I'm looking into opening a Scottrade account in the future, and was wondering if they pay interest on cash in your brokerage account? Are the rates published anywhere?
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3 Answers
http://www.scottrade.com/online-brokerage/interest-margin-rates.html
Rates fluctuate based upon the federal funds rate.
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"Scottrade customers earn interest on uninvested deposits" That's the part I'm after. Is that the Credit Interest section?– MikeCommented Sep 7, 2011 at 5:30
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2@Mike I think you're right that it's the "Credit Interest Rates" tab. Commented Sep 7, 2011 at 13:55
As a longtime customer of Scottrade I want to say that I'm very happy with it. Now, to answer your question: they do give you a nominal cash interest rate but it is VERY low -- this past month it was 0.01% APYR. The interest that I earned in my Scottrade account in August (31 days) on average credit cash balance of $729.36 was $0.01.
I don't know if or where they publish the rate, but you would get a much better rate from an average savings account. However, you can purchase CDs/bonds/tbills through Scottrade if you want cash/safe investments.
These interest rates are very low. One of the reasons that I prefer E*Trade is because on their on-line savings account the interest rates are several times higher than on ScotTrade margin accounts (currently it's 0.7% on E*Trade, on any amount, IIRC).
The transfers between the accounts on E*Trade are immediate, and they allow using the money for investing immediately even for transfers from outside source. If you can wait a couple of days for the money to arrive before your investment (unless ScotTrade, like E*Trade, allow investing external transfers immediately), you can look at AMEX, ING Direct or Capitol One on-line savings accounts for even higher rates.
Oh, and needless to mention, on-line savings accounts are FDIC insured, I'm not sure if the uninvested deposits on Scottrade are.
answered Sep 7, 2011 at 20:13
