Fidelity charges 8% annual interest while Robinhood charges 2.5% for margin account?

Apple
jobs224

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jobs224
Nov 2, 2021 44 Comments

It seems Fidelity is charging me 8% interest vs Robinhood's 2.5%
So why not transfer everything to Robinhood?

(ah yeah, Interactive Brokers is also about 2.5%)
I called Robinhood... looks like the problem is that we cannot "transfer stock into Robinhood... only transfer out", so we have to sell at Fidelity as cash (and pay tax), and then transfer the cash to Robinhood... not sure about Interactive Brokers yet.

By the way... let's say if my margin is $20,000, so then
$20000 * (8 - 2.5) / 100 = $1100
so I lose a MacBook Air M1 each year using Fidelity's 8%

By the way, Robinhood cannot let us buy fractional share unless it is market order... which is not good if you have $2000 extra and want to buy some GOOG using a limit order.

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 TOP 44 Comments
  • Google
    djjxjxs

    Go to company page Google

    djjxjxs
    Why tf are you using margin?
    Nov 2, 2021 20
    • Apple
      jobs224

      Go to company page Apple

      jobs224
      OP
      @freedumb I don't see a "top contributor badge" for you.
      I don't think you "lose" 20k like that. Let's say you have $1 million invested, and you take $10k as margin to renovate your house. Now the market next day drops 1%. So you called it "oh you lose your $10k bet"? No, you lose $10k regardless you have margin or not
      Nov 2, 2021
    • Veritas
      travi$cott

      Go to company page Veritas

      travi$cott
      This discussion is peak tech lmao, commenting on things they don't understand at all.
      Margin of small proportion, especially at this throw away interest rate is good for usual retail investor in many ways and can quickly make money with even lower risk bets. OP seems to know what they're doing and probably just wanted to see what others are doing and then ends up having such replies lol
      Nov 2, 2021
  • Robinhood’s business model is based on creating gambling addictions and Fidelity’s is not
    Nov 2, 2021 1
  • Amazon
    vIbM34

    Go to company page Amazon

    vIbM34
    Seems like you shouldn't be using margin, if you don't know what Robinhood did to retail investors this year.
    Nov 2, 2021 2
  • Microsoft / Eng
    Мicrosoft

    Go to company page Microsoft Eng

    BIO
    Nothing here, move along.
     Мicrosoft
    RH is for people who don't know what PFOF is and don't care.

    Fidelity is for people who know what PFOF is and care.

    IBKR is for people who know what PFOF is and don't care because they need features no other commercial broker offers.
    Nov 2, 2021 4
    • Google
      xMeta

      Go to company page Google

      xMeta
      Not a fan of RH, it's dog 💩 and I don't use it. My point was PFOF is a net positive. For large orders, you could other brokers but that doesn't mean PFOF is evil.
      Nov 2, 2021
    • Microsoft / Eng
      Мicrosoft

      Go to company page Microsoft Eng

      BIO
      Nothing here, move along.
       Мicrosoft
      PFOF is only a net positive if it costs less than your commissions did. For many professional investors, it doesn't. That's why IBKR offers a trading model that includes commissions still. Commissions are often cheaper than the loss you take having your order flow sold to a third party off-market when you're trading $10k+ at a time.
      Nov 2, 2021
  • I don’t personally trade like this but it always seemed like Robinhood is one of if not the best for options and leveraged trading
    Nov 2, 2021 2