Interest rates are on the rise, but customers of brokerage firms aren’t going along for the ride.
The Federal Reserve has driven short-term interest rates up a full percentage point since late 2016; one-month Treasury bills were yielding 1.6% this week. But you’d never know any of that from looking at the returns on the cash in your brokerage account.
Consider the rates major brokers are paying on so-called sweep accounts, the main reservoir where they hold clients’ cash. As of March 2, according to Crane Data, a firm that monitors money-market funds and other cash investments, yields on sweep accounts ranged from as low as 0.01% at eTrade and 0.05% at TD Ameritrade up to — if “up” is the right word — 0.25% at UBS and 0.27% at Fidelity Investments.
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This article was originally published on The Wall Street Journal.
Further reading
Jason Zweig, The Little Book of Safe Money
Jason Zweig, Your Money and Your Brain
Jason Zweig, The Devil’s Financial Dictionary
Benjamin Graham, The Intelligent Investor
A Few Good Reasons to Hoard Some Cash Now
Take a Hint from Goldman: Squeeze More Out of Your Cash
Cash Is Now a Sin