This calculator helps you estimate the margin interest costs based on Interactive Brokers' tiered margin rate structure. Margin interest is charged on borrowed funds used to trade securities. Understanding these rates is crucial for managing your trading costs, especially when using leverage.
Estimated Margin Interest Cost: $0.00
Understanding IBKR Margin Rates
Interactive Brokers (IBKR) offers competitive margin rates, but they are tiered based on the loan amount. Higher loan amounts generally result in lower rates. The rates are typically published on the IBKR website and can fluctuate based on market conditions and the benchmark rate (e.g., SOFR).
The tiers are as follows (rates are illustrative and subject to change by IBKR):
0-9,999: Benchmark Rate + 1.50%
10,000-99,999: Benchmark Rate + 1.00%
100,000-999,999: Benchmark Rate + 0.50%
1,000,000+: Benchmark Rate + 0.00%
The Benchmark Rate is usually tied to a published reference rate like the Secured Overnight Financing Rate (SOFR). This calculator uses a hypothetical benchmark rate for illustrative purposes.
Formula:
Margin Interest = (Margin Loan Amount * (Benchmark Rate + Tiered Rate) / 365) * Days Held
function calculateMarginInterest() {
var portfolioValue = parseFloat(document.getElementById("portfolioValue").value);
var marginLoan = parseFloat(document.getElementById("marginLoan").value);
var daysHeld = parseInt(document.getElementById("daysHeld").value);
var benchmarkRate = 0.05; // Hypothetical SOFR benchmark rate (5%) – This should be updated with current rates.
var marginInterestResultElement = document.getElementById("marginInterestResult");
var rateDetailsElement = document.getElementById("rateDetails");
if (isNaN(portfolioValue) || isNaN(marginLoan) || isNaN(daysHeld) || portfolioValue < 0 || marginLoan < 0 || daysHeld portfolioValue) {
marginInterestResultElement.textContent = "Margin loan cannot exceed portfolio value.";
rateDetailsElement.textContent = "";
return;
}
var tieredRate = 0;
var rateDescription = "";
if (marginLoan = 10000 && marginLoan = 100000 && marginLoan = 1000000
tieredRate = 0.0000; // +0.00%
rateDescription = "Tier 4 (1,000,000+): Benchmark Rate + 0.00%";
}
var effectiveAnnualRate = benchmarkRate + tieredRate;
var dailyRate = effectiveAnnualRate / 365;
var marginInterest = marginLoan * dailyRate * daysHeld;
marginInterestResultElement.textContent = "$" + marginInterest.toFixed(2);
rateDetailsElement.textContent = "Using a hypothetical Benchmark Rate of " + (benchmarkRate * 100).toFixed(2) + "%. Applied Rate: " + rateDescription + " (Total: " + (effectiveAnnualRate * 100).toFixed(2) + "%)";
}