If you’re hoping to earn a return on cash that’s merely sitting in your investment account, a handful of brokerage firms have sweetened the yields on your idle dollars. Yields are running higher on a range of fixed income investments as the Federal Reserve continues its policy tightening campaign. Whether you’re buying short-term Treasurys or locking money into a certificate of deposit, you stand to make money on your cash. Brokerages with an eye toward boosting deposits — or locking in those they have — have also joined the fray. Robinhood Gold, a subscription service for retail investors, is now paying an annual percentage yield of 4.9% on money in cash sweep accounts. Previously, it offered a rate of 4.65%. Sweep accounts are where investors hold cash that’s waiting to be deployed. “As we have attracted and engaged more Gold customers, we’ve seen them deposit more into their Robinhood accounts,” said CEO Vlad Tenev on Robinhood’s earnings call earlier this week. Cash sweep balances in Robinhood Gold have grown to $11 billion, more than doubling since the beginning of the year. Fidelity has also recently boosted its rate on cash to 2.72%, up from 2.6%, while Vanguard bumped its rate up to 3.7% from 3.5%, according to an analysis from Bank of America. Expect varying yields How generous a firm may be with their yields will depend on its priorities. Some brokerages prefer to keep their rates paid on cash very low. This way, they expand net interest margin and encourage investors to deploy money into other assets. For instance, LPL Financial raised the rate it pays on its insured cash account – but only for clients with the highest household value, BofA’s analysis found. Consider that the firm is now paying a rate of 0.8%, up from 0.6%, but only for clients with a household value between $750,000 and $1.5 million. Meanwhile, household values below $150,000 receive a 0.35% rate on cash at LPL. Other firms hike their yields on cash as they aim to attract more deposits, which seems to be the case at Robinhood. ” IBKR and HOOD continue to see stable/rising cash balances as their clients sort cash into the brokers thanks to their highly competitive rate offerings,” wrote BofA analyst Craig Siegenthaler, referring to Interactive Brokers Group and Robinhood by their trading symbols. — CNBC’s Michael Bloom contributed reporting.
