Margin loan interest: how it works and what investors should know
Published: Sep 24, 2026
Margin accounts allow investors to borrow money to invest, but borrowing comes with a cost. Margin loan interest is the interest charged on funds borrowed from a brokerage to purchase securities on margin. The amount you pay depends on how much you borrow, the applicable interest rate, and how long the balance is outstanding.
While margin could increase buying power, it also adds borrowing costs that could affect overall returns. Understanding how margin interest works could help you better assess the impact of using leverage in your portfolio.
This guide explains what margin loan interest is, how it is calculated, what affects margin rates, where to find current rates, and the key risks of borrowing on margin.
What is margin loan interest?
Margin loan interest is the cost of borrowing money in a margin account. If you use borrowed funds or carry a debit balance, your brokerage might charge interest on the amount borrowed.
A margin account lets you borrow from your brokerage to buy eligible investments instead of using only available cash. The loan is typically secured by the investments in your account, and interest applies while the borrowed balance remains outstanding.
The amount of margin interest you pay is generally based on three factors:
How much you borrow
The applicable margin interest rate
How long you keep the borrowed funds
Your total borrowing cost might change depending on these factors and the current margin loan rates for your account.
Margin loan interest is separate from other investing costs, such as commissions, account fees, and foreign exchange charges. For example, buying U.S.-listed investments on margin might include both borrowing interest and currency conversion costs.
Margin rates are not fixed and could vary based on market conditions, brokerage pricing, account details, and the currency borrowed. Always review the latest margin rate information to understand your current cost of borrowing.
How does margin interest work?
A margin account lets eligible investors borrow money from their brokerage to buy investments, instead of using only available cash. Margin interest might apply when there is a borrowed balance.
Margin interest is the cost of borrowing to invest. Like a loan, it could build over time as long as the balance remains unpaid. Depending on the brokerage, interest might be calculated daily and charged periodically.
For example, if an investor uses borrowed funds to buy securities and keeps the balance outstanding for days or weeks, interest might continue to accumulate. The longer the money is borrowed, the more interest might be charged.
Margin is not the same as extra cash. It is borrowed money that must be repaid, along with interest. Even if an investment does not change in value, interest costs could still reduce returns. If the investment falls in value, the investor might still owe both the borrowed amount and interest.
Understanding how margin interest works could help investors better evaluate the costs and risks of using a margin account.
How is margin loan interest calculated?
Margin loan interest is calculated based on three main factors:
How much you borrow
The interest rate that applies to your margin account
How long you keep the borrowed funds
A simple way to estimate margin interest is:
Borrowed amount x annual margin interest rate x days borrowed / 365 = estimated margin interest
For example, imagine an investor borrows $5,000 using margin and keeps that borrowed amount for 30 days. If the hypothetical annual interest rate is 8%, the estimated interest would be:
$5,000 x 0.08 x 30 /365 = $32.88
In this example, the estimated cost of borrowing $5,000 for 30 days would be about $32.88 in interest.
This is a simplified example to illustrate how margin interest works. Actual charges might vary depending on the applicable margin rate, the currency borrowed, account terms, and the timing of borrowing. Use the current official margin rate information for the most up-to-date details.
The example above does not estimate your actual borrowing costs. If you have questions about how interest applies to your account, review your account details or contact Questrade for more information.
What affects margin interest rates?
Margin interest rates are not the same for everyone. Even within the same brokerage, different investors might pay different rates depending on a few key factors. Understanding these could help you better estimate your margin costs.
Market interest rates: When interest rates in the economy rise or fall, brokerage margin rates usually move in the same direction because borrowing costs change.
Brokerage pricing: Each brokerage sets its own margin rates, with different pricing models that might include higher or lower markups.
Tiered rate structures: Some brokerages offer lower rates for larger margin balances, while smaller balances might be charged higher rates.
Currency of borrowing (CAD vs. USD): Margin rates could differ depending on whether you borrow in Canadian or U.S. dollars, due to different interest rate environments.
