Types of Sweep Accounts
Loan Sweep
Good if: You want to prioritize paying down your line of credit, minimize interest charges and become debt-free faster.
Features and Benefits
- Reduce Interest: Excess funds in your checking account are automatically applied to your line of credit, saving you money on interest charges.
- Maintain a Safety Net: Your line of credit also acts as a backup, seamlessly covering checks or maintaining balances when your checking account dips.
- Simplify Debt Repayment: The Loan Sweep can also be used to strategically pay down your line of credit balance, helping you become debt-free faster.
Repurchase Sweep
Good if: You want to earn interest on unlimited excess cash by automatically investing it in a secure account holding.
Features and Benefits
- Earn Interest: Excess funds in your checking account are automatically invested into an overnight Repurchase Agreement, earning you a return on your cash.
- Maintain Liquidity: Your funds remain readily available and can be seamlessly transferred back to your checking account when needed to cover checks or maintain your service balance.
- Detailed Tracking: Opt for combined monthly statements that provide a clear overview of both your checking account and sweep transactions.
Important Note: Repurchase Sweep is an overnight repurchase account with no transaction limit and is not FDIC insured. The funds are backed by the U.S. Government Agency Securities. This account has a monthly maintenance fee; for details, please contact us.
Zero Balance Sweep
Good if: You want to simplify business banking, save time on manual transfers and reduce overdrafts by automatically consolidating funds from multiple accounts into one.
Features and Benefits
- Effortless Consolidation: Automatically consolidate funds from multiple secondary accounts into a single master account for simplified monitoring and reduced time spent managing transfers.
- Optimize Cash Flow: Daily transfers between secondary and master accounts maintain zero or pre-determined balances, eliminating idle funds and allowing for efficient cash management across locations, divisions or functions.
- Maximize Earnings & Minimize Risks: The Zero Balance Account helps improve the earning potential of your overall cash flow and reduces the risk of overdrafts in secondary accounts.
Money Market Sweep
Good if: You want to earn interest on excess business funds with easy, automatic transfers to a secure, FDIC-insured money market account.
Features and Benefits
- Grow Your Cash: Automatically transfer excess funds from your checking account to a linked, FDIC-insured money market account, allowing you to earn interest on your idle cash.
- Get Effortless Cash Flow: This account allows for transfers between your checking and savings accounts to maintain a desired minimum balance in both, essentially functioning as a two-way sweep.
3 Way Sweep
Good if: You want to pay down debt faster, earn interest on excess funds and maintain a safety net.
Features and Benefits
- Prioritize Debt Repayment: Excess funds in your checking account are automatically directed towards paying down your revolving line of credit first, helping you manage your debt efficiently.
- Maximize Earnings: You can also sweep excess funds to a money market account to earn higher interest rates on your idle cash.
- Seamless Cash Flow: Your sweep account acts as a secondary buffer, as well, helping you maintain your service balance. The checking account draws from the sweep account first, then your line of credit if needed.
Important Note: Scheduled line of credit payments remain your responsibility. This sweep option does not allow automatic scheduled payments or required interest repayment. We'll provide monthly statements of all account activity and separate notices when line of credit payments are due.
Insured Cash Sweep (ICS)
Good if: You want FDIC insurance on all your cash by automatically spreading it across multiple insured accounts for maximum coverage and liquidity.
Features and Benefits
- Enhanced FDIC Coverage: The Insured Cash Sweep (ICS) safeguards your funds beyond the standard $250,000 limit by distributing them across multiple FDIC-insured money market accounts at other financial institutions within the within the ICS Network. The placement of your funds occurs in increments below the standard FDIC insurance maximum of $250,000; this ensures both principal and interest are fully insured.
- Maintain Liquidity: Your funds remain readily accessible. When needed, the funds are swept back from the multiple money market accounts within the ICS Network.
How Does a Sweep Account Work?
A sweep account is a smart financial tool that automates your cash management, constantly optimizing your account balances. Here's how it works:
- Set Your Limits: You set two key levels for your primary checking account: a minimum balance for daily needs and a maximum balance to earn more on extra funds.
- Sweep Out Excess: If your checking account balance climbs above the maximum, the extra funds are automatically "swept" into a separate account, where they earn interest or help pay down debt.
- Top Up When Needed: If your checking account dips below the minimum balance, the sweep account springs into action again. It automatically transfers funds back from the secondary account to ensure you have enough for everyday transactions.
This creates a dynamic system that keeps your checking account functioning smoothly while maximizing the return on your idle cash.
How to Set Up Your Sweep Account
Here's a quick overview of what to expect:
1. Linked Accounts:
Sweep accounts are add-on features, requiring at least two accounts open to function.- All sweep accounts require a linked checking account as your primary operating account. We recommend the Analyzed Business Checking Account for this purpose.
- You will need to open a secondary account, such as a money market account or another account option, depending on the sweep you've chosen.
2. Sweep Agreement:
A treasury management specialist will work with you to complete a Sweep Agreement outlining:- Minimum Checking Balance: The minimum amount you want to keep readily available for daily transactions.
- Sweep Functionality: How your sweep account will automatically manage your funds (details will be provided based on your chosen sweep type).
3. Activation:
Once you sign the agreement, our team will handle the final step to activate your sweep functionality. This automates the transfers based on your agreement.
