no interest paid at IB
- Thread starter western
- Start date
Thanks Daal. I don't know why anyone would want to opt out of this but near as I can tell from their site, MB uses a universal account that is paying 1.76% on your entire free cash balance at this time, including the first 10k, with no need to bother with EFPs, etc. Apparently better than IB. Do I have this right?
For November, MB Trading (Penson Financial) paid interest at an annual rate of 1.561%. The rate for December will most likely be less. TD Ameritrade paid about the same as MB Trading. With interest rates so low, I have to question the safety of cash reserves at each broker. My opinion for this point in time is cash is safer at IB than at most brokers, banks, and money market funds. Right now I am more interest in the return of my capital than the return on my capital. Losing the small interest on the cash balance is not a big deal to me but losing all of my cash reserves is a big deal. I am not saying cash held at MB Trading or TD Ameritrade is any less safe than cash held at IB. I think the safety of cash held at all financial institutions should be questioned at this point in time.
How can banks afford to pay 12 mo CD rates as high as 4.5% lately with the short end of the yield curve so low?
Not correct. The stocks are covered with cash. In other words, I bought $6,000.00 worth of stock. I have more than enough capital ($50,000.00) to cover this purchase. As far as margin is concerned, IB only places $2000.00 into the securities margin column, and I can use the rest for futures options trading. No interest is charged. If OTOH, I purchased $100,000.00 worth of stock with only $50,000.00 in my account, then IB would charge margin interest, for I am borrowing $50,000.00 to make the purchase.