What Is the Margin Interest Calculator?
When you buy securities on margin, your broker lends you money and charges interest on the borrowed amount. This calculator estimates how much margin interest you will owe based on your outstanding margin balance, the broker's annual interest rate, and the number of days you hold the loan. Most U.S. brokers compute margin interest daily using a 360-day year convention, which this tool follows.
How to Use It
Enter the amount you have borrowed on margin (your margin balance), your broker's annual margin interest rate as a percentage, and the number of days you expect to carry the balance. The calculator returns the total interest for the period, the interest accrued per day, and the total amount you would owe including principal.
The Formula Explained
The core equation is $$\text{Interest} = \text{Balance} \times \frac{\text{Rate (\%)}}{100} \times \frac{\text{Days}}{360}$$ Dividing the rate by 100 converts the percentage to a decimal. Dividing days by 360 prorates the annual rate to the actual holding period, matching the day-count convention most brokerages use for margin loans.
Worked Example
Suppose you borrow $10,000 on margin at an 8.5% annual rate and hold it for 30 days. The interest is $$10{,}000 \times \frac{8.5}{100} \times \frac{30}{360} = 10{,}000 \times 0.085 \times 0.08333 = \$70.83$$ Your daily interest is about $2.36, and your total owed would be $10,070.83.
FAQ
Why divide by 360 instead of 365? Many brokers use a 360-day year for margin interest, which slightly increases the daily rate. Check your broker's disclosure if you need the exact convention.
Is margin interest tax-deductible? In the U.S., margin interest may be deductible as investment interest expense, subject to limits. Consult a tax professional.
Does the rate change? Margin rates are usually tiered by balance and tied to a benchmark, so they can change over time. This calculator assumes a single fixed rate for the period.
