Picture a cardiologist in Southampton who has just found the house. The closing is in three weeks, the sale of her apartment in the city won’t settle for three months, and she needs $100,000 to bridge the gap. Her financial advisor mentions that she can borrow it against her brokerage account the same afternoon, with no application and no appraisal. She does. A year later the house is hers, the apartment has sold, the loan is repaid, and her statement shows $11,200 in interest.

Her neighbor, a patent attorney, did the same thing at a different firm. Same amount, same year, same kind of collateral. He paid $5,000.

Neither of them made a mistake in borrowing. One of them simply never looked at the price. In October 2026 the cost of this kind of loan ranges from about 5% a year at some brokerage firms to more than 12% at others, and most investors have no idea which end they’re on. I spent years as a licensed stockbroker and I still trade every week, and this fall the gap is wide enough to matter even to people who rarely open their statements.

What a margin loan is, in plain terms

A margin loan is a line of credit your brokerage firm extends to you, using the stocks and funds already in your account as collateral. The closest everyday comparison is a home equity line of credit: you borrow against something you own without selling it. Here the asset is your portfolio instead of your house.

The account that allows this is called a margin account. Most people who opened an account in the last decade have one, often because the box was checked by default. You don’t pay anything until you actually borrow. Interest is charged daily on whatever you owe and shows up as a line on your monthly statement, usually labeled “margin interest.”

People borrow this way for three common reasons:

  • To bridge a large purchase. A house, a practice, a partnership buy-in, or a tax bill due before money from elsewhere arrives.
  • To avoid selling. Selling a stock that has risen a lot can trigger a large capital gains tax bill. Borrowing against it postpones that sale.
  • To invest more than they have in cash. This is the riskiest use, and the one most people associate with the word margin.

One feature makes a margin loan very different from a mortgage. If the value of your investments falls far enough, the firm can require you to add cash or securities, and if you don’t act quickly it can sell your holdings to cover the loan, without asking first and at whatever the market price happens to be that day. This demand is called a margin call. Borrowing a modest share of a diversified portfolio rarely gets close to that point. Borrowing heavily against a few volatile stocks can.

Why the price varies so much

Each firm sets its own base rate, an internal benchmark that moves when the Federal Reserve raises or cuts interest rates. Then it adjusts that number by loan size, much like a volume discount from a supplier: the more you borrow, the lower the rate. Several of the largest firms changed their base rates in mid-September 2026, and they didn’t all move by the same amount.

The result is a split that runs roughly along generational lines. Newer firms that operate mainly through a phone app, along with Interactive Brokers, charge near the bottom of the range. The long-established full-service firms, the ones with branch offices, advisors and familiar names, charge near the top. Those firms are betting that customers value the branch, the research and the relationship enough not to compare. For most of their clients the bet pays off, because almost nobody checks.

The numbers, side by side

These are the published rates for borrowing $25,000, taken from each firm’s own pricing page in October 2026:

  • Public: 5.15%
  • Robinhood: 5.25%
  • Interactive Brokers: 5.38% on its Pro plan, 6.38% on its Lite plan
  • Webull: 8.74% for its Premium members
  • tastytrade: about 10.50% (reported by a third-party review; the firm doesn’t publish a simple table)
  • Charles Schwab: 11.575%
  • Fidelity: 11.575%
  • E*TRADE: 12.20%

In dollars: carry a $25,000 balance for a full year at 12.20% and you pay about $3,050 in interest. At 5.15% you pay about $1,290. That is roughly $1,760 a year for an identical loan backed by identical collateral.

The gap widens as the loan grows. At $100,000, E*TRADE’s published rate is 11.20%, Schwab’s and Fidelity’s are 10.575%, Interactive Brokers’ Pro rate is 5.38%, and Public’s is 5.00%. Over a year that is the difference between about $11,200 and about $5,000 in interest, or more than $6,000 for the same borrowed money. That’s the gap between the cardiologist and the patent attorney.

The second leak: cash that earns almost nothing

The same firms that charge the most to borrow often pay the least on cash you leave sitting in the account. When you sell a stock or deposit a check and don’t reinvest it, the firm decides where that money goes. Many full-service firms send it by default to an affiliated bank account, a “sweep,” that pays very little. At Schwab, the standard sweep has been reported at about 0.01% a year.

Elsewhere, the same cash earns real interest. Robinhood pays 3.6% a year to members of its $5-a-month Gold plan. Public pays 3.30% in its high-yield cash account. Fidelity’s default money market fund, a very low-risk fund that holds short-term US government debt, showed a 3.49% yield in early October. Interactive Brokers pays 3.38% on its Pro plan, though nothing on the first $10,000.

Leave $50,000 in cash for a year at 0.01% and you earn about $5. At 3.5% you earn about $1,750. Many professionals keep a cash cushion of that size at their broker for taxes or opportunities and never look at what it earns. At most firms, moving it into a money market fund takes a few minutes and a couple of clicks.

Who overpays the most

The investors who lose the most here are rarely the aggressive traders. Traders tend to know their rates to the decimal. The ones who overpay are surgeons, partners and founders who borrow once, sensibly, to cover a down payment, a tax bill or a buy-in, then leave the balance outstanding for a year or two because the payments never land in their mailbox the way a mortgage bill does. The interest is simply added to the loan each month and goes unnoticed.

There is also a quiet option that full-service firms rarely advertise. Clients with large accounts can often get a lower rate just by calling and asking, especially if they name a specific competitor’s figure. For those clients the posted rate is an opening offer.

What to do this week

  • Find your rate. Log in and search your broker’s help pages for “margin rates,” or look at the margin interest line on your last statement. If the rate isn’t printed, divide the year’s interest by the average amount you owed.
  • Check where your cash sits. Look for the name of the account your uninvested cash goes into. If it’s a bank sweep paying a fraction of a percent, ask about a money market fund.
  • Call before you move. If your balance is large, ask your current firm to match a lower rate before you go to the trouble of transferring. Moving an account is straightforward, but a phone call is easier.
  • Borrow with a cushion. Keep any margin loan small relative to the account, so a market drop doesn’t trigger a margin call and a forced sale at a bad price.

The full comparison

I built BrokerNimble.com to keep these numbers in one place. It compares borrowing rates, cash yields, trading costs and features across 14 US brokerage firms, with every figure dated and linked to the firm’s own page. The margin and cash table shows the full breakdown at different loan sizes.

Rates change whenever the Federal Reserve moves, so check the date next to any number before acting on it. Fifteen minutes with your last statement could be worth several thousand dollars a year.

This article is part of a series. For the complete picture, from account types and futures to AI trading and credit cards that pay in stock, read The Investor’s Guide to Choosing and Using a Broker in 2026, and see how to read your brokerage statement to find your own rate.

Disclosure: Peter Agro runs BrokerNimble.com, which may earn referral fees when readers open accounts through some of its links. Rates were checked against broker pages in October 2026 and change often; figures marked as reported come from third-party sources. The cardiologist and attorney above are illustrative examples. This article is for information only and is not investment advice. Margin trading involves substantial risk, including losses greater than your deposit.