Is Your Brokerage Cash Underpaid? What Idle Cash Earns and How to Move It

Idle cash feels harmless because nothing seems to be happening to it. Something is: each month it sits in a low-paying default, you give up interest you could collect with a few minutes of setup.

Is my brokerage cash really earning that little?

At most firms in our index, yes. The median default sweep pays a small fraction of one percent, which is about $5 a year on $25,000.

The sweep earns something, just far less than it could. A top high-yield savings account pays 4.27% today, and the national average savings rate is 0.38%. The median sweep sits below both.

Rates differ by firm, and some firms pay a different rate at different balance tiers. The bar chart under the calculator shows the spread by broker, and the calculator looks up the tier that matches your balance.

Should I use a money market fund or a savings account?

A money market fund keeps cash inside your brokerage account; an insured savings account keeps it at a bank. Which one fits depends on what the cash is for.

Choose the fund when you plan to invest within weeks. It sits one step from a trade inside the same account, and you earn the fund's yield instead of the sweep's. It is not FDIC insured, and the value can move, so it suits cash that is already part of your investing plan.¹

Choose the savings account when the cash is for an emergency, a tax bill or a purchase. It carries FDIC coverage up to the standard limit at each bank.² Our guide to money funds versus high-yield savings goes deeper on the tradeoff.

How do I change my brokerage cash sweep?

You change it in the account settings or by buying a fund, and neither takes long. The names differ by firm, but the steps are the same.

1. Open your account and look for a setting called core position, sweep option, cash management or settlement fund.
2. Read what it says today. Note whether it names a bank program or a fund, and find the current rate.
3. If your firm lets you pick, choose a government or Treasury money market fund from its list and read the fund's current yield and fees first.
4. If it does not offer a setting, buy the fund directly with your cash balance. Some firms return leftover cash to the default sweep, so check again after the trade settles.
5. To move cash to a bank instead, link the bank account, start an electronic transfer and wait for it to post. Allow a business day or two.

Nothing here needs a login to understand, and the exact menu wording changes, so use your firm's help page if a label differs.

Is brokerage cash safe, and what protects it?

Protection depends on where the cash sits. Bank sweeps can carry FDIC coverage, money funds are investments, and SIPC protects against a brokerage failing rather than against losses.

SIPC covers up to $500,000 per customer at a failed member firm, including $250,000 for cash.³ It does not protect against a fall in the value of securities, and it is not the same as FDIC coverage.⁴

For swept bank deposits, FDIC pass-through coverage applies per owner and adds to your other deposits at the same bank, if the bank's records show you as the owner.⁵ If your household holds large cash balances, see our guide to FDIC coverage for families, and use the FDIC check before you move money.

When is it fine to leave cash where it is?

When the gap is small or you need the convenience. If the calculator shows a gap of a few dollars a year, the default sweep is doing its job well enough.

It can also be fine for a few days of trading cash. The cost of waiting is the row to watch: it tells you what each extra month at the default sweep costs at your balance. If you are also weighing a bank move, our bank switching checklist covers the mechanics, and our guide to parking a windfall covers lump sums.

For the long version of this comparison, read brokerage cash sweep versus bank savings and the cost of brokerage cash drag. You can also track top rates on the rate tracker.