5 Ways To Use Your Brokerage Like A Savings Account

The line between brokerage accounts and savings accounts is blurring as financial companies compete for your deposits. You don’t have to move money between different institutions to get competitive returns on your cash — your brokerage account can often do double duty as both an investment platform and a high-yield savings alternative.

As brokerage accounts and bank accounts begin to look more alike, savers can often do many of the same things in each account. In brokerage accounts, not only can you invest in stocks, bonds and funds, you can often use the account as an omnibus financial account. In other words, you can write checks and pay bills with your account, often while collecting interest, too.

Here’s how to make your brokerage account work harder for your cash.

What is a brokerage account and how it works for savings

A brokerage account is an account used to buy and sell publicly traded investments such as stocks, bonds, mutual funds and exchange-traded funds (ETFs). But modern brokerage accounts have expanded far beyond just trading securities.

Today’s brokerage accounts often function as comprehensive financial hubs where you can hold cash, write checks, pay bills and earn competitive returns on uninvested money. This makes them solid alternatives to traditional banks, especially for people who want to keep their investment and cash management in one place.

Most brokerages automatically sweep excess cash into money market funds or interest-bearing accounts, so your money earns returns even when you’re not actively investing it.

1. Earn interest on cash deposits through money market sweeps

The simplest way to use your brokerage like a savings account is to let it automatically manage your cash through money market sweeps. Most brokerages move any uninvested cash into interest-bearing accounts or money market funds.

Charles Schwab, for example, offers FDIC-insured cash accounts that currently pay competitive rates on deposits. Interactive Brokers provides even higher yields through SIPC-insured accounts, though they don’t pay interest on the first $10,000.

These sweep options require zero effort on your part — the brokerage handles everything automatically. The rates often compare favorably to traditional savings accounts, especially at major banks that pay minimal interest. However, online high-yield savings accounts may sometimes offer better rates, so it’s worth comparing options based on current market conditions.

Compare yields on brokerage cash options with Bankrate’s best high-yield savings accounts to see which offers better returns for your situation.

2. Invest in short-term government bond ETFs

For potentially higher yields than basic cash accounts, consider investing in exchange-traded funds that hold short-term government bonds. These ETFs offer returns that track short-term interest rates while maintaining high safety and liquidity.

Short-term bond ETFs typically hold Treasury securities with maturities under one year, minimizing interest rate risk while providing exposure to current market rates. The bonds are backed by the federal government, making them among the safest investments available.

The Goldman Sachs Access Treasury 0-1 Year ETF (GBIL) is one example that tracks short-term Treasury rates. About three-quarters of the fund’s holdings mature within six months, and the expense ratio is just 0.12 percent annually — roughly $12 per $10,000 invested.

These ETFs can be sold any business day, with settlement typically taking two to three business days. This provides more liquidity than traditional CDs while offering potentially higher yields than money market accounts. The main consideration is that unlike FDIC-insured deposits, ETF values can fluctuate based on market conditions, though short-term government bond ETFs are generally very stable.

3. Use money market mutual funds for stable returns

Money market mutual funds offer another way to earn competitive yields while maintaining high safety and liquidity. These funds invest in very short-term government securities, typically with average maturities of 30 to 60 days.

The Vanguard Federal Money Market Fund (VMFXX) exemplifies this approach, recently offering yields above 5 percent with an average holding maturity of just 16 days. The fund requires a $3,000 minimum initial investment but allows smaller additions afterward. Check out Bankrate’s picks for best money market mutual funds here.

Money market funds track short-term interest rates closely, so yields rise and fall with Federal Reserve policy changes. The very short maturities mean the funds adjust quickly to rate changes while maintaining stable share values.

These funds charge low expense ratios — often around 0.11 percent annually — letting you keep most of the interest earned. They can be redeemed any business day, providing excellent liquidity for emergency needs or investment opportunities.

Like bond ETFs, money market funds aren’t FDIC-insured, but government money market funds are considered extremely safe due to their Treasury holdings.

Related option: Compare CD rates for guaranteed returns if you prefer FDIC protection and can commit to specific terms.

4. Consider brokered CDs for guaranteed yields

Brokered certificates of deposit combine the guaranteed returns of traditional CDs with the convenience of brokerage account management. These work similarly to bank CDs but can be bought and sold through your brokerage account.

Brokered CDs typically require $1,000 minimum investments and are available in $1,000 increments. They offer contractually guaranteed interest rates and are often FDIC-insured, though you should verify coverage before purchasing.

The key difference from bank CDs is liquidity — if you need access to your money before maturity, you can sell the brokered CD in the secondary market. However, if interest rates have risen since you bought the CD, you might receive less than you paid. Conversely, if rates have fallen, you might get more than expected.

Brokered CDs can offer competitive rates and the convenience of managing them alongside your other investments. Just be aware of any commission costs and understand the market risk if you need to sell before maturity. For investors who plan to hold to maturity, brokered CDs provide the same guaranteed returns as bank CDs with potentially better rates and easier management.

5. Set up a cash management account at a robo-advisor

If you already have a robo-advisor account or are looking for a high-yield cash management account, then turning to a robo-advisor could be a great option. Two of the largest independent robo-advisors — Wealthfront and Betterment — have both been clamoring for new deposits and offer better-than-average yields.

Wealthfront currently offers 5.00 percent APY on cash balances, while Betterment provides 4.75 percent APY. These rates significantly exceed the national average for savings accounts and come with FDIC coverage up to $1 million through partner banks.

You can get an account set up quickly, and easily move money around to different accounts. Then if you’re ready to invest with the robo-advisor, you can move money to a fee-charging investment account and get started. A robo-advisor is an excellent choice for cash savings.

Make sure you choose the best brokerage for you

Each brokerage is different, and choosing the right brokerage for you is just as important as the decision to start investing, because fees and trading costs can potentially eat into your returns substantially.

• Consider fees and minimums when evaluating brokerages. Some charge account maintenance fees or require high minimum balances, while others offer fee-free accounts with no minimums. Commission-free trading has become standard, but some brokerages still charge for certain transactions.
• Evaluate the cash yields offered by different brokerages, as these can vary significantly. Some offer competitive rates automatically, while others require you to actively choose higher-yield options.
• Look at additional features like research tools, customer support quality, and user interface. If you plan to use the account for both cash management and investing, make sure the platform meets your needs for both functions.
• Check insurance coverage to understand how your cash is protected. FDIC insurance covers traditional bank deposits, while SIPC insurance protects brokerage accounts, though the coverage differs in important ways.

When is it better to stick with a savings account?

Brokerage accounts and savings accounts serve different purposes, so which one you need depends on your goals. It’s not uncommon to have both types.

Brokerage accounts are usually for investing, while savings accounts are for building a nest egg — whether in the short or long term. For instance, you might use a savings account to store your emergency fund, which you might need to cover an expected expense or in the event of a job loss.

Savings accounts can also be used to save up for a specific goal, such as a down payment on a house or car. Or maybe you want to save for a vacation you’ve been wanting to take.

As you can see, savings accounts are best for setting aside a certain amount of money that will be there when you need it. These accounts are usually FDIC-insured, so when the time comes, the money will be there. Plus, high-yield savings accounts pay generous interest, allowing your money to grow passively over time.

Bottom line

If you’re looking to earn the return of a high-yield savings account with nearly the security of a bank, options exist to make it work with your brokerage account. Using a brokerage account to do your banking can also help you consolidate your financial life with one provider, and it may offer other benefits in terms of simplicity and convenience.