TD Ameritrade Cash Sweep Account Options
If you have money sitting in your TD Ameritrade brokerage account, there are several cash sweep vehicles available to you. The first is an FDIC-insured bank option. This is the default set up. If you don’t make any requests to the broker, your free cash balances will be swept to a program bank that has FDIC insurance. Typically, this is the broker’s parent company, TD Bank.
TD Ameritrade Cash Sweep Interest Rates
TD Ameritrade receives compensation for sending its customers’ cash to TD Bank, which is probably why it’s the default option. The sweep program does pay interest, but
currently it is only 0.01% for all balances (see other TDA cash sweep options below).
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Other TD Ameritrade Cash Sweep Options
The second alternative also pays interest:
|
Dollar Range |
Interest Rate |
Annual Percentage Yield |
|
$0.01 - $4,999.99 |
0.01% |
0.01% |
|
$5,000.00 - $24,999.99 |
0.01% |
0.01% |
|
$25,000.00 - $99,999.99 |
0.01% |
0.01% |
|
$100,000.00 - $199,999.99 |
0.01% |
0.01% |
|
$200,000.00 - $499,999.99
|
0.01% |
0.01% |
|
$500,000.00 - $999,999.99
|
0.01% |
0.01% |
|
$1,000,000 +
|
0.01% |
0.01% |
TD Ameritrade has a supplemental private insurance policy from London insurers that adds additional protection to brokerage accounts beyond FDIC and SIPC coverage. It provides $149.5 million of protection for securities and $2 million in insurance for cash. However, there is an aggregate limit on the policy of $500 million. It seems odd to have such a high limit per customer, but such a low total that the insurance company would pay.
Comparison
Majority of brokerage firms offer very low interest on investors' uninvested cash. Fidelity's cash sweep rates, for example, are
0.01% too.
Ally Invest offers the highest in the industry rate
of 0.6% APY on its online savings account that could easily be linked to its brokerage account.
M1 Finance
offers a checking account that comes with 1% APY.
However, that checking is part of the broker's
M1 Plus program which costs $125 a year.
TD Ameritrade Money Market Fund Rates
The third and final option that TD Ameritrade offers its account holders is to move free cash balances to a money market mutual
fund. These balances are insured neither by the FDIC, nor by SIPC, nor by anyone else; although SIPC does protect the number of
shares. Money market funds attempt to maintain an NAV of $1 per share, but there have been failures in the past.
Currently, the default money market fund offered by TD Ameritrade is one managed by TD Asset Management USA Funds. It pays between 0.01% and 0.05%, depending on the
balance tier.
TD Ameritrade Cash Sweep Insurance
TD Ameritrade’s default sweep option is insured up to $250,000. This is the standard amount of protection from the FDIC, but other brokerage firms offer programs to increase it. Fidelity, for example, uses multiple program banks, a method that provides $1,250,000 of insurance.
The second free cash option available to TD Ameritrade clients is simply to leave cash balances in the brokerage account. This alternative comes with SIPC protection, which includes insurance on cash up to $250,000. The maximum amount of SIPC coverage is $500,000, including all securities in an account.
TD Ameritrade Money Market Final Thoughts
TD Ameritrade allows its clients to change their cash sweep choice at any time. The process may require liquidation of cash positions, which could incur the loss of a day’s interest or dividends. Funds held in the money market deposit account can be liquidated to satisfy any debits. These can be presented either through a Visa debit card, checks, ACH, or other method.
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Open TD Ameritrade Account
TD Ameritrade Automatic Investing
Many investors are wondering if TD Ameritrade is offering automatic investment plan for stocks, mutual funds and ETFs. After all, automatic investment plan is the best way
to dollar-cost-average one's investing without spending too much time on it. You just set it and forget it.
Well, the answer to that question in TD Ameritrade's case is "Yes". Customers can set up automatic investing at the brokerage house for mutual funds and ETFs.
When it comes to automatic investment fees it's a bit tricky. Customers pay regular commission on most ETFs
($0) and load mutual funds ($49.99). However, investors can set up
automatic investing WITH NO FEES on no-transaction-fee mutual funds, no-load mutual funds and on 550+ commission free ETFs offered at the company.
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thinkorswim
TD Ameritrade's flagship software is thinkorswim, a desktop platform with some very advanced trading features.
The charting capability of thinkorswim is higher than that of any of its rivals. The fact that TD Ameritrade doesn't impose any
trading requirements or account minimums for this powerful software is incredible. All that makes TD Ameritrade the best online
broker for charting tools.
thinkorswim Cash Sweep Account Options
Since thinkorswim is owned by TD Ameritrade, thinkorswim cash sweep vehicle options are the same as for regular TD Ameritrade account.
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