IB margin interest, when is it charged?

Discussion in 'Retail Brokers' started by skellington, Feb 28, 2008.

  1. Hi everyone,

    Does anyone know when IB starts charging interest on margin money?

    At TD Ameritrade (for example) interest begins accruing when the stock settles. So if you daytrade and never own a stock through settlement, you'll never pay interest on margin money. You effectively get 4:1 leverage for free.

    Is this the same on IB?

  2. Bowgett


  3. Thanks for the quick answer. It's not easy to find answers on the IB website.

    On a related note, it appears that they charge 3.85% for money between 100K and 1million currently which isn't bad at all if you want to hang onto an equity.
  4. Well, not exactly based on the way I understand your question. Assume you buy stock on margin on Day 1 and sell it on Day 2. The stock purchase will settle on Day 4 and the stock sale will settle on Day 5. You will be charged margin interest for 1 day (or for 3 days if Day 4 is Friday and Day 5 is Monday). This will be reflected as an accrued interest charge on your statement for Day 5.
  5. Hmm, that is interesting and makes sense if they charge between the closing dates (which does make sense that they would).

    What about if you only buy/sell on the same day and never hold overnight? As far as I can tell, settlements happen at 1 day granularity minimum so you would open/close settle on the same day and be charged no interest.
  6. No margin charge if you buy and sell on the same day.