What Is a Margin Interest Rate?

Video Transcript

"Hi I'm Roger Groh. We are here today to talk about interest rates that you're going to pay on margin accounts that you have at your stock brokers meaning if you borrow money from your bank to buy stock that interest that you pay on that money is the interest rate on margin accounts. A few minutes ago I called one of our local brokerage firms here and they said to me that the rates go from roughly 6 almost to 9% on margin accounts with stock or bond accounts held with their firm and what you would pay would depend upon the amount of money totally that you have with them and then then the type of investments that you have and the more secure the investment the lower the rate of interest, the less secure the investment, the higher the rate of interest. Now how does 6 to 9 sound? Well you can borrow money if you have very good credit at 1% for a month to 6 to 9 months seems pretty expensive. Is it convenient? No problem, but certainly speaking to your bank first, perhaps taking out a loan from another location would be a better way to go. I'm Roger Groh and that's a little bit about interest rates on margin accounts."