News for hackers. Stuff that matters.

A comment on Robinhood Accounts Looted, No Customer Support. Parent comment

Re:Robinhood Accounts Looted, No Customer Support by freetime2 on Friday October 09, 2020 @06:35PM (#24735125)
I love Schwab and agree their support has always been great. The one thing I wish they had is an automatic money market sweep for cash in my brokerage account. Right now any uninvested cash I have in that account earns me essentially nothing, and my understanding is that Schwab makes a pretty good profit from it.
[ Parent | on HN ]
Re:Robinhood Accounts Looted, No Customer Support by PhantomGremlin on Sunday October 11, 2020 @01:34PM (#24747517)
At this time, because of ZIRP, a money market sweep is worthless in terms of earning interest. https://en.wikipedia.org/wiki/Zero_interest-rate_policy

You are right that Schwab makes a pretty good profit from it. The way they do that is by lending "your" money to their margin customers and charging those people 7% or more while paying you pennies.

In a "margin" brokerage account, "your" money is merely a debt obligation of Schwab.

TD Ameritrade (and now I think Schwab) will sweep cash from your brokerage account into a real, genuine, bank account. But the interest rate is still almost nothing.

[ Parent | on HN ]