Everyone is well aware of the first 10k not earning interest. I'm not particularly happy about it, at its total cost of about $4-500 a year. Was a lot less in a low rate environment. Still, even for a tiny account of 20k, thats twice the rate TS pays. And TS charges for the platform if you don't trade actively, IB does not. Same goes for Futures feeds, etc,etc,etc. Cruz, you luze.
Not everyone notice the missing interest. I know at lease several who have overlooked this. I'm not happy about this arrangement either. It has pissed off some people or potential customers already. Forget about the MeanStation! After consideration of $400-500 loss, is there any other brokerage firm which offer more competitve rates than IB? PS: The loss is going to be larger and larger since the interest rate is rising and rising.
Until enough pressure is put on the scores of firms doing this; they will continue to add to their coffers at our expense.
avid consumer the problem with tbills is you get killed if you hold anything overnight as its all on margin. i've looked at tbills also as i have well over the 100k cash limit in many accounts and looked at treasury's for protection but it was just too cumbersome if you hold overnight. also treasury's are in street name so there considered a security if the broker goes under. but i guess you're doing it for additional interest. what length do you have and if you sell early there's not much of a penalty is there unless rates sky right? also what's the cost to buy them?
I'm not sure I understand the issue with overnights unless you mean converting an entire account to bills leaving no wiggle room. If there's no cash in the account than any trading losses result in liquidation (breaking) of the bills. I don't know what the exact transaction costs are in that case, but I left a conservative buffer and only converted 2/3rds of this acct into 3 month bills. That's enough room to accomodate my historical max overnight margin and p&l swing in that acct with cash, without ever touching the bills as margin. I was told there would be a $10 transaction cost, though it wasn't referred to as a commission. Sorry I don't have more info on liquidation costs, but that's interesting to know bills generally are held in the name of the broker.
btw pls correct me if i'm missing something, i'm new at the bills. everything about it seemed clear and straight forward except for the account rows in the TS platform where it looks like the non-marginable 5% of the bills is absent from sec on deposit and real-time acct eq.
avid i looked into the tbills. the 2 brokers i spoke with had different rules. the first one 97% of the tbil was marginable and the 2nd 90% was. i think the 3% and 10% of the tbil are not put int he ledger to be able to margin against
Part of the "missing" 5% is interest accrual, which reappears on maturity. The rest of the 5% is a mystery to me as well. Since you buy the T Bill at a discount, the total amount paid should show up somewhere! The account is always balanced out at maturity.