What is a Sweep-In Fixed Deposit? What Are Its Benefits?

What's better than keeping your money safe in a Savings Account or earning steady money on a Fixed Deposit (FD)? Of course, a combination of the two becomes a sweep-in FD. This unique financial product combines advantages of Savings Account and great returns of FD. The Money Multiplier FD offered by ICICI Bank allows customers to access funds like a Savings Account while enjoying the attractive interest rates of an FD. This blog will explore a sweep-in FD's key features and benefits and tell you more about ICICI Bank Money Multiplier FD.

The Striking Benefits of a Sweep-In FD

With these exciting financial products, you stand to get the best of two great financial products. So here is what you can expect.

Maximum Returns

By linking your Savings Account with an FD, you can ensure that your money never remains idle. Based on your instructions, the bank creates the FD in multiples of Rs 5,000 for a tenure of year, or more. It uses the surplus funds in your Savings Account to create these FDs, earning you a higher interest rate than a regular Savings Bank Deposit.

Maximum Liquidity 

With a sweep-in FD, you enjoy the convenience of withdrawing funds from your Savings Account whenever needed. You can easily access your money through an ICICI Bank ATM, internet banking or by issuing a cheque. Additionally, the Bank enables all linked FDs for an automatic Reverse sweep in multiples of Rs 5,000 on a Last-In-First-Out (LIFO) basis. If your Savings Account balance falls below Rs 10,000, funds are automatically transferred from the FD to maintain the required balance.

Auto-Renewal

ICICI Bank offers a hassle-free auto-renewal facility for sweep-in FDs. When your deposits are due, the Bank automatically renews the principal amount and the accrued interest for the same tenure as the original deposit, ensuring that your money continues to grow and earn at attractive interest rates.

Things to Consider Before Opting for a Sweep-In FD 

A sweep-in FD can be an excellent financial tool to optimise your earnings while maintaining liquidity. Before opting for a sweep-in FD or any financial product for that matter, it is essential to ensure that you align certain factors to with your financial goals. Please take note of these key considerations before choosing a sweep-in FD.

 1. Minimum Balance Requirement 

Different banks may have varying minimum balance requirements for sweep-in FDs. Ensure you know the minimum amount needed in your Savings Account to trigger the sweep-in process, as it will help you maintain the desired liquidity while earning attractive interest rates on your surplus funds.

 2. Interest Rates and Tenure 

Compare the interest rates offered on the sweep-in FD with other investment options. Additionally, assess the tenure options available for creating the FD. Opt for a tenure that matches your financial objectives and aligns with your risk tolerance.

 3. Auto-Renewal and Premature Withdrawal 

Understand the auto-renewal process for the FD. Some banks automatically renew the FD at maturity, while others provide the flexibility to choose the renewal option. Additionally, be aware of any premature withdrawal charges, if any, in case you need to access your funds before maturity.

 4. Sweep-In Threshold 

Check the sweep-in threshold. Know the minimum amount required to trigger fund transfer from the Savings Account to the FD. Ensure the threshold suits your liquidity needs and aligns with your spending habits.

 5. Sweep-Out Frequency 

Different banks may have different sweep-out frequencies. These determine the frequency of fund transfer back to the Savings Account when needed. Understand the sweep-out process to ensure you have access to funds whenever required.

 6. Tax Implications 

Be aware of the tax implications on the interest earned on the sweep-in FD. The interest earned may be subject to taxation as per the prevailing income tax laws. Consult with a tax advisor to understand the tax implications on your investment.

Eligibility and other requirements

Certain eligibility criteria and documentation are essential to embark on a fruitful financial journey with a sweep-in FD. Opening a sweep-in FD is hassle-free and requires holding a Savings Account. The bank may request certain documents for verification to facilitate a smooth and efficient process.

Identity proofs and address proofs are pivotal in establishing your eligibility for a sweep-in FD. Valid documents include a passport, driving licence issued by the Regional Transport Authority, voter ID card and Job card issued by the National Rural Employment Guarantee Act (NREGA). Please note that PAN cards issued in India are no longer considered valid identity proofs for this purpose.

Regarding communication address proof, banks accept utility bills for up to two months, such as electricity, telephone, post-paid mobile phone, piped gas and water bills. Property tax bills or municipal tax receipts of last one year are also acceptable. For employees, the Letter of Allotment for accommodation from the employer or the Leave and License Agreement can serve as valid address proof.

It is important to understand that each bank may have specific terms and conditions regarding the documents required for opening a sweep-in FD. Check with your preferred bank for precise details and ensure the documents are ready.

In conclusion, a sweep-in FD, such as ICICI Bank Money Multiplier FD, is a smart financial instrument that optimises the potential of your money. It offers the best of both worlds, providing liquidity of Savings Account and high returns of FD.

With the convenience of auto-renewal and automatic reverse sweep, this innovative product optimises your fund usage while maximising your earnings. If you, too, are looking to make the most out of your surplus funds, a sweep-in FD could be the ideal choice to achieve your financial goals.

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