How Margin Interest Rates Impact Your Investment Returns

When you borrow money on margin to invest, the interest rate you pay directly impacts your returns. Many investors focus on potential gains but overlook how margin interest costs can eat into their profits—or even turn a winning trade into a losing one.

Why Margin Rates Matter

A 1% difference in margin interest rates might seem small, but over time, it can significantly impact your investment returns. For example, on a $100,000 margin balance, a 1% difference translates to $1,000 per year in additional interest costs.

Calculating the True Cost

The true cost of margin borrowing isn't just the interest rate—it's how that rate compounds over time, especially if you're not paying interest monthly. When interest compounds, you're essentially paying interest on interest, which can quickly add up.

Making Informed Decisions

By comparing margin rates across different brokers, you can identify opportunities to save thousands of dollars annually. Our margin interest calculator helps you see exactly how much different brokers will cost you, making it easy to choose the option that maximizes your returns.

Remember: Every dollar you save on margin interest is a dollar that can compound and grow in your portfolio.