Margin Interest Calculator
Calculate daily, monthly, and annual margin interest costs for any brokerage rate and borrowed amount.
How It Works
Enter the total amount borrowed on margin, the broker's annual margin interest rate, and how many days you plan to hold the position. Choose the day-count convention (360 for broker standard, 365 for calendar). The calculator instantly computes your daily, total, monthly, and annual costs.
The break-even return percentage tells you the minimum return your investment must generate just to cover the margin interest. If your expected return is lower, you lose money by using leverage. This is a critical number for any leveraged investing decision.
FAQ
Can I calculate margin interest for a single day?
Yes. Input a holding period of 1 day, and the tool shows your daily cost. Multiply by any number of days in your head or adjust the holding period slider.
What is margin interest and how is it calculated?
Margin interest is the cost of borrowing money from your broker to buy securities. It accrues daily based on your borrowed balance and the broker's annual rate, typically using a 360-day convention.
Why do brokers use 360 days instead of 365?
Brokers use a 360-day year (not 365) as a convention for margin calculations. This means your effective annual rate is slightly higher than the stated rate. For example, a 10% rate using 360 days equals an effective 10.14% over a calendar year.
Is margin interest expensive for short-term trades?
For a short-term trade, margin interest is usually manageable — e.g., $10,000 borrowed at 10% for 30 days costs about $83. But for long-term holding, costs compound significantly. Always factor margin cost into your profit target.
How do I know if using margin is worth it?
Calculate the total interest cost for your expected holding period. Divide by your invested capital to get the break-even return percentage. If you don't expect your trade to exceed that return, using margin will result in a net loss.
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