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.
Currently, 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 (the average national money market deposit account rate for retail deposits at the $100,000 level based on a survey conducted by S&P Capital IQ Proiii); 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 0.13% 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 first quarter of 2022, Schwab Bank earned about 1.03% 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 $103 ($10,000 x 1.03%) on that cash deposit, annualized, which equates to 0.103% or 10.3 basis points ($103/$100,000) 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.