How Can I Earn Interest with Auto-Sweep Facility on an Online Current Account?

Posted on Wednesday, April 17th, 2024 | By IndusInd Bank

Current accounts are the bank accounts used by large and small businesses. These accounts help companies carry out business transactions. Open a current account online if you own a business and regularly transfer large sums of money. One of the different facilities banks offer for account holders is the current account with a sweep facility. Under the auto-sweep service, holders link their current accounts with FDs and fix a trigger limit for auto-sweep in the current account.

How Does Auto-Sweep Work?

When you open a current account online,you must specify your current account’s threshold limit. Whenever the balance in your current account surpasses the specified limit, the excess amount will be deposited into your fixed deposit automatically. This banking facility is called the sweep-in facility or auto-sweep. Under the provisions of a current account with an auto-sweep facility, both FDs and current accounts will enjoy interest earnings. Furthermore, you can even liquidate the excess amount if you require it. If you need to pay a sum exceeding the threshold amount, you could request it, and the balance in your current account will increase accordingly. For example, you need ₹3,00000 to purchase products for your shop, and the threshold limit for a current account with an auto-sweep facility is ₹2,50,000. Under the provisions of the auto-sweep facility, you can avail of the excess sum into the current account.

Also Read: Savings Account & Auto-Sweep Facility: How Does it Work?

What are the Advantages of a Current Account with FD Auto-sweep feature?

A few benefits of current accounts with FD auto-sweep facilities are:

●     No Human Involvement:

Sweep-in and sweep-out facilities are fully automated, meaning you don’t need to track your current account’s balance and deposit the excess funds into your fixed deposit. Automation saves you time and effort. You dedicate the time to growing your business.

●     Provides Liquidity:

Another advantage of current accounts with a sweep facility is the chance to enjoy higher interest rates on your savings and liquidity. Imagine you don’t have enough funds in your current account for an upcoming EMI payment. In that case, the bank will transfer the required funds from your fixed deposit to your current account to enable timely EMI repayment.

●     Flexible Deposits:

Fixed Deposits are flexible as they accept deposits once every 24 hours when the day starts. They also instantly transfer funds into your current account when your balance is lower than the trigger limit. Simply put, auto-sweep is a facility that manages cash effectively.

●     Linking Multiple Accounts:

You can choose factors like the maturity period, tenure, and threshold amount. This feature helps you link multiple accounts to your fixed deposit, ensuring you never experience liquidity crunches.

●     Attractive Returns:

Grow your savings by earning attractive returns by transferring the excess funds to a fixed deposit. Increased savings can aid in business growth by improving the cash flow.

●     A Separate Corpus:

The auto-sweep facility has another benefit. They can help you build a separate corpus, which can help you during a rainy day. A corpus ensures you don’t incur any debt to deal with cash crunches.

You can enable the sweep in/out facility by visiting your nearest bank branch and submitting the form.

Documentation Requirements for Auto-Sweep Facility:

Here are the documents you should submit to the bank to access the auto-sweep facility:

• Passport-sized photographs
• Identity proof like a driving licence, Aadhar card, PAN card, and other government ID cards
• Address proof like the bank passbook, telephone and electricity bills, and other documents verifying your address.
• An introduction from an existing account holder

The auto-sweep facility helps you grow your funds while ensuring liquidity and flexibility. If you already have a current or savings account, take advantage of this facility, and if not, open a current account online and consider incorporating this facility instead of keeping your excess funds idle.

Disclaimer:

The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.