Schwab Bank Sweep vs. SWVXX: What Idle Cash Costs You at Schwab

Rates move. Fund yields are Schwab’s 7-day yields for October 6, 2026; the cash rate is from Schwab’s public rate page on October 7, 2026.

At Fidelity, new cash lands in a money market fund by default. At Schwab it lands in a bank deposit, and the rate on that deposit is Schwab’s choice. Moving it to a money fund takes one trade, though a fund settles and covers purchases differently from sweep cash.

Where your cash goes at Schwab

Schwab’s cash features disclosure names three options: Bank Sweep, Schwab One Interest and a money fund sweep. Most accounts are eligible only for the first two. Accounts approved for options trading or a pledged asset line, among others, get Schwab One Interest instead of the Bank Sweep. The two pay the same rate, and Schwab says it expects them to stay the same.¹ The money fund sweep is closed to most accounts: Schwab “has eliminated sweep money market funds as a cash feature for most new and existing accounts,” and its other money funds are “not available on a sweep basis.”²¹

Schwab sets the rate. For Schwab One Interest the disclosure says rates “are set at our discretion and can change daily” and “can be reduced to zero in certain circumstances.” For the Bank Sweep it says rates may be set “as low as possible consistent with prevailing market and business conditions.”¹ The rates step up across six balance tiers, from under $25,000 to $1 million and above, and the higher tiers require large uninsured balances at Schwab Bank. The tier rates are shown only after you log in at schwab.com/sweep. The one public figure is on Schwab’s cash investments page, which on October 7, 2026 listed “uninvested cash in your Schwab brokerage account” at 0.01% APY without naming a tier.³

What the sweep costs

On October 6, 2026, SWVXX, the Schwab Prime Advantage Money Fund, yielded 3.70% and SNSXX, the Schwab U.S. Treasury Money Fund, 3.55%. Both charge 0.34%, which the yields already reflect, and neither has a minimum.⁴ Against a 0.01% sweep rate, the difference before tax is about $1,800 a year on $50,000, $890 on $25,000 and $180 on $5,000.

After tax the gap stays large. For one modeled saver in California at 32% federal and 9.3% state, moving $50,000 from the sweep to SNSXX adds about $1,200 a year, because SNSXX’s income is almost all Treasury interest that California does not tax. SWVXX adds about $1,080 for the same saver. With no state income tax, SWVXX adds about $1,260 and SNSXX $1,200. Which fund to pick is a smaller question, covered in SNSXX vs. SWVXX.

Run your own numbers

Type in your own sweep rate if your tier pays more than 0.01%. The calculator taxes sweep interest like any bank interest and applies SNSXX’s 2025 state exemption.

Why Schwab pays so little on sweep cash

Swept brokerage cash is a large share of Schwab’s funding. At the end of 2025, deposits swept from brokerage accounts were $232 billion of the $256 billion its banks held. That year Schwab’s banks paid an average 0.23% on money market and other savings deposits, while its interest-earning assets yielded 3.47%. Net interest revenue was 49% of Schwab’s total net revenues.⁵ The 10-K describes the pricing directly: management expects to adjust the rates it pays clients “at some fraction of any movement in short-term rates.”⁵ In the second quarter of 2026 its net interest margin was 3.00%.⁶

The same bank pays more when Schwab chooses to. Cash in Schwab Intelligent Portfolios, the robo-advisor, earned 3.47% APY from October 1, 2026.⁷ That program has its own history: in 2022 Schwab paid $187 million to settle SEC charges that its robo portfolios held cash in amounts “pre-set so that Respondents’ affiliate bank would earn at least a minimum amount of revenue from the spread.”⁸

Schwab is not alone. In January 2025 the SEC fined Wells Fargo and Merrill Lynch a combined $60 million over advisory-account sweep programs, noting that the gap between their sweep rates and other cash options “at times grew to almost 4 percent.”⁹ Several 2024 class actions over Schwab’s own sweep rates were consolidated in federal court in Los Angeles; the case was still open in October 2026.¹⁰

How to move the cash

Buy SWVXX or SNSXX like any mutual fund. Schwab charges no transaction fee on its own money funds and requires at least $1 per trade.² A few mechanics are worth knowing before you do.

