Do I need to pay interest only for the 1 day that my account was properly in the red or for the entire year that my order was pending?
Do I need to pay interest only for the 1 day that my account was properly in the red or for the entire year that my order was pending?
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UTF-8 · External communityPost link
External question — Personal Finance Stack Exchange
Author: UTF-8
Original post: https://money.stackexchange.com/questions/165428
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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Scalable Capital offers a "Credit" option which is described as:
Bis zu 100.000,00 € auf Basis Ihres Wertpapiervermögens, quartalsweise berechnete Zinsen nur bei Nutzung: 4,99% p.a. Sollzins (variabel)
This translates to:
Up to €100,000.00 based on your securities assets, interest calculated quarterly only when used: 4.99% p.a. nominal interest rate (variable)
Suppose I hold sufficient securities but no money in my scalable capital account. I activate the "Credit" option and place a buy order with a limit. The limit only gets reached after 1 year. Upon execution of the trade, I immediately transfer an amount of money equal to the cost of the purchase to my Scalable Capital account. This money arrives the next day.
Do I need to pay interest only for the 1 day that my account was properly in the red or also for the entire year that my order was pending?
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Acccumulation · External communityPost link
External answer — Personal Finance Stack Exchange
Author: Acccumulation
Original post: https://money.stackexchange.com/a/165436
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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Suppose you're interested in buying a big screen TV that normally costs $3000, but a friend mentions that every so often a store in their area puts the TV on sale for $2500. So you tell your friend to buy the TV once it goes on sale, and you'll pay them back. If it takes a year for the TV to go on sale, would it be fair for your friend to buy the TV, then the next day ask you to pay a year's interest on $2500?
Interest is to compensate a lender based on how long they didn't have access to their money. If your broker doesn't execute the trade for a year, then they have access to their own money for that whole year. It's only one day that they don't have access, so they only charge interest based on that one day.
That being said, putting a limit order with an expiration of a year is rather weird, and a little dangerous (although a sell order would be even more dangerous).
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Quoted from Forex.com.bd-Editorial External answer — Personal Finance Stack Exchange Author: Acccumulation Source score (net votes, not local likes): 0 Original post: https://money.stackexchange.com/a/165436 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Suppose you're interested in buying a big screen TV that normally costs $3000, but a friend mentions that every so often a store in their area puts the TV on sale for $2500. So you tell your friend to buy the TV once it goes on sale, and you'll pay them back. If it takes a year for the TV to go on sale, would it be fair for your friend to buy the TV, then the next day ask you to pay a year's interest on $2500? Interest is to compensate a lender based on how long they didn't have access to their money. If your broker doesn't execute the trade for a year, then they have access to their own money for that whole year. It's only one day that they don't have access, so they only charge interest based on that one day. That being said, putting a limit order with an expiration of a year is rather weird, and a little dangerous (although a sell order would be even more dangerous).
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