Auto-sweep facilities are emerging as a popular way for customers to earn higher interest on idle cash by automatically transferring surplus funds into fixed deposits, blending better returns with liquidity.
Banks often encourage customers to open a savings account by pointing to ATM access, debit cards and the interest on deposits, but that rate is usually modest. One way to earn more on idle cash is an auto-sweep facility, which moves money above a preset threshold from a savings or current account into a fixed deposit automatically, according to IndusInd Bank’s explanation of sweep-in deposits.
The basic idea is simple: the customer sets a balance to keep in the account, and any surplus is transferred into a term deposit without manual action. That means the extra cash can earn the higher rate usually associated with fixed deposits while the account holder still keeps day-to-day access to the money. IndusInd Bank says the arrangement is designed to combine better returns with liquidity.
Banks typically structure the product so that excess funds are swept in once balances cross the chosen limit, while the base amount remains in the savings account. DBS Bank’s Auto Saver facility, for example, links a savings account to multiple fixed deposits and can use a last-in, first-out method when funds need to be broken. Ujjivan Small Finance Bank says its own auto-sweep option follows a similar model for current accounts, shifting surplus money into deposits above a set threshold.
The appeal for savers is the gap between ordinary savings rates and fixed-deposit returns. The Business Today Bazaar report says savings accounts may offer about 2.5% interest, while fixed deposits for regular customers can yield roughly 6.5% to 7%, which can make the swept portion far more productive. At the same time, the money is not locked away in the same way as a conventional deposit, since it can usually be withdrawn if needed.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
