Auto Sweep FDs: Your Secret Weapon for a Smarter Emergency Fund

Auto Sweep FDs: Your Secret Weapon for a Smarter Emergency Fund

25 April 2024 | By INDIE

We all know someone who has been in a situation where they are looking for an emergency fund to emerge in their bank accounts. Don’t we all want to be prepared so we never have to be in such a pit? Building an emergency fund is crucial for financial security. It acts as a safety net, protecting you from unexpected expenses like medical emergencies, car repairs, or job loss. However, the constant pressure of saving and having emergency money ready can be daunting. INDIE has the perfect solution to this challenge, the auto sweep fixed deposits (FD), a convenient and potentially lucrative way to build your emergency fund.


What are Auto Sweep FDs?

An auto sweep FD is a unique combination of a savings account and fixed deposit (FD). You can start by setting a minimum balance in your savings account. Any amount exceeding this threshold is automatically transferred to an FD, earning a higher interest rate than a regular savings account. When you need to access your emergency funds, the money is withdrawn from the FD, typically in a first-in, first-out (FIFO) manner.

Let’s understand this with an example, Natasha sets her INDIE savings account minimum balance at Rs. 25,000 and links it to an auto sweep FD. One month, she receives a bonus of Rs. 30,000. With her existing balance of Rs. 15,000, this brings the total to Rs. 45,000. Since it exceeds the minimum balance of her account, the extra Rs. 20,000 gets automatically swept into the FD, earning her a higher interest rate on this money, and the remaining Rs. 25,000 stays in her savings account for daily use. This helps Natasha maximize her savings while maintaining some readily available funds in her savings account.


Benefits of Using INDIE Auto Sweep FDs for Emergency Money:

Automated Savings 

The auto-sweep functionality ensures consistent and effortless savings toward your emergency fund. You set it up once and forget about manually transferring funds.

Higher Interest Rates

FDs offer significantly higher interest rates compared to regular savings accounts and include senior citizen benefits of up to Rs. 50,000 as well, allowing your emergency fund to grow faster.


The auto sweep FDs give you the freedom to liquidate your money for cash at any given point in time. This makes the emergency fund that you created to be used in times of need much more accessible.


The automatic transfer feature eliminates the temptation to spend the money in your savings account, promoting financial discipline and ensuring your emergency fund remains untouched until truly needed.

Short Tenure

The auto sweep FDs can be incorporated with tenures anywhere between 30 days to 24 months and then you can withdraw this money to make a bigger Fixed Deposit and continue with the auto sweep on your account.


Also Read: Learn more about INDIE Auto-Sweep FDs


Is an INDIE Auto Sweep FD Right for You?

● Auto sweep FDs are a good option for individuals who have trouble saving consistently. The automated transfer feature ensures regular contributions to your emergency fund.

● The auto sweep fixed deposit offers better interest rates compared to savings accounts, helping your emergency fund grow faster.

● In case you cannot maintain a minimum balance in your savings account, this auto sweep facility ensures consistently maintaining the required minimum balance (pre-decided) in your account to avoid any penalties.


Bottom Line

INDIE’s auto sweep FDs offer a convenient and potentially lucrative option for building your emergency fund. It is always a good option to diversify your emergency fund strategy by exploring other options like high-yield savings accounts or money market accounts to balance potential returns with immediate accessibility. Ultimately, the best approach depends on your circumstances and risk tolerance. Regardless of the method you choose, prioritize building a healthy emergency fund to be prepared for life's unexpected events and achieve greater financial security.


Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.