The investing information provided on this page is for educational purposes only. SS, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
What is a cash sweep account or sweep account?
A cash sweep account automatically transfers uninvested cash — typically from a bank or brokerage account — to higher-yielding accounts or investments, such as banks, money market funds or short-term Treasury securities. These options are generally low risk and keep cash easily accessible.
Uninvested cash might include account deposits, dividends or interest from investments, or proceeds from an investment sale.
The main purpose of a cash sweep account, also called a sweep account, is to earn interest on money that would otherwise sit idle.
Many sweep accounts also offer banking features such as electronic payments and check-writing services. The interests rates on sweep accounts can vary.
You may be asked to choose a cash sweep program when opening an investment account, or you may be automatically enrolled in one.
Some programs are free, while others may charge fees such as account management or maintenance fees. Some cash sweep accounts also have minimum account balance requirements.
Both entities have cash coverage limits of $250,000 per customer.