Client Benefits

Margin Loans

With a margin loan, you can increase your flexibility.

Open or transfer accounts

What is margin?

Margin loans can provide an extension of temporary credit by allowing clients to borrow against securities in their brokerage account - similar to a flexible line of credit1. When used appropriately, margin loans can help a client execute a wide variety of investment strategies1 by increasing their borrowing power to serve as a source of flexible cash, purchase more securities or to hedge.

Access to liquidity

  • Accessible: Access to capital, competitive rates, and flexible repayment terms.
  • Less Intrusive: No underwriting, personal guarantees, or credit checks.
  • Tax Advantaged: Taking a margin loan and paying interest could be a convenient alternative to liquidating securities in a portfolio which may force realized capital gains and taxation. Additionally, interest on margin loans may be tax deductible2.
  • All margin investing carries certain risks including loss of principal. Please see Margin Risk Disclosure.

How to use a margin account

There are several ways to utilize margin cash. You may request a margin loan by electronic bank transfer (EBT) or wire. You may also utilize your margin cash to invest in securities beyond your settled funds.

 

Paying down your margin debt

When you borrow from Vanguard Brokerage interest charges are automatically posted to your account monthly. Vanguard Brokerage offers flexible repayment for margin loans. You pay back when you want—there's no set repayment schedule as long as you maintain the required level of equity in the account. You may repay your loan at any time by selling securities or funding the account with an electronic bank transfer, wire, or check.

To learn more about using a margin account at Vanguard Brokerage and eligible collateral please review our Margin Investing Guide (PDF).

 

Eligible collateral

You can't just trade any type of security you want on margin. The Federal Reserve Board (FRB) determines which securities can be margined. These include:

  • Most equities and ETFs*
  • Most mutual funds that have been held for at least 30 days.
  • Treasury, corporate, municipal, and government agency bonds
     

* New issue equity offerings and Vanguard ETFs are not margin eligible for at least 30 calendar days.

Stock

A security that represents part ownership, or equity, in a corporation. Each share of stock is a proportional stake in the corporation's assets and profits, some of which could be paid out as dividends.

Bond

A debt security (IOU) issued by a corporation, government, or government agency in exchange for the money the bondholder lends it. In most instances, the issuer agrees to pay back the loan by a specific date and make regular interest payments until that date.

NASDAQ

A computerized system that provides up-to-the-minute price quotations for securities traded over-the-counter as well as for many securities listed on the New York Stock Exchange.

National Market System

A system that facilitates trades of over-the-counter stocks meeting specific criteria and requires all exchanges to post prices simultaneously. It is sponsored by FINRA (Financial Industry Regulatory Authority) and Nasdaq (National Association of Securities Dealers Automated Quotations).

Over-the-counter (OTC) Security

Securities that aren't listed and traded on an organized exchange. Many OTC stocks are traded through the OTC Bulletin Board (OTCBB) or Pink Sheets.

Warrant

An entitlement to purchase a certain amount of common stock at a set price (usually higher than the current price) during an extended period of time. Usually issued with a fixed-income security to enhance its marketability, a warrant can be transferred, traded, or exercised by the holder.

Margin interest rate schedule

As with any loan you'll need to pay interest on the amount of the margin loan. Margin interest rates are typically lower than credit cards and unsecured personal loans; however, you should do your own comparison. The interest rate is variable based on a tiered schedule which is determined by the balance of the margin loan.3 How is interest charged?

How is interest charged?

When money is borrowed in a margin account, interest will be calculated on a daily basis and charged based on the total debit (borrowed) balance. The monthly interest period begins two business days before the beginning of each month and ends three business days before the following month's end.

Current interest rate schedule

Loan balance Margin rate Effective rate (includes 10.75% base rate)
$500,000 and above


Please call 877-662-7447 to learn about our rate offers.

  
$250,000–$499,999 Base rate + 0.50% 11.25%
$100,000–$249,999 Base rate + 1.00% 11.75%
$50,000–$99,999 Base rate + 1.50% 12.25%
$20,000–$49,999 Base rate + 2.00% 12.75%
Up to $19,999 Base rate + 2.50% 13.25%

 

Vanguard Brokerage's Base Rate is 10.75% and is subject to change without notice. Last changed on September 20, 2024.

Want to learn more?

Read the Margin Investing guide (PDF)

Read the Vanguard Brokerage Initial Margin Risk Disclosure Statement

How to access liquidity and maintain your investment strategy

See what you can do with Margin investing

Need to open a brokerage account?

Open your account online

Need to open a margin account?

Complete an application

Need to open a brokerage account?

Open your account online

Need to open a margin account?

Complete an application

1It's an interest-bearing loan that can be used to gain access to funds for a variety of reasons that can cover both investment and non-investment needs. For either use, a client should carefully consider their personal situation to help determine if borrowing money makes sense for them – the amount that can be borrowed is determined by the security type and security requirements. Margin rates are determined by the amount of the loan taken.

2Vanguard Brokerage does not provide legal or tax advice. Please consult a tax-advisor when determining the tax implications of transactions in your account or the deductibility of loan interest.

3As of September 20, 2024, Vanguard Brokerage's base lending rate and interest rates are as shown below. The effective rate, or true interest rate, charged on loan balances is the base lending rate plus the interest rate. If the rate of interest charged to you increases for any reason other than a change in the base lending rate, you will be notified at least 30 days in advance.

*Trading limits, fund expenses, and minimum investments may apply. See the Vanguard Brokerage Services commission and fee schedules for full details.

For additional information about margin investing, including the risks associated with it, read the Vanguard Brokerage Initial Margin Risk Disclosure Statement or visit the FINRA and U.S. Securities and Exchange Commission External site websites.

All investing is subject to risk, including the possible loss of the money you invest.

For more information about Vanguard funds or ETFs, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

You must buy and sell Vanguard ETF Shares through Vanguard Brokerage Services (we offer them commission-free online) or through another broker (who may charge commissions). See the Vanguard Brokerage Services Commission and Fee Schedules on Vanguard.com for limits. Vanguard ETF Shares are not redeemable directly with the issuing Fund other than in very large aggregations worth millions of dollars. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or receive the current market price, which may be more or less than net asset value.