Bank sweep account alternatives: where idle cash earns more

If you keep a brokerage account, some of your cash is almost certainly sitting in a “sweep” — the default holding account where uninvested money lands between trades, after dividends, or right after a deposit. The problem is not that the sweep exists. The problem is what many of them pay. Depending on your broker and account type, the default sweep can be paying anywhere from a few tenths of a percent to a couple of percent, while the cash could be earning meaningfully more with one or two clicks and no change of institution. This guide is the companion to our explainer on how the brokerage cash sweep works and why the default pays what it does. Here we skip the mechanics and go straight to the practical question: what are the concrete alternatives for that idle cash, and how much more do they pay right now?

The fastest fix for low-yield idle cash in a brokerage is to buy a government or prime money market fund inside the same account — VMFXX at Vanguard, SPAXX at Fidelity, or SWVXX at Schwab — which paid roughly 3.3% to 3.5% in early June 2026, versus the 1% to 2% paid by typical FDIC bank-deposit sweeps and the sub-1% paid by older legacy sweeps. If you can move the cash out of the brokerage entirely, a high-yield savings account (around 4% APY) or a four-week Treasury bill (about 3.7%) can pay a touch more, but those involve a transfer, so they suit cash you are not about to invest.

Why the default sweep underpays

Brokers run two broad kinds of sweep. A money market fund sweep holds your cash as shares of an SEC-regulated fund that owns short-term Treasuries and similar paper, and passes through nearly the full market yield. A bank-deposit sweep moves your cash to one or more partner banks — frequently affiliated with the broker — where it earns a deposit rate the bank sets, usually well below what short-term cash earns in the open market. The bank keeps the difference. That spread is a real revenue line for several large brokers, which is precisely why the lower-paying option tends to be the default rather than something you opted into.

The size of the gap has narrowed in 2026 as short-term rates came down, and it varies a lot by broker. Schwab is the cautionary case: the 3.2%–3.3% sweep rate it publishes, set monthly to the Schwab Government Money Fund yield, applies only to the Schwab Intelligent Portfolios robo-advisor program. The standard Bank Sweep in an ordinary Schwab brokerage account still pays a token rate — third-party rate trackers showed 0.01% in late August 2026, and Schwab’s own sheet has ranged between 0.05% and 0.45% in recent years — so an ordinary Schwab customer has to buy the money fund manually. Fidelity’s FDIC-insured deposit sweep, the default on many retirement accounts, has paid closer to 1.8% to 2.7% in 2026, a gap of one to two percentage points under Fidelity’s own SPAXX. And plenty of older or no-frills sweeps — legacy bank sweeps, free-tier app sweeps — still pay under 1%. The point is not a single magic number; it is that the default is rarely the best the same broker offers, and the cost of leaving it there compounds quietly.

Alternative 1: A money market fund inside the same broker

This is the lowest-friction option and the right starting point for most people, because it requires no new account, no transfer, and no loss of access. You buy a money market fund the same way you buy any other holding, and you sell it the same way when you need the cash.

The three workhorse funds, with their early-June 2026 yields:

• Vanguard VMFXX (Federal Money Market Fund) — a Treasury-heavy government fund and Vanguard’s default settlement position. Its yield sat near 3.5% to 3.6% in 2026 (a 3.58% 30-day SEC yield reported at the end of March 2026). At Vanguard there is usually nothing to do — idle cash already lands here.
• Fidelity SPAXX (Government Money Market Fund) — Fidelity’s default core position on most non-retirement brokerage accounts, with a 3.27% seven-day yield as of May 31, 2026. If your Fidelity account defaults to the FDIC sweep instead, switching the core position to SPAXX is a settings change.
• Schwab SWVXX (Prime Advantage Money Fund) — a prime fund (so it holds some short-term corporate paper, not only Treasuries) paying around 3.4% to 3.5% in early June 2026. At Schwab this is a manual purchase, not a settings change: the bank sweep stays the default and you buy the fund deliberately.

Government funds (VMFXX, SPAXX) hold mostly Treasuries; prime funds (SWVXX) reach for slightly more yield by holding corporate paper, with marginally more risk in a stress event. For idle brokerage cash, either is a reasonable cash-equivalent. The trade-off versus a bank sweep is the insurance structure: a money market fund is a security under SIPC ($500,000 coverage if the broker fails) rather than an FDIC-insured deposit, and SIPC does not protect against the fund losing value — though government funds have an exceptionally strong record of holding their $1.00 price.

Alternative 2: A high-yield savings account

If the cash is genuinely savings — an emergency fund, a down-payment pile, money you will not invest soon — a high-yield savings account (HYSA) at an online bank often edges out the money market funds on headline yield, and it carries FDIC insurance. As of June 2026, the leading nationally available HYSAs paid roughly 4.0% to 4.2% APY, with a few promotional or capped accounts advertising up to 5%. Bankrate’s June 2026 survey topped out around 4.10%, against an FDIC national savings average near 0.38% — the same default-versus-best gap, in a different wrapper.

