Which statement about sweep transfers is accurate?

• A. They are a type of cash withdrawal
• B. They are only used for personal accounts
• C. They do not depend on thresholds
• D. They automatically transfer amounts that exceed a threshold into a higher-interest option at close of business day

Answer: (D)

Sweep transfers automate cash management by moving excess cash from an operating account into a higher‑yield vehicle when the balance exceeds a set threshold, typically at the close of business. This arrangement keeps enough liquidity in the main account while earning interest on the swept funds. They are not cash withdrawals, and they are commonly used in business cash management to optimize returns without tying up funds. The mechanism relies on a threshold to determine what is swept, and the transfer happens at the end of the business day, aligning with end‑of‑day balance management. For example, if the threshold is a certain balance, any amount above that is swept into a higher‑interest option such as a money market vehicle.