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What It Really Costs to Borrow Against Your Stocks

A margin loan at a major US brokerage can cost more than three times the Federal Reserve’s benchmark rate. How much you pay depends less on the market than on where you hold your shares, and how much you borrow. 

Borrowing against a stock portfolio is one of the oldest tools in personal finance. Instead of selling shares to raise cash, and giving up the position, an investor pledges them as collateral and takes out a loan. Brokers call it margin, and almost every US brokerage offers it.

What it costs is less obvious. Margin rates rarely sit next to commissions or app features in a broker’s marketing, and many investors only look them up after opening an account. The numbers have also just moved. On September 16, the Federal Reserve raised its benchmark rate for the first time since 2023, to a range of 3.75% to 4.00%. Schwab and Fidelity changed their base margin rates two days later, and E*TRADE followed on September 21. The Fed meets again on October 28.

Here is what borrowing against stocks costs at some of the largest US brokers, according to the rate tables on their websites in mid-October 2026.

Margin rates at major US brokers, October 2026

Sources: Schwab, Fidelity, E*TRADE and Interactive Brokers rate pages, checked October 13, 2026; effective federal funds rate for October 6 via FRED. Rates are variable and can change without notice.

Small Borrowers Pay the Most

Margin rates are tiered, and the tiers work against most retail borrowers. At both Schwab and Fidelity, a balance under $25,000 costs 12.075% a year, while a balance between $250,000 and $500,000 costs 10.325%. E*TRADE works the same way, from 11.40% on balances under $10,000 down to 9.20% between $250,000 and $500,000.

That leaves the smallest borrowers at the biggest brokers paying about 8 percentage points more than the effective federal funds rate, the overnight rate at which banks lend to each other. Put another way, they pay more than three times the Fed’s benchmark. For brokers, the gap between what it costs them to fund margin loans and what they charge for them is a dependable source of revenue.

Interactive Brokers shows how wide the range can be. IBKR Pro accounts are charged 5.38% on balances up to $100,000, or 1.5 percentage points over the broker’s benchmark, and IBKR Lite charges a flat 6.38%. On a $20,000 loan, the choice of broker alone can more than double the bill.

The Cheaper Option Comes With a Minimum

The large brokerages do offer cheaper credit against the same shares, just not to everyone. Schwab’s Pledged Asset Line, a securities-backed line of credit, carried estimated APRs of 6.29% to 8.29% in early October, depending on size, with a $100,000 minimum. Fidelity’s securities-backed line of credit charges the Secured Overnight Financing Rate (SOFR) plus 1.90% to 3.10%, or roughly 5.8% to 7.0% with SOFR at 3.87%. It also starts at $100,000 and typically needs at least $500,000 in pledged assets.

Private banks have long offered the same kind of lending to wealthy clients. The pattern is consistent: the bigger the portfolio, the cheaper the credit. An investor who needs $20,000 pays around 12% on margin at a full-service broker, while one who can pledge enough for a $1 million credit line pays a little over half that. These lines also come with a restriction margin does not have: they usually cannot be used to buy more securities.

What It Adds Up To

Margin interest accrues daily and is usually charged monthly. If it is not paid off, it is added to the loan balance and starts accruing interest itself. Over a few weeks, the difference between rates is small. Over a few years, it is not.

Interest on a $20,000 margin loan

Illustrative only. Assumes the rate stays unchanged, interest is added to the balance monthly and nothing is repaid.

That is the core problem for anyone who wants to borrow against a position they plan to hold for years. “Over a few weeks, a 12% margin rate is an annoyance. Over three years, it compounds into a serious share of the return,” said Marc Ryan, co-founder and CEO of Spout, a startup building interest-free loans against tokenized stocks.

Interest Is Not the Only Cost

Margin borrowing carries risks beyond the rate. If the pledged shares fall in value, the broker can issue a margin call and, if the account is not topped up, sell the shares, sometimes without warning. Shares held in a margin account can also typically be lent out by the broker, for example to short sellers, with the revenue largely kept by the broker unless the customer has signed up for a separate stock lending program.

A Different Model: 0% Interest

One new approach comes from crypto. Spout, a Solana-based protocol that announced a $2 million strategic round on October 13, lets users post tokenized US stocks as collateral and borrow the USDC stablecoin at a flat 50% loan-to-value ratio, without paying interest. At that ratio, a $20,000 loan would need $40,000 of tokenized stock behind it.

Instead of charging the borrower, Spout sells far-out-of-the-money covered calls on the collateral each week and pays lenders from the option premium. The trade-off sits with the borrower: if a stock rises past the call’s strike price, the gains above that level go to the option buyer. “Normally you write a covered call and receive cash. Here you write one and receive free financing,” Ryan said.

The model is still early. Spout is not yet on mainnet. Its beta runs on Solana devnet, and the company says its private beta will open once its smart contracts have been through external audits. Like any onchain product, it also carries risks a brokerage account does not, from smart contract bugs to reliance on the issuers of the tokenized stocks.

What to Check Before You Borrow

•    Your tier, not the headline rate. Find your broker’s rate table and the tier your balance falls into. Rates are variable and follow each broker’s base rate.

•    Whether a credit line is cheaper. If your portfolio is large enough, a securities-backed line of credit can cost several points less than margin, though it usually cannot fund more stock purchases.

•    How far your portfolio can fall. Know the maintenance requirement on your account, and how much of a drop would trigger a margin call.

•    What you give up. For newer 0% models, understand the trade-off, such as capped upside, along with the product’s stage and risks.

The rate you pay to borrow against your stocks has less to do with the Fed than with where you keep them, and how many you have.

This article is for information only and is not financial advice. Rates are as published by each provider in October 2026 and can change at any time.