What is a brokerage cash sweep and why does the interest rate matter?

A cash sweep is the program that automatically moves your uninvested brokerage cash into an interest-bearing place — usually a money market fund or a bank-deposit program — so it earns something while waiting to be invested. The rate matters because the default sweep options vary enormously: some brokers sweep cash into a bank account paying a fraction of a percent, while a money market fund at the same broker might pay close to the federal funds rate. On idle cash of several thousand dollars, that gap can mean hundreds of dollars a year. Check what your broker's default sweep is and whether you can manually move cash into a higher-yielding money market fund instead. The lesson: don't let large cash balances sit in a low-yield default sweep — either invest the money or position it where it earns a competitive rate.