Insured Cash Sweep Accounts: Pros, Cons and Top Options

Insured Cash Sweep (ICS) accounts extend Federal Deposit Insurance Corp. coverage well beyond the standard $250,000 per depositor, per institution. This can offer peace of mind and convenience to businesses with large operating budgets or cash reserves.

An ICS account unlocks multi-million dollar FDIC coverage by spreading funds across multiple partner banks, while you still deal with one primary bank. Sweep accounts can have a few potential drawbacks, though, including additional fees and delayed access to funds. Compare Insured Cash Sweep accounts across multiple business banks to find the best option for your small business.

Insured Cash Sweep is a service offered by banks to safeguard deposits that exceed the FDIC coverage limit of $250,000 per depositor, per institution. Sweep accounts spread funds across a network of FDIC-insured banks to provide up to $150 million in FDIC coverage (though many financial institutions cap ICS coverage to between $2 and $10 million).

You can open an ICS account with any bank that participates in the IntraFi Network or similar organization. Some neobanks also offer ICS account via their partner banks. While you deposit, manage and withdraw funds from one primary account, behind the scenes your funds are moved to deposit accounts within the network, up to the FDIC coverage limit of $250,000 per depositor at each institution.

Among our picks for best business bank accounts, the following options offer ICS accounts:

Bluevine Business Checking is a free business checking account that offers a high yield: Earn 1.50% interest on account balances up to and including $250,000. Terms apply. Account holders automatically are enrolled in an ICS account that offers up to $3 million in FDIC insurance coverage.

Live Oak Bank Business Savings is NerdWallet's pick for best business savings account, thanks to its high 3.80% APY on all balances and lack of a monthly maintenance fee. You can opt for Live Oak's Insured Cash Sweep account if you have a balance of at least $350,000. Note: The bank's ICS account earns a slightly lower yield (3.85% APY as of this writing).

Brex Business Account is a great option for venture-backed startups. The business cash management account has no monthly fees and offers free domestic and international wire transfers. Account holders get a business checking account for operating expenses, a Treasury account that invests funds in a money market fund (4.90% APY as of this writing) and an ICS account, or "Vault" account, that offers up to $6 million in FDIC insurance coverage.

Other Insured Cash Sweep accounts:

• Mercury Business Bank Account: Up to $5 million in FDIC insurance coverage.

• Relay Business Savings: Up to $2.5 million in FDIC insurance coverage.

• Holdings High-Yield Cash Account: Up to $5 million in FDIC insurance coverage.

You can also explore other banks that are part of the IntraFi network on its website.

1. Find a participating institution. Sweep accounts are typically only available at banks that are part of the IntraFi network, which includes nearly 3,000 local, regional and national FDIC-insured banks. Several online banks, including Axos, Grasshopper and Live Oak, are also members of the IntraFi network.

You can also get an ICS account through neobanks like Bluevine, Relay and Mercury, financial technology companies that partner with FDIC-insured banks in the IntraFi network. Just be aware: FDIC coverage only kicks in when an insured bank fails. It does not apply if a neobank or its intermediary shuts down — even if they partner with an FDIC-insured institution

2. Opt in to sweep services. You usually have to opt in to a sweep account, though Bluevine Business Checking and some other accounts offer ICS accounts as the default option. Either way, you’ll sign an agreement when you open your ICS account that allows the bank to move your money to other partner banks. Keep in mind that sweep accounts may have additional fees.

3. Choose your sweep preferences. You can typically select between two sweep options: demand or savings. Demand accounts allow for unlimited withdrawals, whereas savings sweep accounts place funds in money market accounts that cap withdrawals (often at six per month) but often offer a better interest rate. Demand accounts are best for operational funds that you need to draw on regularly, while savings sweep accounts are better suited for emergency savings and cash reserves.

Some banks also offer a third sweep option — Certificate of Deposit Account Registry Service or CDARS — which places funds into business certificates of deposit. These accounts typically have a higher, fixed interest rate, but you’ll pay a penalty if you withdraw funds before the CD term matures. Your sweep account options may vary from one financial institution to the next.

4. Let the account do its work. Your Insured Cash Sweep account will distribute your funds across a network of partner banks behind the scenes per your preferences. No bank account will have more than $250,000 within it — the maximum covered by FDIC insurance at one financial institution.

5. Access funds as usual. Despite having funds spread across potentially dozens of banks, you’ll still only deal with one financial provider and be able to see and access all of your funds through that primary bank. Large withdrawals could be delayed a day or two depending on the amount needed, with CDARS funds likely locked up even longer in line with the CD’s term.

Unlock millions in FDIC insurance. The FDIC insures up to $250,000 per depositor, per institution and per ownership category, which is likely sufficient for many small businesses. But companies with larger operating budgets may be exposed if their bank fails. Insured Cash Sweep accounts offer a solution by placing your deposits, in $250,000 increments, across a network of FDIC-insured banks. Combined, those partner banks can provide several million dollars in FDIC coverage.

Manage funds through one account. Business owners may want multiple business bank accounts to protect themselves from unexpected interruptions like an account freeze. But if you’re manually spreading opening and managing accounts across dozens of financial institutions just to ensure FDIC coverage, Insured Cash Sweep accounts simplify the process. Account holders open an account through one primary bank that acts as a custodian and automatically moves money to partner banks so that you don’t exceed $250,000 (principal and interest) at any one bank.

Additional fees apply to some sweep accounts. Sweep accounts require some additional overhead for financial institutions, and that cost may be passed down to account holders. Some ICS accounts charge a monthly fee, while others simply take a portion of the interest earned on your sweep account.

ICS protection works differently with neobank accounts. If you opt for an ICS account via a neobank, your funds are covered if their underlying partner bank — or any other institution holding your deposits in the IntraFI network — fails. But those protections don’t apply if the fintech or any intermediary it works with files for bankruptcy or otherwise ceases operations.

While it’s unlikely you’ll lose your funds entirely if that happens, getting your money back will be more complicated — and could take far longer — than typical with FDIC insurance coverage, which usually restores access to funds within a few days.

For example, the recent headaches with Synapse Financial Technologies, an intermediary that partnered with Evolve Bank & Trust and several neobanks (including Mercury). When Synapse filed for bankruptcy in April 2024, thousands of customers lost access to their deposits. This issue still hasn’t been completely resolved as of this writing.

You may not earn interest on your full deposit (or at all). If your business has millions of dollars in deposits, ideally you’re putting it to work in a high-yield account. While most ICS accounts earn interest, some pay lower rates or cap what you can earn.