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US Brokers with the Lowest Margin Rates in 2024

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Toni Nasr, CFA, FRM
Fintech Analyst
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Franklin Silva
Co-Founder & Fintech Analyst
Fact checked by: Franklin SilvaUpdated on Jul 29, 2024

When investing, finding the right broker can significantly impact your financial success. Among the various factors to consider, margin rates are a critical aspect that directly impacts your trading costs and overall profitability. By selecting a low-margin rate broker, you can reduce expenses, enhance profit potential, and enjoy greater flexibility in utilizing your capital.

However, with a vast array of brokerage firms available, identifying the ideal option with favorable margin rates can be a daunting task. That’s why we’ve researched extensively to uncover the brokers that stand out for providing competitive margin rates.

In this article, we uncover the US brokers offering the lowest margin rates in 2024 and explain their pricing structure when setting those rates, which might change across different amount brackets.

Overview of US brokers with the lowest margin rates for 2024

Prior to delving into the details of each broker, let’s begin with an overview of the interest range offered by each broker, taking into account that our rankings are based on the rates applied to smaller amounts.

Broker Margin rates range
Interactive Brokers Pro 5.58% – 6.58%
Webull 5.74% – 9.74%
Moomoo 6.80%
M1 Finance Plus 6.95%
Interactive Brokers Lite 7.58%
Robinhood Gold 7.75%
Sofi 8.25%
M1 Finance 8.50%
ZacksTrade 7.58% – 8.58%
Tradezero 9.00%
Tradier 9.25%
Tastytrade 8.00% – 11.00%
Robinhood Standard 11.75%
Morgan Stanley 7.825% – 12.20%
Lightspeed 9.75% – 12.25%
Ally Invest 8.25% – 12.75%
TradeStation 12.00% – 13.00%
Charles Schwab 11.575% – 13.325%
Fidelity 9.00% – 13.3255%
Firstrade 9.50% – 13.50%
Vanguard 10.25% – 13.50%
E*trade 11.95% – 13.95%
Wellstrade 10.00% – 14.00%

Brokers typically offer different rate structures based on the amount borrowed, ensuring flexibility to accommodate traders with varying capital needs. In the following table, we present the interest rates based on different amount brackets, giving you a clear understanding of the rates applicable to specific borrowing levels. However, it’s worth mentioning that some brokers may keep their rates private for higher margin amounts. In such cases, we encourage you to directly contact the broker to inquire about the rates for more significant borrowing amounts or discuss the possibility of negotiating a rate based on your specific requirements.

Brokers with lowest margin rates reviewed

Interactive Brokers

Interactive Brokers is a well-established brokerage firm founded in 1978 and listed on the NASDAQ stock exchange. It is known for its advanced technology and robust trading platforms and offers a wide range of investment options across multiple asset classes, including stocks, options, futures, Forex and more.

When it comes to margin rates, Interactive Brokers provides competitive rates that are suitable for traders looking for cost-effective borrowing options. The broker offers a tiered structure for margin rates based on the amount borrowed and the account type (IBKR Lite or IBKR Pro), allowing you to take advantage of lower rates for higher borrowing amounts. The rates are based on a benchmark rate plus a spread. Here is a summary of Interactive Brokers’ margin rates:

Interactive Brokers margin rates

Account type Below 100K$ $100K – $1M $1M – $50M More than $50M*
IBKR Pro 6.58%

(BM + 1.50%)

6.08%

(BM + 1.50%)

5.83%

(BM + 0.75%)

5.58%

(BM + 0.50%)

IBKR Lite 7.58%

(BM** + 2.50%)

7.58%

(BM + 2.50%)

7.58%

(BM + 2.50%)

7.58%

(BM + 2.50%)

*For amounts greater than $200M, you should arrange the financing with IBKR to avoid being charged an additional 1%.
**BM = Benchmark Rate

Webull

Webull is a popular online brokerage that has gained significant popularity among traders for its robust platform and competitive offerings. It was founded in 2017 and gives you access to many investment products, including stocks, options, ETFs, and cryptocurrencies. The platform is known for its intuitive interface and powerful charting tools.

