Understanding Sweep In and Sweep Out facility in Saving Account
Sweep In and Sweep Out facility is a feature provided by some banks to their savings account holders, which allows them to earn higher interest rates on their idle money while still providing access to their funds whenever needed.
Sweep-In facility: When you have a Sweep In facility enabled on your savings account, any excess money that is above a certain threshold limit in your savings account will automatically get transferred to a linked fixed deposit (FD) account, which earns a higher rate of interest. This way, you can earn a higher rate of interest on your idle money, rather than having it sit idle in your savings account.
For example, if your savings account has a minimum balance requirement of Rs. 10,000, and you have Rs. 20,000 in your account, the extra Rs. 10,000 will be swept in to a linked fixed deposit account, which could earn a higher rate of interest.
Sweep Out facility: On the other hand, the Sweep Out facility allows you to withdraw money from your savings account even if the balance is lower than the minimum balance requirement, by automatically breaking the fixed deposit and transferring the required amount back into your savings account. This feature helps you avoid penalty charges for not maintaining the minimum balance requirement in your savings account.
For example, if your savings account has a minimum balance requirement of Rs. 10,000, and you have Rs. 8,000 in your account, you can still withdraw Rs. 9,000 using the Sweep Out facility. The required Rs. 1,000 will be automatically broken from the linked fixed deposit account and transferred to your savings account, thereby maintaining the minimum balance requirement.
Overall, the Sweep In and Sweep Out facility helps you earn higher interest rates on your idle money, while also providing access to your funds when needed, without incurring any penalty charges.
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