Interactive Brokers Cash Interest Rates: Tiers & Benefits
Interactive Brokers pays interest on positive cash balances above $10,000 in USD. For accounts with a Net Asset Value (NAV) above $100,000, the interest rate can reach up to 4.33% annually. Accounts below $100,000 NAV still earn interest but at a lower, blended rate. Note that interest is applied only to cash in the securities segment of an account, with the first $10,000 ineligible for interest.
Interactive Brokers (IBKR) offers clients the opportunity to earn interest on uninvested cash balances. This is an attractive proposition in today’s volatile financial markets. Interest rates on balances vary by account type, with IBKR Pro holders receiving higher rates than IBKR Lite. This makes Pro a better option for larger accounts with high NAV (Net Asset Value). The minimum threshold for earning interest on uninvested funds is $10,000. Compared to competitors like Saxo and Schwab, IBKR’s rates on large balances can reach 4.33% per annum, making it an attractive option for active investors looking to take a break.
What is the cash interest rate for Interactive Brokers accounts?
Interactive Brokers (IBKR) offers interest on cash balances, with eligibility based on account balance and Net Asset Value (NAV). For USD cash balances, clients with a NAV exceeding $100,000 can earn an annual rate of 4.33% on amounts above $10,000. Balances under this threshold or for clients with a lower NAV typically earn no interest. The exact rates may vary slightly by currency, with some interest thresholds set higher for other currencies such as EUR or GBP.
Minimum balance requirements
To earn interest on cash balances at IBKR, the balance must exceed certain minimum thresholds depending on the currency. For example, interest on USD cash balances is only accrued on amounts exceeding $10,000, while for CAD this threshold is $13,000, and for GBP – £8,000. These terms apply to both account types, IBKR Pro and IBKR Lite. Interest is not accrued for smaller amounts. As you can see, clients with large balances have more income opportunities, and this will significantly improve their overall profitability with a high account balance.
Impact of net asset value (NAV)
A client’s NAV also impacts the interest rate. Clients with a NAV over $100,000 (or equivalent in other currencies) benefit from higher interest rates, such as up to 4.33% on USD balances in IBKR Pro accounts. In contrast, account holders with a NAV under $100,000 receive proportionally lower rates based on their NAV. A blended rate is used to calculate the interest rate in this case, with interest only accruing on the amount above the specified threshold, allowing Interactive Brokers to maintain competitive terms for different categories of clients.
What are the cash interest rates for IBKR Pro and IBKR Lite accounts?
The choice between IBKR Pro and IBKR Lite depends on the account size and the client's goals: IBKR Pro is suitable for active traders with large balances, while IBKR Lite is aimed at investors with smaller interest income requirements.
| Currency | IBKR Pro Rate | IBKR Lite Rate |
|---|---|---|
|
USD |
4.33% (BM - 0.5%) |
3.33% (BM - 1.5%) |
|
AED |
4.048% (BM - 0.75%) |
3.048% (BM - 1.75%) |
|
AUD |
4.164% (BM - 0.25%) |
2.914% (BM - 1.5%) |
|
CAD |
3.133% (BM - 0.5%) |
2.133% (BM - 1.5%) |
|
CHF |
0.312% (BM - 0.5%) |
0% |
|
CNH |
0.5% |
0.5% |
|
CZK |
2.173% (BM - 2%) |
1.173% (BM - 3%) |
|
DKK |
2.290% (BM - 0.5%) |
1.290% (BM - 1.5%) |
|
EUR |
2.682% (BM - 0.5%) |
1.682% (BM - 1.5%) |
|
GBP |
4.488% (BM - 0.5%) |
3.488% (BM - 1.5%) |
|
HKD |
3.303% (BM - 0.75%) |
2.303% (BM - 1.75%) |
|
HUF |
3.309% (BM - 3%) |
0% |
|
ILS |
0% |
0% |
|
JPY |
-0.116% (BM - 0.25%) |
0% |
|
KRW |
1.75% (BM - 1.5%) |
1.5% (BM - 2%) |
|
MXN |
7.443% (BM - 4%) |
3.443% (BM - 5%) |
|
NOK |
2.401% (BM - 2%) |
0.401% (BM - 3%) |
|
NZD |
2.138% (BM - 2.5%) |
1.138% (BM - 3%) |
|
PLN |
3.685% (BM - 2%) |
1.685% (BM - 3%) |
|
SAR |
5.093% (BM - 0.75%) |
4.093% (BM - 1.75%) |
|
SEK |
2.560% (BM - 0.5%) |
1.560% (BM - 1.5%) |
|
SGD |
2.054% (BM - 1%) |
1.054% (BM - 2%) |
|
TRY |
5% |
4% |
|
ZAR |
6.812% (BM - 1%) |
5.812% (BM - 2%) |
BM (Benchmark Rate) is the base rate on which interest rates for cash balances at Interactive Brokers are calculated. This rate is a benchmark to which a certain percentage is subtracted or added depending on the account type (IBKR Pro or IBKR Lite). For example, for IBKR Pro the rate might be calculated as “BM - 0.5%”, which means that 0.5% is subtracted from the current base rate to arrive at the final interest rate for a particular tier.
For example, for an entry like:
PLN (Polish Zloty):
-
IBKR Pro: 3.685% (BM - 2%)
-
IBKR Lite: 1.685% (BM - 3%)
The interpretation is as follows:
-
IBKR Pro: The interest rate for balances in PLN is calculated as the base rate (BM) minus 2%. If, for example, the base rate (BM) is 5.685%, then the rate for IBKR Pro will be:
5.685%−2%=3.685%
-
IBKR Lite: For the same balance in PLN, the rate for IBKR Lite is calculated as BM minus 3%. If BM is 4.685%, then the rate for IBKR Lite will be:
4.685%−3%=1.685%
Thus, the interest rates of IBKR Pro and IBKR Lite depend on the base rate, which can change, and are reduced by the specified percentages (in this case, by 2% and 3%, respectively).
