Earning interest on money deposited in a bank account is both familiar and significant. When it comes to savings accounts, the interest component is a major draw, compensating account holders for their deposits. However, the situation is different when it comes to current accounts, which are generally utilized for commercial operations. However, current account interest rates do not exist because of the various benefits such accounts endow, such as no transaction limit, overdraft capabilities, and so on. This absence of interest component might seem like a drawback at first glance, but there is more to it than meets the eye.
The auto sweep deposit feature
One innovative way to generate returns from a current account is through the auto sweep deposit feature. This feature bridges the gap between the flexibility of a current account and the interest-earning potential of Fixed Deposits (FDs). In accounts like the Indus Premier Current Account, Indus Select Current Account, Indus Select Plus Current Account, and Indus Grandé Business Account, the auto sweep deposit feature automatically transfers excess funds from the current account to an FD, allowing the account holder to earn FD-level interest rates on these funds.
Reasons to opt for auto sweep deposit in current accounts
Liquidity
The auto sweep FD preserves liquidity, allowing you to access your funds just like you would from a savings account. In an emergency, the FD can be broken, and funds are sent back to your current account. This feature guarantees interest generation while remaining available when needed.
Returns that are optimised
The auto sweep option in current accounts boosts returns by automatically shifting surplus cash to an FD, which normally provides higher interest rates. If your account balance surpasses ₹1 lakh, for example, the extra cash is immediately transferred to an FD, ensuring that your savings are constantly receiving the maximum potential returns.
Improved financial management
This product encourages financial discipline by automating savings and optimising idle cash. It promotes regular saving habits and smart cash flow planning, which may considerably improve financial health and growth, particularly for company owners.
Flexibility
You have control over the auto sweep feature’s threshold limit, allowing you to adjust it to your cash flow needs and financial goals. This adaptability permits customised financial management that meets the demands of both businesses and individuals.
Other investing opportunities for higher returns
Besides the auto sweep deposit option, there are additional ways to improve the returns on accumulated funds in a current account. Recurring Deposits (RDs) are one example.
RDs
Periodic payments into an RD may even assist you in accumulating wealth over time. This type of saving assures that a predetermined amount is placed on a month-on-month basis, yielding interest, and forming a huge amount towards the end of the deposit period. This feature makes it an excellent goal-based savings instrument.
Securities issued by the government
Investing in government bonds or securities provides a consistent and secure return. As such securities are government backed, they are a low-risk investment alternative for those who desire predictability and stability in their portfolio.
Investing in mutual funds
For individuals eyeing bigger returns, investing in mutual funds may be a prudent alternative. Such products accumulate funds from various investors to invest in distinct asset classes such as bonds, stocks or other securities having the potential to generate higher returns than conventional savings techniques.
Final thoughts
While there is no direct interest on a current account, auto sweep FD service comes across as an indirect means to earn income. By strategically using this sweep feature and zeroing in on additional investment possibilities, you might successfully enhance your returns on current account holdings. Note that every penny saved and carefully spent might make a huge difference in your financial health and business.