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Cash has become a more appealing asset class since central banks increased interest rates in 2022 and reverted to the norm. Younger traders who do not remember the 5%+ interest rate environment label it the new norm. While most Forex brokers do not pass on interest rate revenues, as outlined in their terms and conditions, a small minority began offering cash interest payments on free margin. Read my report and learn about the best cash-interest brokers and how much you can earn in passive income.
- AvaTrade, Highly regulated, choice of fixed or floating spreads.
- Tickmill, Hedging, scalping, and swing trading allowed with no restrictions.
- Interactive Brokers, The biggest online trading platform in the USA.
- Swissquote, A cutting-edge trading environment with an in-house liquidity aggregator.
- Trading 212, Daily interest payments on free margin and fractional share dealing from $1.
AvaTrade
In Summary Highly regulated, choice of fixed or floating spreadsAvaTrade offers VIP clients a three-tier system to earn interest on free margin. Traders can achieve VIP status by reaching at least $10,000 in account equity or a currency equivalent in British Pounds or Euros. Traders earn 1.5% annual interest in USD, 1.0% in GBP, and 0.5% in EUR in the Gold tier. It increases to 2.0%, 1.5%, and 1.0%, respectively, for Platinum, while Diamond earns 3.0%, 2.5%, and 2.0%, respectively. Therefore, I rank AvaTrade among the best cash interest brokers.
Interest rates are calculated annually but paid monthly. AvaTrade also features industry-leading education and trading tools, including AvaProtect.
Pros & Cons
- High quality educational offering via AvaAcademy
- Excellent choice of trading platforms catering to various trading needs
- Broad asset selection and cross-asset diversification opportunities
- Well-regulated and trusted broker with oversight from a central bank
- Trading costs competitive but nothing special
Tickmill
In Summary Hedging, scalping, and swing trading allowed with no restrictionsTraders can receive interest payments on free margin from an account balance of $100, £100, or €100 if they execute at least one trade every 30 days. These generous conditions place Tickmill among the best cash interest brokers. Tickmill calculates the interest payments daily and pays traders monthly. Traders receive up to 2.75% in USD and GBP accounts and up to 1.25% on EUR accounts.
Traders can use nine payment processors, including cryptocurrencies, with no limits on the amount of interest they earn. Tickmill maintains a competitive trading environment and cutting-edge trading tools to ensure traders have an edge.
Pros & Cons
- Competitive Spreads (low end)
- Scalping & Hedging
- No Choice of Platforms
- No Individual Stocks
Interactive Brokers
In Summary The biggest online trading platform in the USAI rank Interactive Brokers among the best cash interest brokers, as it pays an average annual interest rate of 3.351%. Traders must have a minimum net asset value of $80,000 with an available cash balance of $20,000 to receive interest payments of 1.532%. Traders with a minimum net asset value of $320,000 and an available cash balance of $80,000 qualify for an interest payment of 3.351%. This makes Interactive Brokers the highest-paying US-headquartered interest broker compared to brick-and-mortar brokers.
Interactive Brokers calculates interest rate payments daily with a one-business-day lag and pays traders monthly on the third business day.
Pros & Cons
- Excellent asset selection
- Superb trading infrastructure
- Ultra-low trading fees
- Cutting-edge trading platform
- Limited payment processors
Swissquote
In Summary A cutting-edge trading environment with an in-house liquidity aggregatorSwissquote pays interest on free margin on accounts held in CHF, EUR, USD, GBP, AED, and ZAR. Swissquote has no account minimums to qualify, placing it among the best cash interest brokers. The three-tier systems for CHF, EUR, USD, and GBP accounts have tiers from 0-50,000, 51,100 to 100,000, and 100,000+. CHF accounts qualify for 0.10%, 0.15%, and 0.25%, respectively. EUR accounts qualify for 0.30%, 0.75%, and 1.25%, USD accounts for 0.50%, 1.00%, and 1.75%, and GBP accounts for 0.75%, 1.25%, and 2.00%.
AED accounts receive 0.50%, 1.00%, and 1.25%, respectively, while ZAR accounts get 2.00%, 3.50%, and 5.00%.
