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When you keep cash in your brokerage account without investing it, you miss out on potential returns from the market. This might seem like a missed chance, especially since banks currently offer some of the highest interest rates in years.
Some investment platforms have features that let your cash earn interest even when not invested. These platforms don’t pay the interest themselves; instead, they put your idle cash into an FDIC-insured bank account. This setup called a cash sweep program, allows you to earn interest while keeping your money available for investment. Ideally, a good sweep program is convenient, doesn’t charge fees, and has simple account requirements. If you plan to keep some cash uninvested, here are some investment accounts to consider.
Best Investment Platforms for Handling Uninvested Cash
| Platform | Account Minimum | Annual Percentage Yield | Monthly Maintenance Fee |
| Betterment | $0, $10 minimum to start investing | 4.75% | $0 |
| Interactive Brokers | $0 | 4.83% for IBKR Pro customers with AUM of $100,000, 3.83% for IBKR Lite customers | $0 |
| Wealthfront | $500 for the robo-advisor, $1 for stocks | 5.00% (5.50% when you refer a friend) | $0 |
| Empower | $100,000 for wealth management, $0 for individual investment accounts | 4.70% | $0 |
| Fidelity | $0 | 4.99% brokerage account, 2.72% cash management account | $0 |
| Robinhood | $0 | 5.0% for Gold customers, 1.5% for regular customers | $5 for Gold customers, $0 for regular customers |
BETTERMENT
Key Specs
- Account Minimum: $0, $10 minimum to start investing
- Fees: For investment plan accounts with at least $20,000 or monthly deposits of $250 or more, there’s a 0.25% annual fee. Accounts with lower balances pay a $4 monthly fee. Optionally, accounts with at least $100,000 in assets can pay a 0.15% annual fee to unlock premium features, including access to certified financial planners. For accounts with $2 million or more, there’s a fee discount of 0.10%.
Overview
If you want help managing your investments, Betterment is a robo-advisor that can assist you. You choose your investment strategy, and Betterment’s automated system builds a portfolio of stocks, bonds, and other assets based on your goals. Betterment charges a flat fee of $4 per month or 0.25% of accounts valued at $20,000 or more. This fee is much lower than the 1% or higher annual fee charged by human advisors.
Betterment also provides a high-yield cash account called Cash Reserve to complement its robo-advisor services. Cash Reserve offers a high annual percentage yield (APY) of 4.75% as of December 2023, with no minimum balance required to start earning interest. This rate applies to all account balances, and the FDIC insures your funds for up to $2 million.
When you’re prepared to invest, you can transfer your cash to your Betterment investment portfolios. Additionally, Betterment provides a fee-free checking account. You can transfer cash to this account with a debit card or for ATM withdrawals. However, this checking account doesn’t earn interest unlike the Cash Reserve account.
Pros & Cons
Pros
- Offers a high cash interest rate
- No minimum balance is required to earn interest.
- Automated investment management by robo-advisor
- Wide range of investment portfolios
- Simple account setup
Cons
- Limited investment choices
- Portfolios solely consist of ETF investments.
- Doesn’t offer margin trading
- No customer service is available on weekends
INTERACTIVE BROKERS
Key Specs
- Account Minimum: $0
- Fees: IBKR’s TWS Lite offers $0 commissions for trading stocks and ETFs, while active traders using TWS Pro can access advanced features like order routing at low costs based on trading volume. Options trading on TWS Lite costs $0.65 per contract, and futures trading is $0.85 per contract.
Overview
Interactive Brokers is a great choice for serious traders and investors. Its platform features advanced technology, research tools, and access to over 150 markets. With its IBKR Lite program, you can trade stocks and ETFs without paying commissions. If you want more trading options and better order execution, you can use its IBKR Pro platform, which has low commissions.
Interactive Brokers has a cash program that serious investors might like. As of December 2023, it pays 3.83% interest for IBKR Lite accounts and 4.83% for IBKR Pro accounts on balances over $10,000. The rates may change, but IBKR Lite accounts earn 1% less than IBKR Pro. You don’t have to do anything to start earning interest, but you can join another program to get more FDIC insurance on your cash balance: $2.5 million on top of the regular $250,000 coverage.
Interactive Brokers requires a large account balance to get its best interest rate. If your brokerage account balance exceeds $100,000, you earn interest on all your uninvested cash. However, if your account value exceeds $100,000, Interactive Brokers won’t pay interest on your first $10,000 of uninvested cash. So, if you have an $11,000 cash balance, only $1,000 would earn interest.
