Under a Repurchase Agreement, demand account balances above a predetermined “peg” are automatically swept into a Repurchase (REPO) account and invested excess bank funds in the Overnight Fed Funds market. Customer investments are collateralized by US government/agency securities. Funds are transferred back to demand account to maintain the peg balance.
How it Works
- A minimum required balance is established for the demand account to offset all or part of the cost of services.
- Excess funds above this amount is automatically swept to a REPO investment account.
- Interest is earned based on the targeted Fed Funds rate
- REPO interest is credited to the checking account monthly.
- Funds are automatically transferred back to the checking account to maintain the minimum balance
What You Need to Know
REPO Investments are collateralized backed by U.S. government/agency issued securities, but covered by FDIC insurance.