The Cash in Your Brokerage Is Probably Earning 0.05%. The Same Broker Will Pay You 4%.

Sam sold a position in February, meant to redeploy the proceeds next week, and then life happened. Four months later, $48,000 is still sitting in his brokerage's default cash sweep, the account he has never once clicked into, earning a rate so low he assumed it did not matter. It mattered. The same broker, on the same screen, offers a money market fund paying dozens of times more. Sam just never moved the money the last six inches. (Sam is a composite; the rates below are each broker's real, published numbers.)

Here is the single number that should make you log in. At one major brokerage, the default cash sweep pays 0.05% APY while its own money market fund pays about 4.0%. On $100,000 of idle cash, that is the difference between $50 a year and roughly $4,000, a $3,950 gap that has nothing to do with how good the broker's trading tools are and everything to do with the fact that most people never look.

Two kinds of cash, and only one of them earns

When uninvested cash lands in a brokerage account, it goes into a default sweep. At some firms the sweep is a competitive money market fund. At others it is a low-yield bank sweep that quietly pays you almost nothing while the firm earns the spread. The fix, when there is one, is to manually buy the firm's money market fund. Same account, same liquidity, same one-business-day access. The yield is just sitting behind a setting you have to change yourself.

Here is where the major firms stand as of June 2026.

The default bank sweep, the low one, pays roughly 0.01% to 0.05% APY, about $1 to $5 a year per $10,000. A government or prime money market fund, which you may have to buy, pays roughly 3.9% to 4.05% APY, about $390 to $405 a year per $10,000. A few firms auto-sweep into a money fund near 4% by default, which is the exception, not the rule. Most leave you in the bank sweep until you act.

The point is not which broker wins. It is that inside almost any account, the high-yield option already exists. You just have to put the cash in it, the same choice you would make parking a lump sum anywhere else.

What the drag costs, in real dollars

Sam's $48,000 at a 0.05% sweep earns about $24 a year. In a 4% money fund, about $1,920. The cost of leaving it parked is roughly $1,896 a year, for one unchanged setting.

A retiree holding $200,000 in dry powder earns $100 a year at 0.05% and $8,000 at 4%. That gap, about $7,900 a year, can exceed every trading fee and fund expense in the account combined.

Two investors, same balance, same broker, separated only by which cash bucket they used.

Why this catches careful people specifically

Disciplined investors are taught to keep some cash, an emergency reserve, a redeployment buffer, money waiting for a dip. They do everything right at the portfolio level and then lose a quiet four percent on the cash, because the trade ticket never shows the sweep yield, the statement never flags it, and cash feels like the one thing that cannot be mismanaged. The drag hides in the most responsible part of the account.

What to actually do

• Log in and find the sweep rate. Look under cash management, core position, or account features. If it starts with a zero-point-zero, you have found money.
• Buy the money market fund yourself if your firm does not auto-sweep into one. It is usually a no-fee trade, settles in a day, and stays fully liquid. Government funds yield a touch less than prime funds but hold only Treasury-backed paper. The major brokers differ on what they sweep into by default.
• Compare against an external high-yield savings account too. Top accounts pay around 4.0% with FDIC insurance and full liquidity, a fine home for cash you will not deploy for months.
• Check it once a quarter. Sweep rates move with the Fed, and the relative gap rarely closes on its own.

The rules, stacked

• Cash is not a yield. The bucket you put it in is.
• If your broker does not surface the sweep rate on the trade screen, assume it is working against you and go check.
• The high-yield option is almost always already in your account. The only missing step is you.
• On idle cash, the largest fee you pay is often the one labeled nothing at all.

Sam is a composite character; broker yields are published figures current as of June 2026 and move with the Fed. Educational only, not individualized investment advice. Sources: published 7-day SEC yields and cash-investment pages, June 2026 (default bank sweeps about 0.01% to 0.05%; government and prime money market funds about 3.9% to 4.06%; Vanguard VMFXX about 3.56%, Fidelity SPAXX about 3.96%); federal funds target held at 3.50% to 3.75%; 3-month Treasury about 3.6%.