1. What is Daily Margin Interest?

Daily margin interest is the amount charged or earned each day on a margin account balance. It's calculated based on the outstanding balance and the applicable interest rate.

2. How Does the Calculator Work?

The calculator uses the daily interest formula:

Where:

• \( Balance \) — Current account balance in USD
• \( Rate \) — Annual interest rate in decimal form (e.g., 0.05 for 5%)
• \( 365 \) — Number of days in a year

Explanation: The formula divides the annual interest by 365 days to get the daily charge or earnings.

3. Importance of Daily Interest Calculation

Details: Understanding daily interest helps traders and investors manage margin costs, compare broker rates, and forecast expenses or earnings on margin positions.

4. Using the Calculator

Tips: Enter your current margin balance in USD and the annual interest rate as a decimal (e.g., 0.08 for 8%). The calculator will show the daily interest amount.

5. Frequently Asked Questions (FAQ)

Q1: Why divide by 365 instead of 360?
A: Most financial institutions use actual/365 day count convention, though some may use 360. Check with your broker for their specific method.

Q2: Does this include compounding?
A: No, this calculates simple daily interest. Actual charges may compound daily or monthly depending on the account terms.

Q3: How do I convert APR to decimal?
A: Divide the percentage by 100 (e.g., 5.25% becomes 0.0525).

Q4: Are margin rates the same for debit and credit?
A: No, brokers typically charge higher rates for borrowed funds than they pay on credit balances.

Q5: When is margin interest charged?
A: Usually calculated daily and charged monthly, but terms vary by broker.