Td ameritrade money market account interest rate

TD Ameritrade is readying a suite of alternatives to money market funds that it says will help financial advisers and its online brokerage clients deal with rock-bottom interest rates without assuming too much risk.

The most innovative, in its way, is likely to be a throwback: a savings-account-like product from an FDIC-insured bank (likely an affiliate of Canada’s TD Bank Financial Group, which owns 45% of Omaha, Neb.-based TD Ameritrade).

The account would carry a slightly higher interest rate than money market funds, which are yielding 0.5% in interest, TD Ameritrade president and chief executive Fred Tomczyk said in an interview Thursday.

The vehicle, which is still being vetted to meet regulatory and other standards, would have the disadvantage of offering very limited check-writing features.

The account, which also could capture uninvested cash as a sweep vehicle, is a stab at resolving a vexing problem that juxtaposes an aching need by investors and advisers for yield against fears of taking on too much risk. Despite the slight yield advantage the product might give in today’s climate, TD Ameritrade thinks that advisers and online investors should value the safety and liquidity of the insured product over yield.

“You want to know about how we help you get yield,” Mr. Tomczyk told registered investment advisers at the firm’s annual conference in Las Vegas last week. “There are no magic formulas.”

He told the almost 900 RIAs at the conference that the firm will be introducing several new products and services across a range of risk.

It will continue to include short-term bond funds and brokered certificates of deposit, but Mr. Tomczyk said TD Ameritrade will more try to educate investors to focus on capital preservation and to dispel the too commonly held notion that all money market mutual funds are guaranteed by the U.S. government.

“For clients that want capital preservation and liquidity, the FDIC-insured product is the better one and safer one,” he said.

TD Ameritrade was among the firms burned last year by marketing and investing in the Reserve Primary Fund, a money market mutual fund managed by The Reserve Management Co. Inc. of New York. About $586 million of money from TD Ameritrade and its clients were in the fund when it “broke the buck” last September, falling below the industry’s implied guarantee of $1 a share. TD Ameritrade has since recovered about $468.4 million from The Reserve but also has paid out $35 million to clients to make good on their losses.

A spokesman at Charles Schwab Corp., the San Francisco-based discount broker that is the biggest custodian of RIA assets, said the company would not comment on whether it has plans for a savings-account-like sweep product. A spokesman at Fidelity Investments of Boston did not answer a request for comment, and a spokesman at Bank of New York Mellon’s Jersey City, N.J.-based Pershing LLC division said the company will continue to offer a range of certificate-of-deposit products. The latter spokesman did not know if a savings account product is under consideration.

But the issue of flat to negative returns on money market funds that investors consider equivalent to cash has led TD Ameritrade, Schwab and other brokerage firms and fund sponsors to waive fees on some money market instruments, a decision Mr. Tomczyk said is “painful” to his firm’s bottom line but necessary to keep the confidence of clients.

J. Thomas Bradley, president of Jersey City-based TD Ameritrade Institutional, said in an interview that he expects the new savings account product to be ready in 30 to 90 days.

Mr. Tomczyk and Mr. Bradley, meanwhile, are fretting over unusually high rates on CDs that are being offered from some competitors, including some financially shaky firms that recently became bank holding companies in order to receive government-backed assistance.

Schwab chief executive Walt Bettinger recently made similar comments, though none of the executives would name the competitors that have been drawing away deposits.

Banks run by GMAC Financial Services Inc. and E*Trade Financial Corp., both based in New York, are among those that have been offering one- to three-year CDs at rates from 2% to more than 3% and that are believed to be irking TD Ameritrade and Schwab. Mr. Tomczyk and Mr. Bradley did say they are annoyed about the high CD rates that Capital One Bank of McLean, Va., is offering through Seattle-based Costco, a supermarket warehouse.

TD Ameritrade will continue to offer some higher-rate CDs as Schwab and other custodians are doing, but executives said advisers who buy them shouldn’t come running to complain if something goes wrong. “We will still have an open platform, but we can’t back up all the Reserve Funds in the world,” Mr. Bradley said.

E-mail Jed Horowitz at .

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TD Ameritrade is a brokerage firm offering online and in-person investment services. In October 2020, The Charles Schwab Corporation finalized the acquisition of TD Ameritrade Holding Corporation. At the time of this writing, the companies are still operating as independent entities.

TD Ameritrade offers cash management accounts as a part of its suite of services for its brokerage customers. Cash management accounts at TD Ameritrade are not separate products and require a brokerage account to access.

TD Ameritrade offers two cash accounts: Transactional Cash and Investment Cash. This review provides an overview of TD Ameritrade’s Transactional Cash account, its features and benefits, and how it compares to other cash management accounts. Account details and annual percentage yields (APYs) are accurate as of Nov. 12, 2021.

Account Basics

TD Ameritrade Transactional Cash Account

As mentioned above, TD Ameritrade’s cash management services are an extension of its brokerage products and are available for all of its brokerage customers. Once a brokerage customer, you must opt in to access the Transactional Cash account.