Pros & Cons
Pros
- Earns an interest rate on cash sitting idle
- Advanced and customizable broker platform
- Excellent order execution
- Wide variety of markets and investment choices
- Affordable margin interest rates
Cons
- Limits interest earnings for accounts under $100,000
- Learning the platform might feel challenging.
- Complex fee system
- Fees apply for IBKR Pro trades.
- SmartRouting is not offered for IBKR Lite accounts.
WEALTHFRONT
Key Specs
- Account Minimum: $500 for the robo-advisor and $1 for stocks
- Fees: 0.25% for most accounts; no trading commission or fees for withdrawals, minimums, or transfers
Overview
Wealthfront is a top-rated robo-advisor that helps you invest your money automatically. It creates a portfolio based on your investment goals and preferences, including US stocks, foreign stocks, bonds, and real estate. You answer some questions about your goals, and Wealthfront does the rest, building a portfolio that suits you. Plus, you can trade stocks without paying any commissions.
As of December 2023, Wealthfront’s Cash Account offers a very competitive interest rate of 5.00% APY (5.50% when you refer a friend). This high rate applies to all the cash you have that’s not currently invested. You can deposit no minimum or maximum amount of cash and earn interest on your cash until you decide to invest it. Plus, your cash is insured for up to $8 million (or $16 million for joint accounts) by the FDIC through the banks Wealthfront partners with.
The Cash Account at Wealthfront has no fees or limitations. You can freely transfer money in and out whenever needed and get a debit card to make purchases.
Pros & Cons
Pros
- Great interest rate for money not invested
- No fees or account conditions to earn interest
- Wide variety of robo-advisor investment choices
- Provides complimentary financial planning resources
- Automatic daily tax-loss harvesting
Cons
- No human advisors are available.
- Limited investment options beyond stocks and the robo-advisor
- Limited chat and customer support
- No fee reduction or additional support for larger accounts.
EMPOWER
Key Specs
Account minimum: $100,000 for wealth management, $0 for individual investment accounts.
Fees: 0.89% to 0.49% for accounts over $1 million
Overview
Empower blends robo-advisor tech with personal financial advice. With a $100,000 balance, you get rebalancing, tax help, and advisor chats. No initial balance is needed for independent investing.
Empower’s Personal Cash account doesn’t need a minimum balance. It offers a competitive APY of 4.70% with no fees. To earn interest, transfer cash from any Empower investment account; it won’t happen automatically.
Empower provides up to $5 million in FDIC insurance for your balance. You can freely transfer money from the cash account, but there’s a daily withdrawal limit of $100,000. Empower also offers free financial planning tools such as a budget planner and net worth calculator to help you manage your money.
Pros & Cons
Pros
- The cash account offers a high interest rate.
- No minimum balance is needed to earn interest.
- Blends automated investing with human advisors.
- Offers a variety of investment strategies and portfolios.
- Provides complimentary online financial management tools.
Cons
- Requires a minimum account balance of $100,000 for the robo-advisor service.
- You need to move funds to the cash account to earn interest.
- Fees are higher compared to other robo-advisors.
- Account setup requires a phone call.
- The mobile app lacks some features found on the desktop version.
FIDELITY
Key Specs
- Account Minimum: $0
- Fees: Stock and ETF trades are free, while options trade costs $0 plus $0.65 per contract.
Overview
Fidelity is a major investment broker known for its affordable options. No minimum account balance is needed; they don’t charge stock and ETF trade fees. They also have low administrative fees. Their platform is easy for beginners and offers many tools for experienced investors. That’s why it’s rated the best overall broker in our Best Online Brokers and Trading Platforms review.
Fidelity’s program for uninvested cash is straightforward and competitive, providing a 4.99% interest rate on cash through money market funds. Their cash management program works like a bank account, offering bill pay, an ATM card, and mobile check deposit. As of December 2023, it earns an APY of 2.72%. If you have both Fidelity accounts, you can easily transfer cash between them.
Pros & Cons
Pros
- Automatically offers a high interest rate on cash.
- Interest is earned on all account sizes.
- Low fees and trading costs
- Easy-to-use yet robust investment platform
- Top-notch research tools and educational resources
Cons
- Fees apply for international stock and currency trades.
