You can convert a standard Schwab account to a margin account through your account settings online, by phone, or in person at a branch

A margin account lets you borrow money from Schwab to buy securities, using your existing holdings as collateral. A standard cash account does not allow borrowing. The conversion itself takes minutes if you meet Schwab's requirements, but you need to understand the costs and risks before you proceed.

Schwab requires you to have a minimum account balance (typically $2,000, though this can vary) and to be at least 18 years old. You also need to sign a margin agreement that explains how borrowing works, what interest you will pay, and what happens if your account value drops below certain thresholds.

Key Takeaways

  • You can request a margin account conversion online through your Schwab account settings, by calling Schwab at 1-800-435-4000, or by visiting a local branch in person.
  • Schwab charges interest on borrowed money, and the rate depends on how much you borrow and current market conditions — you pay interest only on the balance you actually use.
  • If your account value falls below the maintenance requirement (usually 25% to 30% of the value of securities you bought on margin), Schwab can force you to sell positions or deposit cash without asking permission first.
  • You must have at least $2,000 in your account to open a margin account, and you need to sign a margin agreement that legally binds you to Schwab's terms.
  • Converting back to a cash account is simpler than converting to margin, but any existing margin debt must be paid off first.

How to request the conversion online

Log into your Schwab account and go to Account Settings. Look for the section labeled "Account Features" or "Account Type." You should see an option to request a margin account. Schwab will ask you to review and accept the margin agreement, which outlines the terms of borrowing, interest rates, and maintenance requirements. Read this document carefully — it is the contract that governs how Schwab can use your account.

After you accept the agreement, Schwab processes the request immediately in most cases. Your account will show as a margin account within hours. You do not need to wait for approval by mail or phone. If Schwab flags any issue with your account (for example, if your balance is below $2,000), the system will tell you what needs to change before you can proceed.

Converting by phone or in person

Call Schwab's main line at 1-800-435-4000 and tell the representative you want to convert your account to margin. They will verify your identity, review your account balance and history, and walk you through the margin agreement over the phone. You can ask questions about interest rates, maintenance requirements, and what happens if you cannot repay borrowed money.

If you prefer to do this in person, visit any Schwab branch with your ID and account number. A representative will have you sign the margin agreement on paper and can answer questions in real time. This route is useful if you want to understand the terms before committing, or if you have a complex account situation that needs explanation.

What the margin agreement actually says

The margin agreement is a legal document that gives Schwab the right to lend you money and to sell your securities without asking your permission if your account falls below the maintenance requirement. It also explains that you will pay interest on any borrowed balance, and that interest rate can change. Schwab publishes its current margin interest rates on its website, organized by how much you borrow.

The agreement also covers what happens if you do not repay borrowed money. Schwab can liquidate (sell) positions in your account to cover the debt. This can trigger capital gains taxes and lock in losses you might have wanted to hold through. The agreement is not negotiable — you either accept Schwab's terms or you cannot use margin.

Understanding margin interest and costs

You pay interest only on the money you actually borrow, not on your entire account balance. If you have $10,000 in your account and borrow $3,000 to buy stock, you pay interest only on that $3,000. Schwab's margin interest rates vary based on how much you have borrowed and change with market conditions. You can see the current rates on Schwab's website under "Margin Interest Rates."

Interest accrues daily and is usually charged to your account monthly. The longer you hold borrowed money, the more interest you pay. If you repay the borrowed amount quickly, your interest cost is low. If you hold margin debt for months or years, interest becomes a significant expense. Some traders use margin for short-term positions and repay within days; others carry margin debt longer and factor the interest into their strategy.

What happens if your account value drops

Schwab requires you to maintain a certain percentage of your account value in cash or securities at all times. This is called the maintenance requirement, and it is usually 25% to 30% of the value of securities you bought with borrowed money. If your account value falls below this level, Schwab issues a margin call.

When you receive a margin call, you have a short window (usually a few business days) to either deposit cash or sell securities to bring your account back into compliance. If you do not act, Schwab can sell positions in your account without your permission to raise the cash. This forced liquidation can lock in losses and trigger unexpected tax consequences. Margin calls happen most often during market downturns, when account values drop quickly.

Converting back to a cash account

If you decide margin is not right for you, you can convert back to a cash account through the same channels: online account settings, by phone, or in person. However, you must pay off any borrowed money first. Schwab will not let you switch to a cash account while you carry margin debt.

If you have an outstanding margin balance, you can repay it by depositing cash or by selling securities in your account. Once the balance is zero, you can request the conversion back to cash. The process is faster than converting to margin because there is no agreement to sign — you are simply removing the borrowing feature from your account.

Frequently Asked Questions

Do I have to use margin just because I convert to a margin account?

No. Converting to a margin account gives you the option to borrow, but you do not have to use it. Many people convert to margin and never borrow anything. You pay no interest or fees unless you actually borrow money. The main difference is that your account is now may be able to access to borrow if you choose to.

What is the minimum balance to open a margin account at Schwab?

Schwab typically requires $2,000 in your account to convert to margin, though this requirement can change. If your balance is below this threshold, Schwab will tell you during the conversion process. You can deposit more money and try again, or wait until your account grows to meet the minimum.

Can I lose more money than I invested if I use margin?

Yes. If you borrow money to buy a stock and the stock price falls sharply, you can lose more than your original investment. You still owe the borrowed money even if the stock becomes worthless. This is why margin is considered high-risk and is not recommended for new investors or for money you cannot afford to lose.

How long does it take for the conversion to go through?

Online conversions usually take effect within hours. Phone and in-person conversions are typically processed the same day. Schwab does not require a waiting period or mailed confirmation. Once you accept the margin agreement, your account is ready to use margin immediately.

Will converting to margin affect my credit score?

No. Margin accounts are not reported to credit bureaus and do not show up on your credit report. Converting to margin does not affect your credit score or your ability to borrow money elsewhere.