This response from Schwab in under 12 hours! In sum, Schwab charges a higher margin rate, but on a lower balance.
I invite Mr. Normile and others to compare and contrast.
Email from Schwab:
Now let us go to your example:
>
>Beginning Credit Balance: $10,000
>Security Market Value: $0
>
>After shorting $20,000 of stock, we arrive at:
>
>Beginning Credit Margin Balance: $10,000
>+ Short Sale Proceeds: $20,000
> -------------
>New Credit Margin Balance: $30,000
>
>Short Market Value: -$20,000
> -------------
>Account Equity: $10,000
>
>As mentioned previously, subtract the Short Account value from the Margin Balance to determine if you are earning or paying interest.
>
>New Credit Margin Balance: $30,000
>- Short Market Value: -$20,000
> -------------
> $10,000
>
>Therefore, interest would be earned on $10,000 at a rate of 4% in this example.
>
>At this time, the interest rates that Schwab charges on outstanding margin debit balances are as follows:
>
>For balances of: The applicable margin interest rate is:
>
>$0.00 - $9,999.99 9.25%
>$10,000 - $24,999.99 8.75%
>$25,000 - $49,999.99 8.25%
>$50,000 and above 7.75%
>
>We hope that this response has adequately addressed your concerns. Enjoy your day.
>
>If you have any further questions or concerns, please do not hesitate to contact us. Thank you for using Schwab's Electronic Brokerage Services.
>
>Sincerely,
>
>Nicole Criscione
>Schwab Electronic Brokerage Services |
