3 ms·

Yes, margin can be dangerous at times and is not that cheap. About 6% over fed rates, or 11-13% right now. Over $500k you'll probably get a better deal.

ywvcbk 2y ago
It’s like people complaining about savings accounts with 0.5% interest rates. Just switch to a different broker… IBKR is +0.5% at >$200k (It starts at +1.5%)
taxman22 2y ago
Schwab Pledge Asset Line (PAL) is SOFR + (2.40% to 4.4%). SOFR today is 4.81%.
- TMWNN 2y ago
  Is Schwab known for being unusually low with its rate for this product? Vanguard is 11-13%, consistent with what mixmastamyk said. <https://investor.vanguard.com/client-benefits/margin?msockid=100f2dbd312165502f483ed9306d640b https://investor.vanguard.com/client-benefits/margin?msockid...> In any case, my Amex line of credit charges 6%, and I am preapproved for an Amex personal loan for 8.98%. I presume others on HN can get comparable or better.
  - JumpCrisscross 2y ago
    > Is Schwab known for being unusually low with its rate for this product? The Schwab rate sounds high. Fidelity, for instance, charges SOFR + 190 to 310bps [1]. I haven't had an SBLOC for a few years, but I remember Stifel charging no more than 200 bps over Libor. [1] https://www.fidelity.com/lending/securities-backed-line-of-credit https://www.fidelity.com/lending/securities-backed-line-of-c...
- mixmastamyk 2y ago
  8ish percent is good but not fantastic, after years of mortgages lower than that.
TMWNN 2y ago
What taxman22 says makes me wish I kept my holdings in my Schwab account. (I guess there is nothing stopping me from doing an asset transfer.) But I agree with you about margin borrowing's interest rate not being that amazing, although it is of course cheaper than most credit cards. Vanguard is, as you said, 11-13%. <https://investor.vanguard.com/client-benefits/margin?msockid=100f2dbd312165502f483ed9306d640b https://investor.vanguard.com/client-benefits/margin?msockid...> By contrast, my Amex line of credit charges 6%, and I am preapproved for an Amex personal loan for 8.98%. I presume others on HN can get comparable or better.

ywvcbk 2y ago

It’s like people complaining about savings accounts with 0.5% interest rates. Just switch to a different broker… IBKR is +0.5% at >$200k (It starts at +1.5%)

taxman22 2y ago

Schwab Pledge Asset Line (PAL) is SOFR + (2.40% to 4.4%). SOFR today is 4.81%.

TMWNN 2y ago
Is Schwab known for being unusually low with its rate for this product? Vanguard is 11-13%, consistent with what mixmastamyk said. <https://investor.vanguard.com/client-benefits/margin?msockid=100f2dbd312165502f483ed9306d640b https://investor.vanguard.com/client-benefits/margin?msockid...> In any case, my Amex line of credit charges 6%, and I am preapproved for an Amex personal loan for 8.98%. I presume others on HN can get comparable or better.
- JumpCrisscross 2y ago
  > Is Schwab known for being unusually low with its rate for this product? The Schwab rate sounds high. Fidelity, for instance, charges SOFR + 190 to 310bps [1]. I haven't had an SBLOC for a few years, but I remember Stifel charging no more than 200 bps over Libor. [1] https://www.fidelity.com/lending/securities-backed-line-of-credit https://www.fidelity.com/lending/securities-backed-line-of-c...
mixmastamyk 2y ago
8ish percent is good but not fantastic, after years of mortgages lower than that.

TMWNN 2y ago

What taxman22 says makes me wish I kept my holdings in my Schwab account. (I guess there is nothing stopping me from doing an asset transfer.) But I agree with you about margin borrowing's interest rate not being that amazing, although it is of course cheaper than most credit cards. Vanguard is, as you said, 11-13%. <https://investor.vanguard.com/client-benefits/margin?msockid=100f2dbd312165502f483ed9306d640b https://investor.vanguard.com/client-benefits/margin?msockid...> By contrast, my Amex line of credit charges 6%, and I am preapproved for an Amex personal loan for 8.98%. I presume others on HN can get comparable or better.