Wondering what that “Sweep Deposit Account / Money Market” account is in your Etrade account, or what is that sweep account with another brokerage, investment or financial services firm? Or maybe you’re wondering just what is that money that’s in there, and how you can get at it. Read on!

As more and more financial and investing services move towards offering a self-service model, those who are taking advantage of that self service often are giving their accounts more scrutiny, and so noticing things that they otherwise might not. One of those things is the sweep account, which may also be labelled as (and indeed may be) a sweep money market account.

If you are one of these people you may be thinking “I don’t remember opening a money market account” or “I don’t remember opening a sweep account, whatever that is” or “Where did the money that is in that sweep account come from and, more importantly, how can I access it?”

First, we have to tell you that we are not investment professionals, and we can’t and don’t provide investment advice. In fact, we’re not even going to talk about the many different forms and functions that sweep accounts can provide, because we are not qualified to do so. What we are going to do is answer the one simple question that probably led you to this article: What is that sweep account, and where did the money in it come from?

What is a “Sweep Account” on Etrade and Other Financial and Investment Services?

Put in its simplest terms, and as worded by an Etrade representative, a sweep account can be viewed as a “holding” account for cash that is earmarked to go elsewhere but hasn’t gone there yet, or for cash that may be laying around in your account being lazy and unproductive.

Sweep accounts typically accrue interest, where as your generic cash-on-hand account does not, or, if it does, it will typically be a lower interest rate than a sweep account, some of which are tied to money market funds.

Example: Let’s say that you have $500.00 in cash in your Etrade (or other brokerage) account. You log into your brokerage account after the market closes (4:00 p.m. EST), and you put in an order for 10 shares of Acme, at $12.00 a share. Your order will execute when the market opens the next business day, and in the meantime your brokerage has now earmarked $120.00 of that $500 to cover your purchase. If you have a sweep account, your brokerage may move that $120.00 from your available cash on hand to the sweep account, until the trade executes.

Another example: You sell your 10 shares of Acme for $11.00 a share (you took a loss, so sorry). The proceeds are $110.00. Your brokerage may (likely will) put the $110.00 into your sweep account, so that it can earn interest until you move it somewhere else, such as a retirement or bank account, or use it to purchase more stock.

The answer to the question “how can I get at the money in the sweep account” depends on why it ended up there, and how your account is structured. If the reason that the money is in the sweep account is because it’s going to be used for a trade that you initiated, then you can’t access it, because it’s on hold to cover your order. If, however, it’s incoming funds based on a sale of stock or some other income-realizing transaction, then you should be able to use it to purchase stock or make some other expense-incurring transaction, although how exactly you do that will depend on what service you are using.