Work out what a margin loan costs. Enter the balance, your broker’s annual rate and how long you will hold the position to see interest per day, per month and in total, with monthly compounding if unpaid interest is added to the loan. Add the position value to see the return you need just to cover the interest.
Last updated:
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%
Use your broker’s current rate for your balance tier.
days
$
Your own money + the loan. Used for the break-even return.
Enter your values to see the result.
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How to use the Margin Interest Calculator
Enter the margin loan balance: the amount you have borrowed from your broker, not the total position.
Enter the annual margin rate for your balance tier and the number of days you expect to hold the loan.
Pick the day-count basis (most US brokers divide by 360) and whether unpaid interest is added to the loan monthly.
Add the total position value to see the break-even return and the cost as a share of your equity.
Click Calculate interest and review the monthly schedule and steps.
Margin interest formula
Daily interest = loan balance × annual rate ÷ 360 and interest = daily interest × days held. With monthly compounding, each month’s interest is added to the balance before the next month is charged.
Break-even return = interest ÷ position value. Because only part of the position is borrowed, the break-even return is lower than the margin rate: a 50% loan at 11.5% needs about 5.75% a year (plus a little for the 360-day basis) just to cover interest.
Cost of $10,000 borrowed on margin (360-day basis)
Annual rate
Per day
30 days
90 days
365 days
6%
$1.67
$50.00
$150.00
$608.33
8%
$2.22
$66.67
$200.00
$811.11
10%
$2.78
$83.33
$250.00
$1,013.89
12%
$3.33
$100.00
$300.00
$1,216.67
14%
$3.89
$116.67
$350.00
$1,419.44
Simple interest without compounding. Scale the figures for your balance: $50,000 costs five times as much.
Tips to keep margin costs down
Compare brokers’ rate tables: the rate on small balances can differ by several percentage points.
Pay the interest each month, or deposit cash, so it does not compound on the loan.
Use margin for short holding periods; the longer you hold, the higher the return you need.
Watch your equity: interest added to the loan pushes your margin call price higher.
Frequently asked questions
How is margin interest calculated?
Brokers charge interest daily on your debit balance: balance × annual rate ÷ 360 (some use 365). The daily amounts are added up and charged to the account once a month. A $25,000 balance at 11.5% costs $25,000 × 0.115 ÷ 360 = $7.99 a day, or about $719 over 90 days.
Why do brokers divide by 360 instead of 365?
A 360-day year is a long-standing money-market convention. Because you are charged for every calendar day, it makes the effective cost slightly higher than the quoted rate: 11.5% on a 360-day basis is 11.66% over 365 days.
Does margin interest compound?
If you do not pay it, the monthly interest charge is added to your margin loan, and next month’s interest is charged on the larger balance. Tick the compounding option to include this effect.
What return do I need to break even on margin?
Divide the interest by the total position value. Borrowing $25,000 for a $50,000 position at 11.5% for 90 days costs about $719, so the position must gain about 1.44% in those 90 days (roughly 5.8% a year) just to pay the interest.
Are margin rates fixed?
No. Margin rates are usually variable, set as a base rate plus or minus a spread that depends on your balance. They change when the broker changes its base rate, typically after moves in benchmark interest rates. Larger balances usually get lower rates.
Is margin interest tax deductible?
In the US, margin interest can be deductible as investment interest expense if you itemize, generally up to your net investment income, and it does not apply to loans used for tax-exempt investments. Rules change, so check current IRS guidance or a tax professional.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.