New Delhi: With the launch of its ActivMoney facility, Kotak Mahindra Bank is now offering clients the chance to earn interest comparable to fixed-deposit (FD) of up to 7% annually and the flexibility to withdraw money from a connected savings account whenever they choose. Axis Bank, HDFC Bank, ICICI Bank, and IndusInd Bank already provide this auto-sweep option, and now Kotak Mahindra Bank has also launched this feature.
How Auto Sweep Feature Works?
When enabled, the auto sweep option transfers funds from your account over a predetermined sum to a deposit that offers you a higher return; this deposit is typically a fixed deposit (FD). This process is called “sweeping out”.
When the balance in your account falls below the predetermined level, the shortfall is refunded to you and this step is sweep-in.
“An auto sweep facility is extremely beneficial for consumers who have to maintain large balances in their savings accounts to deal with cash flow uncertainties,” Naveen Kukreja, co-founder and CEO, Paisabazaar.com, was quoted as saying by MoneyControl.
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Benefits Of Auto Sweep Facility:
Higher Liquidity
With the help of the sweep option, you can maintain a lot of liquidity while getting a significant return on your investment. If you are low on money in your current account and you have an EMI or a check that is coming due, in this facility, your bank will automatically transfer the surplus back to your account, and your transaction will not fail.
Higher Interest Rates
This is the biggest benefit of this facility, and the customer can earn a higher rate of interest by using this facility.
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Linking Multiple Deposits
To make sure there is never a liquidity problem, you can link numerous deposits to the current account for sweep-in. Banks often follow the “Last in, First Out” principle in these circumstances, which means that when a sweep-in is triggered, money will be sent to your account from the most recent deposit associated with the sweep-in facility.
