Margin Interest Calculator

Estimate the interest a brokerage charges on a margin loan. Enter your margin balance, annual interest rate, holding period, and day-count convention to see the daily charge, total interest, and total amount owed.

Quick Facts

Formula
Interest = Balance × (Rate ÷ Day-Count) × Days
The annual rate is converted to a daily rate, then applied to the outstanding balance for each day it is owed.
Day-count matters
360-day vs. 365-day year
Using a 360-day divisor instead of 365 raises the effective annualized cost by a factor of 365/360, about 1.4%.

Your Results

Calculated
Total margin interest
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Interest charged over the period
Daily interest charge
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Interest accrued per day
Total amount owed
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Margin balance plus interest
Effective annual rate
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True annualized cost under this day-count

Ready

Enter your margin balance, rate, holding period, and day-count convention, then press Calculate.

How the Margin Interest Calculator works

When you borrow money from a broker to buy securities on margin, the broker charges interest on the debit balance for every day it is outstanding — separate from any gain or loss on the position itself. This calculator applies the standard simple-daily-interest method that most brokerage margin agreements use to turn a stated annual rate into an actual dollar cost.

The formula

For a margin loan balance B, a stated annual interest rate r, a day-count basis D (360 or 365), and n days the balance is outstanding, the daily rate is r ÷ D, and total interest is:

Interest = B × (r ÷ D) × n

The daily interest charge is simply B × (r ÷ D), and the total amount owed at the end of the period is the original balance plus the accumulated interest. The calculator also reports the effective annual rate — r × (365 ÷ D) — which shows the true annualized cost once the day-count convention is applied.

Worked example

Take a $10,000 margin balance at a stated annual rate of 8.5%, held for 30 days, with a broker that uses a 360-day year. The daily rate is 0.085 ÷ 360 ≈ 0.0002361, so the daily charge is about $2.36. Over 30 days that totals roughly $70.83 in interest, bringing the amount owed to about $10,070.83. Because the broker divided by 360 instead of 365, the effective annual rate works out to about 8.62% — slightly above the 8.5% quoted rate.

Why the day-count convention matters

  • 360-day year: a long-standing money-market convention still used by many brokers. Dividing the annual rate by 360 instead of 365 produces a marginally larger daily rate, so the true annualized cost runs about 1.4% higher (relatively) than the stated rate.
  • 365-day year: a smaller number of brokers accrue on the actual calendar-day basis, in which case the effective annual rate matches the stated rate exactly.
  • Check your broker's disclosure: the convention is normally stated in the margin agreement or account fee schedule. Small differences compound noticeably on large balances held for months.

What this calculator does not model

Real margin accounts often see the balance change daily as positions are bought, sold, or partially paid down, and many brokers post accrued interest monthly, which can compound if left unpaid. This calculator computes simple interest for a single balance held over a fixed number of days; for a balance that changes mid-period, split the calculation into sub-periods at each balance change and add the results. It also does not model margin call risk, maintenance margin requirements, or the market performance of the securities purchased — it is strictly the cost of the borrowed funds.

Frequently Asked Questions

How is margin interest calculated?
Margin interest uses simple daily accrual: Interest = Margin Balance × (Annual Rate ÷ Day-Count Basis) × Number of Days. The annual rate is divided by the day-count basis (360 or 365) to get a daily rate, which is then multiplied by the outstanding margin balance and the number of days the loan is outstanding.
Why do some brokers use a 360-day year instead of 365?
Many brokers accrue margin interest on a 360-day-year convention, a common money-market practice. Dividing the same annual rate by 360 instead of 365 produces a slightly larger daily rate, so the effective annualized cost (rate × 365/360) ends up about 1.4% higher, relative to the stated rate, than the number printed in your account disclosures.
Does margin interest compound?
Most brokers calculate interest daily on the outstanding debit balance and post it to the account monthly. If unpaid interest is added to the balance, the next month's interest is charged on the larger balance, which is a form of monthly compounding. This calculator computes simple interest for a single balance and period; for a running or growing balance, calculate each sub-period separately and add the results.
What is a margin call and does this calculator predict one?
A margin call happens when the equity in a margin account falls below the broker's maintenance margin requirement, usually because the value of securities bought on margin drops. This calculator only computes the interest cost of carrying a margin loan — it does not model position value, maintenance margin requirements, or liquidation risk.

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