The interest rate as posted to the website is expressed as an annual percentage rate, however the rate for any one currency is based upon a benchmark that can change daily. As a result, the margin loan rate posted on any one day may not be the exact rate that an account holder would be charged if they were to maintain a loan for an entire year. Similarly, the credit rate posted on any one day may not be the exact rate that an account holder would be receive if they were to maintain a credit, or long cash balance, for an entire year.
Is the interest rate posted to the website an annual rate?
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Why am I paying interest?
Interest can be charged to accounts for a few reasons, but it is most commonly charged when you are borrowing funds from IBKR. This is typically associated with carrying a debit settled cash balance. However, customers should also note that carrying a large credit balance in certain currencies may also be subject to paying credit interest fees due to the negative benchmark rates currently imposed by several central banking systems. Our current rates, including the applicable benchmarks, are available on the…
Why does my cash balance show both long and short balances?
Your account may list both short and long balances as a result of the following:
- You maintain balances in multiple currencies - the IBKR Universal account allows you to hold cash balances and positions denominated in multiple currencies. Account holders maintaining a margin account are eligible to purchase a security denominated in a particular currency and borrow the funds necessary to settle that transaction with a loan secured by cash and/or securities denominated in another currency. Similarly, with a margin account, one may initiate a withdrawal of fund in a currency other than that they hold, and secure that loan with funds denominated in another currency. Both of these are instances where the account holder may hold both a long and short balance may be eligible to earn interest on the long balance and will be obligated to pay interest on the short balance…
Introduction to market implied rates
BACKGROUND
In determining the interest that account holders are paid on cash credit balances and assessed on debit balances, each currency is assigned a reference or benchmark rate, from which a spread is deducted for credit interest and added for debit interest.1 As account holders may withdraw unencumbered cash balances upon demand and regulations generally restrict the reinvestment of such balances to short-term instruments of high credit quality, benchmarks typically represent the rate at which local banks may borrow on an overnight or short-term basis (e.g., EONIA, Fed Funds)…
How is interest calculated on my cash balance deposited into the Insured Bank Deposit Sweep Program?
You will earn interest at IBKR's published rates based on your total settled cash balances, regardless of where your cash is held.
Interest on Insured Bank Deposit Sweep Program balances will accrue daily from the day funds are deposited into a program bank through the business day preceding the date of withdrawal from that bank. Interest will be credited monthly. The specific program bank assigned to your account does not impact the interest rate you receive…