Tuesday, November 14, 2006

Ameritrade's "Hidden" Cash Sweep Account

Ameritrade has a cash sweep option called the Total Asset Plan (TAP) which offers a significantly higher interest rate on cash than the default Ameritrade cash sweep option. When you first setup an Ameritrade account, you are put into a cash sweep option that pays less than 1% interest. By contrast, as a participant in the TAP, the cash sweep is offered through money market funds at "The Reserve" (website: ther.com). There are a variety of taxable and tax-free money funds available. For example, the taxable Primary Money Market fund pays about 4.4%. Personally, I chose the California Tax-Exempt fund which pays about 2.4%.

But, don't go looking for the Total Asset Plan on the Ameritrade website; it's not there. In order to setup this account, I needed to talk to a customer service representative. In fact, I would not have even known that the TAP option existed without speaking to a real person at Ameritrade. I don't know why they keep the TAP a secret from most investors.

Lastly, having gone through the application process once, I now know where to find the TAP application on the Internet. However, since this is a "hidden" option (that Ameritrade doesn't want the average person to know about), I would suggest calling Ameritrade to inquire about it.



Anonymous said...

$100,000 = 4.4%
25k - 100k = 1.65%
< 25k = .4%

Update for Total Asset Plan information posted earlier. As of 6/6/07 (phone conversation with TDAmeritrade).

P.S. I did have to ask about "TAP", they were not forthcoming. :)

jbb said...

thank you for posting this. about midway 2007 i called ameritrade and switched to the reserve. now im doing my taxes and i think i have a seperate 1099div from the reserve. it isnt included with the turbotax import from ameritrade... so i have to report that manually in turbotax, right? thanks, jbb

Anonymous said...

be glad those did not invest in this plan. Since the reserve went belly up. people upto lost 10% of the value.