What is Margin Investing?
Margin investing, also referred to as margin lending, is an extension of credit to you based on your current margin-eligible securities and cash. Margin-eligible securities would be considered as stocks, bonds, and ETFs. Non-marginable securities would be considered as certain OTC stocks, penny stocks, and companies that recently underwent an IPO.
Margin investing allows you to borrow money to buy securities, with your portfolio balance as collateral. This gives you access to additional buying power based on the value of the securities in your brokerage account and allows you to leverage your existing holdings to purchase securities.
Margin investing is optional to enable and to have access you need to apply, meet eligibility requirements, and pass an appropriateness test to get access. When you borrow on margin, you must pay interest for as long as the loan is outstanding. Margin account loans don’t have a set repayment schedule, but you must keep a minimum level of assets in the margin account to maintain sufficient collateral. You can read more about maintenance requirements here.
There are both benefits and risks associated with margin investing.
What are the benefits of Margin Investing?
The ability to borrow additional buying power in order to purchase more securities
Potential profit increases using leverage to purchase additional securities that you otherwise would not be able to
What are the risks associated with Margin Investing?
You can have positions closed on your behalf if you do not meet margin or maintenance calls. If you do not meet a margin call, you will not be able to choose which security in your margin account is liquidated or sold to meet a margin call.
You can lose more funds than you deposit. If using leverage, you can potentially lose more than if you paid for the securities in full
Interest charges on the margin loan amount
Please review additional risks in our margin risk disclosure.
What interest do I pay on my margin balance?
Interest will be accumulated on balances owed for any credit provided via margin. Rates are subject to change and can be found on Public’s schedule of fees.
For margin accounts, Public Investing charges a margin interest rate that varies based on your margin balance and the upper limit of the Federal Funds Target Range. This upper limit, which is defined as “FFTR” in the table below, is set by the Federal Reserve and is subject to change without notice. The formula used to calculate the margin interest rates above are subject to change at Public Investing’s discretion. For details on the margin interest computations and charges, please see the “Margin Credit Terms & Policies” section of the Margin Disclosure Statement.
Prior to November 1, 2024, the margin interest rate was 0% on margin accounts. Beginning on November 1, 2024, the margin interest rates on margin accounts are:
