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Interactive Brokers margin rates

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 margin rates, other currencies (as of Nov 22, 2022)
  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.

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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.

Choosing your account type in the Interactive Brokers mobile app on an Apple iPhone.

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).

You might be required to complete a test which makes sure you understand the risks associated with trading with borrowed money.

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

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. 

Author of this article

Ádám Nasli

Author of this article

Ádám worked in banking and investment, and holds a professional degree in this field. He is a motivated finance expert, having joined BrokerChooser in 2018. He's also eager to help people find the best investment provider for them, and to make the investment sector as transparent as possible. In his spare time, he loves learning new things, especially data science, algo-trading, programming and trading.

Ádám Nasli

Analyst head

Ádám worked in banking and investment, and holds a professional degree in this field. He is a motivated finance expert, having joined BrokerChooser in 2018. He's also eager to help people find the best investment provider for them, and to make the investment sector as transparent as possible. In his spare time, he loves learning new things, especially data science, algo-trading, programming and trading.

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

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