Pros & Cons
- Broad-based asset selection of 3,000,000+ trading instruments
- Trustworthy, reliable bank, and publicly listed company
- Robo-Advisory developed by Quantitative Asset Management (QAM) division
- High minimum deposit and trading costs
- Limited deposit and withdrawal options
Trading 212
In Summary Daily interest payments on free margin and fractional share dealing from $1I rank Trading212 among the best cash interest brokers due to its extensive offering without balance limits, withdrawal restrictions, and daily payouts. EUR accounts receive an annual rate of 3.4%, USD of 4.1%, GBP of 4.9%, CHF of 1.5%, HUF of 7.0%, PLN of 6.0%, CZK of 3.7%, RON of 5.0%, DKK of 2.5%, NOK of 3.0%, SEK of 3.0%, CAD of 3.5%, and BGN of 2.5%. The rates reflect actual interest rates fairly, making Trading212 a leader in this category.
Trading212 keeps funds in qualifying money market funds and banks. A 0.15% currency conversion fee applies if applicable.
Pros & Cons
- High Level Educational Material
- World-wide Customer Support
- Demo Account
- Proprietary Platform Only
Top Cash Interest Brokers Comparison
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Regulators | ASIC, BVI, Central Bank of Ireland, FFAJ, FSCA, KNF, MiFID | CySEC, FCA, FSA, FSCA | ASIC, Central Bank of Ireland, CFTC, FCA, MAS, SEBI, SEC | DFSA, FCA, FINMA, MAS, MFSA, SFC | FCA, FSC Mauritius |
Year Established | 2006 | 2014 | 1978 | 1990 | 2006 |
Execution Type(s) | Market Maker | ECN/STP, Market Maker | Market Maker | Market Maker | Market Maker |
Minimum Deposit | |||||
Average Trading Cost EUR/USD | 0.9 pips | 0.1 pips ($1.00) | Account and account-tier dependent | 1.6 pips ($16.00) | 1.9 pips ($19.00) |
Average Trading Cost GBP/USD | 1.5 pips | 0.3 pips ($3.00) | Account and account-tier dependent | 1.8 pips ($18.00) | 2.9 pips ($29.00) |
Average Trading Cost Gold | $0.29 | $0.09 | Account and account-tier dependent | $0.47 | $0.68 |
Trading Platform(s) | Other, MetaTrader 4, MetaTrader 5, Proprietary platform, Web-based+ | MetaTrader 4, MetaTrader 5, Web-based | Proprietary platform | MetaTrader 4, MetaTrader 5, Proprietary platform, Web-based | MetaTrader 4, Proprietary platform |
Islamic Account | |||||
Negative Balance Protection | N/A | N/A | N/A | ||
| Visit Website | Visit Website | Visit Website | Visit Website | Visit Website |
What to Look for in a Cash Interest Broker
My listing of the best cash interest brokers focused on the criteria below, as these are necessary to traders.
The best cash interest brokers offer the following:
- Regulation: A clean regulatory record of 10+ years, ideally with a trader-friendly regulator.
- Interest Payments: I advise traders to reference interest rate payments to ensure they receive a competitive rate.
- Requirements: Some cash interest brokers have no or low minimum requirements, but others require more substantial criteria.
- Trading Fees: Commission-based trading fees are often cheaper than commission-based alternatives.
- Deposits and Withdrawals: No internal transaction fees and low minimum requirements with a choice of e-wallets and preferably cryptocurrency transactions.
How to Start Trading with a Cash Interest Broker
Trading with a cash interest rate broker is straightforward and requires little to no extra steps to start earning.
Here is how you start trading with a cash interest broker:
1. Evaluate the minimum requirements to qualify.
2. Reference the interest payments to ensure they are competitive.
3. Ensure your cash interest rate broker offers competitive trading conditions.
4. Fund your trading account.
5. Your cash interest broker will pay interest on free margin automatically.
Forex Trading Regulations Affecting Cash Interest Brokers
No rules, regulations, or restrictions prohibit brokers from paying interest, but traders should only trade with well-regulated brokers.
Tax Treatment of Cash Interest
Traders must pay taxes on income. Taxes are a complicated matter for traders and differ based on their tax residence. Therefore, I urge traders to consult a licensed tax professional in their region to ensure compliance with local tax rules.
Bottom Line
The best cash interest brokers have no or low minimum requirements and pay a fair interest payment on free margin to traders. While brokers began offering cash interest to compete and attract traders in a hyper-competitive market, not all cash interest brokers pay an attractive interest rate, which is better than not receiving income on idle cash. I recommend traders evaluate the trading conditions of a cash interest broker and view the interest as a bonus offer.
