Margin Interest Calculator
Print| Daily Interest Cost | $0.00 |
| Monthly Interest Cost (30 days) | $0.00 |
Trading on margin allows investors to leverage their existing securities to buy additional stocks, short sell shares, or write options. However, borrowing money from your online brokerage is not free. Brokerages charge daily compounding interest on your outstanding margin loan balance, which can rapidly erode trading profits if held over long periods.
Our free Margin Interest Calculator helps active traders compute total borrowing costs. By inputting your borrowed margin balance, stated annual margin rate, and holding duration in days, you can calculate exact daily, monthly, and annual margin interest charges.
How Margin Interest is Calculated
Brokerages calculate margin interest on a daily basis using a standard 360-day or 365-day financial convention, accruing charges daily and billing your account monthly.
Daily Margin Interest Formula:
Daily Interest = (Margin Loan Balance × Annual Margin Rate) / 360
(Note: Most US brokers like Charles Schwab, E*TRADE, and Robinhood use a 360-day year convention; Interactive Brokers uses 365 days).
Total Margin Cost Formula:
Total Margin Interest = Daily Interest × Number of Days Held
Typical Brokerage Margin Interest Rates
Margin rates are variable and tied to the Federal Reserve Benchmark Rate. Rates decrease as your total borrowed margin balance increases:
| Margin Loan Balance Tier | Standard Brokerage Rate Range | Low-Cost Broker Rate Range |
|---|---|---|
| $0 to $24,999 | 12.50% to 13.75% | 6.50% to 7.50% |
| $25,000 to $99,999 | 11.75% to 13.00% | 6.00% to 6.80% |
| $100,000 to $499,999 | 10.50% to 11.50% | 5.50% to 6.20% |
| $500,000+ | 9.25% to 10.25% | 5.00% to 5.75% |
Step-by-Step Margin Loan Example
Imagine a swing trader borrowing $50,000 in margin debt to hold a position for 45 days at an annual margin rate of 11.50% (0.115) using a 360-day convention.
Step 1: Calculate Daily Interest Charge
Daily Interest = ($50,000 × 0.115) / 360
Daily Interest = $5,750 / 360 = $15.97 per day
Step 2: Calculate Total 45-Day Interest Cost
Total Interest = $15.97 × 45 Days = $718.65
The trader will pay $718.65 in total margin interest charges over the 45-day holding period.
Frequently Asked Questions (FAQ)
When is margin interest charged to my account?
Margin interest accrues daily but is posted and debited from your brokerage cash balance once per month (typically on the last business day of the month or on your monthly statement date).
Is margin interest tax deductible?
Yes! In the US, margin interest is classified as Investment Interest Expense. If you itemize deductions on Schedule A (Form 1040), you can deduct margin interest expenses up to your net taxable investment income for the year.
What triggers a Margin Call?
A Margin Call occurs when the total equity in your margin account drops below the FINRA minimum maintenance requirement (typically 25%) or your broker’s house requirement (often 30% to 40%). If triggered, you must immediately deposit cash or sell securities to cover the shortfall.