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Personal Sweep Accounts
Posted on 2/13/14 at 9:51 am
Posted on 2/13/14 at 9:51 am
Are there any banks that offer a personal sweep account with a line of credit?
Posted on 2/13/14 at 11:05 am to CubsFanBudMan
Yes. Most of the big banks. Read the disclosures. For lines tied to checking accounts for automatic overdraft protection, not only is it higher rates, but banks now charge a transfer fee. Some lines that require you to initiate the transfer on you own through online or mobile banking don't have the fee. You'll probably be able to find a community bank to do it without the fee because they are typically slow to adopt those types of changes.
ETA: If you're looking for a name, Citi does it for sure.
ETA: If you're looking for a name, Citi does it for sure.
This post was edited on 2/13/14 at 11:08 am
Posted on 2/13/14 at 11:25 am to Hand
I'm not looking for overdraft protection. I'd like a line of credit account, either secured or unsecured, where when my paycheck gets deposited into my checking account, it automatically sweeps to pay down the LOC. As I write checks or use my debit card, the bank automatically sweeps from the LOC into the checking account. I know this type of service is available for commercial banking, and have seen personal sweep accounts that link to an investment account, but not a personal credit sweep account.
Posted on 2/13/14 at 2:59 pm to CubsFanBudMan
No offense, you can call it whatever you want, but that's what it is.
Sweep accounts go in the opposite direction. Any balance over a certain amount gets swept into a product with a higher interest rate.
The purpose of revolving lines of credit (or any debt product for that matter) is to meet current cash shortages due to a timing difference. That's the key -- timing differences. The cash has to be available in the future to repay the debt product otherwise it's insolvency. An overdraft is a form of a cash shortage due to a timing difference. Banks charge the transfer fee to make up for the overdraft fee.
If I have drawn more on the line than cash, then I have a cash shortage. If I have more cash than I have drawn on the line, then why am I paying interest?
For downside protection, I've got a $10,000 unsecured line tied to a checking account. The available balance always shows whatever cash I have in the account plus the $10,000. If drawn on and as funds are deposited, the line is paid down automatically (at a local bank BTW). For upside protection, I sweep balances that are greater than 90 days of operating expenses.
Sweep accounts go in the opposite direction. Any balance over a certain amount gets swept into a product with a higher interest rate.
The purpose of revolving lines of credit (or any debt product for that matter) is to meet current cash shortages due to a timing difference. That's the key -- timing differences. The cash has to be available in the future to repay the debt product otherwise it's insolvency. An overdraft is a form of a cash shortage due to a timing difference. Banks charge the transfer fee to make up for the overdraft fee.
If I have drawn more on the line than cash, then I have a cash shortage. If I have more cash than I have drawn on the line, then why am I paying interest?
For downside protection, I've got a $10,000 unsecured line tied to a checking account. The available balance always shows whatever cash I have in the account plus the $10,000. If drawn on and as funds are deposited, the line is paid down automatically (at a local bank BTW). For upside protection, I sweep balances that are greater than 90 days of operating expenses.
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