Interactive Brokers Master Card

[freedinner]

interesting development here. IB now offers a "Integrated Financial Management Account" that includes a debit Master Card. Using the card will create a margin loan in your IB account, with IB's rock-bottom margin interest rates.

Peterffy is personally promoting it in a video: ibkr.com/message


With it, IB starts to extend its reach and customer-friendly rates into the banking industry.

Using an IB-linked debit card is clearly a better option than using a high-interest credit card (with potential late payment penalties etc.).

And maybe this also helps IB to sign up new customers who especially value this combination, like asset-rich folks who have been wooed by Wall Street banks with margin loans (no doubt at much higher rates than IB is offering).

However, we'll also likely have to prepare ourselves for tales of customers who will complain that IB made it too easy for them to irresponsibly spend away their savings.

 

[just21]

Email ibmgmt [at] interactivebrokers.com if you would like IB to offer Mastercard to non US residents. thankyou.

 

[Ryan81]

I saw this in an email from IB the other day....

I didn't think that this was anything particularly new though. If I recall correctly, I remember there being some kind of mention of a debit card annual fee on their fee schedule a while back. That fee doesn't seem to be listed on their fee schedule right now, so maybe they've had the debit card capability all-along, and have just removed the annual fee? I don't know.

In any case, I personally do not want any debit or checking access to my trading account. If for some reason, the account is compromised, and an unauthorized withdrawal results in a margin related auto-liquidation from IB, that could be very, very bad. With a card at a bank, it is still a hassle if your account info is compromised, but it won't result in the liquidation of your brokerage positions, at potentially bad prices and with potential adverse tax consequences.

If I need access to my funds, I'll wire or ACH it out to my Ally checking account. Ally also has free debit card access at ANY ATM in the united states. (Yes, they reimburse you the 3rd party fees too... with some minor restrictions.)

 

[freedinner]

I saw this in an email from IB the other day....

I didn't think that this was anything particularly new though. If I recall correctly, I remember there being some kind of mention of a debit card annual fee
...
I personally do not want any debit or checking access to my trading account. If for some reason, the account is compromised, and an unauthorized withdrawal results in a margin related auto-liquidation from IB, that could be very, very bad.

Maybe you misread it back then. This is certainly a new offer.

Purely out of curiosity, I went through their FAQs regarding the new debit card (being outside the U.S., I cannot even theoretically apply for it, and I don't have a practical use for it either): It seems that any debit card charge over 1k usd has to be pre-authorised by you via IBKey. That's quite clever. I expect them to have customary checks against fraudulent charges as well.

 

[freedinner]

Email ibmgmt [at] interactivebrokers.com if you would like IB to offer Mastercard to non US residents. thankyou.

I have no real use for the card, but I like the design of it.

Finally us IB one-percenters (remember IB's hilarious ad a while back, "Join the 1 percent") can flash the card to show off to the cognoscenti that we pay only 0.8 basis points ;-)

 

[just21]

I have no real use for the card, but I like the design of it.

Finally us IB one-percenters (remember IB's hilarious ad a while back, "Join the 1 percent") can flash the card to show off to the cognoscenti that we pay only 0.8 basis points ;-)

Don't you have the IB gold card?

 

[Scataphagos]

Using the card will create a margin loan in your IB account

Not being an IB customer, I don't know anything about this... so pardon me if I'm missing something.

How is that a "debit" card? Margin loan balance? Interest (though low rate)? Sounds like a credit card.

 

[eastern_warrior]

Not being an IB customer, I don't know anything about this... so pardon me if I'm missing something.

How is that a "debit" card? Margin loan balance? Interest (though low rate)? Sounds like a credit card.

If you have 100000 cash in your account, then no loan - debit.
If you have 100000 in securities in your margin account, you can borrow against that

 

[Ryan81]

I guess you could consider it a "credit" card if you usually have a negative cash balance in your brokerage account (and hence, are paying interest at their margin rate.) Or you would consider it a "debit" card if you usually have a positive cash balance in your brokerage account. Money is fungible, and it is just a matter of perspective.

Good to hear about the $1k/transaction limit though -- it makes this a little bit more appealing to me (w.r.t. preventing fraud and wreaking havoc with possible autoliquidations.)

But in any case, I'll probably pass on this -- I prefer to use credit cards for everything because they give me 2%+ cashback rewards. (I never pay interest on credit card balances.)

 

[Soon2Bgreat]

This doesn't make any sense at all...I thought traders were supposed to max their credit cards to buy stocks, not use their stocks as collateral for credit.

Maybe the answer is to max the cards, buy AAPL, and use the IB Card to pay down the CC balance for the interest rate arb.