February 17, 2013
Not sure how new this is, but saw a commercial today that promotes the Sweep feature that automatically moves your funds between savings and checking to cover bills/cheques and into your savings to maximize interest on excess funds sitting in your chequing account. Sounds kind of like the all-in-one account that EQ offers but with chequing privileges. Never understood why you couldn't just write cheques, pay bills and keep savings all in one high interest account. Convenience alone would make a great selling point.
August 4, 2010
Banks want you to keep as much as possible in the chequing account (reduces interest costs), and fear of insufficient funds is one of the incentives, which is why you haven't had auto transfer from savings to cover a chequing account.
There's no details on exactly how Sweep works, but it sounds like you can set it to say "keep a minimum of $XXXX and a maximum of $YYYY in the chequing account, transferring to and from the savings". But they also mention their overdraft service, so I'd assume if a big debit went through and made you NSF, the overdraft would have to kick in first, then Sweep might come along after to top up the account. Overdraft is $1/month, it seems. Perhaps they just mean that overdraft would kick in only if your savings account also couldn't cover things, but one would have to see exactly what mechanisms Sweep can be set up with.
Ideally, there would be a single account, which pays chequing rates (i.e. nothing) on the first $ZZZZ of the balance, and the savings rate on amounts above that. But even accounts where fees are waived at a certain minimum balance always have more than that in it, so banks would have to set the amounts higher than the current values to break even.
October 21, 2013
April 6, 2013
More details are in this press release and video:
The sweep transfers seem to happen overnight and are not real-time. It is not the same as having a single consolidated account. Without overdraft protection, cheques will still NSF should the chequing account balance fall below what is required during the day until the sweep occurs in later that evening.
It doesn't look that great to me. If the sweep transfers are effective next business day, then I would lose at least one day of interest on deposits to my chequing account compared to if I transferred it myself the same day. For people paid by direct deposit on Fridays, they would lose three days of interest each time.
Also, one needs to be very careful. If I manually transfer $20,000 from savings to chequing to cover a large cheque and I have the sweep set for maximum of $1,000 in the chequing account, the sweep will transfer most of the $20,000 back into savings that night and the $20,000 cheque will bounce the next day.