Under a margin loan account holders can borrow up to 50% of the value of their stocks. It's risky to borrow the full 50%, because the borrower would be subject to a maintenance call if stocks go down, as they sometimes do 😀. (The broker would sell enough stock to pay down the margin loan so that the ratio was back to 50%). In my case $90,000 was safely under 50% of the stock value, so a margin/maintenance call was not a worry.
|These changes to 0.075%-1.825% don't look so bad|
|until you notice the Base Rate is 7.75%|
A couple of months ago we noted how the interest that Schwab pays on its cash deposits was well under 1%. So you lend them cash at 0.2%; they lend it back to you for more than 7.75%.
I like the services and products we get from Schwab, but not all of them.