Interest on borrowed funds

Margin account holders have the option to borrow funds from us for a fee to invest. Interest rates charged change regularly, be sure to check our website for current rates. Interest is based on an annual rate, calculated daily and charged to the account midway through the following month.

Interest rates apply from the date the trade of the security settles, which is two days after the date of the trade for stocks (known as T+2 business days), and one day after the date of the trade for options (known as T+1 business day).

  • If you buy stock ABC on Wednesday, May 1 the settlement date will be Friday, May 3 (T+2 business days)
  • If you sell the same stock ABC on Thursday, May 2, the settlement date will be Monday, May 6 (T+2 business days)

Suppose you purchase $1,000 of XYZ on margin. You would not be charged any interest until the second business day after you bought the stock. However, if you hold a negative cash balance and you close the leveraged position, interest charges will continue until the closing trade has settled and your cash and debt is reconciled.

  • SwitchArrow Let's use an example

    Suppose you hold $10,000 CAD and $0 USD in your margin account and you decide to buy $5,000 of a U.S. stock. After purchase, your USD balance will be negative for the total cost of the trade ($5,000USD+plus commissions), and your CAD balance will remain at $10,000.

    While the buy order is settling (as mentioned above), you can place a request manually to exchange CAD cash to cover the USD debt balance as this will not happen automatically. The two-day settlement period can be treated like a grace period; it gives you the opportunity to cover your debt without being charged interest.

    If you don’t end up exchanging your CAD funds to cover the negative $5,000 USD, Questrade will begin to charge you interest once the trade settles on the amount you’re borrowing from us ($5000 USD) even though you may have $10,000 CAD available.

    If you’re interested in borrowing the $5,000 USD so you can use $10,000 CAD available, you don’t have to place an exchange request just keep in mind that interest charges will apply to your account.

  • SwitchArrow Placing an exchange request

    To place a reqeust:
    1. Log in to Questrade
    2. Hover over REQUESTS
    3. Tap Exchange funds

    The cut-off time to place an exchange request for the next day is 2:30 pm. If you place an exchange request on Monday at 11am ET, the funds will be available in your account Tuesday morning. However, if you place an exchange request Monday at 4:00 pm, the funds will be available in your account Wednesday morning.

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