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What is Cash Sweep?

Views 18KJun 4, 2024
what is cash sweep program

Key takeaways:

  • Cash Sweep is a financial service that allows investors to earn interest on uninvested funds in their brokerage account.

  • Moomoo Financial Inc. offers a Cash Sweep program in collaboration with program banks, with a 5.1%* APY for qualified users (Non-promo rate is 0.3%).

  • Cash Sweep programs don't impact the purchasing power of brokerage accounts, automated operations.

  • Qualified users can join (and exit) moomoo's Cash Sweep program at any time using the moomoo app.

  • The uninvested funds swept to program banks are insured by the FDIC, subject to FDIC coverage limits.

What is Cash Sweep?

A cash sweep is a program that automatically moves excess uninvested funds from your brokerage account to earn interest while you plan your next moves. It's like having a separate bucket where any extra money from your main account gets poured in. Using cash sweep, you can ensuring that your money isn't just sitting idle and losing value, but rather still accumulating interest and growing over time.

Cash sweep programs are offered by participating brokerages and the swept money at the program banks are insured by the FDIC. This ensures that your money is secured, up to a certain amount.

How does Cash Sweep work?

Cash Sweep, offered by Moomoo Financial Inc., is a cash management feature designed to help you enhance the potential of your excess cash. When the uninvested cash is automatically swept or moved from your securities account into a partnering bank, you can earn interest on your money. It's a simple way to generate extra income without any hassle.

Our extensive list of partnering banks includes Bank United, Cadence Bank, EastWest Bank, and Preferred Bank. Please note that the list is subject to updates.

Looking for a specific bank? You have the option to filter out banks and choose the one that suits your needs.

Join Cash Sweep today and start making more on your uninvested cash — available to qualified US taxpayers only.

Advantages of Cash Sweep

Cash Sweep helps you earn interest on your uninvested cash. Beyond this, Cash Sweep boasts several additional advantages that can make it an effective choice to consider for managing your uninvested funds:

  1. Your purchasing power is unaffected: swept funds at program banks are still part of your securities account — so don't worry, your buying power won't be affected. This means your purchasing power remains intact, ensuring that you can still take advantage of potential investing opportunities as they arise.

  1. It's all conveniently automated: If your securities account dips into the negatives, funds can be automatically moved from the bank to help cover the deficit. And when you have cash in the account, it can be automatically swept to program banks to earn interest. This automation simplifies management of your idle brokerage funds. Users can also leave the Cash Sweep program at any point. If you decide to exit the program, you can simply unenroll from the program at any time and you will not be charged.

  1. Your swept funds are protected: Users' funds at the partner bank are protected by the Federal Deposit Insurance Corporation (FDIC), which provides insurance coverage up to $1 million (or $250,000 per bank) at partner banks. Subject to coverage limits, see below disclosures for more info.

moomoo cash sweep program

When should I consider Cash Sweep?

Getting involved in Cash Sweep could be a great option for when you've got some extra cash sitting uninvested, in your securities account, not doing anything.

Fund your moomoo brokerage account, and any cash that is sitting uninvested in the account after you enroll in the Cash Sweep Program, will automatically be swept into an account at the program bank that earns interest.

Don't want to spend time managing your cash? Our automated system has got you covered, optimizing your surplus cash without you having to constantly watch over it.

Moomoo's Cash Sweep Program can work effectively when you've got spare cash waiting around, not immediately headed for investments, and you want to potentially boost up its earnings while keeping it handy for when you're ready to make you next moves.

When it comes to deciding whether to join moomoo's Cash Sweep Program, it's crucial for each user to consider their individual financial goals and risk appetite. Understanding what you're aiming for financially and how comfortable you are with the movement and management of your idle cash can make a world of difference in determining if this program aligns with your needs.

Other considerations:When evaluating cash sweep programs, consider other key factors such as public information about the a program bank's health, which can be accessed on the FDIC's website. Review the compensation arrangement between the bank and your broker-dealer, understanding how fees are structured. Explore the interest rate on your uninvested cash in the bank sweep program, taking note of potential alternatives with varying costs, benefits, and risks. Furthermore, the cash swept into bank accounts through the broker-dealer's sweep program is FDIC-insured up to $1million or $250,000 per customer at each participating bank. It's crucial to monitor the amount your broker-dealer sweeps into each bank to ensure that any cash exceeding the $250,000 limit is not left uninsured by the FDIC.

How to join Cash Sweep on moomoo

Qualified users can join Cash Sweep with just a few steps:

  1. Open the US securities account page of the moomoo app.

  2. Simply tap "Up" on the right side of the "Cash" tab or the "Cash Sweep" portal below.

  3. Start the Cash Sweep procedures and activate your interest rate.

  4. Enjoy earning interest on your uninvested cash!

And if you ever want to leave the program, you can do so at any time. If you choose to opt out, all you have to do is tap the "Close" button.

*5.1% APY eligibility: All new user brokerage accounts. Existing user brokerage accounts must refer a friend to deposit $100+ OR deposit/transfer $500 themselves to access the higher rate (If conditions are not met, rate is 0.03%).The Moomoo Financial Inc. (MFI) Cash Sweep Program is a feature of your brokerage account and should not be viewed as a long-term investment or savings option. Interest is earned on the uninvested cash swept from your MFI brokerage account to program banks. Program banks then pay interest on your swept cash, minus any fees paid to MFI. The APY might change at any time at the program banks' or Moomoo Financial's discretion. Additionally, any fees Moomoo Financial receives may vary and is subject to change. Neither Moomoo Financial Inc. nor any of its affiliates are banks. For more information on the cash sweep program, visit moomoo.comWhen the uninvested cash in your brokerage account is swept to deposit accounts at program banks, it becomes eligible for FDIC insurance up to $1 million or $250,000 per program bank, inclusive of any other deposits you may already hold at the bank in the same ownership capacity, which may impact how much is covered. You are responsible for monitoring the total amount of deposits that you have with each Program Bank, in order to determine the extent of FDIC deposit insurance coverage available to you. MFI is not responsible for any insured or uninsured portion of the Deposit Accounts or any other deposits at the program banks.Please note that until funds are swept to a program bank, they are held in your brokerage account which is protected by SIPC. Once funds are swept, they are no longer held in your brokerage account and are not protected by SIPC. However, these funds are eligible for FDIC insurance through the Program Banks subject to FDIC insurance coverage limits. This content is for informational and educational use only and is not a recommendation or endorsement of any particular investment or financial strategy. Information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. In the U.S., investment products and services on Moomoo are offered by Moomoo Financial Inc., Member FINRA/SIPC.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy.

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