Trade Republic 4% p.a Interests

[bryanparry]

It has recently come to my attention that Trade Republic will offer 4% p.a interests from October 1st 2023 and on.
Since I was planning to put my emergency funds there (10k), I was wondering whether TR has the same safety nets as normal band would have in this case. Can anyone shed some light on the issue?

N.B: I am still learning German and I couldn’t find information regarding this in English, hence why I am asking and not looking it up myself.

 

[melissa2016]

@bryanparry Just to keep in mind with the deposit account at trade Republic: Your first deposit is free! All deposits afterwards have a fee of 0.7%.. so if you have a lump sum of 50,000 euro make it your first deposit (earning 4% which is 2000euros-33% tax = €1340 a year (paid monthly 111.60 for all you Irish customers) It is certainly a great way invest your interest into stocks/index funds and such

 

[melissa2016]

I've come to understand this deposit fee for myself by depositing it myself, I didn't see this fee mentioned at all when I started. So it makes me wonder will there be any change in this fee after 1st of October.

I actually emailed the support team which said the following:

Dear Trade Republic Support Team,

I hope this message finds you well. My name is xxxxx, and I am a customer of Trade Republic. I am reaching out to inquire about any changes in the deposit fee and interest rates that will be effective from the 1st of October.

I have heard about the increase in interest rates to 4% p.a. on uninvested cash up to €50,000 starting from October 1st, and I am considering making a significant deposit. However, I am concerned about any potential changes in the deposit fee, which I understand is currently 0.7%.

Could you please confirm whether there will be any changes to the deposit fee starting from October 1st? Additionally, could you provide any other relevant information regarding fees or charges that may impact my investment?

I appreciate your prompt response and clarification on this matter. Thank you for your time and assistance.

Sincerely,
xxxxxxxxxxx

To which they replied:

Thank you for inquiring about earning interest on your uninvested cash balance.

Starting from 01. Oct 2023, we will pass 4% interest from our partner banks to all our users on their uninvested cash up to €50,000. Until then, it will be a 2% annual rate.

How it works:
You'll earn interest on your Trade Republic uninvested cash balance. At the beginning of each month, we forward to you the interest accrued from our partner bank

To activate or upgrade your interest rate:

• If you're an existing Trade Republic user who has not activated the interest or upgraded it from 2% to 4% yet, tap on the Interest tile at the bottom of the Cash tab in the Benefits section and follow the steps in the app.
• If you haven't opened an account with us yet, the interest offer will be automatically activated when you accept the Terms and Conditions during the account setup process.

For more details, please visit our Help Center.

Have a nice day!

Best regards,

They told me nothing..

 

[ionut7]

@melissa2016 If you use a bank transfer it will be free. If you use credit card or google/apple pay you pay the 0.7% fee after the first deposit.

 

[melissa2016]

@ionut7 Aw my gawd such a little thing that I overlooked!! Thank you

 

[redpanda]

@ionut7 thank you

 

[lvw]

@melissa2016 Edit: just confirmed what the previous comment states: credit card/google pay will add the fee.

About the fee: I tested sending some money with my Revolut account and worked fine without fees.

The second time I wanted to add funds with the same Revolut account (by typing the credit card), a fee of 0.7% shows to be deducted

 

[litalee]

@bryanparry Thanks for this post!

I hadn't heard about the increase, weird that they didn't send any communication.

Very happy that they stepped up!

They are my main broker and I was sad to move all my uninvested funds to other places (Wise, Lightyear) because their rates were way outdated. I even sent them an email asking them when they would update them.

Back with them now! Especially since they have this 100k insured vs 20k in the others.

 

[elyonathan85]

@litalee It shows up after recent update of the app

 

[resjudicata]

@litalee Not sure you understand the difference between 100k Einlagensicherung and 20k Anlegerentschädigung.

 

[litalee]

@resjudicata I might not. Care to explain the practical difference?

