Intro
The margin rates of Interactive Brokers (IBKR) are one of the lowest in the industry.
Margin rates are charged when you trade on margin, meaning that you borrow money from your broker to trade, for which you have to pay interest. They can vary based on the amount and the currency of the borrowed money.
What is the IBKR margin rate?
The IBKR margin rate for USD, the most popular currency, at the time of writing is:
- 6.33% on IBKR Lite and
- 5.33% on IBKR Pro (for amount under $100,000)
| IBKR Lite | IBKR Pro | |
|---|---|---|
| EUR | 3.89% | 2.89% |
| GBP | 5.47% | 4.47% |
| CHF | 2.50% | 1.50% |
| AUD | 5.33% | 4.33% |
For the most up-to-date margin rates for all currencies, make sure to check IBKR's margin rates dashboard.
Why are Interactive Brokers's margin rates so low?
Interactive Brokers's margin rates are low because they monetize other aspects of their service (like subscriptions to market data, Pro account monthly fees, and so on). Also, with their favorable credit ratings (S&P 'A' rating with stable outlook) they are in a good position to get loans themselves.
IBKR margin rate
Interactive Brokers margin rates (video explainer)
IBKR margin rate
How does Interactive Brokes calculate margin rates?
Interactive Brokers calculates margin rates by setting a reference benchmark rate for each currency (updated regularly), to which it adds a mark-up.
- For IBKR Lite customers, the mark-up is the same regardless of the borrowed amount (e.g. 2.5% in the case of USD).
- For IBKR Pro, the mark-up is lower and changes depending on the amount involved, decreasing as the size goes up. For example, for USD it is +1.5% for amounts under $100,000, while above $200 million it is just 0.5%.
IBKR margin rate
Margin trading on Interactive Brokers
To trade on margin you have to open an Interactive Brokers margin account. This is a different type of account, separate from a cash account. On the surface they look the same (i.e. charting, search tools and support are identical), but you need to meet various criteria for the margin account. This is because when you trade on margin, IBKR lends you money and there’s a number of legal and tax details that need to be settled for that.
There is a minimum of $2,000 if you want to trade on margin. The maintenance margin when holding positions is 25% of the stock value, while the Regulatory End of Day requirement is 50% of the stock value.
Margin requirement changes
The initial margin, which is also called a minimum account requirement, is set by the Financial Industry Regulatory Authority (FINRA). Brokers can only require margins that are higher than this. They can also set their own “house” requirements or raise their maintenance margin requirements for specific stocks. However, Interactive Brokers does not do this.
As an example, IBKR did increase its margin requirements during the 2020 U.S. elections. This was a unique move on the brokerage market, as other brokers took no similar steps. According to the email they sent out to users at the time, they did this because they expected huge volatility at certain stocks. (Sources: Investopedia, CNBC).
Types of margin accounts
Interactive Brokers provides two types of margin accounts:
- a rule-based account named ‘Reg T' and
- a risk-based account called ‘Portfolio Margin’.
The difference between the two accounts is how margin requirements are calculated. The margin requirement is the percentage of your marginable portfolio that you must pay from your own funds. See the FAQ of our Interactive Brokers review for more details
Interactive Brokers: further reading
- Interactive Brokers review
- How to trade after hours on Interactive Brokers
- How to buy ETF on Interactive Brokers
- Can you buy Bitcoin on Interactive Brokers?
- How to use Interactive Brokers for Paper Trading
- How to withdraw funds from Interactive Brokers
- How to convert currency on Interactive Brokers?
- How to change trading permissions on Interactive Brokers?
- What is the cost of buying US stocks at Interactive Brokers?
- How to download Interactive Brokers's TWS?
- Interactive Brokers fees explained
- Interactive Brokers account opening
- Is Interactive Brokers good for beginners?
- Is Interactive Brokers free?
- Can you trade options at Interactive Brokers?
- Interactive Brokers minimum deposit
IBKR margin rate
FAQ
Why is Interactive Brokers's margin rate so low?
IBKR has a low margin rate because they make money on a number of other features they provide users. These include monthly fees on IBKR Pro, subscription to market data, inactivity fees and others. This allows them to cut costs on other parts of their service, like providing loans for margin trading.
How does IBKR charge margin interest?
The interest margin is accrued daily, but it is charged monthly, on the third business day of the following month. The margin rate depends on the amount and the currency, but for most cases (USD, under $100,000) at their Lite product it is 6.33%, while at IBKR Pro it is 5.33%. More information can be found on IBKR's overview page on margins.
Is margin interest charged daily?
No, it is charged monthly, on the third business day of the following month. However, it is accrued on a daily basis, meaning that it is added up from day to day.
What is the IBKR margin rate?
The Interactive Brokers margin rate for USD, at the time of writing, is 6.33% for IBKR Lite customers and 5.33% on IBKR Pro.
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