Sweep account.

In plain English

A sweep account is an automatic feature, common at brokerages and some banks, that moves uninvested cash where it can earn more or be better protected. At day's end, money sitting idle in your account is 'swept' into a destination such as a money market fund or a network of FDIC-insured partner banks, and it is available again when you trade or spend. The goal is to keep your cash from sitting at zero interest. Where the swept cash lands determines whether it is FDIC-insured (at a partner bank) or instead held in an investment like a money market fund, which is not FDIC-insured.

01Why it matters

A sweep account quietly earns you interest on cash that would otherwise sit idle, but the destination decides whether that cash is FDIC-insured, which matters if you keep large balances parked.

02The math, step by step

You sell some stock and 8,000 dollars in cash lands in your brokerage account. Overnight, the sweep feature moves it into a bank-sweep program spread across FDIC-insured partner banks, where it earns interest and stays insured up to 250,000 dollars per bank, per ownership category. When you buy a new investment, the cash is swept back automatically to settle the trade.

03What this is NOT

04Receipts

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