Margin Interest Cost Calculator
Work out what a brokerage margin loan actually costs — daily interest, total interest over your holding period, and the effective annual rate.
How it works
Daily interest = borrowed × (rate ÷ 100) ÷ 360 · Total = daily × days
Brokerages charge margin interest daily on the balance you borrow, typically accrued on a 360-day year and posted monthly. Because the loan compounds against you every day it is held, a leveraged position has to clear this interest hurdle before it earns you a cent — the longer you hold, the higher the bar. Margin rates are also tiered, so large balances often borrow at a lower rate than the base rate shown here.
Worked example
Borrowing $20,000 at an 11% margin rate costs 20,000 × 0.11 ÷ 360 = $6.11 a day. Held for 90 days that is about $550 in interest, so the position must rise 550 ÷ 20,000 = 2.75% just to break even.
Frequently asked questions
How is margin interest calculated?
Brokers apply the annual margin rate to your borrowed balance and divide by 360 to get a daily charge, which accrues each day the loan is outstanding and is usually billed monthly. This calculator uses the same 360-day convention.
Is margin interest tax deductible?
Margin interest used to buy taxable investments may be deductible as investment interest expense, limited to your net investment income, if you itemize. Consult a tax professional for your situation.
Why does the break-even return matter?
Leverage magnifies gains and losses, but the interest cost is guaranteed while the gain is not. Knowing the return you need just to cover interest tells you how much of any upside is eaten by the cost of borrowing.
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Educational estimate, not investment advice. Options and margin involve substantial risk.