What is the purpose of asset management or sweeps accounts?

The purpose of asset management or sweep accounts is primarily to save money while investing. These accounts facilitate the automatic transfer of excess cash from a checking or operating account into higher interest-earning accounts, such as money market accounts or short-term investments. This strategy is designed to optimize returns on cash holdings, ensuring that the funds are not idly sitting in a low-interest account.

By utilizing sweep accounts, individuals and businesses can maximize their investment potential while still maintaining accessibility to their funds. It serves as a tool for efficient cash management, as it helps in taking advantage of higher interest rates or investment opportunities automatically without the need for manual transfers.