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Margin trading accounts now charge you interest whether or not you’re margin trading now?
Posted on 3/29/24 at 9:30 am
Posted on 3/29/24 at 9:30 am
Example: $100,000 in a margin approved account.
You buy $50,000 in a stock, leaving you $50,000 in cash but you’re getting hit with 12% interest on the $50K you invested?
When did this start?
You buy $50,000 in a stock, leaving you $50,000 in cash but you’re getting hit with 12% interest on the $50K you invested?
When did this start?
9
Posted on 3/29/24 at 9:40 am to Blutarsky
Why on earth would you even be trading with a margin account with today's rates?
Posted on 3/29/24 at 9:45 am to thunderbird1100
If you set up a margin account prior to the high rates, you still have it.
They have found another way to steal money even though you’re not using any margin.
They have found another way to steal money even though you’re not using any margin.
Posted on 3/29/24 at 9:45 am to Blutarsky
You bought $50k on margin. Charging interest on margin has always been the case..
Posted on 3/29/24 at 10:15 am to Blutarsky
quote:
If you set up a margin account prior to the high rates, you still have it.
You can change to a cash account whenever. you dont have to be stuck trading with margin. Unless of course you owe them money on the margin account.
This post was edited on 3/29/24 at 10:16 am
Posted on 3/29/24 at 12:13 pm to Blutarsky
It sounds like you have it set to use a % of margin.
Posted on 3/29/24 at 2:19 pm to Blutarsky
Just like the Casino
Posted on 3/29/24 at 3:00 pm to Blutarsky
I haven’t bought stock in my margin account in a few months but to my knowledge I have never been charged interest unless I didn’t have enough settled funds to pay for the trade when it settled.
One account I have with fidelity makes you pick margin or cash when you place a trade. It has defaulted to margin before but the margin I have on the account isn’t type 2 so I didn’t get charged interest for the trade.
One account I have with fidelity makes you pick margin or cash when you place a trade. It has defaulted to margin before but the margin I have on the account isn’t type 2 so I didn’t get charged interest for the trade.
Posted on 3/29/24 at 3:40 pm to Blutarsky
The only time I get charged is if I deposit and instantly go trade.
The reason you get charged there is because technically it takes a few days for the cash to get transferred into the account which is fair.
The reason you get charged there is because technically it takes a few days for the cash to get transferred into the account which is fair.
Posted on 3/30/24 at 9:39 am to Blutarsky
quote:
You buy $50,000 in a stock, leaving you $50,000 in cash but you’re getting hit with 12% interest on the $50K you invested?
Just for my own information, who are you trading with that this is the case? And what sort of margin account do you have? I have a portfolio margin account with TDA and I’ve never experienced this. I would only pay margin interest if I exceeded the level of cash available in my account.
Posted on 3/30/24 at 1:11 pm to Jag_Warrior
quote:
I would only pay margin interest if I exceeded the level of cash available in my account.
Always has been the case, so guessing maybe the OP did not understand it
Posted on 3/31/24 at 8:44 am to UltimaParadox
quote:
Always has been the case, so guessing maybe the OP did not understand it
No. Margin accounts are now charging interest regardless of the cash availability on hand.
Posted on 3/31/24 at 11:34 am to Blutarsky
quote:
Margin accounts are now charging interest regardless of the cash availability on hand.
You can't make that blanket statement because it is not true. Fidelity does not
Who is your brokerage?
Posted on 3/31/24 at 2:35 pm to UltimaParadox
Right. We still have no idea who he’s trading with or why he thinks that this is a universal industry standard now… when it most certainly is not.
Every options trade I make in my business trading account is done under margin rules - on average 400-500 index contracts per week. And I’ve not paid a single penny in interest related to these trades. The free cash has earned interest income, but the trades in the portfolio margin account have not, do not and will not incur interest charges unless I exceed my “Available Funds for Trading.”
Every options trade I make in my business trading account is done under margin rules - on average 400-500 index contracts per week. And I’ve not paid a single penny in interest related to these trades. The free cash has earned interest income, but the trades in the portfolio margin account have not, do not and will not incur interest charges unless I exceed my “Available Funds for Trading.”
Posted on 3/31/24 at 2:37 pm to Jag_Warrior
Wait... you are trading options on margin?
Posted on 3/31/24 at 2:48 pm to thunderbird1100
quote:
Why on earth would you even be trading with a margin account with today's rates?
I couldn’t even tell you what the margin interest rates are at TDA, because I’m not borrowing money to execute trades.
Certain types of trading requires one to have margin approval. But it doesn’t necessarily mean what the OP thinks that it means. For instance, you can’t write an options strangle on an equity in a cash account… only in a margin account. But even though you’ll be executing the trade in a margin account, you won’t actually be charged interest as long as you’re not exceeding your available cash. And in order to be approved for higher levels of options and futures trading, you’ll be required to have margin approval.
Posted on 3/31/24 at 3:19 pm to Jag_Warrior
Exactly. The only answer that I see in this thread as to why he would be charged is that he is set up for margin and has a percentage set to use regardless of amount.
Example. It's set at 10%. If you spend 1000, 100 is in margin.
Example. It's set at 10%. If you spend 1000, 100 is in margin.
Posted on 4/2/24 at 11:51 am to Blutarsky
quote:
Example: $100,000 in a margin approved account.
You buy $50,000 in a stock, leaving you $50,000 in cash but you’re getting hit with 12% interest on the $50K you invested?
Are you thinking that because you only used $50K of the margin account and there is another $50K available, that you shouldn't be charged?
If you used the margin account, it was a loan and thus interest is charged.
What am I missing here?
Posted on 4/2/24 at 12:12 pm to deathvalleytiger10
quote:
What am I missing here?
What I think he is saying is that he is being charged for 50K used in margin when he feels that it should have been all cash used because it was in there.
With Robinhood, you can set the limit used.
Set Borrowing Limit
Control how much you borrow by setting an upper limit on your available margin.
I think he has it set to use margin in purchases.
Posted on 4/2/24 at 1:52 pm to BCreed1
quote:
What I think he is saying is that he is being charged for 50K used in margin when he feels that it should have been all cash used because it was in there.
Maybe he is, but that is not how he wrote it. Looks like he has $100k in margin, used $50k, and thinks the other $50k he has in margin should cover it. Which is bonkers.
quote:
I think he has it set to use margin in purchases.
Maybe so.
OP needs to clarify things.
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