Trade Republic, a popular stock trading app, adds 2% interest to cash

by Ana Lopez

While German startup Trade Republic is better known as a mobile app that helps you buy and sell stocks, the company adds interest to uninvested money. Users who hold cash in their Trade Republic account receive 2% annual interest.

This feature reminds me of Robinhood’s brokerage cash sweep program. In the US there are currently Robinhood users to get 1.5% interest on cash held in their accounts.

With this new feature, Trade Republic is likely to attract new customers seeking higher interest rates as inflation impacts European consumers’ savings. Of course, the company probably hopes that users will also start trading stocks with its app. Trade Republic makes money from the flow of payments for orders and some small fees.

To be more precise, Trade Republic says interest is calculated daily and startup accounts are credited once a month. Users only accrue interest on cash balances up to $50,000. For now, the company is promising 2% APY, so it will be interesting to see if it can maintain high interest rates over time.

“With 2% effective annual interest per year, we pass on the benefits of the new interest rate environment directly to our clients. Any investor can now benefit directly and easily from interest,” said co-founder Christian Hecker in a statement.

Trade Republic currently operates in 17 European countries and was one of the fintech startups to raise a mega round of funding in 2021. It reached a $5 billion valuation after the $900 million round.

2022 was a little different. Company announced a $264 million (€250 million) Series C renewal, as well some people fired. In addition to stocks, Trade Republic also offers exchange-traded funds (ETFs), derivatives, and cryptocurrencies.

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