Best Margin Rates

Lowest Margin Rates Brokers. Best Margin Rates in 2022


Online brokers with the lowest margin rate accounts. Current best margin rates. Stock brokers margin interest rates comparison chart.


Best Margin Rates


If you’re looking for the best margin rates among U.S. brokerage firms, look no further. Our list will show you who has the cheapest margin rates—and who has the highest. Although your instinct may be to go for the lowest rate, there are reasons not to choose a firm at the bottom of the barrel. Let us explain.


Lowest Margin Rates Brokers


Brokerage houses with the lowest margin rates are not always the best choice. For example, the absolute lowest rate currently available to investment accounts denominated in U.S. dollars is at Interactive Brokers with the IBKR Pro schedule. The interest rate starts (yes, starts) at 2.33% and goes even lower for large debit balances. But the Pro pricing scheme charges commissions, so only large-volume traders would really benefit from the plan. The Pro schedule does not have an inactivity fee. You can read more about the broker in the Interactive Brokers review and IBKR Pro vs IBKR Lite pricing comparison.

And then there’s M1 Finance. With a Plus subscription, margin balances across all tiers cost just 2.75%. But this, too, comes at a cost—a yearly fee of $125. You could learn more about the firm in the M1 Finance review.

Obviously, finding the best margin rates brokers requires more research than just looking at interest rates. We recommend answering the following questions before choosing a broker for margin investing:

- How much do I plan to borrow?
- What investment vehicles do I plan to trade on margin?
- What software do I want to use?
- Do I plan on shorting securities?
- How many times per day do I plan to trade?
- Do I want to withdraw cash on margin?

Not all brokerage firms offer all margin services. For example, Robinhood does not permit shorting, and M1 Finance does not offer the entire market day for trading, which obviously limits the ability to day trade. M1 Finance customers can withdraw cash on margin, but some brokerage firms may not offer this service or may not offer it with as much convenience.

Once you know how you plan to use margin, it’s time to look for the best margin loan rates at a firm that offers services for your planned investment strategy.


Margin Rates Comparison Chart


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
IBKR Pro 2.33% 2.33% 2.33% 2.33% 2.33% 2.33% 2.33% 2.33% 2.33%
M1 Finance Plus 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75%
IBKR Lite 3.33% 3.33% 3.33% 3.33% 3.33% 3.33% 3.33% 3.33% 3.33%
Robinhood 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5%
ZacksTrade 3.56% 3.56% 3.56% 3.56% 3.56% 3.06% 3.06% 3.06% 2.81%
M1 Finance 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% 4.25%
Sofi 5% 5% 5% 5% 5% 5% 5% 5% 5%
Webull 6.99% 6.99% 6.99% 6.49% 6.49% 5.99% 5.99% 5.49% 4.49%
TastyWorks 8.00% 8.00% 8.00% 7.50% 7.00% 6.50% 6.00% 5.50% 5.00%
Ally Invest 8.00% 8.00% 8.00% 7.75% 7.00% 5.75% 4.75% 4.25% 3.50%
Vanguard 8.75% 8.75% 8.75% 8.25% 7.75% 7.25% 6.75% 5.75% 5.50%
Fidelity 9.075% 9.075% 8.575% 7.625% 7.575% 7.575% 7.325% 5.00% 4.750%
Charles Schwab 9.075% 9.075% 9.075% 8.575% 7.625% 7.575% 7.325% 7.325% 7.325%
Merrill Edge 9.173% 9.173% 9.173% 8.423% 8.423% 8.423% 8.423% 8.423% 8.423%
Wellstrade 9.25% 9.25% 9.25% 9.75% 8.25% 7.75% 7.25% 6.75% 6.25%
Firstrade 9.50% 9.25% 9.00% 9.00% 8.50% 8.00% 7.75% 6.00% 5.25%
Sogotrade 9.50% 9.50% 8.50% 9.50% 7.50% 6.25% 5.75% 5.25% 4.75%
TradeStation 9.50% 9.50% 9.50% 9.50% 8.75% 8.75% 8.75% 5.50% 5.50%
Etrade 9.70% 9.70% 9.45% 9.20% 8.70% 8.20% 7.70% 7.20% 6.20%
TD Ameritrade 10.25% 10.25% 10.25% 9.75% 8.75% 8.50% 8.25% 8.25% 8.25%


Special Deals for Large Accounts


Although there are some decent brokerage margin rates displayed in that table, some firms offer even lower rates for large accounts. For example, Merrill Edge and TD Ameritrade customers above certain levels ($500,000 at TD Ameritrade and $1 million at Merrill Edge) qualify for negotiated rates.


