"Cash sweep: battleground for yield"
BankRate surveys 20 brokerages (with assistance from Crane Data's Brokerage Sweep Intelligence) on their cash sweep options. The article says that just 4 of the 20 "automatically sweep customers' excess cash into higher-yielding money market mutual funds. The result is that brokerages are able to borrow billions from customers while paying little more than 0.5 percent interest." It adds, "The average annual yield paid on amounts up to $100,000 is 0.56 percent in these [FDIC insured] cash accounts, according to Bankrate's survey. Compare that with the average 2.78 percent paid by the four institutions -- Banc of America, Muriel Siebert, ShareBuilder and Vanguard" that use money funds. (See rates from BankRates Cash Sweeps Study here.) See also, BankRate's "Cash sweep controversy spurs lawsuit".
