Interactive Investor will pay interest on cash balances

Interactive Investor will pay 0.25% AER/gross on cash balances over £10,000 from July.

The subscription investing platform said the 0.25% AER/gross interest will be paid on cash balances over £10,000 or the equivalent value over £10,000 held in US dollars.

This means that if investors have a cash balance of £15,000, perhaps waiting for a buying opportunity, interest will only apply to the £5,000 – the amount above the £10,000 threshold.

It will apply to cash held in ISAs, trading accounts, SIPPs (Self-Invested Personal Pensions) and Junior ISAs. However, this applies to each account separately, so even if you have more than £10,000 in cash spread across accounts, you won’t get the interest. It must be over £10,000 in a single account.

Interactive Investor said the decision to offer interest on dollars comes as investors increasingly look overseas, and the U.S. market is the second-largest region for its clients who invest directly in shares. He confirmed that interest on dollar cash balances will be paid in dollars.

Richard Wilson, CEO of Interactive Investor, said: “Interest rates are still low, but following recent increases, II will start paying interest on accounts from July 1.

“We are a simple fixed fee investment platform, always striving to improve service and value. We continue to innovate – last year we launched Friends and Family, and this year we followed up with the launch of our fantastic Pension Builder.

“As investors increasingly invest internationally, our clients who minimize foreign exchange costs by holding foreign currency in their account do not need to pay a foreign exchange commission every time they trade. Now they can also earn interest on US dollar balances.

“Clients looking for meaningful returns on their cash, as they are, can consider our cash savings service, with some of the best rates in the market from UK banks and building societies. And for anyone who wants to save money on investment platform costs, the best way to do that is to shop around. For big pots, you could save a fortune by switching to a flat deck like II.

Last month it was confirmed that Abrn had completed its £1.49bn takeover of II, which has 400,000 customers and around £59bn of assets under administration. It continues to operate as a standalone business and an independent brand.

It completed its acquisition of TD Direct Investing in 2017, Alliance Trust Savings in 2019 and Share plc in 2020. Its last acquisition was EQi client book in 2021.