• Dividends start the next business day. A purchase accepted by the fund’s close, generally 4 p.m. Eastern, earns dividends from the next business day; a sale earns that day’s dividend. Dividends accrue daily and are paid monthly.¹¹
• Sales take about a day to settle. Schwab says selling money fund shares “generally takes one business day to settle and access your cash.”¹² To buy a stock with the money, sell the fund in the same session; both sides then settle on the next business day.
• The funds are not sold automatically to cover a trade. In a margin account, buying a stock while your cash sits in a purchased money fund turns the purchase into a margin loan.¹³ Sweep cash, by contrast, pays down a margin balance automatically.
• Nothing moves new deposits for you. Every deposit, dividend and sale lands in the sweep, so a monthly check of the cash balance is part of the routine.

A Treasury bill ETF such as SGOV is the other route. It trades commission-free online at Schwab and settles the next business day like a stock.¹⁴ It trades during market hours at a price that moves slightly, which suits money you buy in larger, less frequent amounts. The trade-offs are in SWVXX vs. SGOV.

FDIC, SIPC and what each one covers

The sweep’s one structural advantage is FDIC insurance. Schwab spreads sweep cash across up to three program banks at $249,000 each, $747,000 for an individual account assigned three banks, and puts anything above that at Schwab Bank “without limit even if the amount exceeds the FDIC insurance available to you.” Accounts still on the single-bank version get one bank. Schwab can change the banks and their order without advance notice.¹

Money fund shares are covered differently. SIPC protects them as securities up to $500,000 if Schwab itself fails, and Schwab carries extra coverage from Lloyd’s of London with a $600 million aggregate limit across all clients.¹⁵¹ SIPC does not cover a fall in the fund’s value. For SNSXX that risk rests on U.S. Treasuries. For SWVXX it rests on bank and corporate debt, and the fund can charge a fee of up to 2% on sales in a crisis, which is the main reason to prefer SNSXX for an emergency fund.¹¹

When leaving cash in the sweep makes sense

Small balances cost little. At October’s rates $2,000 left in the sweep forgoes about $70 a year before tax, a reasonable price for keeping trades and withdrawals simple. Cash you will spend or invest within a few days is in the same position, since a money fund purchase earns nothing on the first day.

The sweep is also the right home for money whose purpose is FDIC insurance, up to the coverage your account actually has. Above that limit the extra sits uninsured at Schwab Bank, so a Treasury money fund or Treasury bills give better protection and, at October’s rates, more yield.

Key takeaways

• Schwab defaults cash to a bank deposit, and its public rate page listed uninvested brokerage cash at 0.01% APY on October 7, 2026.
• Its own money funds yielded 3.55% to 3.70% the day before, with no fee to buy or sell and no minimum.
• At those rates, $50,000 in the sweep gives up about $1,800 a year before tax.
• Schwab will not move it for you. Buy SNSXX or SWVXX after each deposit, and sell in the same session as any purchase.
• Keep in the sweep what covers near-term trades and withdrawals, and any balance you want FDIC-insured within your coverage limit.

How Summitward helps

Frequently asked questions

What is the Schwab Bank Sweep rate?

Schwab publishes tier rates only to logged-in clients at schwab.com/sweep. Its public cash investments page listed uninvested brokerage cash at 0.01% APY on October 7, 2026. Rates are set at Schwab’s discretion and can change daily.

Can Schwab sweep my cash into SWVXX automatically?

Not for most accounts. Schwab ended money fund sweeps for most new and existing accounts, and says its purchased money funds, including SWVXX and SNSXX, are not available on a sweep basis. Some retirement and managed accounts still have a money fund sweep; your account’s cash feature is shown on its balances page.