Special Deals from Uncle Sam


Margin interest paid to a broker-dealer is tax deductible under some circumstances. But the Tax Cuts and Jobs Act of 2017 has made an already complex issue even more complicated. If you’re paying margin interest, we recommend consulting with a qualified tax professional to determine if you could be saving part of the bill on next year’s tax return.


Best Margin Rates


How Margin Interest Is Calculated


Margin is calculated daily and charged to an account monthly. This means that a broker figures how much an account has borrowed at the end of each trading day, multiplies that by the interest rate, and adds up all the assessed days at the end of the month. Although the interest rate is advertised as an annual figure, the brokerage firm actually converts it into a daily figure and uses that number to calculate the interest owed each day.

Let’s take an example. Suppose you have $3,000 worth of Tesla stock in your SoFi Invest account. Using that position as collateral, you borrow $3,000 and buy McDonald’s stock. Now, you have $6,000 worth of securities in your account, half of which is borrowed. That borrowed $3,000 will be charged 5% on an annual basis.

To convert the annual rate into a daily rate, simply divide by 360. Doing this, we see the daily interest charged in our example is $0.42. Obviously, carrying a small margin balance for a few days is a useful service that costs very little.


Eliminating Margin Charges


After creating a margin position, you probably will want to eliminate it at some point. This can be accomplished in one of two ways. You can deposit enough cash to eliminate the margin debit from your account. In the above example, $3,000 was borrowed, and this amount of cash would be enough to eliminate the margin debit.

Another way to reduce or erase the margin balance would be to sell securities in the account. This converts them into the cash that is needed to pay down the margin liability.


Lowest Margin Rates


Tracking Margin Balances


If you’re trading on margin, it’s a good idea to keep track of your account’s balance information to know how much you’re borrowing, what the account’s buying power is, etc. Even if you’re not trading on margin, it’s advisable to check this information periodically as it’s possible to inadvertently trade on margin.

For example, if you don’t have available cash inside a cash account, a trade will be rejected. But if the same trade is attempted inside a margin account, it could go through if the account has enough collateral. This would create an accidental margin balance.

Thanks to modern software, tracking this information is quite easy nowadays. Broker-dealers that offer margin accounts usually provide balance details on margin accounts in real time on their trading platforms. Just look in the menu for balance details. A margin account should automatically have entries that a cash account doesn’t. Usually, these entries include:

- Stock buying power (this will be higher than options buying power because options can’t be traded on margin)
- Margin balance (this is the amount interest is assessed against)
- Maintenance requirement (the minimum amount of equity the account needs to hold a marginable position)
- Margin equity percentage (the amount of leverage)


Margin Requirements Vary


Various institutions in America, namely FINRA, the SEC, and the Federal Reserve Board, are tasked with regulating margin accounts. Their rules and regulations set minimum standards, and this point we really do want to emphasize here. Individual brokerage firms are allowed to increase, but not decrease, these minimums, and this can and does lead to variations among firms.

For example, FINRA Rule 4210 requires a margin account to have a balance of at least $2,000 before it can begin borrowing. M1 Finance used to require $3,000, although it has recently lowered it to the industry standard of $2,000.

Maintenance margin requirements can vary from one firm to another as well. For example, although FINRA requires an account to maintain 25% of a margined position’s value in equity, some firms will increase this number. Schwab’s maintenance margin requirement is 30%, while Webull keeps it at 25%.

And then stock prices can affect a broker’s margin requirements. Webull’s maintenance margin requirement jumps to 50% for securities priced below $5, and then goes to 100% for securities priced below $3.

Short positions, leveraged funds, and bonds all have their own margin requirements, which can differ significantly from long stocks, and the variations among brokers can be significant.


Upgrading to Margin


A cash account can be upgraded to a margin account, usually quite easily at any of the brokerage firms in the margin rates comparison list. This typically requires just a few minutes on the broker’s website. A phone call will also work.


margin rates comparison


Cash Account or Margin Account May Be the Only Option


Some brokerage firms only offer one account version—cash or margin. Moomoo, for example, only offers margin accounts, while J.P. Morgan Investing only has cash accounts.


Margin-Enabled IRAs


Although the Federal Reserve Board won’t permit retirement accounts to borrow funds to buy assets, an IRA can add margin capability in order to trade with unsettled funds. Adding this functionality allows the IRA to day trade. This is a great feature because the IRA won’t receive a 1099-B during tax season, so all of those day trades don’t have to be reported.

Updated on 4/28/2022.


About the Author
Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for Brokerage-Review.com, Chad can usually be found managing his portfolio or building a new home computer.