Investment accounts allow you to borrow ‘on margin’ at rates above the Federal funds rate. I’ll discuss how margin loans work at Altruist.com, the investment platform where I manage my clients’ & my family’s assets.
Margin borrowing
You can borrow against the value of your securities at these rates. Altruist currently charges +2.5% above the Federal Funds rate (~3.75% as of August 2026, so 6.25 % interest total) for loans up to $50,000, +2.25% for loans $50 K – $100 K, and +2% for loans between $100 K – $1 million. So far as I can tell, Altruist doesn’t charge any origination or other fees to use margin. (They charge $25 if they have to sell securities due to a margin call.)
Potential benefits of margin borrowing
If you are strapped for cash but don’t want to sell securities– perhaps to avoid taxes– and other financing alternatives are unavailable or too expensive for you (e.g.: HELOCs, personal loans, mortgage equity loans), then margin borrowing might provide a more cost-effective alternative.
Risks of margin borrowing
Margin calls if the market declines
If the market declines, you will get a ‘margin call’ where you must invest extra cash to avoid having your securities sold (presumably at a loss relative to when you started borrowing.) This can have a catastrophic cascading effect where you have to sell securities at a loss to bring cash, but you don’t HAVE cash because that’s why you were borrowing in the first place!
To avoid this, keep the percentage that you’re borrowing to at least half of the maximums allowed so that you can weather a 50% decline in stock market prices before being required to put up more cash.
Interest rate fluctuations
Because the rates charged are based the Federal funds rate, increases in that rate will increase your borrowing costs.
Historical Federal Funds Target Rate (1980–Present)
Key monetary policy cycles, emergency cuts, and inflation tightening eras.
