Fixed Deposits – A Safekeeping of One’s Money
Banks and non-banking financial institutions (NBFCs) employ fixed deposits (FDs) as a type of financial investment to help their clients save money. Because fixed deposit accounts offer a fixed interest rate and may be repaid over a set period, usually up to five years, they are more payable than other investment forms. Investors can even expect to know their return amounts using an easily available FD calculator.
However, in recent times, there has been an increase in popularity of sweep-in Fixed Deposits. Wondering what that is? This article will help you find out the nature of sweep – in fixed deposits, its advantages along with the reasons why you should invest in them.
You can now secure your savings for the long – term by applying online for Fixed Deposits offered by RBL Bank at an interest rate of 7.00% p.a.
Sweep–in Fixed Deposits – What are they?
A “Sweep–In” Fixed Deposit is an exciting feature that offers high amounts of flexibility to investors. Imagine having a fixed deposit wherein the invested capital is not fixed for the entire tenure.
Unlike other FDs, you cannot calculate the expected amount using the FD calculator. You can continue adding more money to the sum as time progresses. This way, the total sum to be accumulated post-maturity completion keeps increasing.
Nowadays, you can apply for a sweep–in facility on your fixed deposits via net banking. The need to go to bank branches physically is no longer a requirement with the changing investment scenarios. However, make sure you are up – to date with all terms and conditions of the Sweep–In facility before applying for one.
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Difference Between Sweep-in FD and Regular FD
|Particulars||Regular FD||Sweep-in FD|
|Tenure||7 days to 20 years||1 to 5 years|
|Liquidity||Partial withdrawals allowed five years of lock-in period||Only swept-in money can be withdrawn|
|Interest||7.00% per annum||More interest than a regular FD due to swept-in investment|
Here’s Why You Should Invest in Sweep – in FDs?
A fixed deposit sweep-in feature enables investors to move extra cash from their bank accounts to their FD accounts, providing them the chance to earn more significant profits. Depending on the bank, the sweep-in FD has terms of one to five years.
The amount investors want to keep in their savings, and current accounts can be specified, and any remaining funds will automatically be moved to the sweep-in FD account.
This enables investors to earn greater returns on their excess funds and permits them to withdraw money from their FD in times of need. Without paying fees or incurring penalties, investors can access the money they have saved to cover immediate expenses.
How Does the Sweep-In Facility Work?
- In multiples of INR 1,000, banks tend to automatically overdraft from a savings account into a Best fixed deposit. Under particular instances, an investor may choose between having the funds automatically transferred into their FDs or keeping their money in the savings account for an extra week.
- Not every investor is eligible to use the sweep-in facility. Sweep -in facility can only be started once there is a minimum FD investment of Rs. 25,000 for a tenure of 5 years. Or else, investors can opt for this facility on their fixed – deposits, in lieu of a premium account with a minimum balance of Rs. 25,000.
- Without rupturing the entire FD, the excess invested in the FD using the sweep-in facility may be withdrawn. Investors only lose out on the removed swept-in money, not on the rbl bank fd rate.
- Additionally, the bank won’t impose any fees or penalties for withdrawing the money that was swept into the FD.
Sweep – in Fixed Deposits: Advantages
- The depositor retains the flexibility of a bank savings account. Additionally, compared to a savings account, more interest will be earned.
- The best type of liquidity is provided via a sweep-in facility. The money is sent without any noticeable delay from the savings account to the FD account.
- More than one FD account may be connected by a depositor to a savings account. High liquidity is also ensured by this.
- For sweep accounts, there are no additional fees like there would be for a bank-issued overdraft facility. Additionally, there is no fee for early withdrawals.