There is no minimum deposit requirement and no monthly maintenance fees for the Transactional Cash account. The account also features several valuable benefits, including:

• A complimentary debit card issued by TD Bank USA, N.A.
• Unlimited check writing
• Free standard checks
• Online bill pay
• Mobile check deposit on your smartphone or tablet

One of this account’s standout features is unlimited reimbursement for ATM fees charged by ATM operators. This means you can withdraw cash at any ATM in the U.S. and get reimbursed for any ATM fees. There’s no need to stick to a specific ATM network. You can also connect your debit card to Apple Pay for more payment options.

One of the perks of keeping cash in a TD Ameritrade cash management account is that it allows you to move money between TD Ameritrade accounts easily. If you want to move money over to your brokerage account to buy stock, you can do that quickly and easily in one spot.

TD Ameritrade cash accounts are interest-bearing accounts. However, don’t expect to earn too much interest. Currently, the interest rate on all balance tiers is just 0.01% APY. A TD Ameritrade cash management account is not the place to park your money if you want to maximize your savings. You may want to consider, instead, keeping your money at one of the best online banks.

As with most cash management accounts, you can protect your money in a TD Ameritrade cash account beyond standard FDIC insurance limits through the use of a sweep program. After you deposit money in your cash account, TD Ameritrade utilizes a sweep program to move your deposits to partner banks, with each bank offering the standard $250,000 FDIC coverage per depositor. The maximum FDIC coverage you can receive is $500,000 for individual accounts and $1 million for joint accounts.

Other TD Ameritrade Accounts and Services

As a brokerage firm, TD Ameritrade offers individual and joint brokerage accounts along with retirement accounts. TD Ameritrade also offers a variety of investment products and services, including:

• Stocks
• Options
• ETFs
• Mutual funds
• Futures
• Forex
• Margins
• Cryptocurrency
• Bonds & fixed-income investments
• Annuities
• IPOs
• Dividend reinvestment
• Collateral lending
• Managed portfolios

Read our in-depth TD Ameritrade Review for details on investing and retirement accounts through the robo-advisor.

Access on the Go

TD Ameritrade accounts are accessible online through TD Ameritrade’s website or its mobile app. Customers can access cash management tools, deposit checks and manage investment and retirement accounts through its mobile app. TD Ameritrade’s app is available for iOS (4.5 stars out of 5 on the App Store) and Android (3.3 stars out of 5 on Google Play).

For in-person support, TD Ameritrade also operates more than 175 physical branches across the U.S. You can also receive help over the phone through the following numbers:

• New accounts: 800-454-9272
• Existing clients: 800-669-3900

Regular support, and account service and support,  phone features are available 24/7. Technical support is available Monday through Friday from 7 a.m. to 6 p.m. ET.

You can also send messages and chat via social media through Facebook Messenger and Twitter. There’s also an option to receive support on your mobile device by texting messages to 898832.

Pros

•   No monthly maintenance fee
•   Unlimited ATM fee reimbursements in the U.S.
•   Increased FDIC insurance coverage

Cons

•  Not available without opening a brokerage account
•  Low interest rate
•  FDIC insurance coverage is lower than other cash management accounts

How TD Ameritrade Stacks Up

TD Ameritrade’s cash management services are an extension of its brokerage accounts. That’s not always the case with other top cash management accounts, many of which offer separate cash accounts. If you’re opening a cash management account through a brokerage firm, you may also want to use its brokerage services, but it’s not a given.

Either way, TD Ameritrade offers enough value in its cash management services to at least give it a look. The account comes with plenty of perks to make it a viable alternative to a traditional bank account. That said, the interest rate is similar to what you may find at a brick-and-mortar national bank. You could maximize your savings better by opening a high-yield savings account elsewhere. If you’re already a TD Ameritrade customer, though, it’s easy enough to use the broker’s cash management options—you simply need to opt in.

Frequently Asked Questions (FAQs)

Is TD Ameritrade FDIC insured?

Through a deposit sweep program, funds deposited into TD Ameritrade cash accounts are FDIC insured up to $500,000 maximum—up to $250,000 per partner bank, including any existing deposits at those banks.

What is a cash account on TD Ameritrade?

As part of its brokerage accounts, TD Ameritrade brokerage customers can opt in to cash management services, which operate similarly to checking and savings accounts. Cash accounts are interest-bearing and feature benefits like check-writing privileges, online bill pay, mobile check deposit and more.

How does a cash account work?

A cash management account is an account available through brokerage firms and other non-bank financial institutions that acts similar to a bank account. Cash accounts often include similar features to checking and savings accounts, like access to a debit card and a checkbook and interest earnings.

How do I open a cash account with TD Ameritrade?

To access TD Ameritrade cash management services, you must first open a TD Ameritrade individual, joint or retirement brokerage account. You’ll be asked to provide personal information to verify your identity during the application process.

Is a brokerage account required to open a TD Ameritrade cash account?

Yes, TD Ameritrade’s cash management services are a feature of its brokerage accounts and aren’t available without an account.

Does your money earn interest in TD Ameritrade account?

Is there a money market account on TD Ameritrade?

Does TD Ameritrade pay interest on uninvested cash?

How often does TD Ameritrade charge margin interest?