One of the most popular account types is the non-registered margin account. This account offers many unique features that are not available in registered accounts, for example:
- Buying on margin (borrowing funds from us to invest)
- Bonds can have a face value dominations of $100 or $1000
- Joint account ownership
Let's use an example:
Suppose you hold $8,000 CAD and $0 USD in your margin account and you decide to buy $2,500 of a U.S. stock. After making the purchase, your USD balance will be negative for the total cost of the trade ($2,500 USD + plus commissions), and your CAD balance will remain untouched at $8,000.
While the buy order is settling (T+2), you can place a request to manually exchange CAD cash to cover the USD debt balance as this will not happen automatically in margin accounts. The 2-day settlement period that applies to every stock/ETF trade gives you the opportunity to cover your debt without being charged interest.
If you don’t end up exchanging some of your CAD funds to cover the negative $2,500 USD within those 2 days, Questrade will begin charging you interest once the trade settles on the amount you’re borrowing from us ($2,500 USD) even though you may have $8,000 CAD available. For example, if CAD and USD were at par 1:1, once the exchange is completed your CAD balance would be at $5,500 CAD and 0 USD.
If you are interested in borrowing the $2,500 USD so you can use your $8,000 CAD for other purchases, you don’t have to place an exchange request to cover the USD debit balance. However, keep in mind interest charges will apply to your account.