The cash sitting idle in your securities account waiting to be invested hasn’t earned you a penny yet. But the wheel is turning and some online brokers are now rewarding your uninvested money with an annual rate of 2, 3 or even 4%.
On July 27, the European Central Bank (ECB) increased its key rates by 0.25 basis points for the ninth time in a row. The institution’s deposit rate has now reached 3.75%which is the highest level since 2001.
These repeated increases profoundly changed the financial situation, especially in France. Livret A became attractive again, with a locked rate 3% in the next 18 months and mortgage rates are approaching 4%.
The stock market is no exception to the rule. And from early 2023, several online brokers took advantage of the ECB’s rate hikes to reward their clients’ liquidity. The first in France.
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Interest every month
From January 1, the Trade Republic platform pays a rate of 2% per year, within the limit 50,000 euros to the account. Interest is calculated every evening and paid monthly.
With an interest rate of 2% per annum, we are passing on the benefits of the new interest rate environment directly to our customers, said Christian Hecker, co-founder of Trade Republic, in a press release.
The German broker’s offer is unlimited in time. Your funds are always available. And no investment is required to take advantage of the 2% bonus on the cash portion of your account.
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For all customers
Other platforms followed. For example, Scalable Capital offers an interest rate of 2.6% per year on your cash balances. And that until 100,000 euros. The offer is aimed at both existing customers and new users.
Many offers only benefit new customers, but we also want to reward our (…) community and let them benefit from the interest rate hike, said Erik Podzuweit, founder of Scalable Capital.
The variable interest rate is paid quarterly by Baader Bank, an institutional partner of Scalable Capital. However, only PRIME+ package customers sold 4.99 euros per month, they can take advantage of this benefit.
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Up to 4% with Saxo Banque
Likewise, online broker Saxo Banque offers a reward that can reach up to 4%. This means that your interest rate will depend on your account level (Classic, Platinum or VIP), as well as market conditions and the amount of your savings.
So what do you think of these new offerings? For savers, they are an opportunity to (slightly) improve the profitability of their savings by earning interest on their pocket. However, winnings are subject to a one-off flat-rate deduction (PFU). 30%.
As for online brokers, this is a relatively inexpensive way for them to differentiate themselves from traditional players, attract new customers and retain their existing users.
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