Comparing auto-sweep accounts of 3 banks

I like bank accounts with automatic sweep-in and sweep-out functionality. When the saving account balance goes above a threshold, the excess is automatically made into a fixed deposit. When we overdraw from the saving account, fixed deposits are fully or partially liquidated to replenish the saving account.

People who want to optimise the interest they get from their deposits may not like this functionality. To optimise the return, one would want to choose the best yielding deposit duration at the time of opening the deposit and have control over which deposit is liquidated when money is needed. But I like this functionality for the simplicity it provides. I just ignore the deposits and use it like a saving account that pays a higher (but unpredictable) interest.

I have used this functionality at 3 different banks—Axis Bank, HDFC Bank, and Kotak Mahindra Bank. This post is to compare the 3. We’ll look at each bank in alphabetic order.

‘Deposit Account’ by Nick Youngson CC BY-SA 3.0 Pix4free.org

Axis Bank

Axis Bank calls this Auto Fixed Deposit. This can be enabled on any saving account.

The customer can choose the parameters such as the threshold at which new deposits will be created, duration of the deposits, and the frequency of deposit creation. The lowest allowed threshold is ₹25,000.

Their net and mobile banking apps have a UI to enable this functionality, but they did not work. (But that’s typical of Axis Bank—most of their tech solutions don’t work.) I had to give a written request at the branch to enable this. It appears I can now disable Auto Fixed Deposit from net banking, but it does not give the option to change the parameters. 

Net and mobile banking apps show the cumulative value of the account balance and connected fixed deposits everywhere. This makes it easy to see how much you can draw from the account. If you want to find out how much money is sitting in the saving account excluding fixed deposits, you need to manually calculate that.

HDFC Bank

HDFC Bank allows this functionality only in their Savings Max Account product. It appears that auto-sweep cannot be enabled on other account types such as salary accounts.

Configuration such as the balance threshold, deposit duration, and frequency of deposit creation are decided by the bank and the customer cannot tweak them. The threshold is set at ₹1,00,000, which is not too bad.

Since this functionality is available in only a specific account variant, you need to work with branch staff to avail this functionality.

Net and mobile banking apps show only the cash that’s in the saving account. Nowhere can you see how much you can draw from the account. You need to manually sum up the fixed deposit values and calculate that number if you need to know.

Kotak Mahindra Bank

Kotak Mahindra calls this ActivMoney. This can be enabled on any saving account.

Configuration such as the balance threshold, deposit duration, and frequency of deposit creation are decided by the bank and the customer cannot tweak them. But the threshold is set to ₹3,00,000 for their Privy League customers making this somewhat less appealing for their top-tier customers.

You can enable and disable this feature any time from their mobile app. It’s a simple toggle that you can turn on or off at any time.

Kotak Mahindra net and mobile banking apps try to show both balances—with and without factoring in the swept deposits—to give a clear picture of the customer’s holdings. But this also leads to a somewhat confusing experience of seeing different balances at different places. The customer needs to know whether the shown balance includes deposits or not as the bank doesn’t explicitly label that.