How to Cash in Your Margin Account

A stock brokerage margin account lets you use a margin loan to pay for a portion of the cost of stock investments. You can cash in your margin account in a couple of ways. One way is to sell all of your investments and withdraw the entire account balance. Another is to use your margin loan availability to get cash from your account, backed by your current investments.

Close Your Account and Completely Cash Out

Step 1

Sell or close all of the investment positions in your margin account. Place sell orders for your stock positions and buy-to-close orders if you have sold any stocks short. The proceeds from selling your investments will first go to pay off any outstanding margin loan and then to the cash balance of your account.

Step 2

Verify that the money transfer instructions set up in your account are correct. Typically a brokerage account will be linked using the Automated Clearing House, or ACH, system to your bank account. ACH authorization lets you electronically move money between the accounts.

Step 3

Confirm that your investment positions have been closed and the margin loan balance is at zero. Next, note the cash balance in your account. Stock trades take three business days to become final or settle. After the three days, your account should only show a cash balance.

Step 4

Close your account through the broker's online options or call the broker's customer service desk to request the closure. Closing online will result in the account balance being sent to your bank account using an ACH transfer. If you want the funds wired to your account, use the telephone to call and close out your account.

Cashing Out Your Available Margin Loan Balance

Step 1

Look up the cash available balances using your online account access. With a margin account you will have two cash balances. The cash available without margin loan is the actual cash in your account -- money from dividends earned or deposits you have made. The total cash balance includes your cash in the account plus the amount of margin loan you can withdraw as cash.

Step 2

Request a cash withdrawal using the ACH withdrawal screen of your online account. You can cash out any amount up to the total cash balance listed on the summary screen of your account. Taking a margin loan as a cash withdrawal is a way to borrow against your investments in the account.

Step 3

Verify the money has been transferred to your bank account and that your brokerage margin account shows the new margin loan balance. ACH transfers may take a couple of days to complete.

Tip

  • To transfer securities out of an account instead of selling them, you must open an account with another broker and request the transfer through the new broker. A transfer can take up to two weeks to complete.
  • A margin loan is open-ended. You do not need to pay it back or make payments as long as you own stocks in your account.

Warning

  • The amount of margin loan you can have to buy stocks or withdraw as cash is based on the value of securities in your account. If those values decline, you might receive a margin call from your broker requiring you to deposit money or sell securities to pay down the loan balance.

About the Author

Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.

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