What is and how much is Wall Street Journal's (WSJ) current Call Money Rate at online brokerage firms.

What Is the Call Money Rate?

If you’re trading on margin inside your brokerage account, you need to understand the call money rate. This is the fee (quoted as an annual figure but actually billed daily) that banks charge brokerage firms for the funds used for margin loans. Typically, brokers don’t provide the cash for margin debits. Instead, they borrow from a bank whatever their customers borrow, and the bank charges the investment firm a fee. This is the call money rate.

The Current Call Money Rate

As of April 2020, the call money rate is 2.00%. This is what a bank will charge a brokerage firm for a loan for one year. Margin loans are often shorter than this timeframe, so the fee is assessed on a daily basis (2.00%/365).

How a Brokerage Firm Handles the Call Money Rate

For its service to its clients, a broker will add a markup to the call money rate and charge the total amount as its margin rate. All the brokers we surveyed charged a rate higher than the call money rate. For example, Webull customers pay 9.25% for debits below $10,000, while loans amounts above $1,000,000 are charged a much lower 5.00%. This rate, though, is 3.00% higher than the call money rate. That is Firstrade’s gross profit on the loan.

Changes in the Call Money Rate

It’s important to understand that the call money rate can change from time to time. For example, a year ago the APR was 4.25%. It changes just as other interest rates change. As the Federal Reserve Board changes the Fed Funds rate, the call money rate will change.

The Future of the Call Money Rate

It’s important to understand how margin rates charged by brokerage houses are connected to the Fed Funds rate. If you monitor the Fed Funds rate and predict it correctly, you’ll have a better idea of where your broker’s margin rate is headed.

A Survey of Current Margin Rates

With a current call money rate, we can see how much brokerage firms are making off of their customers’ margin loans. Here are two examples one of the highest rates and some of the lowest:

Ally Invest Margin Rates

Debit Balance Margin Interest Rates
$0.01 - $4,999 7.75%
$5,000 - $9,999 7.75%
$10,000 - $24,999 7.75%
$25,000 - $49,999 7.50%
$50,000 - $99,999 6.75%
$100,000 - $249,999 5.50%
$250,000 - $499,999 4.50%
$500,000 - $999,999 4.00%
$1,000,000 + 3.25%

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Zackstrade Margin Rates

Debit Balance Margin Rate
$0 - $100,000 3.55%
$100,001 - $1,000,000 3.05%
$1,000,001 - $3,000,000 2.75%
$3,000,001+ 2.75%

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M1 Finance Margin Rates

Debit Balance Margin Interest Rates
$0,01 - $24,999 3.50%
$25,000 - $49,999 3.50%
$50,000 - $99,999 3.50%
$100,000 - $249,999 3.50%
$250,000 - $499,999 3.50%
$500,000 - $999,999 3.50%
$1,000,000 + 3.50%

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