How this margin interest calculator works
Enter your loan balance, your broker's annual margin rate, and how long you expect to carry the loan. The calculator accrues interest the way brokers actually do — posted monthly and, if unpaid, added to the balance so it compounds — and reports the total interest cost over the period, the full amount owed at the end, and the number that matters most: the break-even annual return your investments must clear for the leverage to be worth anything at all.
The chart is the honest part. Instead of assuming one rosy return, it sweeps across a range of possible annual portfolio returns and plots what the borrowed dollars would earn against the fixed, certain interest bill. Where the yellow gain curve rises above the dashed cost line, the region is shaded amber — leverage helped. Where it sits below, the shading turns red — you paid real interest for the privilege of losing more money. The two curves cross at exactly one point: your break-even, which is the quoted rate compounded monthly (the APY), not the headline rate. A useful and slightly uncomfortable fact falls out of the math: the break-even doesn't depend on how much you borrow or for how long. Size and duration only decide how big the win or the loss gets.
How margin rates are tiered
Margin pricing is one of the widest spreads in retail finance. Nearly every broker builds its rate the same way — a floating benchmark tied to the central-bank policy rate, plus a spread — but the spread varies from under one point to over seven depending on the broker and how much you borrow. Tiered brokers, with Interactive Brokers as the canonical example, shrink the spread as the balance grows: as of mid-2026, IBKR Pro charges roughly benchmark +1.5% on the first $100k (about 5.1%), +1% from $100k to $1M (about 4.6%), and +0.75% above $1M (about 4.4%). The tiers are blended — borrow $250k and the first $100k accrues at tier one while the next $150k accrues at tier two, so your effective rate is a weighted average. Full-service brokers like Schwab and Fidelity post base rates several points higher — frequently 4–7 points over the benchmark for smaller balances — though large accounts can sometimes negotiate, and flat-rate offerings like Robinhood Gold sit in between. Two consequences follow. First, always enter your broker's actual rate above, because the difference between 5% and 12% is the difference between a plausible trade and a near-guaranteed loss. Second, every one of these rates floats: when policy rates move, your margin rate moves within days, with no notice and no lock.
Margin calls and forced liquidation
Interest is the visible cost of margin. The invisible cost is that you've given your broker the right to sell your portfolio out from under you. FINRA requires your equity — portfolio value minus the loan — to stay above 25% of the portfolio's market value, and most brokers impose stricter house requirements of 30–40% that they can raise at any time, on any position, without warning. Put up $50k, borrow $50k, and hold $100k of stock: at a 25% maintenance requirement, a portfolio drop of about a third puts you in violation. What happens next is not a polite phone call. Your margin agreement permits the broker to liquidate positions immediately, without notice, choosing what to sell and when — and in fast markets they exercise that right before you've seen the alert. Forced sales crystallize losses at the worst prices of the cycle, can trigger surprise capital-gains bills on positions you never meant to sell, and remove the one thing an unleveraged investor always has: the option to wait out a drawdown. Notice the interaction with interest, too — unpaid interest grows the loan, which shrinks your equity cushion, which moves the liquidation trigger closer even in a flat market.
Why margin cost quietly outweighs the gains
On paper, borrowing at 6% to earn "the market's 9% average" looks like free money, and the chart above — which uses exactly that kind of flat-return assumption — will happily shade the region amber. Treat that as the optimistic case. The margin bill is certain, continuous, and compounding; the return is an average that arrives as +25% years shuffled with −20% years. Leverage amplifies the volatility, and volatility itself taxes compound growth — a portfolio that swings harder compounds at less than its average return, a gap called volatility drag that widens with leverage. Sequence matters as much as magnitude: a bad year early means you pay interest on the full loan while the assets that were supposed to out-earn it have shrunk, and a deep-enough drawdown hands the decision to your broker's liquidation desk, converting a temporary loss into a permanent one that no recovery repairs. That's why the honest comparison isn't "average return vs. margin rate" but "compounded, guaranteed cost vs. volatile, path-dependent gain" — and why the break-even line on this page should be treated as a floor, not a target. If you want to feel the difference between flat assumptions and real paths, run the same numbers through the DCA calculator, which simulates hundreds of volatile markets instead of one smooth line, and then let the multi-phase compound interest calculator show you what those unborrowed dollars do over the decades that follow. If you're weighing margin against borrowing on your house instead, the HELOC payment calculator prices the alternative.
Frequently asked questions
How is margin interest calculated?
Brokers accrue interest daily on the outstanding balance and post it monthly; unpaid interest joins the loan and compounds. This calculator compounds the quoted rate monthly, so the true cost runs slightly above the flat rate × balance × years shortcut.
What's a typical margin rate?
Tiered discount brokers charge roughly benchmark +1.5% under $100k, +1% to $1M, +0.75% above (IBKR-style — about 5.1% / 4.6% / 4.4% in mid-2026). Full-service brokers often post 4–7 points over the benchmark for small balances. Check your broker's schedule; rates float.
Why are margin rates tiered by balance?
Large borrowers are cheap to serve and expensive to lose, so brokers compete for them. Tiers are blended: each slice of the loan accrues at its own tier's rate, and your effective rate is the weighted average.
What return do I need to break even?
The quoted rate compounded monthly — the APY. A 6% rate needs about 6.17% a year from the borrowed dollars. The break-even is independent of loan size and duration; those only scale the win or the loss.
Does margin interest compound?
Yes, whenever you don't pay it out of pocket — it's added to the loan monthly, so future interest is charged on a bigger balance, and your equity cushion shrinks at the same time.
What is a margin call?
A demand to restore your equity cushion after a drop. FINRA's floor is equity ≥ 25% of portfolio value; house requirements run 30–40%. At 2:1 initial leverage and a 25% requirement, roughly a 33% portfolio drop triggers one.
Can my broker sell my stocks without asking?
Yes — the margin agreement allows liquidation at any time, without notice, with the broker choosing what to sell. In fast markets they often liquidate first and notify after.
How much can I borrow on margin?
Reg T allows up to 50% of a marginable purchase initially; maintenance requirements govern after that. Volatile or concentrated positions can carry higher requirements, changeable without notice.
Is margin interest tax-deductible?
Sometimes — as investment interest expense, if you itemize, capped at your net investment income, with exclusions (tax-exempt bonds; qualified dividends unless you elect ordinary treatment). Ask a tax professional.
Why can margin cost outweigh gains even when my expected return beats the rate?
The cost is certain and compounding; the return is volatile and path-dependent. Volatility drag, bad sequences, and forced liquidation near bottoms mean a flat-return comparison — like this chart — is the optimistic case.
Is margin cheaper than a HELOC or personal loan?
At tiered brokers, often yes — no fees, no schedule. But a HELOC lender can't force-sell your collateral within hours of a price drop; a margin lender can. Cheaper rate, harsher failure mode.
Do margin rates change while I hold the loan?
Yes — nearly all float with policy rates and reprice within days, no notice. Re-run this calculator with a couple of points added to see your sensitivity.
This calculator is for education, not investment advice. It assumes a fixed rate and a flat return — real rates float, real returns swing, and margin calls don't wait for averages. Confirm decisions with a qualified advisor.