[There is an update to this article. Please click here to read it.]
Recently, Bank Negara Malaysia (BNM) has cut its overnight policy rate (OPR) by 0.25% to 2.75%. How does this affect Rakuten Trade‘s interest rate on our cash deposits?
Previous Rakuten Trade’s interest rate
I guess most Rakuten Trade users notice the Interest Earned on the Dashboard of its web trading platform. This value represents the interest earned on our cash deposits on the platform. It will accumulate for a month and be added to our cash balance at the end of the month. Before the OPR cut, its interest rate was 2.25% per annum.
Current Rakuten Trade’s interest rate
Rakuten Trade follows the BNM’s move and reduces its interest rate to 2.00% per annum. How will this reduction play out? Let’s assume we have RM 100 in the account. How much interest will we earn annually?
2.25% per annum = RM 2.25 per year
2.00% per annum = RM 2.00 per year
Thus, the reduction is about 11.12%.
My opinion
From the calculation above, we can see that the reduction is quite large. However, I think that the interest rate for the cash deposits should not be a factor in determining if a trading platform is good or not. A trading platform is primarily used for trading stocks, not for saving. If a higher interest rate is required, it is better to put the money in fixed deposit or money market funds. For me, the interest from the trading platforms is actually a bonus.
Nonetheless, if you know a trading platform with high interest rate and low trading fee, do let us know in the comments section below.
[There is an update to this article. Please click here to read it.]
Referral link
Below is the referral link to Rakuten Trade. As I am involved in Rakuten Trade Educator Program, by clicking on this link, I may gain referral rewards from your registration with the platform once certain condition is met. (2022: I am not longer involved in the Educator Program).
If you think I have done a good service in explaining the topic, please click on the link below if you are interested to register. Otherwise, you can always search Rakuten Trade Malaysia with Google and register yourself.
Rakuten Trade: Link here
*You may earn 500 RT points when you open an account or other account opening rewards being offered by Rakuten Trade. You may choose only one of them.
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