Credit Sweep


DEFINITION of 'Credit Sweep'

Also known as an automated credit sweep, this term refers to an arrangement between a bank and a customer (usually a corporation) whereby all idle or excess funds in a deposit account are used to pay down short-term borrowing under a line of credit. The client usually sets a target balance which will determine how much of its funds will be used.

BREAKING DOWN 'Credit Sweep'

This is a cash management tool that is especially beneficial to large corporations that have multiple accounts and great variablity in payments from day to day. Most credit sweeps also have the opposite arrangement, whereby if the funds in the account are less than the target balance, there will be a drawdown on the line of credit to reach the target.

  1. Credit Ticket

    In accounting and bookkeeping, a credit ticket is a transaction ...
  2. Zero Balance Account - ZBA

    A checking account in which a balance of zero is maintained by ...
  3. Account

    1. An arrangement by which an organization accepts a customer's ...
  4. Sweep Account

    A bank account that automatically transfers amounts that exceed ...
  5. Line Of Credit - LOC

    An arrangement between a financial institution, usually a bank, ...
  6. Tenured Capital

    Loans offered by the government to key business sectors.
Related Articles
  1. Insurance

    Working Capital Works

    A company's efficiency, financial strength and cash-flow health show in its management of working capital.
  2. Investing Basics

    Understanding The Cash Conversion Cycle

    Find out how a simple calculation can help you uncover the most efficient companies.
  3. Credit & Loans

    The Basics Of Lines Of Credit

    Lines of credit are potentially useful hybrids of credit cards and normal loans. Learn how a line of credit can help (and hurt) your finances, and how to find the best one to suit your needs. ...
  4. Credit & Loans

    Try This Home-Equity-Line-of-Credit Hybrid

    This product is essentially a home-equity loan and home equity line of credit (HELOC) hybrid, and it has its own quirks, benefits and drawbacks.
  5. Home & Auto

    The Smartest Way to Tap Your Home Equity

    Using your home as a source of funds can be a smart choice in some situations. Just be sure to carefully run the numbers.
  6. Active Trading Fundamentals

    How Does Fundera Work and Make Money?

    Learn more about Fundera, the online loan broker service agency, and discover what it offers and how it makes money through its service.
  7. Credit & Loans

    Home-Equity Choice: Loan or Line of Credit?

    Before using your home as loan collateral, consider both your financing needs and your appetite for uncertainty.
  8. Credit & Loans

    5 Steps To Getting a Home-Equity Loan/Credit Line

    Want to use your residence as collateral for some financing? Our handy how-to guide to getting a home-equity loan or line of credit explains it all.
  9. Credit & Loans

    Home-Equity Loan vs. HELOC: Which Is Better?

    Knowing the difference between a home-equity loan and a HELOC is important. Here's how to tell which is a better fit for your needs.
  10. Entrepreneurship

    Small Business Loan Vs Line of Credit: How They Differ

    Understand the differences between a small business loan and a line of credit, and learn some of the most appropriate uses for each form of financing.
  1. Where do companies keep their cash?

    If you have ever looked over a company's balance sheet, you have no doubt noticed the first account under the current asset ... Read Full Answer >>
  2. Are FHA loans fixed?

    An FHA loan is a mortgage loan backed by the government that offers more flexible lending requirements than those of conventional ... Read Full Answer >>
  3. Can Sallie Mae garnish my wages?

    Private lenders such as Sallie Mae can garnish wages. In the case of federal student loans, the government has the power ... Read Full Answer >>
  4. What is the difference between "closed end credit" and a "line of credit?"

    Depending on the need, an individual or business may take out a form of credit that is either open- or closed-ended. While ... Read Full Answer >>
  5. What are typical forms of long-term debt for a public company?

    Public companies fund their operational needs and capital expenditures with equity or debt. Most often, companies choose ... Read Full Answer >>
  6. What is the difference between subordinated debt and senior debt?

    The difference between subordinated debt and senior debt is the priority in which the debt claims are paid by a firm in bankruptcy ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  2. Bullish Engulfing Pattern

    A chart pattern that forms when a small black candlestick is followed by a large white candlestick that completely eclipses ...
  3. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  4. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
Trading Center