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What is IB's Margin Rate?
- Thread starter qll
- Start date
Quote from JackR:
After that IB pulls away as their over $1M rate of 5.899% kicks in.
IB's margin rate, charged for dollar balances over $3M, is currently 5.649%, substantially lower than the figure you gave. The figure you gave, 5.899%, only applies to those funds between the $1M and $3M tiers.
Quote from JackR:
You don't indicate what type of balance you are carrying. Let's assume it is $600,000 ($600K). You need at least $500K to get the 6% rate at just2trade(J2T).
In looking at the J2T web site I see that they have 5 tiers to reach their lowest margin rate of 6%.
I did a quick calculation of the simple interest rate on $600K using their five tiers and IB's two tiers.
J2T = 6.81...%
IB = 6.48...%
The rates begin to converge as you approach $1M. After that IB pulls away as their over $1M rate of 5.899% kicks in.
You might give it a try with your real average balance.
Jack
Should it be 6.399% on IB and 6% on J2T? for 500K margin?
Quote from qll:
Should it be 6.399% on IB and 6% on J2T? for 500K margin?
I think that if you are borrowing 500K in margin, then IB, currently, charges you 6.899% on the first 100K, and then 6.399% on the remaining 400K. So your total interest rate would be 6.899% * 1/5 + 6.399% * 4/5 = 6.499%.
Quote from JackR:
Calculating the first 4 tiers at J2T the rate on $500K is 6.975%.
Rate Loan Annual Simple Interest
6.75% $250000 $16875
7.00% $150000 $10500
7.25% $50000 $3625
7.75% $50000 $3875
Total $500000 $34875 6.975%
So IB is the clear winner, charging substantially less margin interest, no matter how much money is involved.
This is based on your numbers, plus the 5th tier for J2T being 6%, as claimed previously in this thread.
qll, for the retail brokerage firms who offer per share pricing, as far as I now, IB has the lowest margin rates for the long positions. Just2trade margin rate can be as low as IB's--if not lower at times--because it claims to match margin rates provided you send them the last 2 monthly statements; however, it does not offer per share pricing. You should also ask your broker(s), how often do they deduct margin charges out of your account. If they do it daily rather than once monthly, then it may actually cost you more.
harry11, suppose broker-A takes away $100 everyday for 30 days as margin charges for long positions from your account. On the other hand, suppose broker-B takes away $3000 on the 30th day as margin charges for long positions from your account. They both may take away the same amount of money, but you will more buying power till day-29 with broker-B. This is just one example.