Best UK Brokers For Earning High Cash Interest 2024
Cash sitting uninvested in your trading account can be a productive asset in your portfolio, particularly in fluctuating interest rate environments. To capitalise on this, many investors are considering interest incentive programs offered by a growing number of brokers in the UK. These programs automatically add interest to your unused cash balance, ensuring your British Pounds are productive until you decide to invest them.
UK Brokers Paying Interest On Cash Balances
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Founded in 2002 in Poland, XTB now serves more than 1 million clients. The forex and CFD broker combines a heavily regulated trading environment with an extensive selection of 6400+ assets and a commitment to trader satisfaction, featuring an intuitive in-house platform with superb tools to support aspiring traders.
Interest Rate: USD: 5%, GBP: 5.2%, EUR: 3.8%
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Established in 1989, CMC Markets is a respected broker listed on the London Stock Exchange and authorized by several tier-one regulators, including the FCA, ASIC and CIRO. More than 1 million traders from around the world have signed up with the multi-award winning brokerage.
Interest Rate: USD: 2%
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AvaTrade is a leading forex and CFD broker, established in 2006 and regulated across 9 jurisdictions. Over 400,000 users have signed up with the broker which processes over 2 million trades each month. The firm offers multiple trading platforms, including MT4, MT5, and a proprietary WebTrader. 1250+ financial instruments are available for trading, from CFDs to AvaOptions and now AvaFutures, alongside a comprehensive education center and multilingual customer support.
Interest Rate: USD: 2.7%
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Interactive Investor are a hugely respected, FCA-regulated investing firm. The trading platform is easy-to-use while the sign-up and deposit process is straightforward for new investors. ii also has a long track record and a string of industry awards under its belt.
Interest Rate: USD: 5.1%, GBP: 4.85%
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Interactive Brokers (IBKR) is a premier brokerage, providing access to 150 markets in 33 countries, along with a suite of comprehensive investment services. With over 40 years of experience, this Nasdaq-listed firm adheres to stringent regulations by the SEC, FCA, CIRO, and SFC, amongst others, and is one of the most trusted brokers for trading around the globe.
Interest Rate: USD: 4.8%, GBP: 4.7%
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Webull is a multi-regulated trading app that offers stocks, options, forex, cryptos, ETFs, fractional shares and more. The firm is authorized by the SEC, FINRA and FCA and continues to uphold a strong trust rating. Low fees, no minimum investment and generous welcome bonuses have made the discount broker popular with online investors.
Interest Rate: USD: 5%
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Freetrade is a London-headquartered investing platform that offers zero-commission trading on thousands of UK, European and US stocks and ETFs through a beginner-friendly platform. Open a standard investment account, a self-invested pension or a stocks and shares ISA and start building a portfolio from as little as £2.
Interest Rate: GBP: 5%
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Revolut has emerged as the most downloaded financial app in 11 countries with over 45 million users and more than $23 billion held in customer balances. It facilitates commission-free trading on over 2000 stocks and commodities, alongside 185 cryptos with a minimum investment of just $1. The mobile trading experience remains market-leading for casual investors seeking low, transparent fees.
Interest Rate: USD: 3.48%, GBP: 4.75%, EUR: 2.12%
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Swissquote is a Switzerland-based bank and broker that offers online trading and investing. The company has a high safety score and is listed on the Swiss stock exchange. The firm offers a huge range of products, from stocks, ETFs, bonds and futures to 400+ forex and CFD assets. Hundreds of thousands of traders have opened an account with the multi-regulated brokerage. Clients can get started in three easy steps while 24/7 customer support is available to assist new users.
Interest Rate: USD: 1.75%, GBP: 2%, EUR: 1.5%, CHF: 1%
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Saxo Markets is a multi-award-winning trading brokerage, investment firm and regulated bank. With a huge 72,000+ trading instruments, plus investment products and managed portfolios, clients have no shortage of opportunities. The trusted brand also offers transparent pricing and top-tier regulatory protection from 10+ agencies including FINMA, FCA & ASIC.
