Auto Sweep Facility: The Smart Way to Turn Idle Savings into Higher Returns
Your salary comes in, expenses go out, and whatever remains sits untouched in your savings account, earning almost nothing. The auto sweep facility is designed to ensure that even this leftover money helps you earn interest. Let us understand the benefits of the auto sweep facility.
What is the Auto Sweep Facility?
An auto sweep facility is a banking feature that helps you earn more interest on the extra money lying idle in your savings account.
Under this facility, your savings account is linked to a fixed deposit.
You set a minimum balance limit for your savings account. Whenever your balance goes above this limit, the excess amount is automatically transferred into a fixed deposit, where it earns a higher rate of interest than a regular savings account.
If you later need money and your savings account balance falls below the set limit, the required amount is automatically moved back from the fixed deposit into your savings account. This ensures liquidity without any manual effort.
How Does the Auto Sweep Facility Work?
The auto sweep facility works by automatically moving extra money from your savings account into a fixed deposit and bringing it back when needed.
Understand sweep transfer meaning and working with this example-
You set a minimum balance of ₹25,000 in your savings account. If your salary credit makes the balance ₹70,000, the extra ₹45,000 is automatically converted into a fixed deposit and starts earning higher interest.
Later, if you pay rent of ₹30,000 and your savings balance drops, the bank automatically breaks part of the fixed deposit and transfers the required amount back to your savings account.
This way, your money earns better returns without affecting daily withdrawals or payments.
Auto Sweep Interest Rate
The auto sweep interest rate is the fixed deposit interest rate that applies to the surplus money moved from your savings account into an FD. This rate is usually higher than a regular savings account and depends on the bank, FD tenure, and prevailing interest rates.
In most Indian banks, auto sweep interest rates are similar to FD rates, generally ranging between savings account rates and standard fixed deposit rates, with interest calculated only on the swept amount.
Auto Sweep Facility Bank List
- State Bank of India (SBI): Savings Plus Account, also known as MOD (Multi Option Deposit), where surplus savings are moved into fixed deposits automatically.
- HDFC Bank: Sweep Out FD and Sweep In Facility, which transfers excess balance into an FD and pulls it back when funds are required.
- ICICI Bank: Money Multiplier Account, designed to earn higher interest on surplus savings through linked fixed deposits.
- Kotak Mahindra Bank: ActivMoney or Sweep In Account, allowing flexible withdrawals while earning FD-level interest.
- Axis Bank: Encash 24 or Sweep In FD, which provides liquidity along with better returns on idle funds.
- Bank of Baroda (BoB): Baroda Super Savings Account with Auto Sweep and Reverse Sweep features.
- IDFC First Bank: Auto Sweep Savings Account that combines savings account access with FD interest benefits.
- Bank of India (BoI): Star Sweep or Savings Plus Scheme for automatic conversion of excess balance into deposits.
- Bank of Maharashtra: Mixie Deposit Scheme, offering a mix of savings flexibility and fixed deposit returns.
- UCO Bank: Auto sweep facility available on select accounts, such as pension-linked savings accounts.
Read about Indira Gandhi National Old Age Pension Scheme (IGNOAPS)- A social security pension for senior citizens below the poverty line, providing basic financial support in old age under the National Social Assistance Programme.
- Punjab National Bank (PNB): Auto Sweep Fixed Deposit facility linked to savings accounts.
- Federal Bank: Sweep In Fixed Deposit that allows automatic fund movement between savings and deposits.
This list can help you identify the correct feature name while activating or enquiring about the auto sweep facility with your bank.
How to Activate Auto Sweep
You can activate the auto sweep facility through your bank using any of the following methods.
Online or Mobile Banking
- Log in to your bank’s net banking or mobile app.
- Go to the Deposits, Fixed Deposit, or Sweep Facility section.
- Select the savings account you want to link.
- Set the minimum balance limit for your savings account.
- Confirm the request using the OTP sent to your registered mobile number.
Bank Branch
Visit your nearest bank branch and submit a request form for auto sweep activation. Carry your identity proof and account details.
Customer Care
Call your bank’s customer care number and request activation. The executive will guide you through the process.
Once activated, surplus money in your savings account will automatically move to a fixed deposit and earn higher interest, without affecting your regular transactions.
Looking to start saving smart without worrying about maintaining a minimum balance? Open a zero-balance savings account today and enjoy easy banking and digital access.
Benefits of Auto Sweep Facility: Earn More Without Locking Your Money
If money is sitting in your savings account doing nothing, the auto sweep facility quietly puts it to work while keeping it ready for emergencies.
- Automated savings: Surplus money from your savings account is automatically moved into fixed deposits, without any manual effort.
- Higher returns: Earns better interest than a regular savings account on idle funds.
- Liquidity and flexibility: Money is automatically transferred back to your savings account when needed, ensuring smooth payments.
- Emergency support: Keeps funds accessible while still earning higher interest, making it useful as a backup emergency fund.
Disadvantages of Auto Sweep Facility: What You Should Know Before Activating It
Auto sweep looks effortless, but frequent use, taxes, and bank-specific rules can reduce the actual benefit if you are not careful.
- Lower returns with frequent use: Regular withdrawals may lead to multiple short-term fixed deposits, reducing overall interest earned.
- Tax impact: Interest earned is taxable as per your income tax slab.
- Possible charges: Some banks may apply activation or account-related fees.
- Minimum balance requirement: A higher minimum balance may be required in the savings account.
- Bank-specific conditions: Rules, limits, and penalties differ from bank to bank and need careful review.
Conclusion
The auto sweep facility is a practical way to earn higher interest on idle savings while keeping money accessible for daily needs, provided you understand the bank rules, tax impact, and balance requirements before activating it.
Auto Sweep Facility – FAQs
Yes, auto sweep is safe, as it is offered by banks and regulated by the Reserve Bank of India.
Your money stays within your bank account and is linked fixed deposit
The minimum balance depends on the bank and account type. Most banks require maintaining a higher threshold, such as ₹25,000 or more.
Auto sweep transfers money back from the fixed deposit to savings when funds are needed.
It ensures payments do not fail due to a low balance.
Fixed deposits are better for long-term, locked investments with stable returns. Auto sweep is better for short-term surplus money that may be needed anytime.
Frequent withdrawals can reduce interest earned and create multiple short-term deposits.
Interest earned is taxable as per your income tax slab.
Bank sweep is good for earning higher returns on idle savings. It can be less effective if you withdraw money very frequently.
Sweep transfer meaning refers to a banking facility where surplus money in a savings account is automatically moved into a linked fixed deposit to earn higher interest. When funds are required, the amount is transferred back to the savings account.
