Schwab Intelligent Portfolios® Sweep Program
The portfolios in the Schwab Intelligent Portfolios® program include a cash allocation, which differs depending on the investment strategy selected. This cash allocation is implemented through the Schwab Intelligent Portfolios Sweep Program ("Sweep Program"), a required feature of the Schwab Intelligent Portfolios program.
As part of the Sweep Program, the interest rate Schwab Bank pays on cash balances in the Sweep Program will be the greater of either:
- The rate determined by reference to a third party index. Currently, that index is the average national money market deposit account rate for retail deposits at the $100,000 level based on a survey conducted by RateWatch; or,
- The rate paid on cash balances of $1,000,000 or more in Schwab's bank sweep program for brokerage accounts. This is known as the Bank Sweep feature in Schwab's Cash Features Program.
The current ratei is 0.12% APYii
This rate may be higher or lower than the interest rates available on other deposit accounts at Schwab Bank or on comparable deposit accounts at other banks. It may also be higher or lower than other cash-equivalent investments, such as money market funds, that are available through Schwab.
Schwab Bank earns income on the cash allocation for each investment strategy. For example:
Assume a $100,000 account with a 10% Cash Allocation ($10,000), which would be a moderate—aggressive investment portfolio allocation. Using market interest rates from the third quarter of 2020, Schwab Bank earned about 1.35% on an annual basis on the cash it invested net of what it paid to clients in the Program. Schwab Bank would have received about $135 on that cash deposit annualized. This is 0.135% or 13.5 basis points of the total client investment of $100,000.
This example is for illustrative purposes only and does not necessarily reflect the interest rate a particular client at a particular point in time receives or the revenue Schwab Bank earns from that client's cash allocation.
Schwab Bank may change the method of determining the interest rate upon 30 days' notice to Schwab or upon a regulatory requirement. Schwab will notify clients if it receives such notice from Schwab Bank. The terms and conditions of the Sweep Program and Schwab's ability to make changes to the Sweep Program or move balances to a new sweep product are set forth in the Schwab Intelligent Portfolios® Sweep Program Disclosure Statement that is made available to clients when they open their accounts. Clients should read this document carefully and retain a copy for their records.
i Beginning January 4, 2021
ii The Annual Percentage Yield (APY) quoted for this account, with a minimum balance of $0.01, is current as of the date shown. This rate is variable and may change without notice.
Please read the Schwab Intelligent Portfolios Solutions™ disclosure brochures for important information, pricing, and disclosures related to the Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium programs.
Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ are made available through Charles Schwab & Co. Inc. ("Schwab"), a dually registered investment advisor and broker dealer.
The cash allocation in Schwab Intelligent Portfolios Solutions™ will be accomplished through enrollment in the Schwab Intelligent Portfolios Sweep Program (Sweep Program), a program sponsored by Charles Schwab & Co., Inc. By enrolling in Schwab Intelligent Portfolios Solutions, clients consent to having the free credit balances in their Schwab Intelligent Portfolios Solutions brokerage accounts swept to deposit accounts at Charles Schwab Bank through the Sweep Program. Charles Schwab Bank is an FDIC-insured depository institution affiliated with Charles Schwab & Co., Inc. and Charles Schwab Investment Advisory, Inc.
Charles Schwab & Co., Inc. and Charles Schwab Bank are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation. Brokerage products, including the Schwab One brokerage account, are offered by Charles Schwab & Co., Inc., Member SIPC. Deposit and lending products are offered by Charles Schwab Bank, Member FDIC and an Equal Housing Lender.