What Cash Sweep Does
Cash Sweep is a Robinhood feature that automatically moves uninvested cash from your brokerage account into a money market fund. When you have cash sitting idle in your account — money you haven't used to buy stocks, options, or other investments — Robinhood sweeps it into one of several money market funds that pay interest. The moment you need that cash to trade, Robinhood moves it back into your account automatically.
The purpose is straightforward: your cash earns a return instead of sitting at zero percent. Money market funds hold short-term, low-risk debt instruments like Treasury bills and commercial paper, so they're considered safer than stock investments but still generate yield. Robinhood doesn't charge you to use Cash Sweep — the feature is free — but you do receive a lower interest rate than the money market fund itself earns, because Robinhood takes a cut.
Cash Sweep is not the same as a savings account. Your money is not held at a bank, and it is not covered by FDIC insurance. It is held in a money market fund, which carries different protections and different risks.
Key Takeaways
- Cash Sweep automatically moves uninvested cash into a money market fund that pays interest, and moves it back when you trade.
- Robinhood offers multiple money market fund options through Cash Sweep, and you can choose which one receives your swept cash.
- The interest rate you receive is lower than the fund's stated yield because Robinhood retains a portion as compensation.
- Cash Sweep is optional — you can turn it off and keep cash in your account earning nothing, or move it to a linked bank account instead.
- Money market funds are not FDIC-insured, though they are considered low-risk investments.
Which Money Market Funds Robinhood Offers
Robinhood does not offer the same money market fund options to all customers. The available funds depend on your account type and sometimes on your location. Common options have included funds managed by Vanguard, Fidelity, and Schwab, though Robinhood changes its offerings periodically.
Each money market fund has a different yield, which changes daily based on market conditions. You can see the current yield for each available fund in your Robinhood account settings under Cash Sweep. The yield you actually receive — your personal rate — will be lower than the fund's published yield, because Robinhood keeps the difference.
If you want to compare what you'd earn in each fund, check the rates Robinhood displays in your account. You can switch between available funds at any time without penalty, though the switch may take a business day to process.
How to Turn Cash Sweep On or Off
Cash Sweep is turned on by default for most Robinhood accounts, but you can disable it. To change your Cash Sweep settings, open the Robinhood app or website, go to your Account settings, find the Cash Sweep section, and toggle it on or off. If you turn it on, you'll also select which money market fund receives your swept cash.
If you turn Cash Sweep off, any cash in your account will remain as cash and earn no interest. You can still move money to a linked bank account if you prefer to keep it outside Robinhood entirely. Some customers turn off Cash Sweep because they want to keep cash available for when ready trading without any delay, though in practice the sweep and reverse-sweep happen quickly enough that this rarely matters.
Changes to your Cash Sweep settings take effect the next business day.
How Quickly Cash Moves In and Out
When you deposit money into your Robinhood account, it typically enters as cash first. Robinhood then sweeps it into your chosen money market fund, usually within one business day. The sweep is automatic — you don't have to do anything.
When you place a trade, Robinhood automatically moves the cash you need back from the money market fund into your account to settle the trade. This reverse-sweep usually happens when ready or within minutes, so you won't experience a delay in executing trades. If you place multiple trades in a single day, each one triggers its own reverse-sweep as needed.
On weekends and market holidays, sweeps and reverse-sweeps don't occur, so cash may sit uninvested during those periods.
The Interest Rate You Actually Earn
The interest rate displayed for each money market fund is the fund's gross yield — what the fund itself earns. The rate you receive in your Robinhood account is lower because Robinhood retains a percentage. Robinhood does not publicly disclose exactly how much it keeps, so you cannot calculate your net rate in advance.
To see what you're actually earning, check your Robinhood account statements. Your monthly or quarterly statement will show the interest credited to your account. You can compare that amount to the fund's published yield to estimate Robinhood's cut, though the fund's yield changes daily so the comparison won't be exact.
The interest you earn is taxable income. Robinhood will send you a Form 1099-INT at the end of the tax year if you earned more than $10 in interest.
Cash Sweep vs. Other Places to Keep Cash
If you have cash in a Robinhood account, you have three options: leave it as uninvested cash earning nothing, use Cash Sweep to put it in a money market fund, or move it to a linked bank account.
A high-yield savings account at a bank typically pays more interest than Robinhood's Cash Sweep, especially if you're comparing to the net rate you actually receive after Robinhood's cut. However, moving money between Robinhood and a bank account takes several business days, so Cash Sweep is more convenient if you trade frequently and want your cash to earn something in the meantime.
Money market funds are not FDIC-insured, whereas bank savings accounts are insured up to $250,000 per depositor per bank. If you prioritize insurance coverage, a bank account is safer. If you prioritize convenience and don't mind slightly lower returns, Cash Sweep is simpler because the money moves automatically.
What Happens to Cash Sweep During Market Stress
Money market funds are considered stable, but they are not risk-free. During periods of financial stress, money market funds can experience losses or temporary restrictions on withdrawals. This is rare, but it has happened — most notably during the 2008 financial crisis and briefly during the 2020 pandemic market shock.
If a money market fund you're invested in experiences problems, Robinhood would notify you and explain your options. In most cases, your money would still be accessible, but the value might be lower than expected or there might be a delay in moving it back to your account.
For this reason, Cash Sweep is best thought of as a place to park cash you'll use soon, not as a long-term savings vehicle. If you have money you won't need for years, a bank savings account or other investment may be more appropriate.
Frequently Asked Questions
Does Robinhood charge a fee for Cash Sweep?
No, Robinhood does not charge a direct fee to use Cash Sweep. However, you earn a lower interest rate than the money market fund's published yield because Robinhood retains a portion of the earnings. The exact percentage Robinhood keeps is not disclosed.
Can I lose money in Cash Sweep?
Money market funds are designed to maintain a stable value, but losses are possible during extreme market conditions. This is rare. Your cash is not FDIC-insured like it would be in a bank account, so there is more risk than keeping money in a savings account, but less risk than investing in stocks.
What happens to my swept cash if Robinhood goes out of business?
Your money is held in a money market fund, not by Robinhood itself, so it would not be lost if Robinhood failed. However, you should understand that money market funds are not FDIC-insured and carry their own risks separate from Robinhood's financial health.
Can I choose not to use Cash Sweep?
Yes. You can turn off Cash Sweep in your account settings at any time. Your cash will then remain uninvested and earn no interest. You can also move cash to a linked bank account if you prefer to keep it outside Robinhood.
How often does the interest rate change?
Money market fund yields change daily based on market conditions and the interest rates the funds earn on their holdings. Robinhood updates the displayed rates in your account regularly, though the exact frequency varies. Your personal rate will fluctuate along with the fund's yield.