Cash sweep

A cash sweep is an account feature that automatically moves uninvested cash into an interest-bearing option. It is common in brokerage accounts, where cash from a deposit, a sale, a dividend, or an interest payment can sit idle until it is swept.

The swept cash typically goes into a money market fund or a deposit at one or more partner banks. Money kept in a partner bank deposit may be eligible for FDIC insurance up to applicable limits, while a money market fund is a security and is not FDIC insured. The sweep usually runs on a set schedule, often daily, and reverses when cash is needed to settle a trade or a withdrawal.

The rate paid on swept cash can change over time and differs by account and provider. Sweep terms, including which destination is used and how insurance applies, are set in the account agreement.