Vanguard Margin Account Rates
Vanguard offers both cash and margin accounts. The latter have increased buying power thanks to the ability to buy securities with borrowed funds.
Vanguard charges margin interest on a tiered schedule with several tiers. The rates aren’t overly impressive based on industry standards. Moreover, as interest rates continue to rise during 2022, Vanguard’s margin rates will probably increase.
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Debit Balance
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Margin Interest Rates
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under $19,999
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8.75%
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$20,000 – $49,999
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8.25%
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$50,000 – $99,999
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7.75%
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$100,000–$249,999
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7.25%
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$250,000–$499,999
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7.00%
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$500,000–$999,999
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5.50%
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above $1,000,000
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5.00%
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Vanguard base lending rate on margin trading account is 6.25%.
Vanguard calculates the amount of interest an account owes each day and charges the account once
per month. The broker’s monthly interest period starts 2 business days before the start of each
month and ends 3 business days before the end of the month.
The Lowest 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 |
|
M1 Finance Plus
|
2.75%
|
2.75%
|
2.75%
|
2.75%
|
2.75%
|
2.75%
|
2.75%
|
2.75%
|
2.75%
|
|
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%
|
Vanguard Margin Account vs. Cash Account
A brokerage account at Vanguard can be opened either as a cash account or a margin account. The cash system is a little simpler, although it doesn’t have the buying power that a margin account has. Furthermore, there are several option trades at Vanguard that do require margin, so a cash account can’t enter these types of trades. Although Vanguard doesn’t offer multi-leg option strategies, some option plays available with the broker do require margin. Uncovered put writing is one example.
A Vanguard account that was opened as a cash account can easily be converted to a margin account. After logging in to the website, click on the Profile & account settings link in the top-right corner. On the next page, scroll down to the Trading services & agreements section. In this section, there are links to add options and margin privileges. Actually, all the links in this section generate the same page, where margin and options settings can be adjusted.
Margin Requirements at Vanguard
Vanguard follows the Federal Reserve Board’s guidelines for margin. This means the initial requirement on a long stock is 50%. If the stock price is below $5, Vanguard requires 100% up front.
Maintenance margin kicks in after a position is taken. Vanguard’s requirement for most marginable securities is 35%. Vanguard can change this number at any time if it wants.
The margin numbers are exactly the same at Vanguard for short positions.
A brokerage account at Vanguard must have at least $2,000 in account equity before it can begin using margin.
Marginable Securities at Vanguard
A security is marginable if it can be used for collateral inside a brokerage account. Vanguard ETFs and mutual funds from all fund families aren’t marginable for the first 30 days after purchase. They always must be paid for in full at the purchase point, which means margin can’t be used to buy a Vanguard ETF or any mutual fund.
All leveraged ETFs (such as inverse, 3x, or 2x leveraged funds) are nonmarginable inside a Vanguard account. Same is true for option contracts.
Margin-Enabled IRA at Vanguard
An IRA can never have full margin capability because U.S. securities regulations prohibit retirement accounts from borrowing money to buy securities. But an IRA can be margin-enabled. That means it can trade with unsettled funds, and this opens up the possibility of day trading inside an IRA.
The process for enabling margin on an IRA at Vanguard is the same process described above. Log into the website and follow the steps outlined. If you need any assistance, give Vanguard a call at 877-662-7447.
Lowest Margin Rates
See Margin Rates Comparison »
Finding Margin Details at Vanguard
To locate balance details on a margin account at Vanguard, log into the broker’s website and click on the link for the account. On the account’s profile page, click on the link for Credits and debits details. Doing so will produce a drop-down page with data on short and long positions.
Updated on 4/16/2022.
Arthur Chachuna is professional personal finance blogger, and the owner of Brokerage-Review.com.
He has been an avid investor for 23 years, and has background in both applied math and programming.
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