A Sweep Account is a bank account that automatically transfers excess funds from a savings or current account into a fixed deposit or investment option to earn higher interest.
A Sweep Account combines the benefits of a savings account and a fixed deposit (FD). It uses an auto sweep facility to move surplus money above a specified limit into a fixed deposit, allowing the customer to earn higher interest than a regular savings account.
There are two main features:
This ensures that funds remain liquid while also earning better returns. Sweep accounts are ideal for individuals or businesses who want to maximize returns without locking money for a fixed period.
Banks allow customers to set a threshold limit (e.g., ₹50,000). Any amount above this limit is swept into an FD, while withdrawals are handled seamlessly without manual intervention.
"If your savings account balance exceeds ₹1 lakh and the threshold is ₹50,000, the extra ₹50,000 is automatically transferred into a fixed deposit. If you withdraw money later, the FD is partially broken to maintain liquidity."