Debit Balance¶
A debit balance is the outstanding amount a trader owes their brokerage firm in a margin account, representing borrowed funds used to purchase securities. It appears as a negative cash balance on the account statement and accrues interest daily at the broker's margin loan rate. The debit balance is distinct from a credit balance, which reflects uninvested cash held in the account.
HOW IT WORKS¶
When you buy securities on margin, the broker funds a portion of the purchase and records that loan as a debit balance. The formula is:
Debit Balance = Total Cost of Securities Purchased − Your Cash Contribution
Interest accrues daily using:
Daily Interest = Debit Balance × (Annual Margin Rate / 360)
For example, buying $50,000 of stock with $25,000 cash creates a $25,000 debit balance. At a 9.5% annual rate, interest runs $6.60 per day, or roughly $198 over 30 days. That interest is added to the debit balance each period, compounding the cost of leverage. FINRA requires account equity to remain above 25% of total long market value; if the position declines and equity falls below that threshold, the broker issues a margin call to reduce the debit balance.
IN TAPEBOARD¶
Tapeboard displays the debit balance in the margin account panel alongside net equity and buying power, giving traders a real-time view of leverage cost. The terminal calculates projected daily and monthly interest charges based on the current debit balance and the account's margin rate, so traders can weigh the carry cost against an open position's unrealized P&L before adding to or holding a trade overnight.