Margin Interest Calculator

Brokerage firms calculate margin interest on a daily accrual basis using a standard 360-day financial year convention. The mathematical formula to determine your total margin interest is: Margin Interest = (Amount Borrowed × Interest Rate ÷ 360) × Number of Days. Here, the interest rate is expressed as a decimal (e.g., 6% becomes 0.06), and the number of days represents the duration the borrowed funds remain outstanding during the billing cycle.

Imagine you borrow $10,000 from your broker to purchase shares, and your brokerage charges an annual margin interest rate of 8.5%. You hold this leveraged position for 30 days before selling the assets. First, multiply your amount borrowed ($10,000) by the annual interest rate (0.085), which gives $850 of annual interest. Next, divide that annual figure by 360 to find the daily interest cost of approximately $2.36. Finally, multiply the daily cost by your 30 holding days, resulting in a total margin interest charge of $70.83.

Always review your broker's specific tier rates, as many institutions scale interest rates based on the total debit balance in your account. Monitor your maintenance margin closely to avoid sudden margin calls that force asset liquidation during market downturns. Finally, factor margin interest into your profit targets; short-term trades must outperform the daily borrowing cost to remain profitable.