flatex, based in Kulmbach, entered the market as an online broker in 2006. The trading opportunities are extensive and the associated conditions are also convincing. However, since mid-March 2017, flatex has been charging penalty interest, which is unlikely to delight most customers. The notification about the additional burden of penalty interest certainly raises the question - change or remain a customer? In the following guide we examine what is behind the flatex negative interest rates. In addition, we would like to take a closer look at the terms and services of the broker so that interested traders can get an overview.
- flatex will introduce penalty interest on March 15, 2017.
- The penalty interest applies to all customers.
- The balances on the cash account are affected.
- The penalty interest amounts to 0.4 percent per year.
- The bank and custodian bank is the biw AG.
- Account and custody account management is free of charge.
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What is the reason for flatex interest?
The European Central Bank (ECB) charges a negative interest rate of minus 0.4 percent on funds that are stored at the central bank. Flatex is now passing the current negative interest rate, which is charged by the ECB, one to one to its customers. All customers of the online broker are affected by the penalty interest who have credit on the cash account. The introduction of flatex penalty interest rates should have been a nuisance to numerous customers. Various banks are already demanding penalty interest from customers who store large amounts in their accounts. If the ECB makes further adjustments to the negative interest rate, it can be expected that flatex will pass these changes on to its customers. So far, direct banks like comdirect have not introduced any such penalty interest. The number of customers at comdirect, at over 3 million, is much higher than is the case with flatex. flatex currently has about 180,000 customers.
The question may arise whether other brokers flatex will do the same and also pass on the penalty interest directly to the customers. As our experience shows, flatex has no hidden costs through which the penalty interest is passed on to customers. The additional burden does not arise from the increase in order fees, for example. Flatex could also charge fees for account and custody account maintenance in order to recoup the interest costs. Account and custody account management is still free of charge at flatex.
The flatex penalty interest is payable on deposits made on the cash account. Customers with a balance of 15,000 euros in the clearing account with a penalty rate of 0.4% per year can expect costs of 60 euros.
Due to the current ECB policy with which a negative interest rate of 0.4% is associated with flatex penalty interest from mid-March 2017. With the additional charge, due to the penalty interest, it depends on the amount that is in the customer's cash account. Account and custody account management is still free of charge at flatex.
Which deposits are affected?
As already mentioned, the flatex negative interest falls on Deposits that are in the cash account. There is no allowance here. The penalty interest is charged on balances from the first euro. With the online broker, customers can benefit from the fact that no minimum deposit is called. In this way, less capital-rich customers can find their way into the trade without a high entry hurdle. However, small investors are also not exempt from the penalty interest. Penalty interest also applies to small amounts in the cash account.
Depending on the customer, there may also be amounts in the cash account that are to serve as a reserve. It is now important to consider whether the credit should continue to be held as a reserve or whether the credit should be withdrawn. The credit can also be used for trading. Especially for very active traders, it can prove useful if a certain balance is available in the cash account so that it can be used for trading in a timely manner. With an active investment strategy, purchases are sometimes carried out quickly so that the required credit must be available.
The flatex penalty interest is payable from the first euro. Customers should think about whether it is better to withdraw unnecessary credit from the cash account. No penalty interest has to be paid on the credit deducted. If you do not hold your capital in the cash account but use it for trading, you can avoid costs.
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Change broker or stay?
If you are not willing to pay the additional costs, you have the option of changing your account. However, it should be clarified in advance whether the custody account change to another broker proves useful. Since the conditions at flatex are quite convincing, a change should be carefully considered. Not only flatex customers have listened to the penalty interest. This aspect is also important for traders who are still looking for the right broker. Before traders decide against the broker, conditions and services should first be compared in detail.
On the flatex website there is a table that interested traders can use to get a first impression. A price comparison is presented here, which compares the fees in over-the-counter direct trading, in Xetra trading and in the US trading with various online brokers. The fees of flatex are compared with those of, among others, maxblue and S brokers.
If you decide to switch, you can benefit from attractive exchange premiums that some brokers offer. The amount of the exchange premium often depends on the transfer volume. In this regard, traders should also find out which securities count for the promotion. For new customers, changing custody accounts usually does not involve costs. However, costs can be charged by the transferring custodian, which should be considered. It is up to the individual decision of the trader whether, despite the penalty interest, he wants to remain a customer of flatex or prefers the offer of another broker who does not charge any penalty interest.
Before a broker change is implemented, the various offers should be closely examined in order to find the broker that is actually suitable. The broker comparison can also show that flatex fits the personal requirements best despite the penalty interest. The choice of broker is an individual decision that can depend on different factors for each trader.