In terms of margin rates, Webull offers competitive tier pricing. Although it starts at 9.74% for small amounts, it decreases to 5.74% for amounts greater than $3M, making it the broker with the lowest margin rates for high borrowed amounts. Interest on margin trading is calculated daily and paid every month. Here is an overview:

Webull margin rates

Amount Below $25K $25K – $100K $100K – $250K $250K – $500K $500K – $1M $1M – $3M More than $3M
Rate 9.74% 9.24% 8.74% 8.24% 7.24% 6.74% 5.74%

Moomoo

Moomoo is a rapidly emerging brokerage platform established in 2018 and has gained significant attention in the financial industry. It is a commission-free trading app where you can access a wide range of investment options, including stocks, options, and ETFs, in both domestic and international markets, making it an alternative to Robinhood and Webull. 

Moomoo aims to offer competitive rates that cater to the diverse needs of traders. The broker provides a transparent and simple rate structure, ensuring traders can accurately calculate their borrowing costs. It is simply 6.80% regardless of the amount being borrowed, which is one of the lowest margin rates.

M1 Finance

M1 Finance is a US brokerage firm founded in 2015 to revolutionize how investors manage their finances. The platform offers a unique combination of automated investing and customizable portfolios, where you can build and maintain diversified investment portfolios tailored to your goals and preferences.

M1 Finance provides competitive options for traders looking to leverage their capital. The platform offers a flexible borrowing structure that allows you to access margin loans based on the account type (in M1 Finance Plus you get lower rates) and portfolio value. It is an ideal option for those looking to manage all their finances on one platform while having access to very low margin rates.

M1 Finance margin rates

Account Type Margin rate
M1 Finance 8.50%
M1 Finance Plus 6.95%

Robinhood

Robinhood, founded in 2013, is a popular US commission-free online brokerage platform. It offers a user-friendly mobile app and website, providing access to various financial products, including stocks, options, ETFs, and cryptocurrencies. Robinhood’s innovative approach appeals to millennial investors, and its intuitive interface has gained significant popularity.

Robinhood offers a margin investing feature that allows you to borrow money and leverage your holdings to buy securities. The interest rate for margin investing is determined by a floating rate, which combines the Federal Funds Target Rate upper bound with the Standard base rate. For standard users, the interest rate is currently 11.75%. However, subscribers to Robinhood Gold receive a discounted rate of 7.75%. The daily charge is calculated for settled margin transactions at the end of each day.

SoFi

SoFi, short for Social Finance, was founded in 2011 and was initially known for its student loan refinancing services. However, Sofi has expanded its offerings to include a wide range of financial products, including investing, brokerage services, and Robo-advisory. Sofi’s brokerage platform allows users commission-free trading on stocks, ETFs, and cryptocurrencies.

Sofi stands out with its competitive pricing for traders seeking leverage. The margin rates offered are simple and do not vary by amount. It is just 8.25%.

ZacksTrade

Zacks Trade was founded in 1978 and offers a solid brokerage experience with a number of tools targeting experienced investors. The company has a strong reputation as a leading provider of independent investment research.

When it comes to margin rates, ZacksTrade offers competitive pricing based on a tiered structure, taking into account the amount borrowed. This allows traders to benefit from lower rates for larger borrowing amounts. 

ZacksTrade margin rates

Amount Below $100K $100K – $1M $1M – $50M More than $50M
Rate 8.58% 8.08% 7.83% 7.58%

TradeZero

Founded in 2015, TradeZero has gained recognition for its advanced trading technology and comprehensive suite of trading tools. The broker specializes in providing direct market access (DMA) to traders, allowing them to execute trades efficiently and access various global markets.

