Anyone else seeing 4.2% interest on EUR? Is this a mistake?

[wrennelson143]

Hi all, I’ve moved my EUR to Trading 212 last week because of the announced 4% interest.
In the app it displays 4.20% now - is it just me?
Thanks!

https://imgur.com/a/5g46bTt

 

[wrennelson143]

Thanks everyone - Trading 212 just announced it in Twitter - https://x.com/trading212/status/1745051812846014672?s=46&t=CU1woW0GcdkjZgBlc-Ot_w

It’s official, we are really getting the higher rate!

 

[buddhisticcowboy]

@wrennelson143 It's already in Reddit ads too.

 

[coffeegrinder]

@wrennelson143 Anyone know how the money is secured though? Up to 20K by T212 as a broker in Cyprus?

In their invest terms under client money:

13.7. However, in the event of failure (for example,
due to the insolvency) of a third party, as your client money will be held with other customers' money in a pooled client money account or QMMF in the event that the third-party bank holding the money defaults and there is a shortfall, you agree to share
proportionately in that shortfall with other creditors of the third party where your client money is deposited.

Doesn't sound very convincing or straight-forward, I'd definitely not hold my emergency fund here.

 

[lisek]

@coffeegrinder QMMFs is what the your bank uses anyways. Regardless, T212 is not a bank and it theory it can't be as safe as a bank. In practice - I think it's safe, definitely safer than some smaller banks.

 

[jsis]

@lisek up to 100k in Eurozone is insured by the state. There can't be any question if a state will fail to pay, but a broker will not. On lurge larger than 100k we could then debate this, although who would hold 100k as cash in a broker just for the interest

 

[dennisk]

@jsis Damn, this is hard to read

 

[christiangirl4life]

@jsis Depends whether the cash on T212 is considered an investment or deposit.

Tupically EU imposes 100k guarantee on deposits and 20k in investments.

Not sure under which category the cash inT212 fall under in this case.

 

[jsis]

@christiangirl4life

Tupically EU imposes 100k guarantee on deposits and 20k in investments.

I don't think these rules apply to cash held in a broker. Although I am not sure

 

[judahs_lion]

@lisek I have more confidence in some brokers rather than some banks

 

[wrennelson143]

@coffeegrinder They said money is either in term deposits (bank guarantee) or in money-market funds (premium government bonds). Either way it’s safe by any standards, I wouldn’t deposit my funds otherwise.

 

[mkrist]

@wrennelson143 Then they are full of shit. No euro denominated A (or higher) rated government bond pays much more than 3%. Whatever they are doing to gain that extra percentage point is a lot of extra risk.

 

[lovelygrace]

@mkrist €STR is 3.9%, so it's possible to get higher than 3%.

You can get €STR with XEON.

 

[coffeegrinder]

@wrennelson143 Yeah but bank guarantee up to which amount per investor? It doesn't state that anywhere, so in the worst case scenario all Trading212 funds at one bank would be counted together and only secured up to 100K total (!).

 

[endeavour]

@coffeegrinder It’s 20k if you’re in Cyprus branch

 

[wrennelson143]

@coffeegrinder You are right, but those banks are Barclays and JP Morgan. If anything happens with these banks - the whole economy is f*cked.

 

[coffeegrinder]

@wrennelson143 How do we know the money is only at those banks? If I'm not mistaken, the terms say our money could be at any regulated bank within and outside the EU.

For me the whole thing gives me this impression right now:
- Zero info on which MMF is being used (in the risk disclosure it says you may get back less than you deposited btw)
- No info on up to which amount our money is secured when it's sitting at a partner bank (deposit guarantee or investor compensation?)
- No info on which banks are used
- Basically, just "trust us (T212), a financial institution regulated in Cyprus, we'll take good care of your money".

To each their own I guess, but I'd personally stick to Trade Republic's 4% with the 100K deposit guarantee if you have access to it.

 

[wrennelson143]

@coffeegrinder Man, I’m not Trading 212’s advocate so I don’t want to make “you believe” anyone. I’m with them since they were broker only in the UK, so when I joined it was the just the FCA that regulated them. Apparently Cyprus became a thing after Brexit - so they haven’t become less reputable because of that. On their site they indicate JPM and Barclays https://www.trading212.com/money-protection

You imply that they are lying - okay, I really don’t know if that’s possible for such a large entity. But I’m no expert either.
If you are already with Trade Republic - good, I’ve also considered them for part of my EUR.

 

[live4christ2016]

@coffeegrinder

XEON or CSH2

It's not only them that are doing this don't worry...it's a trending practice with brokers these days to swap or put the non invested cash in a MMF offering you a short term return on your cash like a savings account. Trade Republic is doing a similar thing and they pay 4%. Just park a cash reserve in and not your entire life savings, and do not keep it more then 6M.

 

[johnisweeney]

@wrennelson143 There are also real banks with 4% interest with the EU deposit guarantee of 100k which is much safer