Trade Republic is currently informing its customers that it pays 2 percent interest p.a. on credit balances. This is not only aimed at existing customers, but also at new customers. According to the statements of the neobroker, the interest payment is made monthly and logically refers only to the uninvested balance. Trade Republic writes that they do not pay interest “basically open end”, instead interest is paid on a balance of up to 50,000 euros.
Is Trade Republic really paying 2 percent interest?
An end to negative interest rates. Deposit interest rates are back and banks are outbidding each other with attractive offers. Today, Trade Repubic announced 2 percent interest on its deposit account.
2 percent interest is now available on the uninvested balance at Trade Republic. In order to take advantage of the offer, you need to log in, agree to the terms and conditions and thus activate the interest offer.
The offer becomes visible when you click on the “little man” in the lower right corner. If you can’t find the offer, updating the app will help (it did for me). Some users also report that they have fixed the problem by reinstalling the app and the offer became visible.
Important: Interest is available for a sum of up to 50,000 euros. The interest is calculated to the day and credited at the end of the month. The effective annual interest rate is thus even marginally above the 2 percent, because the interest brings in the next month directly interest again (compound interest effect).
Since Trade Republic’s partner banks are all in the statutory deposit insurance, the money is protected up to 100,000 euros under the European deposit insurance.
Taxes are also due on the interest. For investors in Germany, Trade Republic directly deducts the final withholding tax.
Here you can open a Trade Republic account, if you don’t have one yet.
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So how is it possible that Trade Republic offers 2 percent interest?
This is related to the rise in interest rates in the short maturity range in recent weeks. These interest rates are mainly controlled by the ECB. Due to the increase in the key interest rate, it is now possible for banks to pay interest again on call money accounts or on the current account. Even short-dated Bunds are currently yielding more than 2 percent.
After a phase of zero interest rates lasting several years, the ECB began to raise key interest rates in the summer of 2022. In four interest rate steps to date, the deposit rate was raised from -0.5% to 2.0%.
The deposit rate is the interest rate at which banks can deposit their surplus liquidity with the ECB. This is therefore the interest rate that banks should largely credit to their customers, as they can earn it themselves without risk.
What is Trade Republic?
Trade Republic is a low-cost broker that allows you to trade and hold securities such as stocks or ETFs. If you can imagine managing your securities account exclusively on your cell phone, you will get an easy-to-use app here.
The Trade Republic app for iOS and Android offers investors the opportunity to trade German and international stocks and ETFs as well as derivatives easily and commission-free: mobile, intuitive and fast. When trading via the Trade Republic app, there is only a third-party fee of one euro per trade.
Is Trade Republic a trustworthy and legit company?
If you are asking yourself if you should trust Trade Republic or not, I have written a comprehensive article with lots of information about the trustworthyness of Trade Republic.
In case you are looking for a simple answer: Yes, Trade Republic is a trustworthy company offering a legit service.
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