# Why $100,000 Against a Portfolio Costs Between $4,800 and $11,400 a Year

After the Fed's September 16 rate increase, borrowing $100,000 against a brokerage account costs between 4.75% and 11.20% a year, depending on the broker.

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Published: 2026-10-08
Updated: 2026-10-08
Reading time: 10 min read
Category: Research & Analysis
Authors: ZeroMargin Research Desk, Portfolio Liquidity & Structure Analysis

## Summary



After the Fed's September 16 rate increase, borrowing $100,000 against a brokerage account costs between 4.75% and 11.20% a year, depending on the broker. On the same amount, the gap exceeds $6,500 a year. The one-year SPX box spread rate (ZMR) is 4.85%. That is well below Schwab and E*TRADE margin, slightly below IBKR, and slightly above Robinhood. The main finding is not that a box spread always wins: the choice of broker often matters more than the choice between margin and a box. The real difference between the two lies elsewhere: a box fixes the rate for a year, while margin floats with the Fed.

## Key points

- Published rates at $100,000: Robinhood 4.75%, IBKR Pro 5.38%, Schwab 10.575%, E*TRADE 11.20%. The four-broker average is 7.98%.
- ZMR, the indicative one-year SPX box spread rate, was 4.85% on October 2, 3.12 percentage points below that average.
- Broker rates are built differently: some are tied to the Fed's rate, others to the broker's own base rate. That determines both the level and how quickly rates are revised.
- For IBKR margin on $100,000 to become cheaper than a box, its benchmark would need to fall by more than 0.5 percentage points on average over the year. Robinhood is the reverse: a single 0.25-point Fed increase would make the box cheaper.
- A box spread does not reduce margin-account risk. If the portfolio falls, the collateral cushion shrinks the same way under either method.

## 1. What Changed

On September 16, the Fed raised the target range for the federal funds rate by 0.25 percentage points, to 3.75–4.00%. The effective federal funds rate (EFFR) was 3.88% on October 1; SOFR was 3.87%.

Brokers revised margin rates after the Fed, each in its own way. Schwab raised its base rate to 10.25% effective September 18. E*TRADE set its base rate at 10.20%, effective September 21 through October 20. IBKR and Robinhood tie their rates directly to a market benchmark, so their rates moved automatically.

The next dates that could change the cost of money again: September CPI on October 14 and the Fed meeting on October 27–28.

## 2. How a Margin Rate Is Built

A margin rate almost always has two parts: a benchmark plus a spread. Brokers differ on both, and on how the spread depends on the amount borrowed.

## How a Margin Rate Is Built
| Broker | Benchmark | Spread at $100,000 | How tiers apply |
| --- | --- | --- | --- |
| Interactive Brokers (IBKR Pro) | the broker's market benchmark, currently equal to EFFR, 3.88% | +1.50 pp up to $100,000; +1.00 pp from $100,000 to $1 million | blended: each portion of the balance at its own tier |
| Robinhood | upper bound of the Fed's target range, 4.00% | +0.75 pp (4.75% from $100,000 to $1 million) | one rate on the full balance, set by its size |
| Charles Schwab | Schwab's own base rate, 10.25% | +0.325 pp | rate set by balance range |
| E*TRADE | E*TRADE's own base rate, 10.20% | +1.00 pp | rate set by balance range |

## 

This is the main source of the gap. IBKR and Robinhood use a market rate close to the Fed's rate. Schwab and E*TRADE use the broker's own base rate, currently about 6.3–6.4 percentage points above EFFR. All four spreads are small. The difference in price comes mostly from the base, not from the spread.

The second consequence is the speed of revision. A market benchmark moves on the day of a Fed decision. A broker's own base rate is revised by the broker, who decides by how much and when.

## 3. What $100,000 Costs Today

## What $100,000 Costs Today
| Method | Rate | Spread to EFFR | Annual cost* |
| --- | --- | --- | --- |
| Robinhood | 4.75% | +0.87 pp | ≈ $4,816 |
| SPX box spread, 1 year (ZMR) | 4.85% | +0.97 pp | ≈ $4,917 |
| Interactive Brokers (IBKR Pro) | 5.38% | +1.50 pp | ≈ $5,455 |
| Charles Schwab | 10.575% | +6.70 pp | ≈ $10,722 |
| E*TRADE | 11.20% | +7.32 pp | ≈ $11,356 |
| Four-broker average | 7.98% | +4.10 pp | ≈ $8,087 |

*Rate × 365/360 on $100,000, excluding commissions and taxes. Broker rates as published on their websites on October 3 for a $100,000 balance. ZMR is an indicative rate at the bid/ask midpoint at the October 2 close, not a transaction price.

## 4. The Amount Changes the Picture

Rates are tiered, so a comparison at a single amount can mislead. Below are the same published rates at four amounts.

