Interactive Brokers Interest on Cash Balances

[Citylights18]

An alternative to picking a fly by night High Yield Savings account to get 4% on a $5000 balance only to see it drop back to 2.5% when rates cut is to tap into a brokerage cash sweep.

IBKR at the moment is paying 3.83% if you have 100k in your account excluding the first 10,000 which doesn't pay interest. In other words you can get a quality yield if you are willing to concentrate money in their brokerage account. Their accounts also support direct deposit and debit card to be able to maximize interest earning time.

https://www.interactivebrokers.com/en/accounts/fees/pricing-interest-rates.php

IBKR also has a stock yield enhancement program. If you participate you get an extra % equal to half the lending rate in form of cash payment to your account. This is in addition to anything else you would normally receiving like a dividend and any appreciation on the asset. Way to earn while keeping your money liquid for when you need it instead of tying it up in a CD.

https://www.interactivebrokers.com/en/index.php?f=46942

[Anonymous]

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@Citylights18 wrote:

An alternative to picking a fly by night High Yield Savings account to get 4% on a $5000 balance only to see it drop back to 2.5% when rates cut is to tap into a brokerage cash sweep.

IBKR at the moment is paying 3.83% if you have 100k in your account excluding the first 10,000 which doesn't pay interest. In other words you can get a quality yield if you are willing to concentrate money in their brokerage account. Their accounts also support direct deposit and debit card to be able to maximize interest earning time.

https://www.interactivebrokers.com/en/accounts/fees/pricing-interest-rates.php

IBKR also has a stock yield enhancement program. If you participate you get an extra % equal to half the lending rate in form of cash payment to your account. This is in addition to anything else you would normally receiving like a dividend and any appreciation on the asset. Way to earn while keeping your money liquid for when you need it instead of tying it up in a CD.

https://www.interactivebrokers.com/en/index.php?f=46942

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So the rate is 3.47% on $100K, going up to 3.83% as the cash gets larger (because of the first $10K getting nothing).  Other places have things like the stock yield enhancement program, and as IBKR notes, it's not quite risk free.   They also have a FX version for your cash.   Personally, I think a "fly by night High Yield Savings account" might be less risky!   (Well, I tend to avoid really new HYSA anyway)

[iced]

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@Citylights18 wrote:

An alternative to picking a fly by night High Yield Savings account to get 4% on a $5000 balance only to see it drop back to 2.5% when rates cut is to tap into a brokerage cash sweep.

IBKR at the moment is paying 3.83% if you have 100k in your account excluding the first 10,000 which doesn't pay interest. In other words you can get a quality yield if you are willing to concentrate money in their brokerage account. Their accounts also support direct deposit and debit card to be able to maximize interest earning time.

https://www.interactivebrokers.com/en/accounts/fees/pricing-interest-rates.php

IBKR also has a stock yield enhancement program. If you participate you get an extra % equal to half the lending rate in form of cash payment to your account. This is in addition to anything else you would normally receiving like a dividend and any appreciation on the asset. Way to earn while keeping your money liquid for when you need it instead of tying it up in a CD.

https://www.interactivebrokers.com/en/index.php?f=46942

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Fidelity's money market position (SPAXX) is currently offering similar rates with no strings attached and no minimum. It's currently sitting at 3.91% but has been over 3% since the beginning of November.

[Citylights18]

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@Anonymous wrote:

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@Citylights18 wrote:

An alternative to picking a fly by night High Yield Savings account to get 4% on a $5000 balance only to see it drop back to 2.5% when rates cut is to tap into a brokerage cash sweep.

IBKR at the moment is paying 3.83% if you have 100k in your account excluding the first 10,000 which doesn't pay interest. In other words you can get a quality yield if you are willing to concentrate money in their brokerage account. Their accounts also support direct deposit and debit card to be able to maximize interest earning time.

https://www.interactivebrokers.com/en/accounts/fees/pricing-interest-rates.php

IBKR also has a stock yield enhancement program. If you participate you get an extra % equal to half the lending rate in form of cash payment to your account. This is in addition to anything else you would normally receiving like a dividend and any appreciation on the asset. Way to earn while keeping your money liquid for when you need it instead of tying it up in a CD.

https://www.interactivebrokers.com/en/index.php?f=46942

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So the rate is 3.47% on $100K, going up to 3.83% as the cash gets larger (because of the first $10K getting nothing).  Other places have things like the stock yield enhancement program, and as IBKR notes, it's not quite risk free.   They also have a FX version for your cash.   Personally, I think a "fly by night High Yield Savings account" might be less risky!   (Well, I tend to avoid really new HYSA anyway)

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I wasn't talking about portfolio risk I was talking about rate risk if the entire move to an online HYSA was to munch on some nice yields.

Before the great financial crisis I moved over to NFCU for their 3.5% checking account rates when my bank at the time was only 1%. I thought for sure I had picked a winner in the checking account game that would continue to be a winner in the future. Boy was I wrong about that as now their top checking only pays out 0.45% APY. My point here is I wouldn't necessarily assume Bank A has the overall highest rate and will continue to be the industry leader moving forward no matter what happens.

However a total banking solution through a brokerage like Fidelity or IBKR will stay bound by the Fed discount rate wherever it goes.