Freetrade to pay 3% interest on uninvested cash
It may well be time for the retail FX industry to revisit this avenue as banks and ISAs in the UK give no interest at all, hence there is no incentive to use them and every incentive to seek out the new, properly organized and FSCS-backed solutions from electronic investment apps
Commission-free investment application Freetrade today announces that Plus members will receive 3% interest on uninvested cash, up to £4,000.
This is the latest exciting feature to be added to Freetrade’s premium subscription, Plus. Interest will be calculated on cash balances on a daily basis and will be paid monthly. The rate of interest offered by Freetrade is well above the industry average of 0% offered on general investment and ISA accounts by major retail brokers in the UK.
Freetrade understands that long-term investors want to be careful not to rush into new positions, while remaining conscious about the effects of cash drag on returns. With that in mind, this feature is designed to help Plus members keep their money generating returns, even while they are between investments.
This announcement follows a year of exponential growth. Since its public launch in October 2020, there has been a twelve-fold increase in Plus membership. Freetrade has grown its UK customer base more than five fold in the last twelve months (to over 250,000) and trade volumes for the year exceeded £1 billion in September. Recently, Freetrade announced its plans to open a European HQ in Stockholm ahead of its European expansion.
Adam Dodds, CEO and Founder of Freetrade, said: “We’ve always believed that retail brokers should be doing more to help their customers put their money to work. That’s why we’re really excited to announce the launch of this new feature for Plus members, that means that our customers’ cash will be able to generate returns while they are diligently managing the cost basis for their positions.”
Whilst this is clearly an attempt to retain customers by making their margin capital ‘work’ for them, an initiative attempted by some retail FX brokerages in the past, it is fair to say that it does have merit, especially given the appalling zero interest offered on ISAs and traditional savings accounts, which have created a disincentive for any retail client to use banks for such investments.
It may well be time for the retail FX industry to revisit this avenue