Sweep-in FD Can Get You Higher Returns

THIS OFFERS THE LIQUIDITY OF A SAVINGS ACCOUNT

- SAIKAT NEOGI

AS BANKS REDUCE the interest rates on savings accounts, depositors can consider sweep-in fixed deposits to maximize returns on surplus savings without sacrificing liquidity. It enables automatic transfer of funds above a predetermined limit to be invested in a fixed deposit that offers a relatively higher interest rate than a regular savings account.

It works by linking a savings account with a fixed deposit facility. When the amount in the savings account goes below the set limit, funds equivalent to this value get credited to the savings account automatically from the swept-in fixed deposit, keeping the rest of the deposit intact and continuing to earn higher interest rates.

How to open a sweep-in fixed deposit An individual can opt for a sweep-in deposit account either at the time of opening a new savings account or by requesting it later through internet banking, customer care, or at a bank branch. Before choosing a sweep-in facility, one should carefully set the threshold limit at which funds are swept into fixed deposits to avoid frequent transactions or underutilized funds.