This is not investment advice. The information provided is for educational and informational purposes only and does not constitute a recommendation to buy or sell any financial product.
Margin rates — the interest you pay to borrow money from your broker — can be the largest single cost for active traders. Interactive Brokers consistently offers the lowest margin rates, often 2-3 percentage points below competitors. On a $50,000 margin balance, this saves $1,000-$1,500 per year. For traders who carry margin balances, the broker's margin rate may matter more than any other cost.
Margin Rate Comparison
Rates are approximate as of 2026. Actual rates vary with the federal funds rate and broker-specific benchmarks.
| Broker | $10,000-$25,000 | $25,001-$50,000 | $50,001-$100,000 | $100,001-$1,000,000 | Over $1,000,000 |
|---|---|---|---|---|---|
| Interactive Brokers | ~6.1% | ~5.8% | ~5.6% | ~5.3% | ~5.0% |
| Robinhood | ~7.75% | ~7.75% | ~7.75% | ~7.75% | ~7.75% |
| Webull | ~7.74% | ~7.74% | ~7.74% | ~7.74% | ~7.74% |
| Fidelity | ~8.25% | ~7.75% | ~7.25% | ~6.75% | ~6.25% |
| Charles Schwab | ~8.95% | ~8.45% | ~7.95% | ~7.45% | ~6.95% |
| E*TRADE | ~8.70% | ~8.20% | ~7.70% | ~7.20% | ~6.70% |
| Vanguard | ~10.0% | ~9.5% | ~9.0% | ~8.0% | ~7.0% |
Key observations:
- Interactive Brokers leads at every balance tier, often by 2-3 percentage points
- Robinhood and Webull offer flat rates — simple but not the lowest
- Most traditional brokers have tiered rates that decrease at higher balances
- The cost difference between IBKR and the highest-cost broker can exceed $2,000 per year on a $50,000 margin balance
Annual Cost Comparison
This table shows estimated annual margin interest at different balance levels:
| Average Margin Balance | IBKR (Lowest) | Robinhood (Flat) | Schwab (Highest) | Annual Savings (IBKR vs Schwab) |
|---|---|---|---|---|
| $10,000 | $610 | $775 | $895 | $285 |
| $25,000 | $1,450 | $1,938 | $2,113 | $663 |
| $50,000 | $2,800 | $3,875 | $3,975 | $1,175 |
| $100,000 | $5,300 | $7,750 | $7,450 | $2,150 |
| $500,000 | $25,000 | $38,750 | $34,750 | $9,750 |
For a trader carrying a $100,000 margin balance, IBKR saves approximately $2,150 per year compared to Schwab. Over 10 years, assuming compounded savings, the difference exceeds $25,000.
How Margin Rates Work
Your broker sets a base rate — typically tied to the federal funds rate or a broker-specific benchmark — and adds a markup. The markup is the broker's profit on the loan:
- IBKR markup: ~1.0-1.5% above benchmark
- Schwab markup: ~2.5-3.5% above benchmark
- Fidelity markup: ~2.0-3.0% above benchmark
- Robinhood markup: ~2.0-2.5% above benchmark
The benchmark rate fluctuates with Fed policy. When the Fed raises rates, all margin rates rise. The spread between brokers remains relatively consistent regardless of the absolute rate level.
Negotiating Margin Rates
Margin rates are negotiable at some brokers. If you have a substantial account or trade actively:
- At Schwab, Fidelity, or E*TRADE: Call and ask for a rate review. Mention the IBKR rate as a competitive reference. Brokers often match or approach competitor rates for accounts above $100,000-$250,000.
- At IBKR: The published rates are already the most competitive. Room for negotiation is limited.
- At Robinhood/Webull: Rates are generally not negotiable.
Frequently Asked Questions
Is margin interest tax deductible? In many cases, yes — margin interest may be deductible as investment interest expense on your tax return, up to the amount of your net investment income. Consult a tax professional for your specific situation.
How is margin interest calculated? Interest accrues daily on the borrowed amount and is typically charged to your account monthly. You do not need to make separate interest payments — the interest is added to your margin balance.
Can I avoid margin interest by day trading? Yes. If you close all positions before the market closes, you do not hold positions overnight and do not incur margin interest. Day trading margin (intraday) is typically 4x your equity, compared to 2x for overnight positions.
What happens if I cannot pay the margin interest? The interest is added to your margin loan balance. If your account equity falls below the maintenance requirement, the broker issues a margin call requiring you to deposit additional funds or sell positions.
Which broker is best for a small margin account? For accounts under $25,000, the rate differences are smaller in absolute dollars. Robinhood's flat $5/month for Robinhood Gold (first $1,000 margin included, then the standard rate on additional borrowing) can be cost-effective for very small margin balances.
Where to Start
Compare rates at the balance tier you expect to maintain. Check your current broker's margin rate and compare to the table above. If the difference is substantial, consider an ACAT transfer — the savings on margin interest may quickly exceed the transfer cost. Read our margin trading guide to understand how margin works and the risks involved.
Margin trading involves substantial risk. You can lose more than your initial deposit. Borrowing to invest amplifies both gains and losses. This page contains affiliate links.