TradeZero offers competitive margin rates for overnight positions on stocks that exceed the equity value. The margin rate is fixed at 9.00%, providing traders with a transparent and straightforward cost structure for leveraging their positions. In addition to competitive margin rates, TradeZero stands out for its commission-free trading. Traders can execute trades on US stocks and options without incurring any commission fees.

Tradier

Tradier is a unique online brokerage that sets itself apart with its highly customizable trading platform through its partnerships with various trading platforms. Investors can choose the platform that best aligns with their trading style and strategies. Additionally, Tradier offers an API plug-in, enabling traders to integrate multiple platforms and tools.

Tradier offers a diverse range of investment products, including stocks, ETFs, and options. As for margin rates, Tradier follows a straightforward approach with a fixed rate of 9.25% that applies to all borrowing amounts.

Tastytrade

Tastytrade is a US brokerage firm founded in 2011 and is known for its focus on options and futures trading education and research. The platform offers a wide range of investment products, including stocks, options, futures, and ETFs.

Tastytrade offers competitive margin rates based on a tiered structure, considering the borrowing amount. The rates are determined by a base rate plus/minus a spread, providing flexibility for traders with different borrowing needs. Here is a breakdown of Tastytrade’s margin rates based on the borrowing amount:

Amount Below $25K $25K – $50K $50K – $100K $100K – $250K $250K – $500K $500K – $1M More than $1M
Rate 11.00% 10.50% 10.00% 9.50% 9.00% 8.50% 8.00%
Spread added to base rate +1.00% +0.50% 0% -0.50% -1.00% -1.50% -2.00%

Morgan Stanley

Morgan Stanley is a renowned global financial services firm with a long-standing history in the industry. It was founded in 1935 and is now among the largest online brokers by AUM, offering a wide range of financial services to individuals, corporations, and institutions.

The margin rates offered by Morgan Stanley are calculated based on a tiered structure that considers the borrowing amount and is determined by adding a percentage to the current margin base lending rate, which currently stands at 11.75%.

Amount Below $100K $100K – $500K $500K – $1M $1M – $5M $5M – $10M $10M – $20M $20M – $50M More than $50M
Rate 12.20% 11.70% 10.70% 10.325% 10.075% 8.825% 8.325% 7.825%
Spread added to base rate +0.75% +0.25% -0.75% -1.125% -1.375% -2.625% -3.125% -3.625%

Lightspeed

Established in 2006, Lightspeed is a brokerage firm renowned for its commitment to providing high-speed and efficient trading solutions. It gives you access to equities, options, and futures with advanced trading platforms and tools. Lightspeed prides itself on delivering highly accurate market data and superior executions, suitable for active and professional traders.

Lightspeed implements a tiered structure where the borrowing amount determines the applicable rate, and the minimum account balance is $25,000.

Amount Below $50K $50K – $250K $250K – $500K $500K – $1M $1M – $3M
Rate 12.25% 11.25% 10.50% 10.00% 9.75%

Ally Invest

Ally Invest, a subsidiary of Ally Financial, is a US brokerage firm offering a wide range of investment products and services, including investing, borrowing, and robo-advisory solutions. It is known for its competitive pricing, user-friendly trading platform, and helpful trading tools.

In terms of margin rates, Ally Invest offers a tiered structure that is dependent on the borrowing amount.

Amount Below $25K $25K – $50K $50K – $100K $100K – $250K $250K – $500K $500K – $1M More than $1M
Rate 12.75% 12.50% 11.75% 10.50% 9.50% 9.00% 8.25%

TradeStation

TradeStation has been a leading provider of advanced trading technology and online brokerage services since 1982. It offers advanced trading tools and gives investors access to a wide range of investment products, including stocks, ETFs, options, futures, and cryptocurrencies.

TradeStation offers competitive commissions on stock and ETF trades and discounted commissions for options trading. Regarding margin rates, TradeStation utilizes a tiered system ranging between 12.00% and 13.00%. For amounts exceeding $500,000, it is recommended to contact the broker directly to obtain an appropriate rate tailored to your borrowing needs. 