## The Amount Changes the Picture
| Loan amount | Robinhood | IBKR Pro** | Schwab | E*TRADE | ZMR |
| --- | --- | --- | --- | --- | --- |
| $40,000 | 5.25% · ≈ $2,129 | 5.38% · ≈ $2,182 | 11.575% · ≈ $4,694 | 12.20% · ≈ $4,948 | 4.85% · ≈ $1,967 |
| $100,000 | 4.75% · ≈ $4,816 | 5.38% · ≈ $5,455 | 10.575% · ≈ $10,722 | 11.20% · ≈ $11,356 | 4.85% · ≈ $4,917 |
| $250,000 | 4.75% · ≈ $12,040 | 5.08% · ≈ $12,876 | 10.325% · ≈ $26,171 | 10.70% · ≈ $27,122 | 4.85% · ≈ $12,293 |
| $750,000 | 4.75% · ≈ $36,120 | 4.95% · ≈ $37,618 | negotiated | negotiated | 4.85% · ≈ $36,880 |

**IBKR blended rate: the first $100,000 at 5.38%, the remainder at 4.88%. Annual cost is rate × 365/360. From $500,000, Schwab and E*TRADE do not publish a rate and invite clients to discuss it individually.

## 

What the table shows:

- At small amounts the box looks cheapest of all, but that is where it is hardest to use. The width of a box can be matched to the amount, but on a small box, commissions and the bid-ask spread consume a larger share of the benefit.
- IBKR's rate declines smoothly as the balance grows: each additional portion of debt is cheaper. At $750,000, IBKR's blended rate nearly matches ZMR.
- From $500,000, Schwab and E*TRADE move into negotiated pricing. The published rate is no longer a reference there, and actual terms cannot be verified from public data.

## 5. How a Box Spread Works as a Loan

A box spread is a combination of four options at two strikes. At expiration it is always worth exactly the difference between the strikes times the contract multiplier, wherever the index ends up. By selling a box today, the borrower receives a smaller amount and repays the full amount at expiration. The difference is the interest.

A simple example with round numbers. An SPX box with strikes 1,000 points apart and a multiplier of 100 is worth $100,000 at expiration. If it is sold today for $95,400 with 360 days to expiration, the implied rate is (100,000 / 95,400 − 1) × 360 / 360 ≈ 4.82% a year.

ZMR follows this logic: a one-year SPX box, the bid/ask midpoint at the close of the last trading day of the week, a simple rate on an ACT/360 basis.

Three properties of a box matter for the comparison with margin.

- The rate is fixed for the full term. Fed decisions after the box is opened do not affect its cost.
- The rate is set by the market. It comes from the options market, not a broker's rate sheet. That keeps it close to money-market rates, though above the risk-free curve by the amount of spreads and costs.
- Execution matters. For a box 1,000 points wide, a fill one index point away from the midpoint changes the annual rate by roughly 0.1 percentage point. That is why ZMR is an indicator, not a price at which a trade is guaranteed.

## 6. Floating vs. Fixed: Which Is Cheaper Under Which Scenario

Margin is cheaper than a box only if its rate averages below 4.85% over the year. How far each broker's benchmark would need to move to match ZMR at $100,000:

## Floating vs. Fixed: Which Is Cheaper Under Which Scenario
| Broker | Current rate | Average change over the year needed to match ZMR |
| --- | --- | --- |
| Robinhood | 4.75% | an increase of 0.10 pp makes margin more expensive than the box |
| IBKR Pro | 5.38% | a decrease of 0.53 pp |
| Charles Schwab | 10.575% | a decrease of 5.72 pp |
| E*TRADE | 11.20% | a decrease of 6.35 pp |

## 

In practice: suppose a one-year loan opens on October 8 and the Fed changes its rate on October 28 and then holds. The new level then applies for about 344 of 365 days.

## Floating vs. Fixed: Which Is Cheaper Under Which Scenario
| Scenario on October 28 | Robinhood, average rate | IBKR Pro, average rate | ZMR |
| --- | --- | --- | --- |
| cut of 0.50 pp | ≈ 4.28% · ≈ $4,338 | ≈ 4.91% · ≈ $4,977 | 4.85% · ≈ $4,917 |
| cut of 0.25 pp | ≈ 4.51% · ≈ $4,577 | ≈ 5.14% · ≈ $5,216 | 4.85% · ≈ $4,917 |
| no change | 4.75% · ≈ $4,816 | 5.38% · ≈ $5,455 | 4.85% · ≈ $4,917 |
| increase of 0.25 pp | ≈ 4.99% · ≈ $5,055 | ≈ 5.62% · ≈ $5,694 | 4.85% · ≈ $4,917 |

## 

The calculation assumes the broker passes a Fed rate change into margin one-for-one and immediately. For IBKR and Robinhood this follows from their formulas. For Schwab and E*TRADE it does not: their base rates are revised at the broker's discretion.

Even a 0.50-point cut leaves IBKR margin on $100,000 slightly more expensive than the box. The market, for its part, is not pricing rapid cuts: the one-year Treasury yield on October 2 was 4.46%, above EFFR. Fixing a rate for a year therefore costs slightly more today than the cheapest floating margin. That difference is the price of protection against higher rates.

## 7. What Margin and a Box Have in Common

Both keep the debt in the same margin account. If cash has been withdrawn and the portfolio falls, the collateral cushion shrinks the same way: a box spread does not protect against a margin call or against the broker liquidating securities.

An SPX box removes only one risk, early exercise: SPX options are European-style and cash-settled. The rest remain: the broker's margin requirement on the position itself, options trading approval, execution quality across four legs, commissions, liquidity in the required long-dated strikes, and the rate at which the box will have to be rolled at expiration. For more detail, see "How a Box Spread Works in a Real Portfolio" and "SPX vs SPY".

## 8. Taxes: Where a Difference May Exist and Where It Is Not Guaranteed

The tax consequences of the two methods differ, but neither is automatic.

- Margin interest in the United States may be deductible as investment interest expense if the borrowed money is invested in taxable investments. The deduction is limited to net investment income. Interest on money spent for personal purposes is not deductible.
- An SPX box consists of options that are generally Section 1256 contracts: the 60/40 rule and year-end mark-to-market. Whether the financing cost of a box spread is treated as a capital loss or as interest is not settled by specific IRS guidance, and practitioners differ.

## 

The comparison in this article is therefore pre-tax. See our Section 1256 articles for more. Consult a qualified tax adviser before making a decision.

## 9. What to Check With Your Broker
- Which rate applies to your specific amount, and how the tiers work: blended, as at IBKR, or one rate on the full balance.
- What the rate is tied to: a market benchmark or the broker's own base rate, and when it was last revised.
- Whether a lower rate can be negotiated for your account size. From $500,000, some brokers explicitly invite this.
- Whether the account has options trading approval and what complex orders cost in commissions.
- How the broker calculates the margin requirement on a short box.

## 10. Limits of This Comparison

The comparison uses the published rates of four brokers and the indicative box spread rate. Individual rates, commissions, taxes and the cost of executing a box are not included. ZMR is the bid/ask midpoint; the actual transaction rate will usually be slightly worse. Bank securities-based lines of credit (SBLOCs) are not covered here: banks do not publish their rates, and their terms are a topic for a separate analysis.

## Frequently Asked Questions

### Why is Schwab and E*TRADE margin about twice as expensive as IBKR and Robinhood?

Not because of the spread, but because of the benchmark. Schwab and E*TRADE price off their own base rates (10.25% and 10.20%); IBKR and Robinhood price off a rate close to the Fed's (around 3.9–4.0%).

### Does this mean a box spread is always cheaper than margin?

No. At published rates, Robinhood margin on $100,000 costs about $100 a year less than the indicative box rate. Against IBKR, the box saves about $540 a year; against Schwab and E*TRADE, about $5,800–6,400.

### What happens to a box rate if the Fed cuts?

The rate on a box already open does not change until expiration. The rate on the next box, at the roll, does.

### Why is ZMR an "indicative" rate?

It is calculated at the midpoint between the best bid and offer at the close. A real trade usually executes slightly worse than the midpoint, and commissions add cost.

### Does a box spread protect against a margin call?

No. The debt remains in the margin account. The collateral cushion shrinks in a decline exactly as it would with ordinary margin.

## Next checkpoints

September CPI on October 14; Fed meeting on October 27–28; next ZMR point on Friday, October 9.

## Sources

Federal Reserve (decision of September 16, 2026); Federal Reserve Bank of New York (EFFR and SOFR for October 1, 2026); U.S. Department of the Treasury (Treasury yields for October 2, 2026); published rate pages of Robinhood, Interactive Brokers, Charles Schwab and E*TRADE (checked October 3, 2026; tier tables October 4, 2026); Zero Margin (ZMR for October 2, 2026).

## Disclosure



This material is for information only and is not individual investment, tax or legal advice. Zero Margin is not a lender or a broker.

## Compliance Notes

This material is for information only and is not individual investment, tax or legal advice. Zero Margin is not a lender or a broker.

Federal Reserve (decision of September 16, 2026); Federal Reserve Bank of New York (EFFR and SOFR for October 1, 2026); U.S. Department of the Treasury (Treasury yields for October 2, 2026); published rate pages of Robinhood, Interactive Brokers, Charles Schwab and E*TRADE (checked October 3, 2026; tier tables October 4, 2026); Zero Margin (ZMR for October 2, 2026).

Source timestamp: 2026-10-08