The cost is friction and timing. Moving money from your brokerage to an outside bank is an ACH transfer that typically clears in one to three business days, and pulling it back to invest takes the same. That delay is fine for a true cash reserve but awkward for cash you might want to deploy into the market on short notice. HYSA rates are also variable and drift down when the Fed cuts, just as money market yields do, so a headline APY is a snapshot, not a lock. For a deeper comparison of which wrapper wins for which dollar, see where your dollars earn the most.

Alternative 3: Treasury bills

For cash you can commit for a set window, a Treasury bill bought through your broker or directly at TreasuryDirect pays a market rate and is backed by the full faith and credit of the US government. In early June 2026 the four-week T-bill yielded about 3.7% and the thirteen-week about 3.7% as well, broadly in line with the strongest money market funds. T-bills also share the money market Treasury funds’ state-tax advantage — their interest is exempt from state and local income tax, which can add a meaningful amount of after-tax yield in a high-tax state.

The catch is liquidity. A T-bill locks your principal until maturity (you can sell early on the secondary market, but at the prevailing price, which can be below face value). That makes a bill the right tool for cash with a known horizon — money you will not touch for a month or a quarter — and the wrong tool for the float you might invest next week. When the yield curve is flat, as it was in mid-2026, there is little extra yield to be had from locking up cash, so for most idle brokerage balances a money market fund’s daily liquidity is worth more than a bill’s marginal pickup. Our side-by-side on T-bills versus a HYSA versus a money market fund walks through exactly when each one wins.

Alternative 4: The “premium” opt-in sweep

Some brokers offer a higher-yield sweep that you have to switch on, sometimes behind a paid tier. Robinhood is the clearest example: its cash sweep pays a competitive rate for Gold subscribers (a few dollars a month) and a much lower rate for the free tier. For a Gold member the opt-in sweep can match a money market fund and runs automatically, with no buy-and-sell step. The arithmetic is simple — if the yield uplift on your cash balance clears the subscription fee, the upgrade pays for itself; below a certain balance it does not. The general rule holds across brokers: read what the premium or opt-in sweep pays versus the default, because the broker has every incentive to make the better rate the one you have to choose.

The dollar cost, made concrete

The reason any of this matters is the compounding gap on real balances. Suppose you keep $50,000 of cash in a brokerage on a default bank sweep paying 1.5%. That earns $750 a year. The same cash in a money market fund at 3.4% earns $1,700 — a difference of $950 annually for one fund purchase. If your default is an older sweep paying 0.5%, the gap on that same $50,000 is about $1,450 a year. Scale it: at $200,000 of idle cash, a 1.9-point spread is roughly $3,800 a year, every year you leave it parked. The decision is not about chasing a few basis points — it is about not leaving a four-figure sum on the table for the sake of a setting you never changed.

How to choose, in one pass

• Cash you may invest within days — keep it in a money market fund inside the broker (VMFXX, SPAXX, or SWVXX). Maximum liquidity, near-top yield, no transfer.
• A true savings reserve you won’t deploy soon — a high-yield savings account, for the FDIC guarantee and a slightly higher headline APY.
• Cash with a known horizon (a month, a quarter) — a Treasury bill of matching maturity, especially if you live in a high-tax state.
• A broker with a paid premium sweep — run the fee-versus-uplift math; switch it on only above the break-even balance.

For the underlying mechanics of how the sweep moves your money and why the default is set the way it is, read the companion piece on the brokerage cash sweep and the glossary entry on cash sweep. The action here is small and the payoff is durable: check what your idle cash is actually earning, compare it against the alternatives above, and move it once.

Sources

• Schwab Intelligent Portfolios Sweep Program rate (3.29% effective September 1, 2026; set monthly to the Schwab Government Money Fund – Sweep Shares seven-day yield; this is the robo-advisor program, not the standard brokerage Bank Sweep): Charles Schwab — SIP Sweep Program Current Interest Rates. Standard Bank Sweep tracked at 0.01% (August 27, 2026): Brokerage-Review — Charles Schwab cash sweep.
• Schwab money market fund yields, including SWVXX: Schwab Asset Management — Money Fund Yields.
• Fidelity SPAXX seven-day yield (3.27% as of May 31, 2026) and money market fund pricing: Fidelity — Money Market Funds Daily Pricing.
• Vanguard VMFXX yield and fund profile: Vanguard — VMFXX.
• Daily Treasury bill rates (4-week and 13-week, early June 2026): U.S. Department of the Treasury — Daily Treasury Bill Rates.
• High-yield savings account rates for June 2026 (top rates near 4.10% APY; FDIC national average near 0.38%): Bankrate — Best High-Yield Savings Accounts.
• FDIC deposit insurance and SIPC coverage scope for bank sweeps versus money market funds: FDIC — Deposit Insurance and SIPC — What SIPC Protects.