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A reader recently asked which low cost stock brokers pay the highest interest rates on cash. This question is particularly important if you plan to have a fair amount of cash in your brokerage account. And the interest rates paid by brokers on cash balances vary considerably. Some brokers don’t pay any interest, while others offer rates comparable to interest rates on demand accounts like high yield savings accounts or short term CDs. So if you are looking for an online broker that pays interest on cash balances, here are some of your best options.

Scottrade: For arguably the most full featured of all the online discount brokers, Scottrade offers a rising rate based on the amount of cash you have in your account. At the low end, Scottrade pays just 0.05% for balances under $5,000. The rate increases to a high of 1.00% for balances of $1 million or greater. Perhaps not the best rates unless you have a lot of cash in your brokerage account, but at least it pays some interest. You can get more details and check the current rates on the Scottrade website.

E*TRADE: Of all the online brokers, E*TRADE is perhaps best known for its cash management features. In addition to stock brokerage services, E*TRADE also offers banking services as E*TRADE bank. With an E*TRADE brokerage account, you get access to an online savings account. Funds can be easily and quickly transferred between accounts. E*TRADE also allows you to set up an automatic savings plan. Currently, E*TRADE’s online savings accounts pays 1.75% interest. The E*TRADE bank also offers online checking and CDs. Because these rates change frequently, you can get current rates and details about E*TRADE’s brokerage services on the E*TRADE website.

Article comments

Paul Adams says:

Hello. I’m a reporter/editor and found your article — Discount Brokers that Pay Interest on Cash. Much as I’d like to use it in a piece I’m writing on brokerage sweep accounts, I can’t because you didn’t date it. I have no idea whether the article is current or an archived piece. So as a helpful suggestion, please date your submissions so those of us who read them know explicitly whether they’re current or not.

DahDude says:

The article is dated as of May 16

steven jones says:

Need to update article. Need to make the distinction if IRA is being considered and you’ve left out a large institution – Capital One which pays .75 on IRA savings that you can easily sweep to.

Ab says:

Interactive brokers pays 0.66% after 10k I think

William Kester says:

Interactive Brokers only pays interest on cash over $100K. Their tv ads are deceptive-give the impression that they pay over 1% on all what they call “idle cash”.,but no interest at all is paid until there is $100K in your account. Bad form Interactive Brokers!