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What are sweep accounts and how do they work?

A sweep account is a type of bank or brokerage account that automatically transfers (or "sweeps") excess cash into a different account or investment to maximize returns or manage liquidity.

How sweep accounts work:

  • At the end of each business day, any cash that exceeds a predetermined balance is automatically swept into higher yielding investment or separate account. 
  • The funds remain liquid and can be accessed when needed. 
  • Sweep accounts help you earn interest on idle cash or optimize cash flow. 

Benefits of sweep accounts: 

  • Maximizes returns: your idle cash earn interest.
  • Automatic transfers: funds exceeding a set threshold are automatically moved to a higher - yielding account.
  • Simplified financial management: Sweep accounts can help businesses and individuals streamline their cash flow and financial management. 
  • Concentration of Funds: Sweep accounts can help businesses consolidate their cash balances in a single location, making it easier to track and manage.

Types of sweep accounts offered at Panacea: 

At Panacea we offer ICS (Insured Cash Sweep) accounts and ZBA (Zero Balance Account). Click on each one of the hyperlinks to learn more.

The main difference is that a Zero Balance Account (ZBA) maintains a zero balance by automatically transferring funds to and from a master account, while an Insured Cash Sweep (ICS) account allows you to deposit large sums of money while maintaining FDIC insurance coverage for amounts exceeding the standard $250,000 limit per depositor.