Freedom24 D-account: What is it and how does it work?
If you consider investing via Freedom24, you might wonder what the “D-account” is. This article aims to demystify what the Freedom24 D-account is, how it works, and how it differs from other accounts on Freedom24.
Please note: The interest rate offered on the Freedom24 D-account and long-term savings account is variable. This means that it has probably changed since I wrote this article. Please remember to check out the current rate on the official website before you sign up.
What is the Freedom24 D-account?
The Freedom24 D-account is a savings account offered by Freedom Finance Europe. It allows clients to earn a high interest rate of 5.31% in US dollars and 3.87% in euros per annum on their free cash balance.
The D-account features daily interest accruals, no limit on the maximum deposit amount, and the ability to transfer money to your trading account at any time.
A D-account is created automatically when you open a trading account on Freedom24.
What does the “D” stand for in D-account?
The “D” in Freedom24 D-account likely stands for “Deposit” as the D-account is a type of deposit account.
How does the Freedom24 D-account work?
The way the Freedom24 D-account works is that every business day, the funds from D-accounts are invested in Over-the-Counter (OTC) currency swap transactions as per the client’s orders.
A currency swap involves two conversion trades. The first trade has the settlement date on the swap opening day, and the second one has the settlement date calculated as T+1. The income paid to the D-account is the profit from the second trade. This is how the D-account generates a fixed income of 5.31% in US dollars and 3.87% in euros per annum.
The interest is accrued daily, even on non-business days. The accrual transactions are only made on weekdays, but you will receive interest for the weekend in the Monday’s transaction, and similarly for holidays that fall in the middle of the week.
There are no limits on the maximum deposit amount in the D-account on Freedom24, but the daily accrued interest amount may not be below US dollars and euro 0.01, hence the income is paid for a balance over 80 US dollars and 100 euros.
It’s important to note that you cannot make trades directly from your D-account. It is specifically designed to hold your funds. If you wish to make a trade, you can easily transfer funds from your D-account to your trading account in just a few clicks, and the funds will be received instantly.
Freedom24 D-account vs long-term savings plan
On Freedom24 you also have the option to make a long-term savings plan which has a higher rate of return than the D-account. By using the long-term savings plan, you can earn up to 8.76% per annum for USD deposits and up to 6.42% per annum for Euro deposits. To achieve a higher return with the long-term savings plan you must bind your money for 3, 6, or 12 months.
Freedom24 D-account vs trading account
The Freedom24 D-account is a savings account specifically designed to hold funds and earn a fixed income through currency swap transactions. On the other hand, a trading account allows users to actively trade and invest in various financial instruments such as stocks, ETFs, and options.
If you sign up on Freedom24, you get both a D-account and a trading account and it is easy to swap between these two accounts.
How safe is the Freedom24 D-account?
The Freedom24 D-account is designed to be secure and safe for all users. But like any other financial instrument, there are risks associated with using the D-account.
Regarding the specific safety of the D-account, the funds deposited into it are invested in OTC currency swap transactions, which are generally considered low-risk investments.
However, it is important to note that all investments carry some level of risk, and the rates of return are subject to change at the company’s discretion. Therefore, while the D-account is designed to be secure, potential investors should carefully consider their risk tolerance and financial situation before investing.
Learn more about safety in my Freedom24 review.
Is the Freedom24 D-account worth it?
Due to the high interest rate, the Freedom24 D-account can be worth it for individuals who want to earn a fixed income on their free cash balance. It offers a competitive rate compared to traditional savings accounts and allows for daily interest accruals.
However, it’s important to consider your individual financial goals and risk tolerance before investing in the D-account. While it is designed to be secure, there are always inherent risks in any investment. If you are not looking to invest your money actively in the stock market and are looking for a higher rate of return, you may want to consider the long-term savings plan on Freedom24 instead of the D-account.
Ultimately, the decision of whether the D-account is worth it depends on your personal financial situation and investment objectives. It may be beneficial to consult with a financial advisor or do further research to determine if the D-account aligns with your investment goals.
Disclaimer: Investments in securities and other financial instruments always involve the risk of loss of your capital. The forecast or past performance is no guarantee of future results. It is essential to do your own analysis before making any investment.
