How does a brokerage cash management or sweep account work?

A cash management or sweep account at a brokerage automatically moves your uninvested cash into an interest-earning place rather than letting it sit idle. Depending on the firm, the cash is "swept" either into a money market fund or distributed across a network of partner banks for FDIC coverage that can exceed the usual $250,000 single-bank limit. These accounts often add features like debit cards, bill pay, and ATM access, so they can function much like checking. The yield is frequently competitive with high-yield savings. Read the disclosures carefully: a bank-sweep program is FDIC-insured, while a money market fund is a security, not a bank deposit, so it isn't FDIC-insured (though it's still considered low-risk). Either way it beats leaving cash earning nothing in a basic brokerage settlement account.