You can access the second account whenever you need funds. This way, you can earn more interest on your savings without losing any interest by frequently transferring money between the two accounts. If you have two different bank accounts in different banks, it is better to use only one account for the auto-sweep facility. First In First Out (FIFO) method: In this method whenever you debit more money than your saving account threshold your first FD will be broken down by bank. if you take frequent withdrawals, this method might better.Last In First Out (LIFO) method: In this method whenever you debit more money than your saving account threshold your last FD will be broken down by bank. In general, this method will earn better because the first FD swept is permitted to earn interest for a longer period.There are two ways that sweeps between the savings account and the FD can happen: ![]() Hence, it is not advisable to use the auto-sweep feature if you need to withdraw your money frequently. Therefore, if you frequently withdraw money from your savings account, you may be earning less than if you kept your money in the savings account itself. This penalty charge will reduce your total return. Therefore, if you withdraw your money before the end of the term of the fixed deposit, you will earn interest only for the number of days your money was in the account.Īdditionally, there is a penalty charge for early withdrawal of fixed deposit accounts, usually around 1% of the interest payable. The bank calculates interest based on the number of days it remains in your fixed deposit account. If you withdraw money frequently from your auto-sweep savings account, you will earn less return, no matter how much money you put in. Overall, it is a convenient and reliable way to manage your money, earn high interest and keep your savings safe. Hence, it is better to avoid recurring transactions and avail the hassle free auto-sweep facility. However, if you frequently move money back and forth between your accounts, a penalty of 1% will be levied on the amount you transfer back to your fixed deposit account. But if you need money, you can withdraw it from your savings account anytime, and the bank will automatically break the fixed deposit without any penalty. 20,000 will be transferred to your FD account, where it will earn a higher rate of interest. 30,000 in your savings account with a limit of Rs. This way, you earn more interest on your savings without doing anything.įor example, if you have Rs. ![]() At the end of each day, any excess money in your savings account over and above the limit set by you will be automatically transferred to the fixed deposit account. How does auto sweep work exactly?Īn auto-sweep account is a smart way to manage your money. Additionally, you can withdraw money from your savings account whenever you want, and the bank will automatically break the fixed deposit if you need the money, so you don’t lose any interest. Therefore, with an auto-sweep account, you can earn more interest on your savings without having to manually transfer money between accounts. This is useful because fixed deposit accounts offer higher interest rates than savings accounts. Whenever the balance in your savings account exceeds that limit, the excess money is automatically transferred to your fixed deposit account. When you open an auto-sweep account, you set a limit or amount of money you want to have in your savings account, which is called a limit. ![]() You have a regular savings account and fixed deposit account combined. How does Auto Sweep facility benefit you?Īn auto-sweep account is like having two bank accounts in one.Overall, the auto-sweep feature is a simple and convenient way to make your savings work harder for you and earn higher returns without any extra effort. This way, you can earn more interest without doing anything. Whenever the amount in your savings account exceeds a certain limit set by you, the excess amount is automatically transferred to the fixed deposit account. This service uses the excess amount in your savings account to create a fixed deposit account, which earns a higher rate of interest. The auto-sweep feature is an easy way to make your money work hard for you by generating better returns. That’s why many people prefer to keep their money in a savings account. Investing in the stock market or mutual funds can give better returns, but not everyone has the knowledge or confidence to do so. However, there are ways to earn more interest on our savings, such as through the “auto-sweep facility” provided by most banks. ![]() Usually, when we keep our money in a savings account, we earn an average return of 2-3% per annum.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |