Trade Republic is now also involved in the competition for the highest interest rates for savings on fixed-term and call money accounts. The smartphone broker now pays two percent interest on all credit balances – even for existing customers.

The new year starts with good news for Trade Republic customers: The smartphone broker, which currently occupies first place in the FOCUS Online ETF savings plan comparison, is now offering its customers two percent interest on all balances in clearing accounts. Interest is paid on credit balances of up to EUR 50,000 that customers deposit there in order to keep their powder dry for later investments in financial products such as shares, ETFs or cryptocurrencies. The interest rate of 2.0 percent per annum applies indefinitely and also to existing customers.

With this offer, Trade Republic is also indirectly challenging the providers of overnight and time deposit accounts, above all the leaders in the FOCUS Online overnight money comparison: Consorbank and ING. It is fitting that Trade Republic teases directly at the competition in an Instagram post. The starting point is a comparison of APRs (in the post on slide number 3).

In fact, ING, for example, also offers new customers 2.0 percent interest. However, the bank only wants to guarantee this level for four months, after which the current customer interest rate of 0.3 percent applies. Trade Republic calculates an effective annual interest rate of just 0.9 percent over an investment period of twelve months.

Although Trade Republic does not officially guarantee permanently high interest rates, the Instagram post signals that.

“With two percent effective annual interest, we are passing on the advantages of the new interest rate environment directly to our customers,” says Christian Hecker, co-founder of Trade Republic.

The smartphone broker makes it quick and easy to open a depot. Video identification usually takes just under five minutes and saves you postal identification, which is still the standard at many banks.

There is also a second effect. Many banks credit interest annually or quarterly. Trade Republic, on the other hand, pays interest on a pro rata basis every month. As a result, Trade Republic customers benefit from the compound interest effect and earn a little more than with a bank that only does this once a year.

Of course, the new Topzins is simply good PR. On the one hand, the compound interest effect with a credit balance of 50,000 euros per year amounts to just 9.22 euros. And of course the smartphone broker has little interest in its customers bunkering money permanently. Trade Republic earns significantly more when they use this balance to buy securities on the stock exchange.

The leading providers of overnight and time deposit accounts must now consider an appropriate response. Because of course Consorsbank and ING also want to convert the call money customers they are now recruiting into stock market investors as soon as possible. So it will be interesting to see what offers Trade Republic’s advance will trigger.

You can find the current front runners in overnight money in the FOCUS Online overnight money comparison.