How is margin interest calculated?

Discussion in 'Retail Brokers' started by kubilai, Jun 9, 2005.

  1. They way I figure it should be done is as follows. It should be the margin rate divided by days in a year. That number times debit amount times days held.


    .06 (Annual rate)/ 364 (Days a year)= .0001648 (Daily Rate)

    .0001648 * 10,000 Margin Debit)= 1.648 per day

    Isn't that right?
     
    #11     Jun 14, 2005
  2. alanm

    alanm

    winter: How much margin did you use on that one day, though?

    $1147 is the average balance if you used $30969 one night, and $0 on the other 26 nights.
     
    #12     Jun 14, 2005
  3. Yea good point - that is possible and actually likely.
     
    #13     Jun 14, 2005
  4. kubilai

    kubilai

    In my case it was for sure $20k margin balance for one day resulting in $100 interest charge.

    The failed money market sweep can explain the problem because when it fails to return cash to my account at the beginning of a day, whatever trades I make that day will be on margin and trigger interest accumulation.
     
    #14     Jun 14, 2005
  5. alanm

    alanm

    You shouldn't be charged margin on intra-day trades, and if it didn't sweep your cash back in, I'd think you'd have gotten a margin call. In any case, I guess they're on it. Hard to believe a big firm like Penson doesn't have checks and balances to catch something like that (i.e. their margin income suddenly skyrocketing), and that nobody has noticed it until now.
     
    #15     Jun 14, 2005