What Is A Fixed Deposit Sweep-In Facility?

Have you ever wished you could earn higher interest on your savings without compromising on liquidity? A Fixed Deposit (FD) sweep-in facility might be just what you need. This innovative financial product combines the best of both worlds – the high interest rates of FDs and the accessibility of savings accounts. In this article, we’ll dive deep into the features and benefits of FD sweep-in facilities, and how they can help you make the most of your surplus funds.

What is a Fixed Deposit Sweep-In Facility?

A Fixed Deposit sweep-in facility is a unique offering that links your savings or current account with a Fixed Deposit account. Here’s how it works:

1. Account Linkage: First, you need to link your savings or current account to an FD account within the same bank. This allows for automatic transfers between the two accounts.

2. Setting a Threshold: Next, you set a threshold limit for the balance you wish to maintain in your savings account. Any amount above this threshold is automatically swept into your linked FD account.

3. Automatic Transfers: Whenever your savings account balance exceeds the threshold, the excess funds are transferred to the FD. Conversely, if your savings balance dips below the threshold, money is swept back from the FD to maintain the desired balance.

For example, let’s say you set a threshold of ₹50,000 for your savings account. If you receive ₹75,000, the extra ₹25,000 will be automatically moved to your linked FD, earning you higher interest. Later, if you withdraw ₹30,000 from your savings account, ₹5,000 will be swept back from the FD to maintain the ₹50,000 threshold.

Key Features of FD Sweep-In Facilities

1. Minimum Investment: The minimum amount required to open a sweep-in FD varies across banks, but typically starts at around ₹25,000.

2. Sweep-In Amount: Banks usually transfer funds in multiples of ₹1,000, although some may allow transfers ranging from ₹1 to ₹1,000 based on your instructions.

3. Tenure: Sweep-in FDs generally have tenures ranging from 1 to 5 years, similar to regular FDs. Some banks may also offer shorter tenures of 6 months or more.

Benefits of FD Sweep-In Facilities

1. Higher Interest Earnings: By automatically moving surplus funds to an FD, you can earn higher interest compared to a regular savings account. The interest rates for sweep-in FDs are similar to those of standard FDs, depending on the tenure.

2. Liquidity: Despite being invested in an FD, your money remains accessible. You can withdraw funds from the FD without breaking the entire deposit, providing liquidity similar to a savings account.

3. Automatic Savings: Sweep-in facilities encourage saving by automatically transferring excess funds to a high-interest FD. This helps you make the most of your money without manual intervention.

4. Reduced Idle Funds: By setting a threshold for your savings account, you ensure that surplus money doesn’t sit idle and earns higher returns in an FD.

Sweep-In FD Interest Rates and Calculations

The interest rates for sweep-in FDs are similar to those of regular FDs and vary based on the bank and tenure. For instance, Airtel Finance offers competitive interest rates on their Fixed Deposits, ranging from 3.5% for a 7-29 day tenure to 6.5% for a 5-year tenure.

To calculate the interest earned on your sweep-in FD, you can use an online FD interest calculator. Simply enter the deposit amount, interest rate, and tenure to see the estimated returns.

For example, if you invest ₹1,00,000 in a sweep-in FD with Airtel Finance for 1 year at an interest rate of 5.5%, you’ll earn ₹5,500 as interest at maturity.

Documents Required for Opening a Sweep-In FD

To open a sweep-in FD, you’ll need to provide:

• Proof of identity (Aadhaar card, PAN card, passport, etc.)

• Proof of address (utility bill, rental agreement, passport, etc.)

• A recent photograph

• Linked savings or current account details

Most banks allow you to open a sweep-in FD online or through their mobile app. For instance, you can easily open an FD with Airtel Finance through the Airtel Thanks app, with just a few clicks.

Conclusion

A Fixed Deposit sweep-in facility is an excellent tool for anyone looking to maximize returns on their surplus funds without sacrificing liquidity. By automatically transferring excess money from your savings account to a high-interest FD, you can ensure that your money works harder for you.

If you’re considering investing in a sweep-in FD, Airtel Finance offers attractive interest rates and a seamless digital experience. With their user-friendly Airtel Thanks app, you can easily manage your finances on the go. Visit their website to learn more about their Fixed Deposit options, interest rates, and required documents, and take the first step towards smarter money management today!

FAQs

1. Is sweep-in facility good?
   Yes, a sweep-in facility is beneficial as it helps you earn higher interest on surplus funds while maintaining liquidity. It automatically transfers excess money from your savings account to a linked Fixed Deposit, ensuring your money works harder for you.

2. What is the difference between FD and sweep in FD?
   A regular Fixed Deposit locks in your money for a fixed tenure, offering limited liquidity. In contrast, a sweep-in FD automatically transfers funds between your savings account and FD based on a preset threshold, providing both high interest and liquidity.

3. Can I withdraw money from sweep FD?
   Yes, you can withdraw money from a sweep-in FD without breaking the entire deposit. If your savings account balance dips below the set threshold, the required amount is automatically transferred back from the FD, ensuring liquidity while still earning higher interest on surplus funds.