What’s the limit over which the money gets converted in a FD in sweep in bank accounts?
Each bank has a different pre fixed limit for its sweep in bank accounts where the surplus money gets bracketed into a FD. So any surplus funds over a pre fixed limit are automatically fixed in multiples of a pre fixed sum as a one year fixed deposit.
When your Savings Account balance surpasses a certain limit, the autosweep facility diverts the surplus money into an FD. The bank usually decides the minimum maturity period for the FD. The threshold can be anywhere between Rs.25,000 and Rs.1 lakh. This differs from one bank to another.
This works in reverse too. In case you withdraw more than what is available in the Savings Account, the balance will be taken from the FD automatically. For example, if you have an account at Axis Bank Ltd and your balance goes below Rs.25,000 in your autosweep savings account, the bank will tap into your FD to give you the sum that you require for withdrawal.
The biggest advantage of autosweep is that the money lying in this account can give you interest that is much higher than Savings Account interest. However, the problem is that if you make withdrawals frequently from the FD, you will lose out on interest.
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