Interest Rate: USD: 4%, GBP: 3.9%, EUR: 2.6%
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Trading 212 is a European and UK-regulated CFD broker that also offers stock investing and ISAs. It’s best known for its commission-free trading model and beginner-friendly app, which has helped it attract 2.5 million users and £3.5 billion in client assets.
Interest Rate: USD: 5.1%, EUR: 4.2%, GBP: 5.2%, CHF: 1.5%, HUF: 7%, PLN: 6%, CZK: 6%, RON: 5%, DKK: 2.5%, NOK: 3%, SEK: 3%, CAD: 3.5%, BGN: 2.5%
Note: interest rates are subject to change. Check the current rate available before depositing funds.
What To Consider With An Interest-Earning Investment Account
When evaluating what to do with uninvested cash, consider these factors to ensure your money works effectively for you:
- Weigh the interest rates available for the amount you plan to leave in your investment account. For instance, Swissquote is paying interest up to 2% on balances up to 50,000, however the interest rate drops if you want to deposit more than that. Alternatively, XTB serves British traders of all budgets, paying 5.2% on all balances.
- Consider whether traditional savings accounts offer higher interest rates. At the time of writing, I evaluated the options available and Wealthify stood out by offering 4.91% in their Instant Savings account, while Virgin Money was offering 5.01% in their Defined Access account. The downside is convenience – you’ll need to move funds to an investment account to capitalise on trading opportunities.
- The safety of your cash is another critical aspect. Verify whether your uninvested cash will be protected by insurance schemes like the Financial Services Compensation Scheme (FSCS) in the UK – which insures deposits up to £85,000 per eligible person and up to £170,000 for joint accounts. XTB, eToro and Interactive Investor, for example, are all regulated by the FCA and provide deposit protection through the FSCS.
Interest rates are determined by the rates brokers receive from the banks where they hold your cash. If there are changes in the Bank of England’s base rate you can anticipate corresponding adjustments in the interest rates on your cash.
Pros & Cons Of Interest-Adding Brokerage Accounts
Pros
- Interest automatically added to unused cash helps mitigate the opportunity cost of holding onto idle funds, allowing you to earn a return on funds that would otherwise earn no interest.
- Some brokerage accounts give you the flexibility to earn interest on the funds held within it, and to utilise the account as a financial tool to pay bills directly from your account.
- Account funds remain liquid and accessible for trading or withdrawal, providing flexibility to capitalise on market opportunities or meet unexpected financial needs.
- Interest earned can be automatically reinvested, compounding returns over time without requiring manual intervention.
Cons
- Although earning interest on your uninvested cash is a pleasant bonus, it may not amount to a substantial sum. If you want to earn risk-free interest, you may be better off considering a high-yield savings account.
- While a broker may offer an attractive interest rate on uninvested funds, they may have a minimum balance requirement and will only pay interest on all your uninvested cash if your total balance exceeds a specific threshold.
- Some brokers have account fees and restrictions, which may limit how often you can transfer money in and out.
Comparing different brokerage offers and their terms can help you choose the best place for your uninvested cash, balancing earning interest and having funds readily available for investment opportunities.
Bottom Line
If you want to attain the returns of a high-yield savings account while maintaining nearly the same level of security as a bank, there are possibilities to achieve this within your brokerage account.
Utilising your trading account for banking purposes can also aid in consolidating your financial affairs under one provider, potentially offering additional advantages in terms of simplicity and convenience.
But while many investors view cash interest programs as temporary holding spots, it’s common for uninvested cash to remain there for an extended period. As such, ensure that your cash is positioned optimally for your circumstances, for example, maximising the interest rate.
To find the right platform for you, see our ranking of the best UK brokers paying cash interest.
FAQ
Which UK Investment Platform Pays The Highest Cash Interest?
eToro and Trading 212 are among the highest interest-paying investment platforms in the UK, offering up to 5.3% and 5.1% respectively, on cash balances.
We’ve compiled a list of the best brokers paying interest on idle funds in the UK, considering their overall trading environment, alongside factors like interest earned on cash.
Do You Have To Pay Tax On Interest Earned From Brokerage Accounts?
In the UK, you may owe tax on interest earned through a brokerage account. HMRC sets the rules on how much tax you will pay, which varies depending on your personal allowance, personal savings allowance, and the starting rate on savings.