Margin trading is a strategy where investors borrow money from their broker to invest in securities, with the potential to amplify both gains and losses. One key factor for traders utilizing margin is the interest rate on their margin loan.
Here are some of the top brokers offering competitive margin rates as of October 2024.
Best margin rates
* Rate information accurate as of Oct. 2, 2024, based on tier rates for a balance level of $25,000.
Robinhood
Robinhood is renowned for its user-friendly mobile app and commission-free trading of stocks, ETFs, and options. While it lacks certain account types and mutual fund trading, it boasts one of the most attractive margin rates in the industry.
Margin rate: 6.25 percent
Interactive Brokers
Interactive Brokers is a top choice for advanced traders, offering a robust trading platform, a wide range of tradable securities, and low margin rates.
Margin rate: 6.33 percent (IBKR PRO) or 7.33 percent (IBKR LITE)
moomoo
moomoo may be lesser-known but provides commission-free trading on various securities and appealing margin rates for traders.
Margin rate: 6.80 percent
Webull
Webull offers a cost-effective, mobile trading experience with competitive margin rates, though slightly higher than some competitors.
Margin rate: 9.24 percent
Tradier
Tradier caters to advanced traders with features like futures trading and multiple platforms, with margin rates slightly higher than other brokers.
Margin rate: 9.50 percent
tastytrade
tastytrade appeals to active traders with capped options commissions and commission-free stock and ETF trades, though lacking in mutual fund options.
Margin rate: 10.50 percent
Margin trading: How it works
Margin trading allows investors to amplify their purchasing power by borrowing against their existing securities, potentially increasing returns but also heightening risks and potential losses.
Interest rates on margin loans are variable and often tied to the federal funds rate set by the Federal Reserve.
Risks of margin trading
Margin trading is considered high-risk and is best suited for experienced traders due to potential pitfalls such as losing more than the initial investment and margin calls.
Bottom line
Margin trading can enhance returns but also increase risks, so selecting a broker with favorable margin rates is crucial for making informed investment decisions.
Editorial Disclaimer: Investors should conduct their own research before investing, as past performance does not guarantee future results.