Sweep-in Fixed Deposits: What are the Various Advantages of a Sweep-in FD?

Sweep-in Fixed Deposits: What are the Various Advantages of a Sweep-in FD?

Sweep-in Fixed Deposit: An Overview

Sweep-in Fixed Deposit or simply SIFD has become a popular method of investing surplus funds. It is considered a much better alternative to an FD because it allows you to use a part of your funds without breaking the FD. This means you can keep earning the interest even after withdrawing a portion of funds in your fixed deposit. Let's learn more about fixed deposit sweep-in meaning in detail!

What is Sweep-in FD?

Sweep-in balance in a fixed deposit allows you to transfer the surplus funds from your bank account to a fixed deposit account with the aim to earn higher returns. In most cases, the tenure of a sweep-in fixed deposit starts from one year and can go upto five years based on your bank or other financial institutions. With this facility, you can specify an amount you want to hold in your current or savings account, and the remaining balance gets automatically transferred to your sweep-in FD account. This provides you with the opportunity to gain higher returns on your excess funds and also offers you the flexibility to use funds in your FD in case of financial emergencies without breaking it. 

How Does Sweep-in FD Work?

Note that the sweep-in facility is not available for all, only eligible investors can use it. If you're eligible and have a bank account in the same bank you have an FD, you can avail of the sweep-in balance facility. 

The first thing you need to do is to link either your savings or current account to your fixed deposit account. After this, you need to state the amount you want to hold in your account. Once this is done, your extra funds will be transferred into your FD account automatically. Let's understand how FD sweep-in works with the help of an example-

Suppose, you've opted for the sweep-in facility and specified a holding amount of Rs. 50,000 in your savings or current account. Now say, your account has Rs. 30,000 and you've received another Rs. 35,000. So, the extra Rs. 10,000 will be automatically transferred to your FD account. Note that you'll earn the same rate of interest on these Rs. 10,000 as your fixed deposit amount. 

Sweep-in Fixed Deposits: Features

There are many great features of sweep-in FD that make it a highly sought-after option for investors. Some of its notable features are as follows:

  • Linking FD Account to Bank Account: To enjoy the benefits of the sweep-in facility, it is mandatory to link your bank account to your fixed deposit account. Moreover, it is recommended to have your bank account in the same bank you've your FD account in. 
  • Tenure: The tenure of a sweep-in FD can be as minimum as one year and goes as high as five years. 
  • Minimum Amount: Most banks transfer the surplus fund in your bank account in your FD account in the multiples of Rs. 1000. But there are some banks that allow you to transfer any amount starting from Rs. 1 to Rs. 1,000. 
  • Interest Rate: Usually, the interest rate for the sweep-in facility is similar to the normal fixed deposit and is mostly based on the tenure of your FD. 
  • Eligibility: There is a certain eligibility criterion that you have to meet in order to avail of the sweep-in facility. You're eligible for a sweep-in balance facility only if you've invested a minimum amount of Rs. 25,000 in an FD. Moreover, you can also opt for this service if you have a premium account and a minimum balance of Rs. 25 thousand. 
  • Withdrawals: As we have mentioned several times, the extra amount invested in your FD via the sweep-in option can be withdrawn without terminating the entire FD. Another good thing is, the bank will not be charging any money or penalty for withdrawing this sweep-in money. 

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Benefits of Auto Sweep Account

Now that we have discussed what is fixed deposit sweep-in, it's time to highlight its amazing benefits. Check out them below:

  • Enjoy Higher Interest: By opting for this facility, you can enjoy higher return rates from your FD, while also maintaining the liquidity in your FD account. Note that the interest earned with this facility is much more than what you earn with your savings account. 
  • Higher Liquidity: Sweep-in facility is known for providing higher liquidity. You can transfer your funds seamlessly between your FD account and bank account. 
  • Offers Flexibility: The majority of banks offer the flexibility to the investors to decide the period of deposit, maturity, and payment as per their convenience. 
  • Link Multiple Accounts: You can link multiple FD accounts to one bank account with the sweep-in facility.
  • No Extra Charges: Finally, you don't have to pay any additional charges to maintain your sweep-in account. Moreover, there is absolutely no fine or penalty for withdrawing prior to the completion of your tenure. 

That's about it!

The sweep-in facility makes FD a lot more beneficial by allowing you to earn higher returns on your surplus funds. On top of it, you can make necessary withdrawals when needed, without closing the FD. 

  • Can I link multiple FD accounts with a single bank account?

  • Can I opt for the sweep-in facility if I already have a fixed deposit?

  • Is the sweep-in option safe?