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.
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.