Public App Margin Account Rates
Public.com now offers margin accounts. However, Public’s margin service has no interest rates at all.
This is because borrowing is not allowed. Margin at the broker is used to trade with unsettled cash.
If you want to be able to borrow money from a broker to trade or invest, we
recommend a $0-commission brokerage called Webull that has low margin rates:
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Debit Balance
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Margin Rate
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under $25,000
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9.74%
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$25,000.01 - $100,000
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9.24%
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$100,000.01 - $250,000
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8.74%
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$250,000.01 - $500,000
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8.24%
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$500,000.01 - 1,000,000
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7.24%
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1,000,000.01 - 3,000,000
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6.74%
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>3,000,000.00
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5.74%
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Margin Accounts at Public
If you want to trade on margin at Public, you need to read this article first. While the brokerage firm does offer individual taxable accounts, it doesn’t offer them with margin capabilities, nor does it have any other account types. So an individual account without margin is your only option with this firm.
Margin Workaround
The best way to use leverage at a broker-dealer that doesn’t offer margin accounts is to trade options, which provide leverage without the need for margin. However, Public doesn’t yet offer options trading; so this strategy won’t work.
Importance of Margin
Margin is important for several reasons. The first is that it gives you the ability to buy a larger amount of securities than you could otherwise purchase. For example, if you have a cash account, $10,000 is required to buy $10,000 worth of securities. But if you have a margin account, you only need $5,000 to buy $10,000 in securities. Moreover, that $5,000 could be in pre-existing investments rather than cash. The $5,000 serves as collateral in case your investment doesn’t go so well. Essentially, margin gives you the ability to trade on a loan. You don’t need $10,000 in cash as you would need in a cash account.
Another reason you’ll want to consider using margin is that you can buy securities first and deposit the cash to purchase them later. If you don’t actually plan to trade with borrowed funds, you could take advantage of a margin account by purchasing first and paying second. Normally, when you buy securities you first must deposit cash in your brokerage account, wait for the funds to settle, and then make a purchase. But in a margin account, you can do this in the opposite direction.
If you have an account equity of $2,000 or more, you can buy securities first (typically the initial leverage is 50%, meaning that you can trade up to half your account equity), and then if the trade goes through, deposit the cash to cover the trade and prevent any margin interest from being charged.
A third reason why you would want a margin account is to take out a loan using your securities as collateral. Many brokerage firms allow their customers to do just that.
Fractional-Share Brokers With Margin Accounts
Although Public doesn’t offer margin accounts, Firstrade and Robinhood do; and they both offer mobile apps and whole-dollar investing as well.
Updated on 4/20/2024.
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