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Finance Glossary

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Margin Interest

Definition:

When you open a margin account in a brokerage, you can borrow money against the stocks and securities in your account. Have $50,000 to invest? The brokerage may give you another $25,000 to invest so you can be making profits on $75,000.

Nice deal, but it doesn't come free. Like all borrowed money, there is a cost or interest rate involved. The cost of borrowing money through your brokerage is known as margin interest.