M1 Finance Margin Rates
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Debit Balance
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Margin Interest Rates
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$0,01 - $24,999
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8.75%
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$25,000 - $49,999
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8.75%
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$50,000 - $99,999
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8.75%
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$100,000 - $249,999
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8.75%
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$250,000 - $499,999
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8.75%
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$500,000 - $999,999
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8.75%
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$1,000,000 +
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8.75%
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M1 Finance Plus Margin Rates
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Debit Balance
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Margin Interest Rates
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$0,01 - $24,999
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7.25%
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$25,000 - $49,999
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7.25%
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$50,000 - $99,999
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7.25%
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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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7.25%
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$500,000 - $999,999
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7.25%
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$1,000,000 +
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7.25%
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Open M1 Finance Account
Open M1 Finance Account
Margin Accounts and Rates at M1 Finance
M1 Finance offers more than just investing. The brokerage firm has many useful financial services, one of which is margin. Let’s check it out.
M1 Finance’s Version of Margin
Margin works a little differently at M1 Finance, just as pretty much everything else works differently. Instead of a traditional margin service with a tiered pricing schedule, the brokerage firm has something called M1 Borrow. The service charges a flat fee on borrowed funds. Plus members get a discount, but in either case, the fee is always very low by industry standards. A Plus membership does cost $95, with the first year currently free.
One of the biggest differences between M1 Borrow and a traditional margin service is that M1 adds margin power automatically to every account. There’s no need to apply for margin capability. Once an account reaches at least $2,000 in equity, it can start using borrowed funds. Previously, the minimum level was $5,000, but M1 has lowered it.
Interest on borrowings is charged at the end of the month. The fee is deducted from the available cash balance. If there is no available cash, it is added to the amount borrowed, but there’s a limit to this.
An M1 Finance brokerage account can borrow up to 40% of account equity. This is a slightly lower number than other firms have (usually, it’s 50%). If an account holds certain securities like very volatile stocks or leveraged ETFs, the 40% figure will drop a little.
M1 Margin Account Cash Withdrawals
M1 Borrow can be used to withdraw cash instead of buying more securities. The system works the same. The withdrawal in this case is considered a loan, and it is charged the same interest rate. The same maximum of portfolio value still applies (40%).
This could be a really handy service as M1’s interest rate on cash withdrawals is much lower than my credit card or local bank is charging right now.
Open M1 Finance Account
Open M1 Finance Account
M1 Margin Account Limitations
As with all financial services, there are exclusions and limitations on M1 Borrow. First, M1 won’t permit any borrowings in an account that is invested in a single stock or is otherwise deemed not to be diversified enough.
Custodial accounts and IRAs are not eligible for M1 Borrow. Trust accounts are only if they sign a Margin and Short Agreement with the broker.
As with a traditional margin service, a margin call could be issued on an account if the value of securities falls to such a point that the amount borrowed is too high on a percentage basis. This will require the account holder to deposit cash or sell positions.
Plus Membership
On top of a lower margin interest rate, Plus accounts get a host of other features at no additional cost (beyond the $95 annual fee, which is waived for the first year). These include:
- Ability to open custodial accounts
- Smart transfers
- Two trading windows per day (instead of one)
- A checking account with 1% APY
- No forex fees with the M1 debit card
Open M1 Finance Account
Open M1 Finance Account
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.
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