You may be charged interest even with a positive cash balance due to several factors related to how Interactive Brokers calculates interest:
- Adjusted Cash Balance
Interest charges are based on your account's Adjusted Cash Balance, not just your visible cash balance. The Adjusted Cash Balance is calculated as: Adjusted Cash (Principal) = Settled Cash - Short Stock Collateral - Futures Risk Margin
If your Adjusted Cash Balance becomes negative, you may incur interest charges even if your visible cash balance is positive.
- Currency Differences
Your account may have positive balances in some currencies but negative balances in others. Interest is calculated separately for each currency, so you could be charged interest on negative balances in one currency while having a positive balance overall.
- Settlement Timing
Different transactions have different settlement dates:
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- Stock trades typically settle in T+1 (one business day after the trade date)
- Currency conversions may take two business days to settle
- Some transactions may settle immediately
This can create temporary negative balances in specific currencies, leading to interest charges.
- Daily Interest Accrual
Interest is calculated and accrues daily based on settled cash balances. These daily accruals may differ from the beginning and ending cash positions shown in your statement. If daily interest accrual is less than $1.00 (or the minimum unit for the currency), it will accumulate until reaching the minimum posting threshold.
- Intraday Fluctuations
Your cash position may become negative during the day due to various factors such as futures contract collateral changes, affecting daily interest calculations.
- Account Segments
Only settled cash above $10,000 in the Securities segment earns interest. Cash in other segments (e.g., Commodities) may not earn interest, potentially resulting in net interest charges.
- Short Positions and Borrowing Costs
If you have any short positions, you may incur borrowing costs that offset positive interest earned on cash balances.
- Negative Benchmark Interest Rates
If you have a cash balance in an allowed deposit currency with a negative benchmark interest rate, you may be subject to paying interest.
To understand your specific interest charges:
- Log in to Client Portal
- Click the Performance & Reports menu followed by Statements.
- In the Custom Statements panel, click the Create "+" icon on the right-hand side.
- Enter “Interest Details” as the Statement Name and "Activity" as the Statement Type
- Under Default Sections select your desired sections
- Under Optional Sections select “Interest Details”
- Under the Section Configurations and Delivery Configuration sections make desired selections and click Continue
- Review Your Custom Statement and click Create, then click OK on the confirmation screen.
- Once back on the Statements screen, scroll down to Custom Statements and click "Run" next to "Interest Details"
- Select your preferred Period, Date, and Language
- Click Download next to your preferred Format.
The Interest Details section of the Custom Statement shows:
- Credit Interest Details (for positive Adjusted Cash Balance)
- Debit Interest Details (for negative Adjusted Cash Balance)
- Short Credit Interest Details (for Short Stock Collateral Value)
Additional Information
- Interest calculations and current rates, visit the Interactive Brokers website.
- Remember to regularly review your activity statements for a comprehensive view of your account's interest accruals and charges.