About Margin Interest

Discussion in 'Order Execution' started by igcompany, Nov 7, 2012.

  1. Hello! My first post on Elite Trader.
    I'm planning on doing some day trading in the future. I want to open a margin account at Interactive Brokers (already own one, the margin account will be linked to the other one). But i have some questions about margin interest.
    Let's say i will borrow around $2000 a day. How much will the margin interest be?
    I've read some articles and i found somewhere that the margin interest is calculated on the average you borrow a day. So by using IB's calculator we have:

    Your blended rate for
    USD =


    and Interest Charged: 33.4 which they say will be deducted in the third day of the following month.
    But if we take it this way: $2000 x 20 days (a month) = Interest Charged: 668.

    The second one seems pretty much and i don't see how you're supposed to do any profit if the fees are going to be so big.

    Can anyone tell me if any of the above is correct?
    Thank you!
  2. I got an email from the Interactive Brokers support. It's all clear now. The margin interest seems to be pretty low.

    The interest you see represents annual interest charges.

    The formula is this:
    (rate * prinicipal* days)/360

    So using your values you would get

    (0.0167*2000*1)=33.40, the amount you would pay for a year.


    A borrow of $2000 would cost approximately $0.09 per day.
  3. 1245


    Margin interest should only be on EOD balances.
  4. zdreg


    skip the acronym nonsense. it doesn't make u look smarter. eod is end of the day balance.
    calculations of interest charges includes sat, and sun.

    668 makes no sense at all. post your numbers.
    interest is about $1.40/month.
    i bet the op has had some college education. what a country the US has become.
  5. $2,000.00 Amount
    1.67% APR
    $33.40 Annual Interest
    365 Days Year
    $0.09 Interest Per Day
    20 Days
    $1.83 Total Interest
  6. Check the my second post above. I got an email from IB support and it took some time until it got posted on the forum.

    The person above me was right.
  7. My fault. The second one (664) is for a $40.000 borrow and represents the margin interest for one year.
    My question was actually on the period of time you are supposed to pay the margin interest.
    It's all / year.
  8. What i was trying to say with the second one is how you are supposed to calculate: the /day borrowed ammount or the /month borrowed ammount or whatever.

    It's the /day borrowed ammount. If we would have $40.000 a month we would have a 668 margin interest per year, that's how i got those numbers @zdreg.

    After posting this topic this line came into my attention on Interactive Brokers's website:
    IB accrues interest on a daily basis