Interactive Brokers is a digital trading space designed to be very effective for and offer competitive industry benefits to those who want to seriously get into the world of trading. As a result, the platform has received very good rankings from various business websites.
One of the many services provided on the Interactive Brokers platform is the ability to lend and borrow money.
This is available to users to an extent, and after certain prerequisites are met, to increase their investing power and improve their experience trading with Interactive Brokers.
Is this Legal?
Interactive Brokers provides margin borrowing, with competitively low-interest rates, against qualifying users’ portfolios. Moreover, it is legal, and there are smart and secure ways of borrowing, similar to situations in which one would borrow from any other lender.
While Interactive Brokers does offer borrowing options to qualified users, the company does encourage meeting with a financial or tax advisor before taking out any loans.
In addition, it is always a good idea to carefully calculate and think through any loans before taking them out.
How Much Can You Borrow?
Interactive Brokers only lend to investors that are both experienced and have a high tolerance for risk. As a rule- and only for those qualified to borrow- one may borrow up to half the value of their account.
There are, however, minimum account balances for those who intend to borrow from Interactive Brokers. These minimum account balances are determined by the age group of each respective investor.
For retail investors under the age of 25 years old, the minimum balance for borrowing is $3000. For retail investors over the age of 25 years old, the minimum balance for borrowing is $10,000.
Qualifying Interactive Brokers clients can also sign up for the company’s debit card. Users that sign up for the debit card must have $3000 in their account and will be able to receive a spending limit of the same amount.
How Much Leverage Can you Get on Interactive Brokers?
In the world of finance, the term “leverage” refers to the use of debt (borrowed money) to trade and purchase assets. The goal of said leverage is to make a higher income than the amount initially borrowed.
As mentioned before, an Interactive Brokers user may borrow up to half of their account balance. This is the greatest amount of leverage that can be used on the Interactive Brokers platform.
What Do You Need to Enable Before You Borrow Money?
Before taking out a loan from Interactive Brokers, you must enable Portfolio Margin capability within the program. You can do this by requesting the Pre-borrow Trading Permission in Interactive Brokers’ Client Portal.
Pre-borrow orders may be accepted between the hours of 6:45 and 14:45 Eastern Time. However, they are most often brokered between the hours of 9 and 11 in the morning.
How Do You Pay it Back?
The money in your portfolio is the security for any margin loan taken out from Interactive Brokers. The amount in your account will determine your borrowing power. The market can be very volatile; in all trading, it is important to calculate your borrowing decisions.
For this reason, it is very important that a borrower is extremely careful not to borrow against too great a percentage of his or her portfolio; your portfolio funds will be used to pay back any deficit when it comes time to pay.
Final Thoughts on How to Borrow Money From Interactive Brokers
Interactive Brokers is a good tool for experienced investors looking for simple, digital trading space. While no minimum deposit is needed to use the platform, there are minimum requirements for borrowing for trade on the platform.
You should always maintain high levels of caution when trading on any platform. However, if an investor is smart, taking advantage of Interactive Brokers’ low-interest rates is a compelling financial opportunity.