We at OptionsHouse strive to be the best value in the online brokerage business. To that end, we are pleased to announce new lower rates for debit margin balances.
The margin rate charged for each margin balance level has been lowered. These new rates for balances over one million dollars are 38.7% lower than before!
Also, our rates are not tiered. In other words, your first dollar of margin is charged the same rate as your last dollar.
We believe these lower margin rates, combined with our low commission schedule, make OptionsHouse the best value there is for serious stock and option traders.
1Fed Funds Rates is the interest rate banks charge each other for loans. The Fed Funds rate is currently at 25 basis points (0.25%).
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Tags: margin rates
Would be nice if you guys didn’t have a % charge on penny stocks, which makes it less competitive compared to Zecco. Zecco charges $1-2 more for penny stock trades, but when I trade at optionshouse it sometimes cost me $25+/trade.
John: These types of orders inherently carry more risk and therefore require more overhead cost to support. In order to keep our rates competitive across the board, we need to charge an extra fee for these types of securities.
I’m impressed, these rates are now cheaper than my mortgage.
So is the rate for 0-49,999 still 4.45% now? or is the change just for 1000000?
Tyrese: The rate for $0 – $49,999 is 4.00% (Fed Funds Rate + 3.75%). Please visit our fees page for more information.
I do not understand what your “Interest Rate” means. There is no period stated making me assume it is simple interest per year. But that can’t be so. The options end in less than a month. See I can still not calculate what you would charge. And what does Margin Balance mean, only Optionshouse loan amount or my entire balance like it used to say? You see why I can’t consider this. Sorry, I am an Engineer.
Gregory: Assuming you are talking about debit interest, it will be calculated based on the average daily balance for the month times the number of days in the month, divided by 360. Yes, it is simple interest.
Thanks for the nice drop on the margin rates and for the comments and responses which help clarify.
This is a competitive rate with most sites and I agree the Fed Funds Rate is more widely recognized. Of course, lower rates are always more enticing!
Could you show us the rates from before so I could compare?
Also, those rates are quite reasonable for borrowing.
Daniel: Prior to this change, our margin rates were as follows: 4.45% for account balances $0 to $49,999, 3.45% for $50,000 to $499,999, and 2.45% for $500,000 and above.
In addition to lowering all of these rates, we added a tier for accounts larger than $1,000,000.
Let me see if I understand what the “not tiered” aspect means.
Let’s say you borrow $40,000 at 4.0%. That would cost you about $133 per month in interest. If you go up to $50,000 the rate drops to 3.0%, and your monthly interest drops to $125. Is that what would happen? Do you think the simplicity outweighs the unusual negative marginal interest hump that it creates?
Chuck: Yes. Simple is better.
We realize there are pockets of pricing disconnect, which is why many firms probably have a progressive rate.
We at OH strive to be the best value for serious investors. Therefore if your margin balance is an average daily balance of 60,000 dollars, you pay the one lower rate on all $60,000 that you are borrowing. Go ahead – borrow more and save some money!
Can you share anything about why the base rate was changed from the Broker Call Rate to the Federal Funds Rate?
Chuck: We concluded that this was a more easily followed measure and also more easily comprehended by our customers. Thanks for the question!
Thanks for lowering the margin interest. However, your interest charges are still too high. Who borrows a million dollars on margin? What about the rest of us?
We appreciate that the majority of our customers do not have a million dollars in their account. But our research has shown that we provide some of the lowest margin rates in the market, including for accounts below $50,000. Many of our competitors charge 6% or higher for margin balance (on accounts below $50,000). At 4.0%, we are 33% below that.