Tuesday, August 30, 2011

[www.keralites.net] Sweep- In-Fixed Deposit

 

Sweep- In-Fixed Deposit

 
We are all familiar with bank fixed deposits otherwise called Term Deposits. This type deposits provides us higher rate of returns when compared to the traditional savings bank account However fixed deposits take away the flexibility of ready cash at disposal, which we many a times need to meet our unplanned expenses or contingencies.  In such situations, Sweep in fixed deposits come to our rescue.
 
"Auto Sweep" is a facility which provides the combined benefits of a Savings Bank account and Fixed Deposit.  Auto-Sweep facility interlinks your saving bank account with a deposit account and makes sure any extra amount lying in your bank account above a threshold limit is automatically transferred to fixed deposits and you earn better interest on your money.
A sweep in facility is quite similar to a fixed deposit.  One has to specify the amount he wants to keep in this fixed deposit, thereby earning you higher interest rates.  In case you require money, you can withdraw it like you do from a normal savings bank account.
The difference between fixed deposit & sweep in fixed deposit
Here is an example of how sweep in fixed deposit works:

Suppose you have Rs 1,00,000 in  your  bank account out of which Rs 80,000 is in a sweep-in- fixed deposit and remaining Rs 20,000 is in your saving account. Do to some emergency you wanted to withdraw Rs 30,000 from your account. In this case you don't need to break your fixed depo
sits. Out of Rs 30,000 you wish to withdraw, Rs 20,000 will be deducted from your Savings account, remaining Rs 10,000 would be withdrawn from your Sweep in account, and you would continue to earn interest on the remaining Rs 70,000 in your Sweep in fixed deposit.
For availing the facility of Sweep-in benefits, you need to specify an amount above which the money is moved to a fixed deposit. In case you need money, it is transferred from sweep in deposit to your savings account automatically. This will make sure you earn good interest on the cash lying idle in your Savings account.
Example
Mr. X open a new Savings Bank account with  ABC Bank Ltd, he enables Auto-Sweep facility on his savings bank account and defines the threshold limit as Rs 40,000 and present balance in his account is only  Rs 10,000, that earns interest @ 4.00%.  After some times he deposited Rs. 70,000.00 in his account, now the balance in his account is Rs. 80,000.00.  Mr. X fixed the threshold limit as Rs. 40,000.00, the extra amount of Rs.  40,000.00 will be automatically converted as fixed deposit and starts earning a good interest.
There are various modifications to a sweep-in account catering to different customers in different situation, so please contact your bank for more details related to interest and other terms and conditions.
Best Regards
 
Prakash Nair 

www.keralites.net   

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