What is a Charles Schwab Bank Sweep Account?
Simply put, instead of moving cash in and out of your savings account yourself, a Schwab cash sweep
account automatically moves unused cash into a safe account that pays more interest than just letting
it sit.
Charles Schwab Cash Sweep Accounts
Charles Schwab, known for its low fees, lets investors use different ways to earn more on their cash. One popular option is the cash sweep account. There are a few choices, depending on your account type and what you like.
While details depend on the sweep account type, most have these things in common:
1. You choose if you want to use the cash sweep feature.
2. Using a cash sweep doesn’t affect how easily you can use your money. You don’t have to wait to move money between your main account and your cash sweep. It works in the background, but it’s as easy as having cash ready.
3. The cash sweep pays more interest than just letting the money sit in your main account.
Schwab Bank Sweep
This is the basic cash sweep for standard brokerage accounts. When you use the bank sweep, your cash goes into a bank linked to Schwab.
Since the cash is in a bank, it’s protected by FDIC insurance. This means the government covers your cash up to $250,000 if the bank fails.
For more safety, Schwab is now using a version that spreads your cash across several banks. This lowers risk, and you get $250,000 of FDIC insurance for each bank, so people with a lot of cash are even safer.
With this sweep, your cash earns interest every day and you get paid monthly on the 15th (or next business day).
Interest rates change based on how much cash you have. More cash can mean more interest. The rate for bank sweeps is 0.05% per year. It’s not the highest, but there are better options below.
Schwab Benefit Plan Sweeps
If you’re self-employed or own a small business, Schwab has retirement plans you can use instead of a 401(k).
Like the standard sweep, your cash goes into one or more banks with FDIC insurance. There are no extra fees, and you can use the cash right away to buy investments in your plan.
At the moment, the interest rate is also 0.05% per year for these sweeps.
Schwab Money Fund Sweep Rates
If your account qualifies and you’re okay giving up FDIC insurance for a better yield, Schwab lets you use money fund sweeps. Instead of sending your cash to a bank, the money fund sweep puts it in a Schwab-managed money market account called SWGXX. Right now, SWGXX pays 3.85%.
But, only certain accounts can use money fund sweeps:
- Schwab Managed Portfolios. Schwab manages these for you, so you don’t have to do the work.
- Schwab Charitable Accounts.
- Some retirement accounts. The rules are tricky, so check with Schwab to see if you qualify.
Even if you can’t use the sweep feature, anyone with a Schwab account can still invest in SWGXX to
earn more on cash, though it won’t happen automatically.
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Schwab Intelligent Portfolios
Schwab’s Intelligent Portfolio is like a managed account, but uses a robo-advisor (AI) instead of a person. It picks investments and strategies based on your age, risk, and other things.
Intelligent Portfolios put some cash in SWGXX, which pays 3.85%.
Interest rates for all money fund sweeps and Intelligent Portfolios are set on the first business day of the month and may change monthly.
Other Cash Investing Options From Schwab
If you don’t like money sweeps, Schwab gives you more ways to earn on your cash instead of letting inflation lower its value. Besides SWGXX and similar funds, Schwab offers:
Schwab HYCA: High Yield Checking Account
To open a high-yield checking account (HYCA), you need to have an investment account.
You can move money between these two accounts easily, without using a sweep. The HYCA is FDIC-insured and gives you a debit card and other checking features. The HYCA pays 0.05%.
High Yield Savings Account
High-yield savings accounts (HYSA) with Schwab are like the HYCA, but you can only take money out six times a month. The HYSA now pays 0.15%.
Schwab Certificates of Deposit
Certificates of deposit (CDs) pay more if you agree to keep your cash locked up for a set time. You
can’t take money out until the CD ends. Terms are from 30 days to several years. The longer the term,
the higher the rate. Current rates are
3.45% to 3.9%.
Charles Schwab Cash Sweep Conclusion
No matter what you pick, using a sweep account is important when inflation is rising. Cash sweeps make
it easy to move cash around. With Schwab sweeps, your money is still easy to use, just like cash in
your pocket.
Don’t let your cash lose value. Put it to work with a Schwab cash sweep account.
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Visit Schwab Website
Updated on 11/1/2025.
Arthur Chachuna is a professional personal finance blogger, and the owner of Brokerage-Review.com.
He has been an avid investor for 25 years, and has a background in both applied math and programming.
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