- No trading of commodities or futures
- High charges for trades assisted by brokers
- Higher-than-average fees for options trading
ROBINHOOD
Key Specs
- Account Minimum: $0
- Fees: No commission fees for trading stocks, ETFs, options, and cryptocurrencies (small markup included in price)
Overview
When Robinhood debuted, it caused a stir in investing. The app made investing super simple, maybe too much so. Robinhood’s app lets you trade stocks, ETFs, options, and cryptocurrencies without paying commissions. Its research tools are basic compared to bigger platforms, but they work fine for casual investors.
Robinhood has a good deal for uninvested cash, but there’s a condition. You need a Robinhood Gold account to get the high rate at which they advertise. Robinhood Gold gives you extra features like Morningstar research, higher instant deposit limits, and lower monthly margin rates for $5.
If you have Robinhood Gold, you can earn 5.0% on your uninvested cash. But with a free Robinhood account, you only get 1.5%. Whether the $5 monthly fee is worth it depends on how much cash you have and whether you want the other Gold benefits. You must choose Cash Sweep on the app to use Robinhood’s program. This lets you earn interest and increases FDIC coverage of your cash balance to $2.25 million. There’s no minimum or maximum balance needed to earn interest.
Pros & Cons
Pros
- The high interest rate for users with Robinhood Gold
- Free trades
- The app is simple to use
- You can trade fractional shares.
- No need for a minimum balance
Cons
- Subscribe to Robinhood Gold for $5 monthly to get the highest APY.
- Accounts without any fees earn a decent interest rate.
- Limited research tools are available.
- Limited variety of assets available.
Final Verdict
All the brokers listed here have great cash programs if you qualify for the best rates. The best choice depends on your goals and how much you plan to invest. Serious investors might prefer Interactive Brokers for its advanced features, but Fidelity offers the highest interest rate and a fantastic platform.
Betterment and Wealthfront are great options if you’re interested in a robo-advisor. They’re similar, so your choice might be your preferred platform. Empower also offers a strong cash account with no minimum balance requirement and access to free financial planning tools. However, you’ll need $100,000 to invest through Empower’s robo-advisor. Lastly, Robinhood has a competitive program if you’re okay with paying $5 monthly for Robinhood Gold. Otherwise, its rate isn’t as good as the others.
Frequently Asked Questions
1. How Else Can You Earn Interest on Cash?
Ans: If you want to earn interest on your cash without using brokerage accounts, consider high-yield savings or money market accounts. Online banks typically offer higher interest rates than traditional banks, and you can access your cash instantly with these accounts.
If you’re open to locking your money away for a while, consider putting it in a bank certificate of deposit (CD). CDs often offer higher interest rates, but you must leave your money untouched for a specific period. If you take it out early, there’s usually a penalty. Another option is bonds, which also pay interest. However, there’s a risk of not getting paid if the issuer faces financial trouble. Bonds with higher risk usually offer higher interest rates. Rating agencies assign letter grades to bond issuers to indicate their safety level.
2. What Are Some Risk-Free Areas for Investing Your Cash?
Ans: Savings accounts, money market accounts, and CDs are safe places to put your cash. They’re backed by FDIC insurance, which means your money is protected up to $250,000 per account holder per bank. Even if the bank fails, the government ensures you won’t lose money. Cash in a brokerage account is also secure because the SIPC insures it for up to $250,000.
Investing in U.S. government bonds is considered very safe because the government is stable and promises to pay back what you invest. There are different types of government bonds, like Treasuries, I-Bonds, and Treasury Inflation-Protected Securities (TIPS). Another safe option is a fixed annuity, where an insurance company guarantees to pay you a set interest rate. However, you’ll have to keep your money in the annuity for a certain number of years, or you’ll face a penalty if you cancel early.
3. What Is the Cash Earnings Interest on Robinhood?
Ans: As of December 2023, Robinhood offered a 1.5% APY cash earnings interest rate for free accounts and 5% for Robinhood Gold accounts. To access the higher rate, you must pay a $5 monthly fee for Robinhood Gold. These rates may vary depending on market conditions.
Sign up for its cash sweep program to begin earning interest on your Robinhood balance. This automatically moves your uninvested cash to banks where it can earn a high-interest rate. By joining this program, you also get extra FDIC protection, covering your balance up to $2.25 million for uninvested cash.
