Features & Services Section

Introduction to the Bank Sweep feature

Introduction to the Bank Sweep feature

With the Bank Sweep feature, free credit balances are swept from your client’s brokerage account to one or more Schwab-Affiliated Banks Tooltip to earn interest. Based on the net cash debit or credit amount created by client deposit, withdrawal, and/or trading activity in the brokerage account for any given business day, cash automatically sweeps into and out of deposit accounts at the applicable FDIC-insured Affiliated Bank(s). Funds deposited at the Affiliated Banks are insured, in aggregate, up to $250,000 per Affiliated Bank, per account holder, for each account ownership category, by the FDIC. Bank Sweep is the default cash feature for most new domestic accounts.

Bank Sweep is available for most domestic Schwab One and IRA accounts. Review the Cash Features Disclosure Statement  for additional information.

Bank Sweep for Benefit Plans is available to the following business retirement plans, and participant accounts covered by ERISA (Employee Retirement Income Security Act of 1974):

  • PCRA (Personal Choice Retirement Account)
     
  • CRA (Company Retirement Account)/Pension Trust
     
  • Schwab Individual 401(k) Plan
     
  • Schwab Personal Defined Benefit Plan
     
  • Schwab QRP/Keogh
     
  • Nonqualified Retirement Plan

Bank Sweep is not available for the following account types:

  • Managed Accounts (except for Managed Account Marketplace accounts)
     
  • International Accounts
     
  • Schwab Charitable Accounts
     
  • Charles Schwab & Co., Inc. Pledged Accounts*

*Associated with a Schwab Bank Pledged Asset Line (PAL).

With the multiple-bank version of Bank Sweep, clients with cash balances greater than $250,000 are eligible for extended FDIC insurance coverage, as deposits at each Affiliated Bank are insured separately by the FDIC. Additional Schwab-affiliated Banks could be added to further extend the FDIC coverage available to clients.

Eligible accounts opened after February 16, 2018, default to the multiple-bank version of the Bank Sweep. Existing clients who have the single-bank version of Bank Sweep will gradually be converted to the enhanced version.

The multiple-bank version of Bank Sweep extends FDIC coverage by spreading a client’s uninvested cash across Schwab’s multiple Affiliated Banks which include Charles Schwab Bank, SSB, Charles Schwab Premier Bank, SSB, and Charles Schwab Trust Bank, Members of FDIC. From a client’s perspective, the cash awaiting investment is deposited at their Primary Bank up to a maximum of $249,000, with any additional assets then deposited to their Secondary Bank up to that bank’s maximum of $249,000 – thereby extending the total FDIC insurance coverage (amounts are set to $249,000 per affiliated bank to allow for any additional accrued, but not yet posted, interest during the statement period to also be eligible for FDIC insurance coverage). 

Any cash that a client has in excess of $498,000 will be deposited with an Overflow Bank Tooltip . Schwab Bank is designated as the Overflow Bank for Bank Sweep for the foreseeable future. Funds deposited at the Overflow Bank will be uninsured by the FDIC to the extent they exceed the aggregate $250,000 coverage limit.

Bank Sweep Image

In the hypothetical example, a client with $600k cash in a Schwab individual brokerage account will have their first $249k deposited in the Primary Bank, the next $249k will be deposited in a Second Bank and the remaining $102k to Charles Schwab Bank as the Overflow Bank. Up to $500k will be FDIC insured including up to $1000 of accrued (but not yet posted) interest at each Affiliated Bank. Balances are not FDIC insured to the extent they exceed the maximum coverage limit for deposits at the overflow bank.

Are all clients eligible for the Bank Sweep feature?
Eligibility for each cash feature (including Bank Sweep) is based on the registered ownership and the type of account. Not all account registrations or account types are eligible for all cash features. Some account registrations and account types will be eligible for only one cash feature. See the appropriate account application and the Cash Features Disclosure Statement for eligibility details.

Is there an enhanced multiple-bank version of Bank Sweep for retirement plans, such as PCRA, CRA, and 401(k)?
Yes. All accounts with the Bank Sweep for Benefit Plans feature have the multiple-bank version of that feature.

When do sweeps occur?
Cash awaiting investment (free credit balance) sweeps to the applicable Affiliated Bank(s) after close of business and begin earning interest on the following business day.* A Business Day is defined as any Monday through Friday that is not a Federal Reserve Bank or New York Stock Exchange holiday.

Funds sweep out of the Affiliated Bank(s) into the brokerage account after close of business to cover any cash need in the account.

* There are some Schwab Brokerage accounts that sweep cash weekly. If a client prefers daily sweeps, the Update Your Schwab or Schwab One Account form can be completed to convert an existing Schwab Brokerage account to a Schwab One account.

What is the current yield for the Bank Sweep feature?
For current interest rate and yield information, see Cash Investment Yields.

Introduction to cash and cash investments

Cash Investment Yields

Cash Features Disclosure Statement