Are you curious to know what is auto sweep in SBI? You have come to the right place as I am going to tell you everything about auto sweep in SBI in a very simple explanation. Without further discussion let’s begin to know what is auto sweep in SBI?
State Bank of India (SBI) is one of India’s largest and most trusted banks, offering a wide range of financial products and services to its customers. Among its many offerings, SBI provides an innovative and efficient way to manage your savings and maximize returns through a feature known as “Auto Sweep.” In this blog, we will explore what Auto Sweep in SBI is, how it works, and how it can help you optimize your savings.
What Is Auto Sweep In SBI?
Auto Sweep, also known as the SBI Multi Option Deposit Scheme (MODS), is a feature that allows you to link your savings or current account with a Fixed Deposit (FD) account. This integration enables you to earn higher interest rates on your surplus funds while maintaining liquidity and accessibility to your money when needed.
Key Features Of SBI Auto Sweep:
- Threshold Amount: When you open an Auto Sweep account, you specify a threshold amount. Any balance in your savings or current account above this threshold amount gets automatically transferred to a fixed deposit account in multiples of a predefined amount.
- Fixed Deposit Tenure: The funds transferred to the fixed deposit account have a predefined tenure, usually ranging from 1 year to 5 years. The tenure is determined by the bank.
- Interest Rates: The interest rates on Auto Sweep FDs are typically higher than regular savings account interest rates, providing an opportunity to earn more on your idle funds.
- Premature Withdrawal: In case you need funds from your Auto Sweep FD before its maturity, you can break it prematurely. However, this may entail a penalty, and you may earn a lower interest rate compared to the original rate.
- Liquidity: You can access the funds in your FD account easily by breaking the FD, which is a more convenient option than traditional FDs, where you would need to break the entire deposit.
How Does Auto Sweep Work?
Let’s walk through how Auto Sweep operates in practice:
- Threshold Amount: Suppose you set a threshold amount of Rs. 25,000 in your savings account.
- Excess Funds: If your savings account balance exceeds this threshold, say you have Rs. 50,000, the excess Rs. 25,000 will be automatically swept into an FD account. You will still have Rs. 25,000 in your savings account for regular transactions.
- Interest: The Rs. 25,000 in the FD account will earn interest at the prevailing FD interest rate for the chosen tenure.
- Accessing Funds: You can withdraw the funds from the FD account by breaking it, either partially or completely, as needed.
Benefits Of SBI Auto Sweep
- Higher Returns: Auto Sweep allows you to earn more on your idle funds compared to a regular savings account.
- Liquidity: You retain access to your funds while also benefiting from the higher FD interest rates.
- Automatic: The process is automatic and hassle-free. You don’t need to manually transfer funds to an FD; it happens seamlessly.
- Customization: You can set the threshold amount and tenure based on your financial needs and goals.
- Safety: SBI is a trusted bank, offering the security and reliability needed for your savings.
SBI Auto Sweep is a smart and convenient way to make the most of your savings. By earning higher interest rates on your surplus funds while maintaining liquidity, you can achieve your financial goals more effectively. Whether you are looking to build an emergency fund, save for a specific goal, or simply make your money work harder for you, Auto Sweep in SBI is a valuable tool that can help you achieve your financial aspirations.
Who Is Eligible For SBI Auto Sweep?
Provision of MODs are also available through auto sweep facility in Savings Plus accounts. For ‘auto sweep’ facility, the Minimum Threshold Balance & Minimum Resultant Balance should be Rs 35,000/-and Rs. 25,000/- respectively. inimum Sweep amount of Rs. 10,000/- in multiples of Rs.1000/-.
Is Auto Sweep Good Or Bad?
The most important aspect that lures people to autosweep must be the fact that the excess money in a savings account can give you interest much like that of FD (higher than savings account interest). However, the problem is that if you make withdrawals frequently from the FD, you will lose out on interest.
How Does Auto Sweep Work?
With an auto-sweep account, your savings account is linked to a fixed-deposit account and a monetary limit is defined. Whenever the amount in the savings account crosses that defined limit, the excess money is transferred automatically into the fixed deposit.
What Is The Disadvantage Of Sweep Account In SBI?
Disadvantages of sweep accounts
Penalty charges: The chief disadvantage of sweep accounts remains the penalty charged, if any, on the premature withdrawal. In unfortunate cases, you may earn even less than saving bank interest due to the penalty.
I Have Covered All The Following Queries And Topics In The Above Article
SBI Auto Sweep Minimum Balance
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What Is Auto Sweep In SBI Savings Account
What Is Auto Sweep In SBI Interest Rate
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Disadvantages Of Auto Sweep Facility In SBI
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What Is Auto Sweep In SBI