Sweep Account
A bank account that automatically transfers excess funds into an interest-bearing investment at the end of each business day, maximizing returns on idle cash.
FAQs
Are sweep account funds FDIC insured?
It depends on the sweep destination. If swept into money market mutual funds, FDIC does not apply (these are securities, not deposits). If swept into deposit accounts at network banks through programs like ICS or CDARS, they can be FDIC insured up to $250,000 per bank × the number of participating banks. Always verify the sweep destination and insurance coverage.
What is an insured cash sweep (ICS) program?
An ICS program (offered through networks like IntraFi) allows businesses to deposit large sums at a single institution while receiving FDIC insurance across the full balance. The network bank breaks the deposit into $250,000 chunks and distributes them across member banks — the business manages everything through one account and gets one consolidated statement.
How much interest do sweep accounts typically earn?
Sweep yields vary with market rates. In low-rate environments (2009–2021), sweeps earned near 0%. In the 2022–2024 rising-rate environment, overnight money market sweep rates reached 4.5–5.5% annually, making idle cash management highly consequential. Large companies can earn millions annually by optimizing cash sweeps.
Related Terms
Operating Account
The primary business bank account used for daily operational transactions including payroll, vendor payments, and customer receipts.
Treasury Management
The organizational function responsible for managing a company's liquidity, cash flow, investments, debt, and financial risk.
Float
The time gap between when a payment is initiated and when funds are actually debited or credited, creating a temporary balance discrepancy.
ACH Transfer
An electronic bank-to-bank transfer processed through the Automated Clearing House network, used for payroll, bill payments, and business transactions.