Are margin rates low at Fineco Bank?
Margin trading - borrowing money from your broker to buy more assets than you could otherwise afford - is popular, but it's not available at all brokers, and margin interest rates can vary widely.
Fineco Bank offers margin trading, but its margin rates are high, so you should look elsewhere. Start with our picks for the best margin trading platforms, or read on for info on margin trading.
I've thoroughly tested Fineco Bank's services using real money. When it came to margin trading, high margin rates killed the deal for me:
- Fineco Bank's margin rates are high, which can erode your trading profits.
- Stock and ETF trading fees at Fineco Bank are low.
- Margin trading involves borrowing money from your broker to increase your exposure.
- Into margin trading? Skip Fineco Bank and check the best margin trading platforms.
Before we begin, let's see if Fineco Bank is available in your country:
Fineco Bank margin rates are high
So what are margin rates? Margin rates, sometimes called debit rates, refer to the interest rates charged by brokers when you borrow money to buy and sell stocks, ETFs (exchange-traded funds) or options on margin.
Each brokerage sets its own margin rates, but generally margin rates are closely tied to the benchmark interest rate of the currency in which you borrow. If your broker lends you USD, the margin rate will most often be the US interest rate plus a markup that the broker adds.
Brokers often have a tiered system for margin rates, depending on the amount you borrow: the more money the broker lends you, the lower the margin rate is. Some brokers also charge different margin rates for different types of trading accounts. Typically, a standard account will have higher rates than a premium account. The rates BrokerChooser quotes refer to standard accounts.
Most brokers calculate the margin rate on a daily basis, but the amount you owe them is charged to your account once a month. Brokers are required to disclose their margin rates; some do so citing an annual percentage rate while others will display it in swap points. Whichever it is, just keep in mind that margin rates can change rapidly without advance warning from your broker.
Broker | USD margin rate | USD margin rate class |
---|---|---|
Fineco Bank | 12.6% | High |
Saxo | - | |
Interactive Brokers | 6.1% | Low |
Margin rates on short selling
Margin rates can also apply when you engage in short selling. Short selling means that you borrow shares from your broker and sell them with the expectation that the share price will decline. You will then repurchase the shares at a lower price, return them to the broker and pocket the price difference as your profit.
The margin rate for short selling is the interest rate charged by the broker on the borrowed funds used to facilitate the short sale. It is similar to the margin rates for simple stock, ETF or options trading.
Stock trading fees are low
Margin rates are the single most important item that influences your margin trading profits, but trading fees and other regular or one-off charges can also impact your overall trading costs.
Fineco Bank has low stock and ETF trading fees overall. See details of this and other fees charged by Fineco Bank and some close competitors in the table below. (Trading fees cited here refer to a $2,000 trade.)
Broker | US stock fee | UK stock |
---|---|---|
Fineco Bank | $4.0 | $3.7 |
Saxo | $1.6 | $3.8 |
Interactive Brokers | $1.0 | $3.8 |
Trading on margin
Trading on margin means borrowing money from your broker to buy stocks, ETFs or options. But why would you do that? Basically, it increases your 'buying power', allowing you to open larger trading positions than you could otherwise afford with just the cash in your brokerage account.
In order to trade on margin, you'll need to open a special account at your broker, typically simply called a margin account. You are also required to deposit a certain percentage of the total traded value as collateral, also known as the margin requirement. The remaining portion is funded by the broker.
Make sure you check the margin rates your broker applies, as higher rates can significantly impact your overall trading cost and erode your investment gains. For example, you may be happy with a simple stock investment that yields an 8% return over one year; probably less so if you borrowed money at 10% annual interest to finance that stock investment.
You also need to be aware of the risks associated with trading on margin, as any losses will also be magnified in the same way that gains are amplified.
Check out this short video for a behind-the-scenes peek into how our experts personally test and evaluate brokers.
Further reading
- Diversifying your investments
- Fineco Bank stock conditions explained
- Stock trading at Fineco Bank: an expert guide and rating
- Fineco Bank penny stocks trading conditions explained
- ETF trading conditions at Fineco Bank explained
- Fineco Bank fractional shares trading conditions explained
- Fineco Bank cash interest rate
- Fineco Bank ESG investing
- Fineco Bank invest $100,000
- Fineco Bank IPO accessibility
- Fineco Bank Mexican stocks trading availability
- Fineco Bank US stock trading details
- Fineco Bank Australian stocks trading availability
- Fineco Bank Canadian stocks trading availability
- Fineco Bank Japanese stocks trading availability
- Fineco Bank French stocks trading availability
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- Fineco Bank Hong Kong stocks trading availability
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- Fineco Bank Spanish stocks trading availability
- Fineco Bank Singapore stocks trading availability
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Everything you find on BrokerChooser is based on reliable data and unbiased information. We combine our 10+ years finance experience with readers feedback. Read more about our methodology.