Interactive Brokers Margin Rates
If you’re looking for a brokerage firm that offers margin accounts with low
interest rates, take a look at Interactive Brokers. There is a difference between
IBKR Lite and Pro pricing schedules, but even Lite customers get a decent deal.
IBKR Pro Margin Rates
|
Debit Balance
|
Margin Rate
|
|
$0 - $100,000
|
6,33%
|
|
$100,001 - $1,000,000
|
5,83%
|
|
$1,000,001 - $50,000,000
|
5,53%
|
|
$50,500,001+
|
5,33%
|
IBKR Lite Margin Rates
|
Debit Balance
|
Margin Rate
|
|
$0 - $100,000
|
7,33%
|
|
$100,001 - $1,000,000
|
7,33%
|
|
$1,000,001 - $50,000,000
|
7,33%
|
|
$50,000,001+
|
7,33%
|
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Competitor Margin Rates
| Broker |
$0 - $4,999 |
$5,000 - $9,999 |
$10,000 - $24,999 |
$25,000 - $49,999 |
$50,000 - $99,999 |
$100,000 - $249,999 |
$250,000 - $499,999 |
$500,000 - $999,999 |
above $1,000,000 |
|
Robinhood
|
6,25%
|
6,25%
|
6,25%
|
6,25%
|
6,25%
|
6,25%
|
6,25%
|
6,25%
|
6,25%
|
|
IBKR Lite
|
7,33%
|
7,33%
|
7,33%
|
7,33%
|
7,33%
|
7,33%
|
7,33%
|
7,33%
|
7,33%
|
|
ZacksTrade
|
8,83%
|
8,83%
|
8,83%
|
8,83%
|
8,83%
|
8,33%
|
8,33%
|
8,33%
|
8,08%
|
Non-USD Accounts Margin Rates at IBKR
An Interactive Brokers account can be set up in U.S. dollars or several other currencies, such as Canadian dollars, Euros, British pounds, and Japanese yen. Each of these currencies has different margin rates due to varying central bank interest rates. Interactive Brokers works hard to keep these rates competitive.
For example, margin rates for accounts in Japanese yen range from 2.5% to 0.75%. The highest rate we observed was for Turkish lira, which currently stands at 21.7%.
Cash Accounts and Margin Accounts
A cash account is straightforward: if you deposit $3,000, you have $3,000 to buy securities. However, these securities are assets and can be used as collateral for loans in a margin account. A margin account allows you to borrow against your assets to buy more securities.
While margin trading can seem complex, Interactive Brokers simplifies it by automatically calculating the margin requirements for your account and displaying them on their trading platform.
To view margin details, log into the Trader Workstation desktop platform and click on the Portfolio link under the New Window tab in the upper-left corner.
This will open a window showing your current positions. In the upper-right corner, there’s an account tab with a plus sign. Click on it to see detailed margin information, including:
- Buying power
- Overnight excess liquidity
- Day trades left
- Special memorandum account (SMA)
To add margin trading to a cash account, click on the person icon in the upper-right corner of the website and go to Settings. Under Account Configuration, click on Account Type. Follow the prompts to upgrade from a cash account to a margin account or to switch back.
Exposure Fee
Interactive Brokers has an exposure fee for high-risk accounts. The company uses advanced computer programs to scan its accounts for unusually risky positions. Although these accounts may be margin compliant, IB still assesses an exposure fee against these accounts.
The exposure fee is calculated on every calendar day and is assessed against the account at the end of the following trading day.
Positions that increase the likelihood of an account being charged an exposure fee include short positions and highly-concentrated long positions.
Margin-Enabled IRA at Interactive Brokers
Although the IRS prohibits the use of IRA funds as collateral, it is still possible to add margin capability to a retirement account at Interactive Brokers. This will allow the IRA to trade with unsettled funds, which means it can day trade.
Interactive Brokers Margin Education
Interactive Brokers has an extensive educational program called Traders’ Academy. Among the many online lessons it offers, one is an overview of trading on margin. There are five lessons in total in the program. They are:
- Margin – Getting Started
- Securities Margin Trading in the US
- Commodities Margin Trading in the US
- Margin in Practice Part 1: Trader Workstation (TWS)
- Non-US Margin Trading
The margin course would be especially good for beginners.
Interactive Brokers Cash Interest Rate
0%
Updated on 10/2/2024.
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