Is SWVXX FDIC insured?

No. It is a mutual fund, covered by SIPC as a security if Schwab fails but not against a loss in the fund’s value. The Bank Sweep is FDIC-insured up to $249,000 per program bank.

Is Schwab One Interest different from the Bank Sweep?

It holds the cash as a credit balance with Schwab’s broker-dealer instead of at the program banks, so SIPC covers it, up to $250,000 of cash, instead of the FDIC. Schwab pays the same rate on both.

Does selling a Schwab money fund trigger a tax bill?

No. SWVXX and SNSXX hold a $1.00 share price, so a sale realizes no gain. The dividends are taxed as ordinary income in the year you receive them.

Related guides

• SWVXX vs. SGOV: whether sweep cash should go to a money fund or a Treasury bill ETF.
• SNSXX vs. SWVXX: which Schwab money fund keeps more after tax.
• Best Fidelity Core Position: the Fidelity version, where the default is a money fund and the sweep is an option.
• Where to Park Your Cash: money funds, Treasury ETFs, bank accounts and CDs side by side.
• What Percent of SGOV Is State Tax Exempt?: 2025 state-exempt percentages for 15 cash funds.
• Emergency fund sizing: how much cash to hold before deciding where to hold it.

Sources

1. Charles Schwab & Co., “Cash Features Program Disclosure Statement,” October 2026 (eligibility, rate-setting language, tier breakpoints, program banks and deposit limits, SIPC and excess SIPC). schwab.com
2. Charles Schwab, “Money Market Funds” (sweep funds eliminated for most accounts; no transaction fees; $1 minimum per trade), read October 6, 2026. schwab.com
3. Charles Schwab, “Cash investments,” rates as of October 7, 2026 (uninvested cash in a brokerage account, 0.01% APY). schwab.com
4. Schwab Asset Management, SNSXX and SWVXX fund pages, 7-day yields as of October 6, 2026. SNSXX, SWVXX
5. The Charles Schwab Corporation, Form 10-K for 2025 (revenue table, p. 32; rate-setting, p. 33; average balances, p. 34; deposits swept from brokerage accounts, Note 12; savings deposit rates, p. F-6). sec.gov
6. The Charles Schwab Corporation, Form 10-Q for the quarter ended June 30, 2026 (net interest margin, p. 10). sec.gov
7. Charles Schwab, “Schwab Intelligent Portfolios Sweep Program current interest rates” (3.47% APY effective October 1, 2026). schwab.com
8. SEC, In the Matter of Charles Schwab & Co., Inc., et al., File No. 3-20897, June 13, 2022, and press release 2022-104. sec.gov (PDF)
9. SEC, press release 2025-16, January 17, 2025 (Wells Fargo and Merrill Lynch cash sweep settlements). sec.gov
10. Loughran et al. v. The Charles Schwab Corporation et al., No. 2:24-cv-07344 (C.D. Cal.), consolidated with Saunders and Davis, October 22, 2024; docket. courtlistener.com
11. Charles Schwab Family of Funds, Schwab Taxable Money Funds prospectus, April 28, 2026 (share price and dividend timing, liquidity fees). sec.gov
12. Charles Schwab, “What Are Money Market Funds and How Do They Work?” September 2026. schwab.com
13. Charles Schwab, “Margin Loans and Purchased Money Market Funds,” November 4, 2025. schwab.com
14. Charles Schwab, pricing (online trades of U.S. exchange-listed ETFs without commission) and “What to Know About T+1 Settlement,” May 14, 2026. schwab.com
15. Charles Schwab, “SIPC” account protection page ($500,000 limit including $250,000 for cash; excess SIPC aggregate). schwab.com

Author disclosure

I have no relationship with Schwab. Every rate and figure is Schwab’s own, from its public pages, disclosures and SEC filings, on the dates given. I could not see logged-in tier rates; if your statement shows a higher sweep rate, use it in the calculator. Nothing here is tax advice.