Want to earn more on your saving?! Switch on Sweep Facility on your bank account. Although, ensure your bank is not charging premature withdrawal charges!!
Sweep-In Facility allows one’s bank to transfer any extra sum over the decided limit in a savings account into an FD. For eg: The current balance in the account is Rs. 80,000 & the limit set is of Rs. 100,000. Suppose there is a deposit of Rs 40,000 in the account, making the total balance INR 120,000. In that case, the bank will transfer the excess INR 20,000 (120,000 – 100,000) to the sweep-in fixed deposit account
What interest rate the Rs20,000 earn?
So, say after 2 years if you need Rs1,20,000, which exceeds the base limit set by you then the Rs20,000 will get the 2 year FD rate. The tenure of the deposit varies from one year to five years, and the interest rates also vary accordingly.
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Also, you can draw funds from the FD without any fees or penalties. Thus, allowing you to earn higher returns on your surplus money and also allowing you to dip into the FD in case of emergencies.
However, do note that different banks have a different name for this facility with different eligibility criteria and conditions. Therefore, before availing this facility check with your RM or bank about the criteria, Terms & Conditions, Withdrawal facility, and other details!
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Disclaimer: I am not a licensed financial advisor, registered investment advisor, or registered broker-dealer. This video should be used as an educational tool only and are not a replacement for professional investment advice.