What is a cash sweep account and is your brokerage earning enough interest?

If you have a brokerage account, chances are your uninvested cash is already in a sweep account, whether you set it up or not.

A cash sweep account is a feature built into most brokerage accounts that automatically moves, or "sweeps," your uninvested cash into a designated interest-bearing account. This happens whenever cash enters your brokerage account from a stock sale, a dividend payment, bond interest, or a deposit you haven't invested yet. 

Instead of sitting idle as a non-interest-bearing credit balance, the money is directed into a holding account where it can earn some return.

The mechanics of cash sweep accounts are largely invisible. When you sell a position or receive a payout, the cash appears in your brokerage account and is automatically swept, usually overnight, into the designated account. When you're ready to place a trade, the funds sweep back just as seamlessly, so you don't need to initiate a transfer or move money manually.

Where the cash actually goes depends on the brokerage and the cash sweep program it offers. The two most common destinations are:

• Bank deposit sweep accounts, where your cash is deposited into one or more FDIC-insured bank accounts affiliated with or partnered by the brokerage

• Money market sweep funds, which are mutual funds that invest in short-term, low-risk securities like government debt. 

Each structure has different implications for insurance coverage, yield, and access, which we'll cover in more detail below.

The convenience of a cash sweep program comes with a trade-off that many investors don't notice until they look at the numbers.

Sweep account rates vary widely across brokerages, and the spread between the best and worst is striking. Some programs currently pay as little as 0.01% APY on swept cash, while others offer rates closer to 3.00% to 3.50%. 

Meanwhile, as of July 2026, top high-yield savings accounts are paying around 4.00% APY or more. The difference between what your brokerage pays and what your cash could be earning elsewhere can be significant when it compounds over time. 

"Savers spend a lot of time thinking about where to invest their money, but often overlook where their cash sits between investment decisions,” said Alastair Wood, CEO, US, at Raisin. “One of the biggest misconceptions is that uninvested cash is working just as hard as the assets they've intentionally put to work."

Why cash sweep rates are so low 

The reason some sweep rates are so low comes down to how brokerages earn revenue. 

When a brokerage sweeps your cash into an affiliated bank, it often profits from the spread between the rate it pays you and the rate it earns by lending or investing that cash. This creates a structural incentive to keep sweep rates low. 

The SEC has taken note of this. In January 2025, it charged Wells Fargo Advisors and Merrill Lynch with compliance failures related to their cash sweep programs, resulting in $60 million in civil penalties. The agency found that during periods of rising interest rates, the yield gap between these firms' bank deposit sweep programs and other available cash sweep alternatives grew to nearly 4% and went against their customers’ best interest.

Cash sweep programs remain a focus of SEC examination priorities in 2026, particularly around concentration, liquidity, and counterparty risk. 

In the meantime, the takeaway is straightforward for savers. Don't assume your brokerage is giving you the best cash sweep rates available, and check what you're actually earning and compare it to what's available on the open market.

How the math works out 

Here's what that gap looks like on a saver’s hypothetical $50,000 cash balance over 12 months. 

At a low sweep rate of 0.01% APY, that cash could earn roughly $5 in a full year. At a moderate sweep rate of 3.25% APY, the same balance could earn around $1,649. And in a top high-yield savings account at 4.00% APY, it could earn approximately $1,998.

That means a saver with $50,000 in a low-paying sweep program could be leaving nearly $2,000 a year on the table. 

Not all cash sweep programs protect your money in the same way, and understanding the differences matters.

If the brokerage sweeps cash into an FDIC-insured bank deposit account, funds are covered by standard deposit insurance: up to $250,000 per depositor, per institution. Some multi-bank sweep programs spread deposits across several banks automatically, extending total FDIC coverage beyond the standard $250,000 limit.

If the brokerage sweeps cash into a money market fund instead, however, FDIC coverage does not apply. Money market funds are investment products, not bank deposits, and they're covered under SIPC (Securities Investor Protection Corporation). This protects against broker-dealer failure, not investment losses. 

SIPC coverage applies up to $500,000 per customer, with a $250,000 limit for cash claims. While money market funds are generally considered low-risk, they are not guaranteed and their value can fluctuate.

There are a few things worth checking in your own brokerage's sweep program:

• Confirm whether your cash is being swept into a bank deposit account or a money market fund, as the type of insurance coverage depends entirely on this distinction. 

• If your sweep goes to a single affiliated bank, your FDIC coverage is capped at $250,000 at that institution. Keep in mind that if you hold other deposits at the same bank, those count toward the same limit. 

• Ask whether your brokerage offers a multi-bank sweep option. Multi-bank programs can meaningfully expand your insurance coverage, particularly if your cash balance is substantial.

If your brokerage's sweep rate isn't keeping up, you don't have to settle for it. There are several options for putting your idle cash to work more effectively.

A cash sweep account is designed for convenience, not yield. Once you recognize that distinction, the next step is deciding where your uninvested cash would be better served and how much effort you're willing to put into the move.

High-yield savings accounts. A HYSA is one of the simplest alternatives. Current top rates sit around 4.00% APY or higher, and your money stays fully liquid with no term commitment. Opening a HYSA at a separate institution and periodically transferring idle brokerage cash into it could meaningfully boost earnings. The trade-off is that it requires a manual step, as it’s unlikely that a brokerage would automate this sort of transfer.

No-penalty CDs. If you have a lump sum sitting in your brokerage that you don't plan to invest in the near term, a no-penalty CD lets you lock in a fixed rate while preserving the ability to withdraw without a fee. This can be particularly useful in a falling-rate environment, where your sweep rate and HYSA rate would both decline but a CD holds steady.

Money market funds. If your brokerage's default sweep goes to a low-yielding bank deposit account, you may be able to switch to a money market fund within the same brokerage. Some brokerages offer government money market funds that yield significantly more than their default sweep option. Check whether your brokerage allows you to change your sweep election, keeping in mind that funds in money market funds can lose value.

Wood notes that the threshold for taking action is lower than most people think. 

"There isn't a one-size-fits-all balance where your sweep rate becomes important,” he said. “The reality is that any cash earning less than it could represent a missed opportunity. Many investors optimize their portfolios for an extra 1% or 2% in market returns, yet overlook their cash position, which could be earning 3–4% in guaranteed returns."

With Raisin, you can access high-yield savings accounts and CDs across multiple federally insured banks and credit unions from a single account. That makes it easy to move idle brokerage cash into a competitive product without managing multiple banking relationships.

Cash sweep accounts serve a useful purpose, as they keep your uninvested brokerage cash earning something rather than nothing. But "something" and "enough" aren't the same thing.

If your sweep rate is below 1% while top high-yield savings accounts are paying 4% or more, the gap could be costing you real money every month.

The good news, though, is the fix doesn't have to be complicated. Check your current sweep rate, compare it to what's available, and consider moving idle cash that isn't earmarked for near-term trades into a higher-yielding account. A high-yield savings account, a no-penalty CD, or even a higher-yielding money market fund within your brokerage can make a meaningful difference, especially over time.

Raisin makes this easy. From one free account, you can compare and open high-yield savings accounts and CDs across multiple federally insured banks and credit unions, so your idle cash is always working as hard as the rest of your portfolio.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.