What Is Auto Sweep Facility: Meaning, Benefits & Activation Process

1. Auto Sweep automatically moves the extra money to short-term fixed deposits. This way, you earn higher FD rates and create an emergency fund for yourself.
    
2. With Autosweep, you get higher returns (more than your savings account) and instant access when needed.
    
3. If you break the FDs earlier, you can face penalties (about 0.5–1%). Be vigilant about tax and TDS rules on FD interest (TDS at 10% above ₹50,000 unless Form 15G/15H submitted). 

Auto Sweep Facility is a bank feature where extra money in your savings account automatically shifts to a fixed deposit. It gives both liquidity and better returns.

For example, Anita keeps ₹80,000 in her savings account. Her auto sweep limit is ₹50,000. The extra ₹30,000 moves into an FD earning 6% annually. Let’s see her current finances in the table given below.
 

Here, if there were no auto-sweep, Anita would earn ₹2,800 extra. This amount is ₹750 less than her current earnings. 

Savings and FDs are one of the best and safest combinations for any beginner. To automate this combination, many people use the auto-sweep feature. It ensures you are not losing out on interest while still having funds ready when needed. 

Let’s learn more about it, from its working, benefits, to the activation process in this blog.

How Does The Auto Sweep Function work?

With auto sweep, your savings account will become smarter than you. ‘Paisa kab, kahan, kite phonchane hein, sab pta hai!’ This way, you earn more interest and can also move it back into your account when you need it. 

Now, let’s figure out how it's working. It is of 2 types: Sweep Out and Sweep In.

1. Sweep Out (Auto Sweep-In)

You set a balance limit for your account (say ₹25,000). Whenever your account balance goes above this limit, the extra money is automatically moved into a short-term FD. This way, you earn FD-level interest on what would otherwise just sit there earning low savings interest.
 

2. Sweep In (Reverse Sweep)

If your account balance drops below the set limit, the bank breaks the FD in parts and moves just enough money back. You don’t even have to ask; it’s instant.

For example, let’s say on 15th March, you need to make a big payment.
 

• Your savings account has ₹10,000 left.
   
• You need to pay ₹35,000.
   
• The bank breaks ₹25,000 from your FD and moves it back instantly so the payment goes through.
   

Before you enable the auto sweep feature, keep in mind the following instructions:
 

Auto Sweep is a good feature only if you know how to control it. 

Do you know that savings accounts in India offer around 2.5% per annum interest, while sweep-in fixed deposits provide 6% or more per annum?

Why People Love the Auto Sweep Facility?

In this section, we will see the benefits Auto Sweep provides to its users. Fair warning: once you see how smart this feature is, you’ll probably want it on all your bank accounts! 
 

1. Earn Higher Interest
    

Idle money in savings accounts hardly grows. With Auto Sweep, any extra above your set limit moves into an FD and earns much better rates. Instead of 3-4% interest savings, your money could earn more. 
 

2. Stay Liquid, Always
    

Emergencies do not knock and come. You may need money unexpectedly, and that should never be your problem. Auto sweep automatically moves funds back from the FD to your savings account. You get the best of both worlds: higher return + full liquidity.
 

3. Fully Automated, Zero Effort

Once activated, you don’t have to put in any effort. You don’t need to participate in the hassle of moving money, opening new FDs, or chasing branches. It’s smart banking made easy.
 

4. Total Flexibility
    

You control the threshold amount, that is, the limit for auto sweep, FD tenure, and even link multiple accounts. It adapts to your lifestyle.
 

5. Builds an Emergency Fund

Without thinking about it, your surplus funds grow into the safest investment option. If you keep it that way, you have a small emergency fund that can be used whenever you want, without any planning.
 

We have summarised the above content in the table given below:
 

Auto sweep develops discipline in terms of investment. It prevents us from spending extra and automatically invests that money in various instruments (stocks, FDs, etc.)

Things to Watch Out For with Auto Sweep

‘Har sikke ke do pehlu hote hain!’. If you stay vigilant and use this financial tool in a smart way, you can save yourself from the negatives of auto sweep. 

