Margin loans

Whether you need extra money for a short-term financing need or buying more securities, a margin loan may help you get the money you need.


The nuts and bolts of using margin

There are some things you should know about eligibility, qualifications, and accessing the money as you consider using margin.

Margin is a feature you can add to one of these types of accounts:

  • Individual brokerage
  • Joint brokerage
  • Limited liability company (LLC)
  • Partnership
  • Sole proprietorship
  • Trust
  • Unincorporated association

In addition, the following securities are eligible to use as collateral for margin borrowing:

  • Most equities* and ETFs trading over $3 a share
  • Most mutual funds that have been held for at least 30 days
  • Treasury, corporate, municipal, and government agency bonds

How much can I borrow on margin?

While margin can provide flexibility by not locking you into a fixed monthly principal repayment plan, it's important to understand the amount available to borrow is dependent on the type of and value of your eligible securities, which may fluctuate over time. And of course, even without scheduled principal repayments there will still be interest assessed on the loan, so you'll need to be sure that you have sufficient funds available to cover this interest expense.

View an example

Managing your margin loan

Viewing your balance

Once you have established a margin loan, on Fidelity.com, go to Accounts and Trade, then Portfolio. Then select a specific account and navigate to the Balances page. Here you’ll see a number of balances available, but there are 2 that are particularly important when withdrawing money from your account.

  • Cash Only — How much money do you have available for a cash withdrawal without generating a margin loan?
  • Cash & Borrowing Margin — How much money do you have available to withdraw that includes cash along with the loan value of the securities held in your margin account? Amount withdrawn that exceeds your cash will be a margin loan and therefore will accrue interest.

View the Additional Balances for more information which can help you determine if you are at or near a margin call.

screenshot_viewing_balance

Image is for illustrative purposes only.
Withdrawing money

There are many convenient ways to withdraw your money. The most common is using an electronic funds transfer (EFT) to your bank.

Paying down your margin loan

Interest charges are automatically posted to your account monthly. You determine the payback schedule and payment amount. It's important to have a plan for reducing your margin balance to minimize the interest amount you’re charged which you can do by selling a security or depositing cash into your account through electronic funds transfer (EFT), bank wire, or depositing a check.

Ongoing requirements (house maintenance)

Ongoing margin requirements whenever you have an outstanding margin debt are known as maintenance requirements, which require that you maintain a certain level of equity in your margin account. It’s important for you to be aware of these requirements to help avoid margin calls. Margin calls are due immediately and in some cases securities may be sold without notification to you. It's smart to leave a cash cushion in your account to help reduce the likelihood of a margin call.

More on managing margin calls

Regulations require that you maintain a minimum of 25% equity in your margin account at all times. However, most brokerage firms maintain margin requirements that meet or, in many cases, exceed those set forth by regulators.

At Fidelity, house maintenance requirements are systematically applied based on the composition of an account. These are called rules-based requirements (RBR).

Insights and education

Ready to get started?