As far as I understand, the funds in Trade republic are considered a deposit vs a security for the rest. So the applicable scheme/insurance is different. But I don't fully understand the difference in practical terms other than the amount and I guess the process for recovery.

 

[resjudicata]

@litalee Einlagensicherung refers to deposit insurance. In Germany, bank deposits up to 100,000 euros per customer per bank are protected by the deposit insurance scheme if the bank becomes insolvent. This means customers would get back up to 100,000 euros of their money even if the bank goes bankrupt. But not more that that.

Anlegerentschädigung refers to investor compensation. This covers up to 20,000 euros per customer per bank in the event of loss due to bad investment advice, misselling of financial products, or if assets are misappropriated. So if an investor suffers losses because of misconduct or negligence by the bank, they can claim compensation of up to 20,000 euros from the investor compensation scheme.

Examples for 20k compensation:

• The bank or the broker makes trades without customer authorization or knowledge, resulting in losses. The unauthorized trading would be covered.
• A bank mismanages funds by making excessively risky investments inconsistent with the agreed investment mandate.
• A bank goes bankrupt and is unable to return securities or assets held in accounts back to investors.

 

[fribus]

@resjudicata https://www.stuttgarter-nachrichten...hsd.da4e5e21-fe6f-4454-ac2c-a4c4b49d9d34.html

 

[resjudicata]

@fribus Not sure what you’re trying to say

 

[fribus]

@resjudicata That your comment is incorrect. Their underlying banks have 100k insurance on the 4% interests cash account (aka “uninvested funds”) just like all the German banks.

The 20k that you mention — assuming that this number is even correct — is for your investments, not the cash account.

From https://traderepublic.com/en-de/bonds:

All funds in the cash account are legally protected up to €100,000 per investor. They are held in an escrow account at one of our partner banks. These currently are Solaris SE, J.P. Morgan SE, Citibank Europe plc and Deutsche Bank. Solaris SE and Deutsche Bank are subject to supervision by the Deutsche Bundesbank and the BaFin (Federal Financial Supervisory Authority Germany). Citibank Europe plc is supervised by the Central Bank of Ireland.

Trade Republic accepts your funds only in connection with the provision of investment services. For this purpose, Trade Republic has opened omnibus trust accounts at partner banks on which your cash is held.> You can pay in funds for investment services on the cash account. When you buy and sell securities, we settle these transactions directly on your cash account. Trade Republic transfers the conditions of the partner bank to you, subtracting the costs. As of now, you receive 4% p.a. on your uninvested cash, from our partner banks, up to 50.000€.

Trade Republic Bank is a German investment firm. We are supervised by the Federal Bank of Germany and BaFin (Federal Financial Supervisory Authority) and offer you the usual reliability and security of a German financial institution. The money you pay in is held in one of our omnibus trust accounts with banks that are authorized to conduct deposit business. These are currently Solaris SE, Deutsche Bank AG, J.P. Morgan SE and Citibank Europe plc.

See also: https://assets.traderepublic.com/assets/files/230915_TradeRepublic_PressRelease_Bonds_IR.pdf

 

[resjudicata]

@fribus Maybe you simply misunderstood what i said. Read it again. The Deposit insurance up to 100k is for cash deposits. 20k Anlegerentschädigung is for when the bank misplaces your stocks or other securities … or does unlawful things, like I listed above.

That’s the law and i’m 100% correct.

Please do your due diligence before correcting others.

 

[dylan511]

@litalee What you're saying is incorrect; the others (Degiro, etc.) also offer insurance coverage up to 100k if you have the funds in a bank account.

 

[sekim]

@bryanparry I'm thinking the same. Another question, do they do the tax declaration of capital gains automatically?

 

[resjudicata]

@sekim Only if your tax residency is Germany

 

[eternalspring7]

@resjudicata And once they do it, what do you need to do it on your side? Nothing else? Sorry for the dumb question.