Using a Cash Account is a safe and effective way to hold your cash that is available for you to invest with. All the money held in your Cash Account can be used directly for trading on your investment account.
Unfortunately, the Cash Accounts – like all other bank accounts that depend on the interest rates set by the European Central Bank – do have a downside. Namely, the possibility of a negative interest rate.
However, starting August 1st, 2022, there is no negative interest rate on Cash Accounts denominated in Euro.
Should the interest rate decrease again in the future, we will partially compensate these interest costs to limit the costs of investing with us. This is done on a non-committal basis in the following manner:
- Compensation will only be given for the first €2.500,- in cash holdings for the Cash Account in your base currency, which is EUR for Irish clients. Negative interest on amounts higher than this will not be compensated.
- If you have paid €350 or more in transaction fees during a 60-day period, compensation will be given for the first €100,000 in cash holdings for the Cash Account in your base currency. This will be reviewed at the beginning of every month.
How it works
Every day at 13:00 GMT, we will send a file to flatexDEGIRO Bank with the cash balance from the previous day at market close (21:00 PM GMT) for the calculation of the interest rate. The interest charges will be calculated by multiplying that balance by the negative interest rate and the number of days that the balance on the cash account was unchanged. These calculations are visible via the ‘General account information’ reports under ‘Activity’ à ‘Reports’.
For example, let’s say you hold €3.000 in your Cash Account, with an interest rate of -0.50% per year for the full year. The total interest charges will be €15. Because we will compensate the charges that were caused by the first €2.500, the total cost to you will be €2.50.
Please note that in some cases, interest charges can occur on your Cash Account, even though you have used a direct deposit to fund investments on the same day as the deposit was made. This is because the synchronization of the activities on your investment account and your Cash Account.
You hold €50,000 in your Cash Account, with an interest rate of 0.50% yearly. However, you have paid over €350 in transaction fees during a 60-day period. The €250 incurred as a result of negative interest is then compensated by DEGIRO.