Calculate the true cost of borrowing on margin. Compare broker rates, see daily/monthly costs, effective rates, and whether leverage boosts or erodes your returns.
Margin interest is the ongoing cost of borrowing money from your broker to buy securities. Unlike a fixed loan, margin interest typically accrues daily on the outstanding balance and can significantly erode your returns — especially for positions held over months or years.
Most brokers charge between 5% and 13% annually, compounded daily. On a $50,000 margin loan at 8%, you're paying roughly $11 per day or $333 per month. Your investments must earn more than the interest rate just to break even, and any shortfall comes directly out of your pocket.
This calculator shows your exact interest cost for any holding period, the effective annual rate after compounding, the break-even stock return, and the net impact of leverage on your returns. The rate comparison table lets you evaluate different broker rates, and the monthly accrual schedule shows how the cost compounds over time.
Use the preset examples to load common values instantly, or type in custom inputs to see results in real time. The output updates as you type, making it practical to compare different scenarios without resetting the page.
Margin interest is invisible until it hits your statement. This calculator reveals the true daily, monthly, and annual cost of your margin loan and whether the leverage is actually helping or hurting your returns.
This tool is designed for quick, accurate results without manual computation. Whether you are a student working through coursework, a professional verifying a result, or an educator preparing examples, accurate answers are always just a few keystrokes away.
Daily Compound Interest = Balance × ((1 + Rate/365)^Days − 1) Simple Interest = Balance × Rate × (Days/365) Effective Rate = (1 + Rate/365)^365 − 1 Break-Even Return = Interest Cost / Total Position × 100 Leverage Boost = ROE_leveraged − ROE_unleveraged
Result: Interest cost = ~$4,160 (daily compounding)
A $50,000 margin loan at 8% with daily compounding accrues approximately $4,160 over one year. The effective annual rate is 8.33%. You need your investments to return at least 4.2% on the total position just to cover the interest.
Use consistent units throughout your calculation and verify all assumptions before treating the output as final. For professional or academic work, document your input values and any conversion standards used so results can be reproduced. Apply this calculator as part of a broader workflow, especially when the result feeds into a larger model or report.
Most mistakes come from mixed units, rounding too early, or misread labels. Recheck each final value before use. Pay close attention to sign conventions — positive and negative inputs often produce very different results. When working with multiple related calculations, keep intermediate values available so you can trace discrepancies back to their source.
Enter the most precise values available. Use the worked example or presets to confirm the calculator behaves as expected before entering your real data. If a result seems unexpected, compare it against a manual estimate or a known reference case to catch input errors early.
Most charge daily based on the settled margin debit balance. The formula is: Daily Charge = Balance × (Annual Rate / 360 or 365), accrued daily and debited monthly.
Yes, margin interest is generally deductible as investment interest expense, but only against net investment income. Consult a tax advisor.
Rates vary by broker competitiveness and loan size. Interactive Brokers charges 5-6%, while full-service brokers may charge 10-13%. Larger balances often get lower rates.
When your expected return is close to or below the margin interest rate. If you're borrowing at 8% and expect 9% returns, the leverage boost is minimal and the risk is high.
If you don't pay the interest monthly, it adds to your balance and compounds. Most brokers debit interest monthly from your cash balance.
Choose a low-rate broker (like IBKR), maintain a larger account for tier discounts, or use box spreads for synthetic lending at lower rates. Use this as a practical reminder before finalizing the result.