Why are there overnight charges on a fully funded account

[kabuki]

For Example

Lets say I am long 5 US 500 at 4500 a unit = £22,500

and the Balance of my account is £30,000

Why on earth would I be liable for ovenight charges?

Edited April 6, 2022 by kabuki
cnage sp500 to US 500

[ArvinIG]

5 hours ago, kabuki said:

For Example

Lets say I am long 5 US 500 at 4500 a unit = £22,500

and the Balance of my account is £30,000

Why on earth would I be liable for ovenight charges?

Hi @kabuki,

The overnight funding is not linked to your account balance. 

When placing a spread bet or CFD, you’re using leverage. This means you are effectively being lent the money required to open your position, outside the initial deposit you’ve paid. To keep your position open after 10pm (UK time),  4.50pm Sydney time for AUD-denominated products (indices and shares), an interest adjustment will be made to your account to reflect the cost of funding your position overnight.

You don’t need to pay overnight funding for futures or forwards because we build that cost into the spread.

You can find further information here.

I hope that it helps.

All the best - Arvin


 

[kabuki]

Thanks Arvin,

I realise that is the Corporate Line.

However it still makes no sense paying IG interest on a position whilst receiving no offsetting interest allowance on my larger balance.

The reason for my query is not so much the current rules under which I trade with my eyes open -

My concern is if interest rates take off - Overnight charges could be so usury as to make trading overnight a FOOLS mission (and of course leaving overfunded balances with IG earning no interest would make even less sense)

[eastside]

you dont have to pay overnight funding everyday if you change from daily funded bet to a future dated US 500 from the dropdown. just be aware of the expiry date though. not a perfect world.