Now, banking is easy with fast paced technology. Many banks provide an option where the excess amount in your savings bank account after the threshold limit will be booked as fixed deposit.
Any extra amount in your savings will be moved as fixed deposit and one can earn higher interest rate on the amount, this process is called as auto sweep out.
By opting for Auto Sweep facility, you can fetch around 8-9% depending on the bank.
How to it works?
Say, for example, Arun has set a threshold limit of Rs 40,000 in his account. Any amount more than that will book as fixed deposit. The tenure and interest rates vary with the bank. This facility can be used to park as emergency funds.
Some banks have the facility where any deficit in your savings will take care of. As the exact value comes from your fixed deposit.
This will be useful in case of where you are withdrawing the amount from ATM, any amount which is short will be pulled from fixed deposit.
In HDFC Bank, deposits are broken down in units of Rs 1/-thereby minimising Interest Loss. Remaining amount be intact in fixed deposits.
One can reap the benefits of altering the period of deposit, maturity and payment instruction, principal amount and roll over period.
The names of these process may differ with banks like Axis Bank call it Encash 24, HDFC Bank named it Super Saver Facility. Check with your bank before availing this facility.