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Fixed Deposit(FD) Sweep-in

Fixed deposits could earn you a high-interest rate when it is compared to a standard bank account. However, the challenge with Fixed deposits is that they do not offer the flexibility and liquidity as a savings account. This is when Sweep-in FDs come in handy.

What is Sweep-in FD?

The Sweep-in facility of an FD will allow the investor to transfer excess funds in the bank account to the FD account. Hence, it gives them the opportunity to earn a higher return. The period of the Sweep-in FD ranges from one to five years. This depends on the bank. Investors could state the amount that they would like to hold in their savings account and the current account, and the rest would be automatically transferred to the Sweep-in FD account.

It allows investors to earn higher returns on their surplus money and also allows investors to dip in the Fixed Deposit in the case of emergencies. Investors could draw funds from the fixed deposit with any penalty to meet their short-term needs.

Components of the Fixed Deposit Sweep-in 

The table below displays the major attributes of the Sweep-in FD:

1) Period of the Investment: 

The tenure of a sweep-in FD would range from a year to 5 financial years.

2) Linkage of the Bank Account to the Sweep-in FD Account:

It is critical that the current or savings account is linked to the sweep-in FD account. Also, all of the banks do insist on the investor having a bank account in the same bank as the FD to get a Sweep-in facility.

3) The Minimum Investment

Banks would usually transfer surplus money in the savings account to sweep in FD multiples of thousand rupees. Certain banks would also allow transfers in the range of Rs. 1 to Rs. 1,000 according to the instructions that are given by the investor.

4) Sweep in FD Interest Rates:

The interest rate for the sweep-in FD account would be similar to any normal FD and would also be dependent on the tenure of the investment. The excess amount that is invested in the sweep-in facility would earn the same interest as the FD. Also, it lets the investors earn a greater interest return than a savings account on the surplus money.

5) Withdrawals of the Scheme:

The excess amount that has been invested in the fixed deposit through the sweep-in facility could be withdrawn without breaking the whole FD. Investors will not be losing out in the interest of the FD but only the swept-in money that is withdrawn. Also, the bank will not charge any fees or penalties for the withdrawal of the swept-in money from the FD.

6) Eligibility Criteria for the Scheme:

Not all investors are allowed to get the sweep-in facility. The investor who has invested Rs. 25,000 in an FD is eligible for the sweep-in facility. Alternatively, the investor who has a premium account with a minimum balance that ranges from Rs. 25,000 to Rs. 1,00,000 could opt for the sweep-in facility on their FDs.

How to Apply for a Sweep-in Facility?

The simplest method of applying for the sweep-in facility is through the online procedure. Mentioned below is the step by step process to get it done:

Step 1: The very first step you would need to take is to log in to your net banking.

Step 2: Click on the option - 'FD Sweep-in.' You can find it under the FD tab.

Step 3: You need to click on the savings account number and the FD number that you would like to be linked for the sweep-in.

Step 4: Click on the options that say 'continue' and 'confirm' to have the facility activated.

Access to fixed deposits
of various banks
Invest without opening
a new bank account
Avail high interest rates
of up to 6.5%
OPEN FD ONLINE

Benefits of the Fixed Deposit Sweep-in

There are various advantages of the Fixed Deposit Sweep-in, and they are mentioned below:

  • An individual that runs a small business and has a current account would not have to take an overdraft on the fixed deposit that is held by them, and setting up a sweep account would be more beneficial for them.
  • With this Scheme offered, investors can now draw the exact amount they need instead of an overdraft which is a stipulated amount to draw more than you need.
  • You will not lose your interest in the FD, and you will lose interest only on the sum that has been swept or drawn.
  • Various banks offer you the facility to link multiple FDs to a sweep account.
  • There will be no additional charges that you will be asked to pay, like in the case of overdraft facilities that are levied by the banks.
  • The interest that is earned as well would be higher than a regular savings account.

Difference Between a Sweep-in and Flexi Deposit

Sweep-In FDs and Flexi FDs both have the same advantage of high-interest rates and liquidity. A sweep-in feature is a feature that can be introduced to a conventional fixed deposit arrangement. A Flexi deposit, on the other hand, is a different deposit system in and of itself.

In a Flexi deposit arrangement, the investor must manually deposit funds into their fixed deposit account. They could also withdraw the money at any moment, i.e., ahead of schedule. As a result, a single plan can provide both high returns and liquidity, allowing investors to invest and withdraw at any moment.

Any extra funds in the savings or current account are automatically swept into the fixed deposit in a Flexi deposit program. When the depositor's threshold limit is achieved, the account holder is not needed to register a new FD account. Furthermore, there are no fees, charges, or penalties for violating the FD. Only the interest rate on the money removed from the sweep-in account is lost to the depositors.

Comparison of FD rates

Name
Tenure
Highest Interest Rates
1
2
3
4
5

FAQs

Q1. What is FD sweep-in?

Fixed deposit sweep in means you will be allowed to invest excess funds into your FD.

Q2. Is it possible to get a Sweep-In with repeated deposits?

Yes, investors can link one or more bank accounts to fixed deposits.

Q3. Can anyone with an existing fixed deposit avail of the sweep-in facility?

Yes, you can use the sweep-in feature by linking your existing fixed deposit to your savings or current account.

Q4. Is it possible to link a Fixed Deposit to two different bank accounts for the Sweep-In?

No, for the sweep-in option, investors cannot link two bank accounts to one FD. For a sweep-in facility, they can only link one savings or current account to one FD.

Q5. Is it safe to use sweep accounts?

Sweep accounts are safe because they're administered by the same bank that handles your fixed deposit and savings/current account. It is, however, advisable to monitor the sweep account on a frequent basis. This is to ensure that you do not lose a significant portion of your deposit by paying excessive charges or fees.

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