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1Scan for outdated or missing drivers - takes under a minute2Repair Windows errors before they cause bigger problems3Fix the driver behind crashes, sound loss and screen glitchesBrokerages can earn money from idle customer cash, but the economics depend on where the cash is held. A free credit balance may remain with the brokerage, a bank sweep becomes a deposit at one or more banks, and a money market sweep buys fund shares. In a bank sweep, the bank may earn a spread by using deposits while the brokerage or an affiliate may receive separate program compensation; in a fund sweep, returns come from the fund’s investments after expenses.
Where brokerage cash goes—and who can earn from it
“Cash” in a brokerage account can describe three different arrangements. FINRA defines a sweep program as an automatic transfer of free credit balances to either a money market mutual fund or an FDIC-insured bank account (FINRA Rule 15c3-3 interpretation).
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Free credit balance
The cash remains recorded as a credit balance in the securities account. A brokerage may pay interest, but it sets the rate and may pay none. Depending on the feature, the balance can remain a direct obligation of the brokerage. The firm may earn income on its use of the balance or related assets, but the arrangement and rate are firm-specific.
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Bank deposit sweep
The brokerage automatically transfers available cash to deposit accounts at one or more program banks, which may be affiliated with the brokerage. Banks use deposits in their business, including lending and investments. Their economics generally reflect the income from those activities minus deposit interest and other costs. The brokerage or an affiliate may also receive fees or other benefits under the program.
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These are distinct revenue streams: the bank may earn a spread, while the brokerage may receive program compensation. For example, Schwab says income its affiliated program banks earn through deposit activities is expected to exceed fees Schwab and its affiliates earn from certain alternative cash features (Schwab Cash Features Program Disclosure Statement). That disclosure describes Schwab’s program, not every brokerage’s.
Money market fund sweep
The sweep buys shares of a money market mutual fund. The fund earns investment income and pays returns net of its fees and expenses. A broker or affiliate may earn management or distribution fees if it manages or distributes the fund. The customer owns fund shares; this is an investment, not an FDIC-insured bank deposit.
Why the rate you receive may be lower than the bank or fund earns
The rate credited to a customer is not necessarily the same as the income generated by the deposited cash or fund portfolio. In a bank sweep, the bank’s interest paid on deposits is one cost; income from loans and investments is another side of the bank’s spread. The brokerage may have separate program fees. JPMorgan’s brokerage-services guide describes profitability on deposit lending and investment activities in terms of the spread between deposit interest and costs, and income earned on loans and investments made with deposits (JPMorgan Brokerage Services Guide).
For a free credit balance, the firm may set the interest rate it pays. For a money market fund sweep, the customer’s return reflects portfolio income after fund expenses. These are different products, so there is no single margin or rate gap that applies to all brokerages.
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FINRA has reported that rate differences among money market fund, bank sweep, and free credit balance options have sometimes reached 5 percentage points in higher-rate environments. FINRA’s page does not identify a publication year alongside that figure, so it is historical context—not a current rate comparison or a guaranteed difference (FINRA: Brokerage Accounts and Cash Sweep Programs).
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Compare your account’s cash options
Use the current cash-features disclosure and account statement to identify what happens to your uninvested balance. These details vary by brokerage and account, and rates can change.
- Destination and product: Check whether cash is a free credit balance, a bank deposit, or shares of a money market fund. The account label alone may not make the legal arrangement clear.
- Rate or yield: Find the current rate, how it is set, and whether balance tiers apply. Schwab, for example, says its Schwab One Interest Feature rate is set at Schwab’s discretion.
- Bank affiliation and compensation: Identify the program banks, where deposits are allocated, whether a bank is affiliated with the brokerage, and how the firm or its affiliates are compensated.
- Choices and how to change them: If the brokerage offers alternatives, check whether your account is eligible and how to select another cash feature. SEC investor guidance says that when a broker offers choices, it must agree to the option selected by the customer; availability is account-specific (SEC Investor Bulletin: Bank Sweep Programs).
- Access and redemption: Review transfer timing, liquidity, and any fund redemption terms, fees, or risks. Fund redemptions remain subject to the fund’s terms and applicable law (SEC Investor Bulletin: Bank Sweep Programs).
- Protection: Eligible deposits at participating FDIC-insured banks may qualify for FDIC insurance, subject to conditions and limits. The SEC bulletin describes coverage up to $250,000 per customer at each participating bank, subject to applicable rules. That does not make the brokerage account itself a bank account. Fund shares are securities, not insured deposits; SIPC protection is separate and does not insure against investment losses or guarantee a fund’s value.
For a named account, the current disclosure is essential: product terms, rates, bank allocation, and customer choices are not uniform across firms.
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