TD still credits virtually zero interest on cash balances

[Daal]

TD still hasn't really budged on interest rates, even though the Fed raised rates several times this year. TD's interest for the entire year is virtually zero, while other brokers are almost at 1% on idle cash. Depending on the account size, this can be very substantial. The interest in other accounts more than covers the commissions for the year, while the interest in TD only covers a few trades at best. What's so great about TD that they deserve to not have to pay interest on idle cash?

What about buying SHY?

 

[Jreality]

That would reduce my buying power by the amount of SHY purchased, and I'd get to pay TD a wonderful $6.95 commission to buy it. (Since it's an ETF) if I were to purchase one of the lame TD money market funds that are commission free, the "confirm order" pop up says that purchasing the lame money fund would reduce my buying power by the amount purchased. At least with IB, the idle cash is FDIC insured due to their sweep program) and pays over 90 basis points of interest.

 

[FSU]

Another option is to purchase a box in the SPX. Implied interest rates for short term boxes (about a month) are going for slightly over 2%. You will have the cost of execution and since you are using up capital, if you buy something else later, you may end up paying a higher rate when you need to borrow money from them. For example I am seeing the Jan 1000/2000 box trade for 998.60. So if you buy 1 box here you will spend 99,860 and get back 100,000 in about 3 weeks, making $140, less commissions.

 

[ET180]

Oh my - someone patronizing me that does not even know how the NBBO works. Let me take you to school on this. Brokers do not set the bid/ask price - that comes from the consolidate quote which is the best National Bid/Offer across all the ECNs. The bid/ask quote are ubiquitous among all brokers.

ETFs with less liquidity have wider spreads - this is not your brokers fault, they simply pass through the NBBO.

Saving $2,500 on commissions while getting a good rate on the cash sweep is a great deal. Fidelity took Barron's #1 spot in 2016/2017. Their 606 reports look good - no signs of blatant payment for order flow like some brokers.

I don't trade commission free ETFs or options. When you use a number of brokers like I do it gives you the best of all worlds since they all seem to have a thing or two they do better than their competition. Getting 10,000 shares filled in a split second directly on the ECN of choice with free L2 is nice, not to mention the first 500 free trades is a killer deal.

You misunderstood my post. Where did I claim that brokers set the bid/ask price? I simply stated, as you acknowledged, that ETFs with less liquidity have wider spreads. That's an issue because if you plan to avoid the commission (once your free trades are gone) by trading the free ETFs, you'll end up paying a relatively wider spread when you enter and exit the trade compared to a more liquid ETF. If you don't plan to trade the free ETFs, then any broker can execute 10000 shares in a split second so not sure why you're so excited about that.