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How does - Withdraw from fixed deposit sweep in functionality work?

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navam

TF Premier
So, my RM tells me ki we should keep all the money in FD instead of anything in the savings account and setup a "sweep in" to use an FD to cover amounts like paying CC, UPI, fund transfer.

I wanted to (a bit lazily) ask if someone here understands the consequences of doing this.

E.g. if I have say 2 lk in my savings which gets used for various purpose throughout the month and now using sweep in I create an FD worth 2 lk which gets me some interest and gets used everytime I make payments, is it truly something that makes me money?
Also if say I can use only 1 lk out of it and rest remains in FD would I have made more or equal or less money if I kept 1 lk in savings account and 1 lk in FD (letting it mature without the daily sweep ins)

Thanks!
 
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navam said:
So, my RM tells me ki we should keep all the money in FD instead of anything in the savings account and setup a "sweep in" to use an FD to cover amounts like paying CC, UPI, fund transfer.

I wanted to (a bit lazily) ask if someone here understands the consequences of doing this.

E.g. if I have say 2 lk in my savings which gets used for various purpose throughout the month and now using sweep in I create an FD worth 2 lk which gets me some interest and gets used everytime I make payments, is it truly something that makes me money?
Also if say I can use only 1 lk out of it and rest remains in FD would I have made more or equal or less money if I kept 1 lk in savings account and 1 lk in FD (letting it mature without the daily sweep ins)

Thanks!
Click to expand...
Keep it as
It's breakable fd
& Number of days fd last with x amount
Or x- amount u get intrest on that
 
It all depends on how frequent amount gets withdrawn from the Linked FD.
If withdrawn within 7 days then no interest on withdrawn amount.

Simple maths is to follow the Interest rate table of the bank which has Tenure and applicable rates mentioned.
So interest will be accumulated of the withdrawn amount depending on tenure it was there as FD.
 
navam said:
So is it doing like end of day math for interest.
If I end up spending 1000 everyday, what's the math like?
Click to expand...

In my view, sweep-out -- sweep-in is usually a bad idea for the customer. Here is why:

The sweep-out feature automatically books FDs for amounts above a preset threshold. The FD tenure could be 6 months or a year (for example, -- ask your bank). If one needs to break part of it before that, most banks would charge an 1% premature withdrawal penalty on top of the already reduced interest rate applicable for the time it had actually run. Thus one could potentially end up earning even less than the SB interest on the broken part!

So the overall picture for the customer might not be as rosy as it is hyped up to be! It does not pay to be lazy, and one can always do better by investing the surplus money judiciously oneself.
.
 
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Trust Me said:
In my view, sweep-out -- sweep-in is usually a bad idea for the customer. Here is why:

The sweep-out feature automatically books FDs for amounts above a preset threshold. The FD tenure could be 6 months or a year (for example, -- ask your bank). If one needs to break part of it before that, most banks would charge an 1% premature withdrawal penalty on top of the already reduced interest rate applicable for the time it had actually ran. Thus one could potentially end up earning even less than the SB interest on the broken part!

So the overall picture for the customer might not be as rosy as it is hyped up to be! It does not pay to be lazy, and one can always do better by investing the surplus money judiciously oneself.
.
Click to expand...
Oh interesting penalty toh i completely overlooked, let me be less lazy and read the entire T&C
 
navam said:
Oh interesting penalty toh i completely overlooked, let me be less lazy and read the entire T&C
Click to expand...
Trust Me said:
In my view, sweep-out -- sweep-in is usually a bad idea for the customer. Here is why:

The sweep-out feature automatically books FDs for amounts above a preset threshold. The FD tenure could be 6 months or a year (for example, -- ask your bank). If one needs to break part of it before that, most banks would charge an 1% premature withdrawal penalty on top of the already reduced interest rate applicable for the time it had actually run. Thus one could potentially end up earning even less than the SB interest on the broken part!

So the overall picture for the customer might not be as rosy as it is hyped up to be! It does not pay to be lazy, and one can always do better by investing the surplus money judiciously oneself.
.
Click to expand...
Will there be penalty on sweep in sweep out fd? I thought that's major benefitting factor in them coz you are not promising to them any fixed tenure.
 
Harsha896 said:
Will there be penalty on sweep in sweep out fd? I thought that's major benefitting factor in them coz you are not promising to them any fixed tenure.
Click to expand...

It's just regular FDs, -- the tenure is pre-defined, typically 6 months or 1 year depending on the bank.

Just think about it, -- if there really could be such FDs with undefined tenure and without any premature withdrawal penalty, why would anyone ever want to invest in regular FDs with their premature withdrawal penalty rules ?!
.
 
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navam said:
So, my RM tells me ki we should keep all the money in FD instead of anything in the savings account and setup a "sweep in" to use an FD to cover amounts like paying CC, UPI, fund transfer.

I wanted to (a bit lazily) ask if someone here understands the consequences of doing this.

E.g. if I have say 2 lk in my savings which gets used for various purpose throughout the month and now using sweep in I create an FD worth 2 lk which gets me some interest and gets used everytime I make payments, is it truly something that makes me money?
Also if say I can use only 1 lk out of it and rest remains in FD would I have made more or equal or less money if I kept 1 lk in savings account and 1 lk in FD (letting it mature without the daily sweep ins)

Thanks!
Click to expand...
Dont do that, you will be charged 10% TDS on FD interests which will look your money unnecessarily.

If you have >5L balance i suggest going for ID FC savings account which will give you 7.25% interests monthly
 
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