Buying on margin lets you invest borrowed money, but you pay interest every day the loan is outstanding. Rates often run 8–13% at major brokers for smaller balances, so margin only pays if your investments beat that rate after tax.
How to use the Margin Interest Calculator
- Amount borrowed
- Annual margin interest rate
- Number of days
- Day count
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the amount borrowed, the annual margin rate and the number of days, and choose the day-count convention.
Tips
- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.
Common mistakes to avoid
- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).
Inputs explained
| Field | What to enter |
|---|---|
| Amount borrowed | Amount in your currency |
| Annual margin interest rate | In % |
| Number of days | A number |
| Day count | Choose one: 360-day year (most brokers), 365-day year |
What each result means
- Margin interest = [Amount borrowed]×[Annual margin interest rate]÷100×[Number of days]÷[Day count]
- Interest per day = [Amount borrowed]×[Annual margin interest rate]÷100÷[Day count]
- Interest for a full year = [Amount borrowed]×[Annual margin interest rate]÷100×365÷[Day count]
Example values
How the main result changes when Amount borrowed changes and everything else stays at the example values above:
| Amount borrowed | Margin interest |
|---|---|
| 12,500 | 114.58 |
| 18,750 | 171.88 |
| 25,000 | 229.17 |
| 31,250 | 286.46 |
| 37,500 | 343.75 |
| 50,000 | 458.33 |
Formula
Margin interest = amount borrowed × annual rate × days ÷ 360Daily interest = amount borrowed × rate ÷ 360Worked example
Inputs — Amount borrowed: $25,000; Annual margin interest rate: 11 %; Number of days: 30; Day count: 360-day year (most brokers).
Results — Margin interest = $229.17; Interest per day = $7.64; Interest for a full year = $2,788.19.
Frequently asked questions
How is margin interest calculated?
Daily on the borrowed balance, usually using a 360-day year, and charged monthly.
Is margin interest tax-deductible?
In the U.S., as investment interest expense up to your net investment income, if you itemize.
What are typical margin rates?
Often 8–13% at large brokers for small balances; lower for large balances.
What formula does the Margin Interest Calculator use?
Margin interest = amount borrowed × annual rate × days ÷ 360.