These are the things you must watch out for:

1. Interest Loss & Penalties for Early Withdrawal

When your FD (created through sweep-in) is broken early due to a sweep-in-out, you don’t get the full promised interest. You also get charges of 0.5% to 1% of that interest. This reduces your returns significantly.

For example, SBI charges between 0.5% and 1%, while HDFC applies around 1%.

2. Auto Sweep May Activate Without Your Consent

Some customers have found that FDs are created automatically without them asking for it. Your funds get locked away unexpectedly. This can be inconvenient if you need that money immediately. Due to this, the following will happen:
 

1. Your immediate access to funds will be reduced 
    
2. If you break the FD, you need to pay the penalties and face delays.

3. Extra Tax Reporting on FD Interest

The interest you earn from both your savings account and your auto-swept FD is taxable. From FY 2025-26, if your FD interest exceeds ₹50,000 in a year, banks apply TDS at 10%, unless you submit Form 15G/H to clear it. If TDS isn’t deducted, you’ll still have to report and pay tax while filing your return.
 

You can have an overview of the point discussed above and how you can avoid it in the table given below:
 

With autosweep, you have to be vigilant about the FD tenure, taxes associated with it and see if there is no sudden activation. With autosweep, many transactions (into investing funds) go unnoticed, but you must be aware of the overview of your investment.

Activation Process 

Before you can enjoy the benefits of Auto Sweep, you need to set it up. Each bank has its own simple activation process, either online or offline. We have discussed the major ones below:

1. Axis Bank

Axis Bank makes activating Auto Sweep quick via their mobile app. It’s designed for customers who prefer full control from their phone.

Steps:
 

1. Log in to the Axis Bank Mobile App.
    
2. Go to "Auto Fixed Deposit" or "Auto Sweep".
    
3. Set your threshold, choose the FD tenure, and confirm with OTP.
    

Optionally, you can also enable it offline by downloading the form and submitting it at a branch.
In a few taps, your account is ready to move surplus funds automatically and that too without any branch visits or paperwork.
 

2. Kotak Bank (ActivMoney)

Kotak calls its auto sweep feature ActivMoney, giving customers multiple activation options. Kotak’s Auto Sweep (called ActivMoney) can be activated in three ways:
 

• During account opening, select the ActivMoney option.
   
• Via the Kotak811 app under the Bank tab.
   
• By calling the customer experience centre at 1860-266-0811.
   

 This flexibility ensures you can enable it anytime, anywhere.

3. RazorpayX

RazorpayX focuses on business accounts and makes sweep activation simple for entrepreneurs. Its online-first process means you don’t need to deal with forms or queues.

You can use RazorpayX internet or mobile banking, or contact customer support for setup. Activation takes 1–2 business days.

Conclusion

If you have ever thought of hiring an assistant for your bank account, you've probably heard of auto sweep. It gives you a balance between liquidity, easy accessibility (bank account) and higher interest and safety (in your FD). By understanding its mechanism, benefits, and possible drawbacks, you can earn more on your savings without sacrificing liquidity.

Frequently Asked Questions
 

1. Is Auto Sweep available for NRI accounts?
Yes, some banks allow Auto Sweep for NRE and NRO accounts, but they apply different rules. NRE Auto Sweep FDs earn tax-free interest but allow full repatriation. NRO Auto Sweep FDs are taxable, and repatriation of funds is restricted, requiring RBI compliance.

2. Does Auto Sweep affect my credit score?
No, Auto Sweep has no impact on your credit score. It is purely a deposit-linked facility, not borrowing. Since no loan or liability is created, credit bureaus like CIBIL do not record it. However, disciplined account management still reflects financial stability.

3. Can I choose which FD to break first during Sweep In?
In most banks, the default rule is FIFO (First In, First Out). This means the FD created earliest is broken first. Some banks, however, may offer customisation, letting you decide priority. Always confirm terms before opting for Auto Sweep.

4. Does Auto Sweep work with joint accounts?
Yes, Auto Sweep can be enabled for joint accounts. But banks require consent from all account holders to activate or modify the facility. Proper identity verification and signatures are necessary to avoid disputes later, ensuring the smooth operation of the feature.