OANDA Cancels Interest on Cash Balances due to Management Costs

OANDA, one of the remaining few North American Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term brokers, has notified its clients today that it will no longer be able to pay an interest on cash balances held on its books. Interest on currency pairs held in customer positions will continue to be calculated as Rollover.

This decision is not surprising at all considering that interest rate around the developed world are at an all time low. According to the OANDA announcement, the management costs of offering an interest on cash no longer justify the utility of it.

Offering interest on cash balances was once a popular promotional tool used by many brokers around the world. Right now however, the only brokers offering meaningful interest rates are Russians and those are mainly just on Ruble balances. When interest rates in the West will one day go back up to noticeable levels, most international brokers might be forced to bring back interest on cash balances too.

This is the full message the broker sent out to its clients today:

"Dear Valued Client,

Due to the current interest rate environment with rates near or below zero, we will be setting OANDA cash balance rates to zero as of April 30, 2015. The administrative overhead to manage interest Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term is significant across our 6 regulated entities. Setting account balance interest rate to zero enables us to continue to offer you tight spreads with no incremental fees.

We will continue to pay and charge interest on the currency pairs currently held in customer positions. OANDA calculates interest charged and paid continuously, second-by-second. This is in contrast to other financial markets, where interest payments are made at daily intervals with the shortest increment of one business day.

If you have any questions about this notice, please contact our Customer Support team whenever the markets are open.

Thank you for trading with OANDA."