The Benchmark Rate at Interactive Brokers is revised daily based on market conditions and changes in interbank interest rates. This rate is dynamic and adjusts to reflect current changes in the foreign exchange and lending markets. Clients can see the latest Benchmark Rate values on the Interactive Brokers platform and via the Interest Rate Calculator for their account balances.
How does Interactive Brokers calculate interest on cash balances?
Interactive Brokers (IBKR) uses a "blended rate" system to calculate interest, which depends on the size of the cash balance and the total NAV (Net Asset Value) in the account. The rate calculation is based on the base rate (Benchmark Rate) taking into account minimum thresholds and the NAV level, with different interest rates applied for balances above a certain threshold.
Example calculation for accounts with a NAV of less than $100,000
If the NAV of an account is, for example, $50,000, the client receives an interest rate proportionally reduced from the rate for NAV over $100,000. For example, if the rate for NAV> $100,000 is 4.33% on USD balances, then for an account with a NAV of $50,000 the rate could be 2.165%, i.e. half of the base rate.
Example for high NAV accounts
For clients with a NAV above $100,000, the rate on USD balances above $10,000 can be as high as 4.33% for IBKR Pro and 3.33% for IBKR Lite. For example, an $80,000 balance would only earn 4.33% interest on the amount above $10,000, or $70,000. This calculation allows for more efficient management of large balances, providing increased returns for clients with larger capital.
For convenience, IBKR provides an interest rate calculator where clients can enter their current balance and NAV to see the exact blended rate for each currency and estimate potential interest payments.
Programs and benefits for large clients
For clients of Interactive Brokers (IBKR) with large currency balances, a special automatic currency exchange program is available — FX Auto Swap Program. This service is designed to optimize the return on cross-currency positions and uses the mechanisms of the interbank market to minimize interest rate spreads. The program implements a strategy of sequential forward exchange (FX swap), within which each currency position is automatically re-issued the next day, which allows you to effectively manage the costs of holding large currency positions. This program is only available to clients with currency balances of USD 10 million or equivalent in other currencies and requires professional status in most regions.
Participation in the FX Auto Swap Program allows clients to benefit from tight spreads applied in the interbank market, which reduces the overall cost of servicing positions. The program does not charge additional fees and is suitable for investors who actively manage multi-currency portfolios and want to increase returns while minimizing losses on currency differences.
To maximize profits, monitor the Benchmark Rate changes and the terms of use of IBKR Lite and Pro accounts
One of the best ways to earn more interest on your cash at Interactive Brokers is to divide your cash between a couple of currencies where rates tend to be favorable, like USD or GBP. With this, you can benefit from holding cash where rates are higher while also minimizing the impact of currency swings. For example, keeping some balance in GBP might get you a better return than USD alone. The Interest Rate Calculator on IBKR can help you explore which currency combinations yield the highest interest based on your total account value.
Another useful tip is to consider boosting your Net Asset Value (NAV) slightly if it’s close to $100,000, as crossing this threshold can get you better rates on your cash balance. Even a temporary increase can qualify you for the top-tier interest rate, especially if you’re holding a larger cash reserve. Also, make sure your funds are in the “securities segment” of your account, as IBKR only pays interest on cash held there, not in the commodities segment. This way, you’re setting up your account to get the most out of every dollar.
Furthermore, a final tip is to closely monitor the Benchmark Rate, as it can change regularly. This is often overlooked by IBKR users, but rates adjust daily and can significantly impact your overall returns, especially if your NAV is below $100,000. It is helpful to use the built-in rate calculator on the IBKR platform to more accurately understand how much income you can earn under current conditions.
Conclusion
When choosing between IBKR Pro and IBKR Lite, consider your goals and account size, as rates and terms may vary based on these factors. Large account holders can maximize returns by using programs like FX Auto Swap and controlling changes in the base rate. The availability of minimum thresholds for interest accrual also highlights the benefit for holders of large balances. These features make IBKR an attractive choice for investors looking to improve the return on their capital.
FAQs
How to optimally distribute funds between currencies to maximize income on balances?
It is most profitable to distribute funds between currencies with high rates and significant balances. It is also important to evaluate the exchange rate and regularly recalculate cash positions, which helps to minimize commission costs and ensure maximum profitability in the face of currency fluctuations.
How often should you review the size of cash balances to increase profitability?
It is recommended to review the balance quarterly or when the base rate changes significantly. Regular assessment helps to adjust the strategy, if necessary, switching between currencies and increasing NAV for more favorable rates.
What additional cash position management tools can be useful?
Using swaps and forward contracts can reduce the cost of holding currency positions and protect against exchange rate fluctuations. These tools are recommended for large accounts and active users with experience working with currency positions.
How to distribute funds between accounts to get the most out of interest rates?
It is useful to have different accounts for active trading and long-term holding of funds. This allows you to use more favorable rates on large balances, minimize operating costs and flexibly adjust cash reserves depending on strategy and risks.
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Team that worked on the article
Maxim Nechiporenko has been a contributor to Traders Union since 2023. He started his professional career in the media in 2006. He has expertise in finance and investment, and his field of interest covers all aspects of geoeconomics. Maxim provides up-to-date information on trading, cryptocurrencies and other financial instruments. He regularly updates his knowledge to keep abreast of the latest innovations and trends in the market.
Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data. He is also an educator in the field of finance and technology.
As an author for Traders Union, he contributes his deep analytical insights on various topics, taking into account various aspects.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).