Account type and terms: The type of account and its conditions could affect how margin interest is calculated and which rate applies.
Brokerage rate updates: Margin rates are not fixed and might change when market or funding conditions shift.
Because of these factors, margin rates could vary between investors and brokerages. Users often compare margin loan rates when choosing where to invest or borrow.
For current Questrade margin rates, check the official rate table before borrowing or carrying a margin balance.
Margin interest vs. margin rate vs. margin requirement
These terms are related, but they are not interchangeable. They describe different parts of how borrowing in a margin account works.
Margin interest: This is the actual dollar amount you pay to borrow money in a margin account. It is the cost charged by the brokerage for using borrowed funds over time.
Margin interest rate (margin loan rate): The annual percentage rate used to calculate the cost of borrowing on margin. Brokerages apply this rate to your borrowed balance to determine how much interest is charged.
Margin requirement: This is the amount of your own money (equity) you must keep in a margin account to support your positions. It acts as collateral, and if your account falls below this level, you might face a margin call.
Buying power: This is the estimated amount you could use to purchase or sell securities, including both your own and borrowed funds. However, higher buying power does not mean borrowing is free because it still has interest costs.
In short, margin interest is what you pay, margin rate is how it’s calculated, margin requirement is what you must maintain, and buying power is what you could potentially invest with.
What are the risks of borrowing on margin?
Borrowing on margin could help you invest more than you could with your own money, but it also increases risks. It’s important to understand how it works before using it.
Gains and losses are larger: Margin could increase potential returns, but it could also increase losses if investments decline.
You must pay interest: Borrowed funds accrue interest over time, which could reduce overall returns even if the investment performs well.
Rates could change: If market rates or brokerage pricing change, your borrowing costs might increase.
Margin calls could happen: If the account value drops too much, you might need to add funds or sell assets to meet requirements.
Forced selling risk: If you cannot meet a margin call, the brokerage might sell investments without your control, potentially at unfavourable prices.
You could lose more than expected: Because leverage is involved, losses might be larger than if only your own money is used.
How can investors manage margin interest costs?
Margin interest is an ongoing cost that should be understood before and while borrowing. Think of it as a “hurdle” your investment needs to overcome. If returns are lower than the borrowing cost, the margin could reduce overall performance.
Margin trading usually only works out when people stick to amounts they can easily handle and actually get how the interest charges work.
Consistent tracking of the debit balance is a key part of managing borrowed funds.
Reviewing current margin rates prior to borrowing clarifies the actual cost of the loan.
Understand your time horizon: Consider how long you expect to carry the borrowed balance, since interest increases the longer you hold it.
Investors often consider whether potential returns justify the cost.
Having a plan: A clear purpose for borrowing helps reduce unnecessary interest costs.
A little extra space acts as a safety net: Maintaining a buffer could help reduce the risks of margin calls during market fluctuations.
Managing balances: Reducing a debt balance limits ongoing interest charges.
Where to find current Questrade margin rates
The most reliable source for accurate information is the official Questrade rate page. Rates could be updated based on market conditions, funding costs, and changes in brokerage pricing, so it’s important to review the most recently posted information before borrowing or maintaining a margin balance.
Take a moment to understand how the current rates apply to your account type, currency, and debit balance. This helps ensure you have a clear picture of potential borrowing costs and how they might affect your overall returns.
You could also explore related resources to better understand how margin works within your account, including trading fees, account types, and risk considerations:
Understand the cost before borrowing on margin
Margin loan interest is the cost of borrowing money in a margin account. It depends on how much you borrow, the interest rate that applies, and how long you keep the balance outstanding.
While margin could increase buying power and potential opportunities, it also increases risks and ongoing costs. If investment returns do not exceed borrowing costs, the margin might reduce overall performance.
Before using margin, it’s important to review current rates and understand how interest charges and account requirements might affect your results.
Review current Questrade margin rates and ensure you understand how borrowing costs might affect your investment returns.
