I was in the process to open an IB account and I noticed that IB now warns you about the negatives interest rates of CHF.
As stated in Interest Rates | Interactive Brokers LLC it seems that there is not size account limitation.
" For balances held in CHF, DKK, EUR, JPY or SEK, IBKR currently applies an effective negative rate to long balances held. The negative rate applied to accounts holding these currencies is the same regardless of account size. For other currencies in which the benchmark rate plus the interest rate paid is less than zero, the interest paid is 0%."
It is an American company, so they have this habit to put big fat warnings at every corner, so that nobody could blame IB that they were not informed. Negative interest is for CHF or EUR cash balances over 50k.
It should be as safe as with any other bank. I’m not sure whether the SIPC protection (up to USD 250k) applies to cash held via IB UK. However, if not, cash should still be protected up to GBP 85k via FSCS. I.e., below the current negative interest threshold (CHF/EUR 50k), there should be virtually no risk, besides inflation.
Inflation will not differently impact it at IB than at your current bank.
It IB, it i easier and certainly cheaper to invest it in stocks and hope that you can at least mitigate inflation. Of course, depends if/when you think you’ll need the money.
According to my understanding of this page, Interest Rates | Interactive Brokers LLC IBKR seems not to charge a negative interest rate on cash balances in CHF anymore, no matter the amount.
When using the calculator provided on the page, the blended rate remains at 0.00%.
Can anyone confirm that there’s no more negative interest rate on CHF cash balance?
Regarding interest, USD cash has 2.58% interest rate after the first 10’000.
I always kept my “dry powder” in chf because well we know that the currency exchange will eat away the interest rate difference, and it was 0 anyway.
But as my wealth grows, I have “more cash” on the side (I have allocation 75/25) and I end up using these cash only to buy stock quoted in USD (VT) during rebalance. I’ve never used this cash to buy something in CHF.
So I wonder if it makes sense to keep all the dry powder in USD, getting interest after the first 10k, and buying VT?
I guess keeping chf and monthly converting them in USD would not make any difference in theory, correct? It could even be detrimental because you would pay taxes on those interests?
I am leaning towards keeping CHF as long as possible. But maybe somebody has “ru the numbers” and it may makes sense to get that 2.58% interest, even including taxes?
Yes, they’re claiming to use SARON but that was 0.44% on Oct 4 according to SNB, not -0.179%. I’m surprised they are lagging behind, especially as it would benefit them for margin loans.
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I can leave some of my cash there with peace of mind 