I have an IB account. Two questions: 1. I've seen adds for like 3.83% interest or something like that on cash balances. I set up my account a loooong time ago. Can it qualify for this? Do I need to so something to start getting that interest? That is better than putting your spare cash in short-term bond funds. 2. I have various closed end funds that pay dividends. But if you don't elect for them to be paid in cash, they will pay them in stock. Which stock is taxed just as if it had been cash. So I want the cash. Is is possible to make this election for all securities forever going into the future, so I don't have to go in each time a dividend is to be paid and elect cash instead of stock? That can be a real hassle. Thanks!
1-Cash balance rates: https://www.interactivebrokers.com/en/accounts/fees/pricing-interest-rates.php 2-Dividends: https://www.interactivebrokers.com/lib/cstools/faq/#/content/61901214 ***IBKR has the best Q&A section of any broker. Most questions can be answered there.
The interest is paid on idle cash balance above $10K. Idle meaning that it's not used as margin or collateral, basically not doing anything, just parked there. As long as you have cash in your account that's not doing anything, you will automatically qualify. The rate that you quoted is for IB Pro account. If you have an IB Lite account, the rate is lower. https://www.interactivebrokers.com/en/accounts/fees/pricing-interest-rates.php Dunno about dividend-electing policies.
Incorrect. You earn more on tbills right now, IB takes a profit margin and pays you less interest on your positive net cash balances.
BKR88, for that second one, I did just what was said in that link. And it had my account level settings already set as default to cash. Just the way I wanted it. HOWEVER, when I go to a security that is paying a dividend where you can elect stock or cash, it still has option 1, elect stock, as the default (same as I remember it doing in the past). Any idea what is going on there? Is maybe my account level settings overriding that default listed in the particular stock/cash dividend notification, its just not letting me know that? Seems weird it would not automatically change the default election to cash. Thanks!
I just checked my default (see below). Stocks are default to cash but mutual funds are default to reinvest. They might consider CEFs as "mutual funds" but not sure. Changes to mutual fund settings won't occur until the 5th of the month. I forgot to check each individual company to see what it's set to. I'll check later today. Just opened an account with IB a few weeks ago so need to do more research as I have many div. paying stocks.
Whoa, this is WEIRD BKR88. It does not have a setting for mutual funds like you posted there, only for stocks. I'm sure that is why CEFs are defaulting to stock as opposed to cash. I'll have to call them - will let you know what they say. Thanks!