility is a combination of savings bank account as well as fixed deposit. Here excess funds kept in the savings account of a person are automatically swept into a FD.
How does auto sweep facility work?
The facility first needs the account holder to specify the minimum balance that always needs to be maintained in his account. This is also referred to as the threshold limit.
Whenever the funds in a person's account exceed the threshold limit, a FD of the excess amount is created. FDs are created as many times the funds in the account cross the threshold limit. This is called Sweep In.