IBKR interest rates on cash balances

[nedsibley]

Hello,

New member here. Since interest rates on savings account are very low here in Switzerland (below 2%), does anyone recommend holding cash balances on their IBKR account, converting to another currency such as GBP or USD and earning interest? The balance has to be above USD10k or equivalent but the interest rates are much higher eg. 4.83% for USD and 4.733% for GBP. Is this a good idea or does the currency risk eliminate the extra interest earned?

Please see following link for IBKR interest rates:

Interest Rates | Interactive Brokers LLC

How much interest is your broker paying you? IBKR clients can earn market rate interest on instantly available cash balances.

www.interactivebrokers.com

Many thanks,
Ned

 

[Baptiste Wicht]

Hi Ned

This is generally not recommended unless you are planning to use the other currency.
The risk of going from CHF -> USD and then USD -> CHF will generally be higher then the gains in the interest rate arbitrage.
There is a reason the CHF has a lower interest rate, it's because we have a strong currency and lower inflation.

 

[newiron8]

My reason to go with IB was to be able to sell otm puts and earn on the idle cash at the same time.

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