The Best Margin Rates for 2023

Advertising Disclosure This article/post contains references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services
Margin can be a powerful tool, if used carefully. However, finding out which stock broker has the lowest margin rates can be time consuming. We've collected the most popular brokers and created a list of the best margin rates at various deposit amounts.

I don't use margin that often, but my taxable accounts are margin based by default. It doesn't cost anything additional to set up a brokerage account on margin. I have my accounts set up up with margin just in case I ever have to use it. It can be helpful when you've sold one stock and don't have enough money to cover a new purchase. Otherwise, without margin, you are forced to wait until the sold stock is cleared and the money is deposited within your account. This can take a few days to occur, and you could lose out on an investment opportunity in the meantime.

The margin rates listed here are what's publicly listed on each respective broker's website. In some cases, it's possible to get a better rate than what is advertised. So if you are with an existing broker and want a lower margin rate, it's best to contact them first before switching. Like credit card terms, it is possible to negotiate a better rate.

Margin Rate Comparison

To see all brokers, please scroll right in the table. ➢ ➣ ➤

 TD AmeritradeAlly InvestFirstradeRobinhoodTradeStationZacks TradeLightspeed TradingSogoTradeStockpileTastyworksUstocktradeVanguard 
$0 - $4,9999.50%10.00%%9.75%%0%9.50%5.91%%%%8.75%11.00%%8%%9.75%$0 - $4,999
$5,000 - 9,9999.50%10.00%%9.75%%0%9.50%5.91%%%%8.75%11.00%%8%%9.75%$5,000 - 9,999
$10,000 - $24,9999.25%10.00%%9.50%%0%9.50%5.91%%%%8.75%10.00%%8%%9.25%$10,000 - $24,999
$25,000 - $49,9999.00%9.75%%9.25%%0%9.50%5.91%%%%8.75%10.00%%7.5%%9.25%$25,000 - $49,999
$50,000 - $99,9998.00%9.00%%8.75%%0%8.75%5.91%%%%7.75%9.00%%7%%8.75%$50,000 - $99,999
$100,000 - $249,9997.75%7.75%%8.25%%0%8.75%5.41%%%%7.75%7.75%%6.5%%8.25%$100,000 - $249,999
$250,000 - $499,9997.50%6.75%%8.00%%0%8.75%5.41%%%%7.00%7.25%%6%%7.75%$250,000 - $499,999
$500,000 - $999,999For balance tiers over $500K, please call 800-655-4777 to learn about our latest rate offers.6.25%%6.25%%0%5.50%5.41%%%%6.50%6.75%%5.5%%6.50%$500,000 - $999,999
Open AccountOpen AccountOpen AccountOpen AccountOpen AccountRead ReviewRead ReviewOpen AccountRead ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead Review
To find out more about the various discount brokers, please visit our best online brokers web page.

Why Use Margin?

Some use margin accounts to borrow money for investments outside their stock portfolio (e.g., a down payment on a house) without having to sell stocks. If planned carefully, it can be a wise decision, since you don't have to sell your stock and pay tax on the capital gains.

Other investors use it as a form of arbitrage, as Interactive Brokers mentions in their commercials. You borrow at a lower interest rate than a stock's dividend payout rate. There are many dividend aristocrats with higher payouts than Interactive Broker's margin rates. You pocket the difference between the two.

Is Using Margin Risky?

Leveraging margin can also backfire on you if you aren't careful. You could be forced into a margin call because the stocks you own have decreased in value and are below your margin limit. So you experience double jeopardy, which forces you to sell stocks at the worst time. So it's critical you don't leverage too much, if you use margin.

In most cases, you are paying a heavy premium for it. The current Federal Funds Rate (at the beginning of 2018) is at 1.50%, so margin rates are starting to creep up. In the table below, you'll see that most of the brokers make off very well with the interest they charge. It would be very difficult to profit on margin with TD Ameritrade, since many dividend stocks and fixed-income investments earn less than 7.00%.

Although not listed in the table, Interactive Brokers offers margin rates below 2.5% for deposit amounts of $2,000,000 or greater. I'm assuming this is outside the scope of most investors. If you are an ultra-high-net-worth individual, this could be a great way to borrow against your stock assets.

If you do use margin for investing or short-term loans, make sure you understand the risks and the costs. Otherwise, it could be a costly investment lesson. Depending on the broker you choose and the amount invested, it might be better to get a short-term loan from another source. Using unsecured debt from credit cards or a loan from P2P lenders like Prosper would have less risk.

  1. Interactive Brokers margin rates are on a sliding scale. To get an accurate and up-to-date rate, use their calculator. Interactive Brokers has rates lower with amounts greater than $1 million.
  2. For Charles Schwab balance tiers $500K and above, call 877-752-9749 for more information about their latest rate offers.

Larry Ludwig

Larry Ludwig was the founder and editor in chief of Investor Junkie. He graduated from Clemson University with a bachelor of science in computers and a minor in business. Back in the ’90s, I helped create some of the first financial websites for firms like Chase, T. Rowe Price, and ING Bank, and later went on to work for Nomura Securities. He’s had a passion for investing since he was 20 years old and has owned multiple businesses for over 20 years. He currently resides in Long Island, New York, with his wife and three children.

Related Articles

Back to top button