Margin Rates - Fidelity (2024)

FAQs

What is the margin rate at Fidelity? ›

Fidelity's current base margin rate, effective since July 28, 2023, is 12.325%.

Margin rates represent the cost of borrowing for an investor for an outstanding margin loan. Each brokerage can set the margin rate differently, it typically reflects the current broker call rate or call money rate. This is the rate that the bank charges the broker for the money used to fund investors' margin loans.

Fidelity National Financial average net profit margin for 2022 was 15.36%, a 12.73% decline from 2021. Fidelity National Financial average net profit margin for 2021 was 17.6%, a 64.64% decline from 2020.

So if you are with an existing broker and want a lower margin rate, it's best to contact them first before switching. Like credit card terms, it is possible to negotiate a better rate.

Then, pandemic-induced monetary and fiscal stimulus upped the ante, allowing levered portfolios to capture exceptionally strong returns. Yet as the Federal Reserve began tightening monetary policy in 2022, the trend reversed, with margin loan rates tripling from 2% to more than 6% (Display) in a short span.

If an account loses too much money due to underperforming investments, the broker will issue a margin call, demanding that you deposit more funds or sell off some or all of the holdings in your account to pay down the margin loan.

As with any loan, when you buy securities on margin you have to pay back the money you borrow plus interest, which varies by brokerage firm and the amount of the loan.

While margin loans can be useful and convenient, they are by no means risk free. Margin borrowing comes with all the hazards that accompany any type of debt — including interest payments and reduced flexibility for future income. The primary dangers of trading on margin are leverage risk and margin call risk.

The initial margin requirement is currently 50% of the purchase price for most securities, and it is known as the Reg T or the Fed requirement, which is set by the Federal Reserve Board. In addition, Fidelity requires customers to have a minimum account equity of $2,000 when placing orders on margin.

Can I withdraw margin Fidelity? ›

Cash & Borrowing Margin — How much money do you have available to withdraw that includes cash along with the loan value of the securities held in your margin account? Amount withdrawn that exceeds your cash will be a margin loan and therefore will accrue interest.

Gross advisory fee applicable to accounts managed through Fidelity^® Strategic Disciplines ranges from 0.20% to 0.49% and gross advisory fee applicable to accounts managed through Fidelity^® Wealth Services ranges from 0.50%–1.04%, in each case based on a minimum investment of $2 million.

Trading on Margin

Margin interest is the interest that is due on loans made between you and your broker concerning your portfolio's assets. For instance, if you short sell a stock, you must first borrow it on margin and then sell it to a buyer.

Fidelity's current base margin rate, effective since 7/28/2023, is 12.325%. 3. Margin Rates: Effective since 7/28/2023, Fidelity 9.25% for balances over $1,000,000. Effective since 7/28/2023, Schwab 11.825% for debit balances of $250,000 to $499,999.99.