Brokerage Sweep Accounts: The Hidden Rate Trap

The default sweep rate at most legacy brokerages is a profit center for the firm, not a benefit for the customer.

The word 'sweep' in brokerage parlance means the automatic transfer of uninvested cash to a holding position at the end of each business day. At most legacy brokerages, this holding position is a bank deposit account at an affiliated bank — not a money market fund, and not an account you chose.

At Merrill Edge (Bank of America), the default sweep is the Merrill Lynch Bank Deposit Program, paying approximately 0.01% as of May 2026. At Morgan Stanley, the default is the Bank Deposit Program (BDP), also in the 0.01–0.05% range. These rates are not promotional; they are the standing rates.

The alternative — available within the same brokerage account, if you know to ask — is a money market mutual fund. At Fidelity, the government money market (SPAXX) yields 4.96% as of 15 May 2026. At Schwab, the Schwab Value Advantage Money Fund (SWVXX) yields 4.89%. At Vanguard, the Federal Money Market Fund (VMFXX) yields 5.27%.

The steps to fix this vary by brokerage:

Fidelity: Account Features → Core Position → Change to SPAXX or FZFXX. Schwab: The default sweep cannot be changed, but SWVXX can be purchased manually and held. Merrill Edge: CMA Cash account requires a request to switch to a money market fund core. Not all accounts are eligible. Morgan Stanley: Premium Cash Management clients can opt into the Preferred Cash Fund.

The total idle cash sitting in below-market brokerage sweep accounts in the U.S. runs to hundreds of billions of dollars, according to industry estimates. Your share of that idle cash is not in anyone's interest to identify for you — except ours.