Broker interest the same as bank account interest?

  • This topic has 6 replies, 1 voice, and was last updated 1 week ago by Sam.
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  • #179213 Reply
    CharlieAlwaysTrading

      Appreciate someone’s help with the below please!

      This might be a stupid question but you know when brokers say they pay interest on accounts, is that literally the same as a bank account earning interest? Been thinking about a move to eToro who say you can earn up to 5.3% (way more than my savings account). But dunno if I’m missing something.

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      • #179254 Reply
        James Barra
        Moderator
          DayTrading.com Team

          Hi CharlieAlwaysTrading,

          Thank you for your message.

          Brokers paying interest on account balances is similar to earning interest in a bank account in that you receive regular interest payments, typically every month, calculated as an annual rate.

          However, there are some notable distinctions:

          • Account type: A brokerage account like eToro is designed for trading, whereas a bank account is for everyday banking needs such as direct deposit capabilities or overdraft facilities.
          • Interest rates: Brokers may offer higher interest rates on account balances compared to traditional savings accounts, as you mentioned with eToro offering up to 5.3%. However, these rates can be variable and subject to change. It’s also worth noting that the interest offered by brokers may come with specific conditions, such as maintaining a certain balance or actively trading on their platform.

          You can find more information about the mechanics of how brokers pay interest in the FAQs of this guide – https://www.daytrading.com/interest-on-cash.

          I hope that helps.

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        • #179398 Reply
          CharlieAlwaysTrading

            Suspected that might be the case, nice one for confirming.

            I can see eToro is mentioned in that article you sent and looks to have the highest rate. Is that right?

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          • #179400 Reply
            James Barra
            Moderator
              DayTrading.com Team

              Hi CharlieAlwaysTrading,

              At this point they’re offering the highest interest rate of the brokers we’ve reviewed. There may be other firms out there offering even higher rates, however.

              Can I also check what currency you’re dealing in? The 5.3% rate is for USD.

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            • #179401 Reply
              CharlieAlwaysTrading

                Yep, USD. I’ve looked elsewhere and pretty sure they’re the best rate at the mo.

                Thanks for your help.

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                • #179854 Reply
                  Estaban

                    IB also offer 4.8% at the mo and I think their software is a cut above for intraday trading.

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                • #180231 Reply
                  Sam

                    ii are paying 5.1% on USD now so worth a look if you’re in the United Kingdom.

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