Bank depositors can transfer their money from SB Account to Fixed Deposits and vice versa and benefit from the higher interest rate or meet liquidity

Bank depositors can transfer their money from SB Account to Fixed Deposits and vice versa and benefit from the higher interest rate or meet liquidity needs, says Prakash Patil

Do you have excess cash in your savings bank account. but do not have the time to invest in fixed deposit or in some other instrument to earn more returns? Or have you found yourself in a situation where you needed cash to meet sudden exigency and had to break up your fixed deposit, in the process losing a good chunk of the interest earned on the deposit? In the first instance, you wish your excess cash could be transferred automatically to some higher earning instrument and, in the second instance, you wish you could encash your fixed deposit without losing your interest. Well, the good news is that all this is possible if you open a hybrid account with your bank. Most of the banks offer such hybrid accounts with different facilities under different names (see box - Hybrid Deposits). So how does this account work and what are the terms and require­ments for opening such an account. Let's find out.
Auto Sweep-In For Higher Returns
A savings bank (5B) or current account with an auto sweep-in facility provides increased returns by transferring the amount in excess of the threshold limit specified by the accountholder to fIXed deposit (FD). This way, the accoun­tholder gets the benefit of the higher rate of interest avail­able for fIXed deposits. The accountholders of IerCI Bank, Andhra Bank, State Bank of India and few other banks c;an avail of such auto sweep-in facility to earn higher rate of interest on excess cash in their 5B or current accounts. Currently, 5B accounts carry interest of 3.5 per cent per annum and current account do not carry any interest at all,