You keep a few accounts at the same bank. You have your savings account, your checking account, and a special super-saver account, with the extra-high interest rate.
The checking account is a sweep account. That distinction means that any amount above a certain total automatically gets "swept" into the higher-rate accounts.
So...say you always want a balance of $2,000 in the checking account. You have $1,500 in the account now and deposit $600. The balance should rise to $2,100...but since its a sweep account, the $100 extra (the amount above your $2,000 threshold) automatically transfers to the super-saver account.
It's a way to make sure you're getting the highest possible rate on your savings, as opposed to letting the cash just sit in your checking account.
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Finance: What is an Omnibus Account?111 Views
Finance a la shmoop. What is an omnibus account?
Herbi just eats leaves, Carni just eats meat, Omni well it's pretty much [Different buses eating stuff]
everything. So yeah an omnibus as in bus-i-ness or business account services is
a bunch of investors who've all pitched in or wired in their capital to become a
percentage owner of that omnibus account. Why would people do this? Scale, volume,
discounts size, heft. When you have a lot of money in an account basic things like [Lots of money in a suitcase]
audit and legal fees and brokerage services and the fees with them and
other one-off costs get amortized across a lot of people in dollars invested [Definition of Amortization]
rather than being laid entirely or solely on one investor where they can
then be a meaningful percentage of the total and with an omnibus account you [Bus labelled Omni eating leaves]
also get anonymity since it's a broker dealing in street name with the account [Anonymity stamp]
interfacing with the street well investors can live if they want in the
lovely dark shadows of Erewhon. Omnibus accounts are sort of like your own [Full moon in a dark sky]
custom mutual fund without the whole nav, net asset value stamp requirements at
the end of each trading day and all the other regulations and filings and legal
crap needed for publicly offered securities it's like having a fully [Book labelled my very own omnibus account]
gassed up bus with a working GPS and Waze system you can drive anywhere you [Guy sat on a bus]
want on the investing landscape you don't have to tell anyone outside of
your own partners about it, and it works great as long as you all want to eat the
same kind of financial cooking.. [Omni asking Carni if he is going to finish his food]
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A wrap account is an account that wraps into one annual fee all of the services you'd normally pay for a la carte at a given brokerage.