Auto Sweep Facility: Banks provide account holders with the auto sweep facility, commonly referred to as the sweep-in or sweep-out facility, as a way to maximise their savings while preserving flexibility and liquidity. It works by automatically moving extra money out of a savings account and into a liquid mutual fund or linked fixed deposit, where it earns greater interest rates. Customers can earn more on their deposits without jeopardising their ability to access their money thanks to this technique, which makes sure that idle funds are used effectively.
How Auto Sweep Facility Works
If a consumer chooses the auto sweep option, any surplus amount in their savings account that exceeds a set threshold is automatically transferred in pre-specified sums into a liquid mutual fund or fixed deposit.
Since these deposits are usually made for a brief period of time, clients can withdraw their money anytime needed. The method automatically sweeps money back into the savings account to maintain the necessary balance when there aren’t enough funds to cover withdrawals or other debits.
Benefits of Auto Sweep Facility
Higher Returns: Account holders can earn better interest rates than with standard savings accounts by automatically investing idle funds in liquid mutual funds or fixed deposits.
Liquidity: The auto sweep service keeps liquidity intact by enabling consumers to access their assets promptly when needed, even with the greater returns.
Ease of Operation: The account holder does not need to manually intervene in the process because it is automated. Based on predetermined parameters, funds are effortlessly swept in and out.
Activation and Usage
Customers must specify the threshold limit for sweep-in and sweep-out transactions and link their savings account to a fixed deposit or liquid mutual fund in order to use the auto sweep feature. This function, which most banks provide to both corporate and individual account holders, offers a practical solution to efficiently manage cash flow.
To sum up, the auto sweep option is a useful resource for people and companies trying to maximise their savings while preserving liquidity. Account holders can maximise their unused assets and earn higher returns without sacrificing their ability to access their money by utilising this option.
