German startup Trade Republic, best known for its mobile app that helps you buy and sell stocks, is interested in uninvested cash. Users who keep cash in their Trade Republic account receive 2% annual interest.
This feature is reminiscent of Robinhood’s brokerage cash sweep program. In the US, a Robinhood user currently receives 1.5% interest on the cash he has in his account.
With this new feature, Trade Republic could attract new customers seeking higher interest rates as inflation affects European consumers’ savings. Of course, the company probably also wants users to start trading stocks on the app. Trade Republic makes money from order flow payments and small commissions.
More precisely, according to Trade Republic, interest is calculated daily and the startup will credit user accounts once a month. Users generate interest only on cash balances up to €50,000. For now, the company is pledging his APY of 2%, so it will be interesting to see if they can keep the high rate going forward.
“With an effective annual interest rate of 2%, we are passing the benefits of the new interest rate environment directly to our clients,” co-founder Christian Hecker said in a statement. I can do it,” he said.
Trade Republic currently operates in 17 European countries and is one of the fintech startups to raise a large funding round in 2021.
2022 is a little different. The company announced his $264 million (€250 million) Series C expansion, but laid off some people. In addition to stocks, Trade Republic also offers Exchange Traded Funds (ETFs), derivatives and cryptocurrencies.