Popular stock trading software Trade Republic increases the interest rate on cash by 2%

Trade Republic, a German business, is more known for its mobile app that makes it easier to purchase and sell stocks, but it also offers interest on unspent funds. Users will earn 2% a year in interest on whatever cash they have in their Trade Republic accounts.

I’m reminded of Robinhood’s brokerage cash sweep program by this function. Users of Robinhood in the United States currently get 1.5% interest on the money in their accounts.

Due to the impact of inflation on European consumers’ savings, Trade Republic will certainly draw in new clients who are searching for better interest rates thanks to this new service. Naturally, the corporation undoubtedly expects that customers will begin trading stocks through its app. Payment-for-order flow and a few small fees are how Trade Republic generates revenue.

More specifically, Trade Republic specifies that daily interest calculations will take place and that the business will credit user accounts once every month. Interest is only paid to users with cash balances up to €50,000. It will be fascinating to see if the company can continue to offer a high interest rate over time given that it currently claims 2% APY.

“We are passing on the advantages of the new interest rate environment straight to our consumers with 2% effective yearly interest each year. Every investor can now simply and directly profit from interest, according to co-founder Christian Hecker.

Trade Republic, one of the fintech businesses that obtained a massive capital round in 2021, today operates in 17 European nations. After its $900 million round, it was valued at $5 billion.

2022 was a little bit unique. While also making some layoffs, the business disclosed a $264 million (€250 million) Series C extension. Trade Republic provides exchange-traded funds (ETFs), derivatives, and cryptocurrencies in addition to shares.