Margin Interest Calculator

Investing on margin can amplify your returns—but it also comes with costs. One of the most important costs to consider is margin interest, which is the fee you pay when you borrow money from a broker to buy securities.

What Is Margin Interest?

Margin interest is the interest charged by your broker on the borrowed amount when you buy securities on margin. It's typically calculated daily but charged monthly, based on the annual interest rate provided by your broker.

Margin Interest Formula

The formula to calculate margin interest is:

$\text{Margin Interest}=\left(\text{Amount Borrowed}\times \frac{\text{Interest Rate}}{100}\right)\times \frac{\text{Number of Days}}{365}$

Breakdown of the Formula

1. Amount Borrowed – The money you borrow from your broker.
2. Interest Rate – The annual percentage rate (APR) charged by the broker.
3. Number of Days – The number of days you hold the borrowed amount.

The formula converts the annual interest into a daily rate and multiplies it by the number of days you borrowed the money.

Why Use This Calculator?

Manually calculating margin interest can be tedious and error-prone. Our Margin Interest Calculator saves time by automatically computing the interest based on your input values—ensuring fast and accurate results.

Example Calculation

Let’s say:

• You borrowed $10,000
• The broker charges 8% annual interest
• You held the position for 30 days

We plug the values into the formula:

$\text{Margin Interest}=\left(10000\times \frac{8}{100}\right)\times \frac{30}{365}$

$\text{Margin Interest}=800\times \frac{30}{365}$

$\text{Margin Interest}=800\times 0.08219\approx 65.75$

Conclusion

Understanding and calculating margin interest is crucial for smart investing. Always know your borrowing costs in advance to avoid surprises. Use our Margin Interest Calculator to plan your trades better and manage your costs wisely.