You can hold uninvested money on your multi-currency account which can also earn interest.
Like most brokers, Lightyear earns interest on the cash it holds on your behalf in institutional bank accounts that are designed for financial firms to hold their customers’ money, as well as from holding your money in MMFs. Lightyear gets paid interest for holding customers' money and at a rate typically not available to retail customers. We have decided to pay this forward to you transparently.
The amount of interest earned is based on the current per annum (per year) base interest rate for GBP, EUR and USD and on the partner banks’ interest rate for HUF — from which we’ll take a 0.75% cut. See our pricing page for the current interest rates.
Calculation and payment
- You’ll start earning interest daily, on the same day as your deposit hits your Lightyear account
- We calculate the unpaid interest daily on the available uninvested cash balance of your investment account to five decimal places using the latest Lightyear rate. We then sum and round the unpaid interest amounts to two decimal places
- Interest payments will be credited to your Lightyear account on the first of every month, and you can see the interest that you have been paid in the latest version of the Lightyear app and in your statements. Money that’s been reserved for orders or other reasons does not accrue interest, and if you close your account before the next interest payment date, it won’t be paid out
For example, if 1000€ is held for a whole year at the base rate* of 3.25%:
- 1000 * 0.0325 per year = 32.5 EUR per year
- 32.5 / 12 = 2.70 per month
*the base rate may change, which we’ll notify you about. See our pricing page for the current interest rates
Taxes
For Estonian personal account customers, we automatically withhold your tax and pass it on to the Estonian Tax and Customs Board. If you live elsewhere, please note that you are responsible for the appropriate tax reporting and payments, in accordance with your local tax laws. You can opt out from earning interest by navigating to “Earn Interest” under the Settings page, which will cause any unpaid interest to be forfeited
Protection
We always hold our customers’ uninvested money in segregated client money accounts in regulated EU credit institutions and highest-rated* money market funds, which you can read more about in our article How are my assets protected?
It is important to note that the funds held in your Lightyear account are not equivalent to a bank deposit, and therefore in the unlikely event that all appropriate safeguards fail, funds are ultimately protected by the Investor Protection Sectoral Fund only for amounts up to 20,000 EUR in total across all your multi-currency account balances. Funds are not covered by the Deposit Guarantee Sectoral Fund, as it only covers bank deposits
*rated AAA/mmf by Moody’s, S&P and Fitch