Here’s All You Need to Know About the Auto Sweep Facility in Banks

Posted on Tuesday, February 20th, 2024 | By IndusInd Bank

In the landscape of personal finance, banks have introduced a game-changer: the Auto Sweep Facility. This financial tool operates behind the scenes, working actively to ensure your money doesn’t just sit idly but rather, it dynamically engages in wealth-building manoeuvres. 

What is an Auto Sweep Facility Offered by Banks? 

The auto sweep facility shifts your funds intelligently. When a portion of your money lies dormant in the savings account for too long, like seeds waiting for the right season, the auto sweep mechanism kicks in. It automatically transplants these idle funds into higher-interest-yielding avenues. In essence, the auto sweep facility maximises the potential of your funds by strategically moving them to areas where they can flourish and yield higher returns. 

People who want to make their money work more efficiently should opt for the auto sweep facility. For example, if you usually maintain a balance of, let’s say, Rs. 10,000 in your savings account but rarely go below Rs. 5,000, you can set the auto sweep limit to Rs. 5,000. Any amount above that will be moved to a fixed deposit, earning you better interest without requiring manual intervention. 

How Does Auto Sweep Work? 

The auto sweep facility operates in a series of steps to optimise your savings. 

• Initially, when your account balance surpasses a designated amount, the surplus funds are automatically transferred to a fixed deposit account with higher interest rates, a process known as “sweeping out.” This ensures that you earn more on the excess money. 
• Conversely, if your savings account balance falls below a specific limit, the auto sweep feature initiates “sweeping in.” During this step, the necessary amount is transferred from the fixed deposit account back to your savings account, ensuring that your regular account maintains a sufficient balance when required. 
• For instance, consider a savings account with an auto sweep feature in a bank, having a minimum required balance of Rs. 5,000. Upon depositing Rs. 30,000 and setting a threshold of Rs. 10,000, Rs. 20,000 is transferred to a fixed deposit. Both accounts then accrue interest based on their respective rates. 

Benefits of Auto Sweep in Savings Account 

1. Maximised Returns on Idle Funds: With the auto sweep facility, your surplus funds don’t laze around; they actively move to higher-interest avenues when not in use. This means your money works harder, earning more interest and maximising your returns. 

2. Maintaining Minimum Balance Seamlessly: The auto sweep facility effortlessly ensures that your savings account maintains the necessary balance while intelligently sweeping idle funds for earning a higher interest. 

3. Balance Between Liquidity and Returns: Your funds remain easily accessible for emergencies or regular expenses, yet the auto sweep facility smartly channels excess money into short-term investments, striking a perfect balance between liquidity and returns. 

4. Effortless Money Management: Say goodbye to manual fund transfers between accounts. The auto sweep facility handles the intricacies for you, making money management a breeze.  

5. Tailored to Your Financial Goals: Whether you’re saving for short-term goals or building a nest egg for the future, the auto sweep facility adapts to your financial aspirations. It’s a versatile tool that aligns with your goals, making your money work in harmony with your financial plans. 

6. Automatic Renewals: In many cases, when the fixed deposit matures, the auto sweep facility can automatically renew it if not withdrawn. This ensures a continuous cycle of optimising your funds without constant manual involvement.

You can enjoy all these benefits with the Indus Multiplier Max Savings Account by IndusInd Bank. This feature-packed savings account is designed to deliver an excellent banking experience coupled with attractive interest rates, personalised services, and exclusive benefits such as lifestyle privileges and discounts. All this, in addition to the smart sweep feature that automatically converts any excess balance above a threshold limit of Rs. 20,000 in your savings account into FDs in multiples of Rs. 1,000. You can also pay via these FDs whenever your account balance runs low. 

In conclusion, the auto sweep facility is a dynamic force in the world of banking, turning a simple savings account into a powerful tool for wealth creation. It’s an active participant in your financial journey, ensuring that your money does not stay idle but proactively contributes to your financial goals. Embrace this feature, and let your finances thrive with the auto sweep facility. 

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.