# When is margin interest charged?

Let's say that I have a margin account at a major broker like TD Ameritrade or Interactive Brokers. I am trying to calculate what my cost would be to use margin and I would also like to know when it would be charged.

For simplicity's sake, let's say that the margin stays fixed for 1 year and the borrow rate is 5%. Can I say then that my total cost on \$10,000 margin would be \$500 a year for a monthly rate of \$42?

Do brokers like these charge interest on a daily basis?

## 1 Answer

If the amount borrowed remains constant at \$10,000 and with a 5% borrow rate then your calculation is correct.

At IBKR, the margin interest accrues daily and it is deducted from your account at the beginning of the each month. Though I have an account at Ameritrade, I haven't used margin there. I'd assume that the process is the same. A quick call to them would provide the answer

• So would that mean that I would be charged roughly a 1.36 a day? – Voltage Spike May 29 at 18:18
• @laptop2d Yes, that would be the correct math. \$1.36 per day on a \$10k margin. IB charges your account monthly. – Brian R May 29 at 19:45