More and more brokers have found a way to attract and keep clients: they pay interest on free, uninvested cash. With central bank rates high, it pays them to put the enormous pool of client deposits to work, and they share part of the return. For an investor it means the money earns something even while it is only waiting for the right opportunity.
Two names dominate this space in Europe: the international broker XTB and the global social investing platform eToro. Each approaches the subject differently, with different terms and a different client in mind.
This article compares the two offers. We look at the rates on the table, the conditions attached to them and which model suits whom.
Interest compared: XTB versus eToro
Both brokers offer what looks like the same product, interest on uninvested cash. Their approach and target client differ. XTB builds on simplicity and availability for everyone, eToro designed the benefit as a tier tied to account size, but does not cap the top rate at three months the way XTB does.
Both sit under European supervision. XTB operates under the KNF and CySEC, eToro under CySEC, and client money is held separately from the broker’s own funds.
| Parameter | XTB | eToro |
|---|---|---|
| Top rate | up to 3.40 % (USD) or 2.50 % (EUR), preferential for the first 90 days | up to 3.55 % (USD) on balances above 50,000 USD |
| Rate after 90 days | XTB does not publish it as a number | 2.75 % on balances up to 50,000 USD |
| Availability | automatic for every client | for eToro Europe clients, the higher rate only above 50,000 USD |
| Cap on the preferential rate | up to the equivalent of 100,000 EUR across accounts | two bands by balance, threshold 50,000 USD |
| Interest credited | monthly, calculated daily | per programme rules, calculated daily |
| Protection of funds | European regulation, segregated client accounts | ICF up to 20,000 EUR, extra cover for Platinum and Diamond up to 1m EUR |
| Platform | xStation 5, desktop and mobile | eToro WebTrader and mobile app, social trading |
| Complexity of terms | simple, interest runs automatically | more involved, the balance decides |
With XTB, then, the currency and the timing of opening the account matter. New clients get preferential rates for the first 90 days, up to 3.4 % in dollars and 2.5 % in euros. After that the rate drops to a standard level that XTB does not publish as a figure. The advantage is that smaller accounts earn interest too.
eToro does it differently, by balance. Up to 50,000 USD you get 2.75 %, above that line 3.55 %. Set against savings accounts, both brokers sit at a comparable level.
XTB does not require you to trade. Interest switches on automatically for every client holding uninvested cash, with no action and no minimum. Do watch the currency conversion cost, though, if you want to buy US shares with euros.
eToro likewise asks for no transactions. Its condition is simply a large enough balance.
eToro pays up to 3.55 % a year
eToro runs a programme called Interest on Balance, which lets clients earn passively on uninvested funds. Investors can receive up to 3.55 % on cash held in dollars. The rate follows the size of the balance, which is also what the client club level is tied to. Platinum, Platinum+ and Diamond clients qualify for the highest rates and for additional cover of their funds up to 1 million EUR.
Interest is calculated daily on the average free balance and credited under the programme rules. Rates run from 2.75 % to 3.55 % a year depending on the balance.
The rates by balance:
- up to 50,000 USD: 2.75 % a year
- above 50,000 USD: 3.55 % a year
The drawback is that the top rate only reaches money above 50,000 USD, which is out of range for smaller investors. Tax reduces the net return, and not every currency earns interest.
Why eToro?
The platform’s strengths include a clear mobile app with quick access to shares and ETFs. eToro stands out for social trading, where you can copy the strategies of other investors, and it is translated into many languages. Premium clients also get the eToro Visa debit card.
The programme is open to clients of eToro (Europe) Ltd. regulated by CySEC. Money in the accounts is protected by the Investors’ Compensation Fund (ICF) up to 20,000 EUR. Clients at higher tiers receive additional private cover up to 1,000,000 EUR.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.
XTB pays up to 3.4 % for three months
Unlike eToro, which rewards clients with the largest capital, the Polish broker XTB took the more straightforward route. Its offer is built so that every client benefits, with no requirement on portfolio size. XTB pays interest on uninvested funds held in EUR and USD, and the rates are variable, following central bank policy.
Interest is automatic and needs no activation. There is no minimum balance before the programme applies.
Current rates at the time of writing:
- EUR: 2.50 % (preferential)
- USD: 3.40 % (preferential)
The preferential rates apply for the first 90 days from signing and cover the equivalent of 100,000 EUR of available funds across all the client’s accounts. Anything above that, and everything after the 90 days, earns the standard rate.
That time limit is the weakness. You get the top rate only for the first three months, after which the lower standard rate takes over. Interest is calculated daily and credited monthly.
Why XTB?
XTB is worth considering mainly because the interest is automatic and available to every client with no conditions. You need no special status and no large account. The preferential rates run for the first three months on top of that, so the opening deposit earns the maximum. Add European regulation, English-speaking support and xStation, one of the clearer platforms on the market.
77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
How the other brokers compare
XTB and eToro are not the only brokers available. The rest of the market, though, does noticeably worse than most people assume.
| Broker | Pays interest on cash? |
|---|---|
| XTB | yes, in EUR and USD |
| eToro | yes, dollar balances |
| Interactive Brokers | yes, but only above a threshold |
| Trading 212 | yes, does not publish the rates openly |
| DEGIRO | no |
DEGIRO says so plainly in its own help centre: it pays no interest on uninvested cash and positions itself as a broker of transactions rather than a bank.
Interactive Brokers does pay, but with thresholds. The first slice of the balance in every currency earns nothing at all, so a small investor ends up with considerably less than at XTB.
Why the rates move
Brokers do not pay interest out of goodwill. They place your money and share part of what they earn on it. Their rates therefore track central bank policy.
At the time of writing, the European Central Bank holds its deposit rate at 2.25 % and the US Federal Reserve the upper bound of its target range at 3.75 %. That also explains the gap between euro and dollar rates at both brokers.
A practical rule follows. When a central bank raises or cuts, broker rates move the same way within a few weeks. The figures in this article therefore hold as of the last update, and it is worth checking them with the broker before opening an account.
Is it worth it against a bank?
Comparing this with a bank is fairer than comparing brokers with each other, because it is the same thing: money you are not investing right now.
Savings account rates sit in a similar band to XTB’s preferential euro rate, though the exact level differs by bank and changes over time.
The difference lies in what the money is for. Interest-bearing cash at a broker makes sense as a staging post between trades. As a home for a long-term reserve, a savings account is simpler and carries no time limit on the rate.
What to watch for
The time limit. At XTB the top rate lasts only three months. After that comes the standard rate, which you have to look up yourself.
The cap. XTB’s preferential rate covers the equivalent of a hundred thousand euros across all accounts. Above that, the standard rate applies even within the first 90 days.
The currency. Rates differ by currency. Anyone holding euros who wants the dollar rate has to convert and pay for it, which can swallow the whole difference.
Tax. Interest is taxable income. The net return is therefore lower than the rate the broker advertises.