Amount Below $50K $50K – $500K More than $500K
Rate 13.00% 12.00% Contact Broker

Charles Schwab

Charles Schwab is a popular brokerage firm serving investors since 1971 with a strong reputation and extensive industry experience. The company offers a comprehensive range of investment products and services to meet the diverse needs of investors. It offers huge investment products, including mutual funds, ETFs, stocks, bonds, and options.

When it comes to margin rates, Charles Schwab provides competitive options that are tailored to suit varying borrowing needs. The rates are structured using a tiered system, which offers a range of rates between 11.575% and 13.325%. These rates are determined by a base rate, which currently stands at 11.50%, with adjustments made by adding or subtracting a spread.

Amount Below $25K $25K – $50K $50K – $100K $100K – $250K $250K – $500K More than $500K
Rate 13.325% 12.825% 11.875% 11.825% 11.575% Contact Broker
Spread added to base rate +1.825% +1.325% +0.375% +0.325% +0.075%

Fidelity

Founded in 1946, Fidelity is the largest broker with over $11.1T of assets under management and a strong reputation in the financial industry. It offers a comprehensive range of investment products and services, including stocks, bonds, mutual funds, options, and more. It is known for its robust trading platforms, extensive research and educational resources, and excellent customer service.

Fidelity’s margin rates are tiered, based on the borrowing amount, and structured based on a base rate with adjustments made by adding or subtracting a spread.

Amount Below $25K $25K – $50K $50K – $100K $100K – $250K $250K – $500K $500K – $1M More than $1M
Rate 13.326% 12.825% 11.875% 11.825% 11.575% 9.25% 9.00%
Spread added to base rate +1.25% +0.75% -0.20% -0.25% -0.50% -2.825% -3.075%

Firstrade

Firstrade was founded in 1985 and provides cost-effective investment solutions spanning a wide range of investment products, including stocks, ETFs, options, mutual funds, and bonds. It offers a user-friendly trading platform, comprehensive research tools, and dedicated customer support.

Firstrade offers a tiered margin rate structure based on a base rate currently at 11.75%, which is adjusted according to the borrowing amount. The margin rates range between 9.50% and 13.50%.

Amount Below $25K $25K – $50K $50K – $100K $100K – $250K $250K – $500K $500K – $1M More than $1M
Rate 13.50% 13.25% 12.75% 12.25% 12.00% 10.10% 9.50%
Spread added to base rate +1.75% +1.50%  +1.00%  +0.50%  +0.25% -1.65% -2.25%

Vanguard

Vanguard, founded in 1975, is a popular investment management company that offers a wide range of investment products and services. While Vanguard is primarily known for its expertise in index funds and low-cost investing, it also provides brokerage services to individual investors.

Vanguard offers margin borrowing with rates structured based on a tiered system, with the current Vanguard Brokerage’s Base Rate at 11.00%. Margin rates currently range between 10.25% and 13.50%. However, for amounts over $1M, you should contact the broker to get lower rate offers.

Amount Below $20K $20K – $50K $50K – $100K $100K – $250K $250K – $500K $500K – $1M More than $1M
Rate 13.50% 13.00% 12.50% 12.00% 11.50% 10.25% Contact Broker

 

Spread added to base rate +2.50% +2.00% +1.50% +1.00% +0.50% -0.75%

E*trade

E*trade is a brokerage firm founded in 1982 that was recently acquired by Morgan Stanley. It is known for its user-friendly platform and comprehensive range of investment offerings that include stocks, bonds, mutual funds, ETFs, options, and futures.

