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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[James BarraModerator 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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[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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[James BarraModerator 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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[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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[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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[Sam]

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

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