Kevin McCormally: I am Kevin McCormally of Kiplinger's and I am with Mary Beth Franklin, Senior Editor of Kiplinger's Personal Finance magazine to talk about Brokerage Sweep Accounts. Mary Beth, you have got Brokerage Account you have some idle cash in it. It's swept into a certain account, that if it's dividends or if it comes from the sale of the stock. What happens to that money then?
Mary Beth Franklin: Well, you would like to think it was going into an interest earning account, in most cases a money market account which maybe paying 4 % or more but depending who you broker is, it might swept into a much lower paying account, maybe even less than 1 %.
Kevin McCormally: How do you find out what your sweep account balance is earning?
Mary Beth Franklin: You ask where is my money going? How much is it earning?
Kevin McCormally: And let's say you got a lousy deal, one of those accounts have only pays 0.5 %, 0.75 %, what can you do about it?
Mary Beth Franklin: You call your broker and say demand a better deal because there is a lot of competition out there and if I don't like how you are treating me, I will go some place else.
Kevin McCormally: But can you just take the money out yourself and put it into the money market fund?
Mary Beth Franklin: Yes, you can, but you loose the convenience of just having that pool of money with your broker, that as the dividends coming or there's proceeds from the sale of the stock, and then you get turn around and recycle it. You probably want to keep it with the broker but you want to make sure they are paying you a going rate.
Kevin McCormally: And simply checking on it and asking for more, you may get more money.
Mary Beth Franklin: Exactly.
Kevin McCormally: Thank you very much.
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