When it comes to margin rates, E*trade follows a tiered system, with the base rate being currently at 11.45%. As such, the current margin rates range between 11.95% and 13.95%

Amount Below $10K $10K – $25K $25K – $50K $50K – $100K $100K – $250K $250K – $500K More than $500K
Rate 13.95% 13.70% 13.45% 12.95% 12.45% 11.95% Contact Broker
Spread added to base rate +2.50% +2.25% +2.00% +1.50% +1.00%  +0.50% 

Wellstrade

Wellstrade is an online brokerage platform offered by Wells Fargo, a well-known financial institution in the US. They give access to a wide range of investment products, including stocks, options, ETFs, mutual funds, and bonds.

Although they offer margin trading, their rates are higher than other brokers. Their base rate is currently at 8.25%, and they add a spread to it depending on the borrowed amount.

Amount Below $25K $25K – $50K $50K – $100K $100K – $250K $250K – $500K $500K – $1M $1M – $5M $5M – $10M More than $10M
Rate 14.00% 13.50% 13.00% 12.50% 12.00% 11.50% 11.00% 10.50% 10.00%
Spread added to base rate +5.75% +5.25%  +4.75% +4.25%  +3.75%  +3.25%  +2.75%  +2.25%  +1.75% 

Conclusion

In conclusion, selecting a broker with low margin rates is crucial for optimizing their trading costs and enhancing their profitability. Throughout this article, we have explored a diverse range of brokerage firms and their respective margin rate structures. It is essential to consider the tiered structure of margin rates, where borrowing amounts play a significant role in determining applicable rates. 

From Interactive Brokers, known for its advanced technology and competitive rates, to M1 Finance, with its innovative investing platform, each broker offers unique features and benefits for traders. We have also examined the margin rate structures of brokers like Robinhood, Sofi, ZacksTrade, Webull, and many others. Some brokers may provide lower rates for higher borrowing amounts, allowing traders to leverage their capital more efficiently. In contrast, others keep it simple, with one rate being applied across all amounts.

We hope this article helped you research the margin rates available on the markets.  Remember, margin trading involves risks, and it is important to understand and manage those risks effectively.

If you are a European investor, we have also conducted similar research, specifically focusing on brokers with the lowest margin rates in Europe for 2024.

FAQs

What are Margin Rates? Why Choose a Broker with Low Margin Rates?

In simple terms, when engaging in margin trading, you borrow money from your broker to increase your buying power and potentially magnify returns. These rates represent the interest percentage you must pay on the borrowed funds.

On the other hand, overnight funding, often referred to as swap rates or overnight interest rates, is the cost or benefit incurred when holding positions overnight in specific financial instruments. It is a fee or payment compensating for the interest rate differential between the two currencies involved in Forex trades or the borrowing and lending rates in other trade types. Typically, overnight funding is charged or credited to traders who maintain margin positions beyond a designated cut-off time, usually at the end of the trading day.

While both margin rates and overnight funding involve interest charges or payments in trading, they differ significantly between brokers and asset classes.

Choosing a broker with low margin rates or overnight funding fees is crucial for the success of your trading experience. Higher margin rates lead to elevated interest expenses, diminishing the potential gains you can achieve. Conversely, lower margin rates decrease the interest burden, allowing you to retain a larger portion of your profits. Choosing a broker offering low-margin rates helps you effectively reduce your trading costs, enhance overall profitability, and maximize investment returns.

It is essential to keep in mind that trading on margin entails a high level of risk. While it has the potential to amplify profits, it also exposes traders to increased losses. You should fully understand the risks involved and carefully evaluate your risk tolerance before engaging in margin trading.

How do margin rates affect my trading costs?

Margin rates have a direct impact on your trading costs. Lower margin rates can help reduce your borrowing expenses and potentially increase your overall profitability when trading on margin.

How often do brokers update their margin rates?

Brokers typically update their margin rates periodically, but the frequency of updates can vary. It’s recommended to check with your broker or refer to their website for the most up-to-date margin rate information.

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Toni Nasr, CFA, FRM
Fintech Analyst

Toni is a Fintech Analyst with over 8 years of experience in the financial industry where he worked as a financial control analyst at a regional bank and later conducted independent investment research analysis.

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