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Ask Globe Investor: I have a large sum in a U.S. dollar account at Tangerine. The interest rate is terrible, namely 0.1 per cent. What are some good alternatives?If you don’t already have a discount brokerage account, now may be a good time to open one, as it will give you far better options for parking your idle cash.

Most discount brokers offer investment savings accounts, denominated in either Canadian or U.S. dollars, that pay much higher rates. BMO InvestorLine’s BMO USD High Interest Savings account, for example, currently pays an interest rate of 4.9 per cent, with a minimum initial purchase of US$1,000. Other bank-owned brokers offer similar rates. What’s more, such accounts – which you buy and sell much like a mutual fund, with no fees or commissions – are covered by Canada Deposit Insurance Corp.

There are other options. You could squeeze out an additional half-point or so of interest by choosing a high-interest savings account exchange-traded fund, but there are drawbacks to these products. You may have to pay a commission to buy and sell them. Moreover, not all HISA ETFs automatically reinvest distributions, so you won’t necessarily get the benefits of compounding. With broker-operated investment savings accounts, on the other hand, interest compounds automatically .

For all of the above reasons, an investment savings account will likely meet the needs of most investors looking for a place to stash their cash. And the rates will crush the puny return you’re getting from Tangerine.

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