Some brokerages like Ameritrade and soon to be Scottrade will "sweep" any cash balance and deposit it into certain banks to gain FDIC insurance and to earn interest. They won't just let it sit and leave it alone. I had Ameritrade years ago and they did this and I found it to be very annoying and it was a nightmare. It caused delays in me withdrawing cash and making some trades. I just hated it. So I switched to Scottrade because at the time they didn't do stuff like this. They still paid interest on any cash balance but didn't do any of that "sweep" crap. They just left it alone so it was a cash balance in your brokerage account. Now Scottrade has informed me they are implementing a "sweep" program they call their "bank deposit program". UGGGGHHHH. I'm not doing that crap again, time to switch brokerages.
For anyone who has a Fidelity brokerage account, does Fidelity brokerage account do anything like this type of sweep program for idle cash balances? Hopefully not as they have cheap commissions at a flat $7.95 per trade.|||Yes Fidelity sweeps cash into their money market account
Scottrades, like most firms are doing away with "bank" sweeps since they generate very little interest compared to "in-house" sweeps and the firm does not have full control over money movements. Whenever banks are involved in any type of money movement it's usually screwed up.
Most in-house sweeps, since they are part of an account balance are covered by SIPC and most major firms have additional insurance, usually up to one million dollars.
I have accounts at both Fidelity %26amp; Scottrade, "in-house" sweeps are much better
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