ETF savings plan offer at flatex
The product range at flatex includes also ETFs. In order to invest in an ETF savings plan, the right ETF must first be found. The selection of ETFs that can be saved is shown to be generous at flatex. The Fund Finder proves to be a useful tool. Using the advanced search, traders can also enter the risk class that suits their personal investment strategy, which is an advantage. An ETF savings plan can be set up from a monthly rate of € 50. It should be considered whether the amount is withdrawn from the cash account or via the specified reference account.
In the personal user area, the collection account can be specified. The customer number and password are required to log in. The ETF savings plan is flexible when it comes to changes. So savers can choose the savings rate according to the current financial circumstances. Deleting is also easy. Payments can also be suspended. Flatex customers can choose to pay monthly savings. In addition, there is also the option of quarterly, half-yearly or annual deposits.
As far as the fees for the savings plan execution are concerned, the costs are 0.90 Euros per version. There are also special offers at flatex that allow customers to save fees. During the promotional period, ETF savings plans can be traded via Comstage free of charge. The next campaign, which revolves around db x-tracker, has already been announced. There is also an attractive selection of free ETFs available from this provider.
ETF savings plans have proven to be a popular way of saving money in the long term. Flatex has an appealing selection of ETFs that are eligible for savings plans. The online broker also offers interesting special offers. When moving in the savings rate, the specified reference account can also be selected as the moving-in account. If you want to use your reference account as a move-in account, you can easily make the necessary settings.
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Costs at flatex for trading
Flatex offers several products for retailers. In addition to CFD and Forex trading, shares, certificates, warrants, ETFs, bonds and more can also be traded. Over-the-counter or exchange trading can be used for this. Trading on German stock exchanges and Xetra is possible from 5 euros per order. There may also be exchange fees. The total cost of an exchange order on the Munich Stock Exchange is from € 7.24 per order.
There is also a fixed price for trading on exchanges in the USA and Canada of 9.90 Euro listed per order. For exchanges in Europe, the price per order is € 24.90. Flatex also presents a fixed price for over-the-counter direct trade, which amounts to 5.90 euros per order. There is also the possibility to trade mini futures and term turbos at 0 euros per order via flatex select. Overall, the fees are convincing. In order to obtain detailed information, the corresponding price and service index should be read.
It is noticeable that there are fixed prices at flatex for which an order can be executed online. If you want to place an order by telephone with an employee, you should note the additional costs of 10 euros. Even if the flatex negative interest can result in additional costs, traders should not ignore the strikingly fair conditions for trading.
What does the broker's range of services offer?
Customer service is also an important service. The availability of customer service proves to be good, although no service times for the weekend are listed. There is a phone number for prospective customers and customers, which proves to be well considered. Questions can also be asked using the contact form. The extensive FAQ section can also be used to obtain information.
Anyone entering the trade with no experience sometimes takes an unnecessary risk. In order to support its customers in trading, flatex offers an informative training offer. There are webinars on various topics in the corresponding area and training videos can also be viewed. Inexperienced traders as well as advanced users can expand their knowledge of trading through the training courses provided.
The demo account is also one of the free services at flatex. The demo account can be used to gain initial trading experience without taking any risk. Trading via the demo account is done with virtual credit so that users do not have to use real money. Flatex has a CFD demo account and also a FX demo account. Both variants can be tried out for 14 days without obligation. The CFD demo account is equipped with a virtual credit of 10,000 euros, so that users can test the trade even with larger amounts.
The online broker flatex also presents itself as satisfactory. The service times for customers from Monday to Friday from 8:00 a.m. to 10:00 p.m. The training offer, which includes helpful webinars and training videos, can also score points. The trading platform can be tried out and the processes of trading tested using a demo account.
CONCLUSION: flatex penalty interest also for small deposits
The introduction of penalty interest at the online broker flatex affects all balances in the cash account, including small amounts. The penalty interest accrues from the first euro and amounts to 0.4 percent per year. The ECB is currently calling up precisely this negative interest rate. flatex passes on the interest costs to its customers, so that they should consider whether certain amounts should be kept in the cash account.
If you do not agree to the penalty interest, you can consider changing brokers. There are currently numerous brokers who do not charge negative interest on deposits from the first euro. However, the conditions at flatex are impressive, so customers should weigh them up here. Traders who are looking for the right broker should also look at the bigger picture and not just the penalty interest. How the decision is made depends on the trader.
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