Non-margin buying power is the amount your brokerage account can use to buy securities that cannot be purchased with borrowed margin funds. These securities usually have a 100% margin requirement, so the broker requires the full purchase value to be covered by cash or available account equity.
Since 2024, most U.S. securities transactions have used a T+1 settlement cycle. Settlement timing can affect the balance available for a trade, but your broker's account screen controls the amount you can use.
At Fidelity, non-margin buying power may apply to certain options, mutual funds during their initial holding period, penny stocks, and other securities that are not marginable. The securities included depend on the broker and the specific trade.
Non-Margin Buying Power at a Glance
| Term | Meaning |
|---|---|
| Non-margin buying power | Amount available to purchase non-marginable securities |
| Margin buying power | Amount available to purchase marginable securities, potentially using a broker loan |
| Available to trade without margin impact | Amount you can generally use without creating a margin debit |
| Cash available to withdraw | Amount you can withdraw under your broker's rules |
| Margin requirement | Percentage of a purchase that must be funded by you |
Does Non-Margin Buying Power Mean You Are Not Borrowing Money?
No. Non-margin buying power does not guarantee that a trade will avoid margin borrowing.
A margin account may include cash and surplus equity from marginable securities in its non-margin buying power. If you use more cash than you have available, the purchase can create a margin debit even though the security itself cannot be used as margin collateral. Fidelity specifically warns that buying a non-marginable security can still create a margin loan.
If you want to avoid margin interest, check the balance labeled "available to trade without margin impact" or the equivalent cash-trading balance. Fidelity describes this balance as the amount intended to help investors avoid creating a margin debit. Settlement timing and security-specific rules can still affect the result.
Example of How Non-Margin Buying Power Works
Assume your margin account shows:
- Non-margin buying power: $5,000
- Available to trade without margin impact: $3,000
- Margin buying power for marginable securities: $10,000
You could place a $5,000 purchase of a non-marginable security, subject to the broker's approval and the security's rules. But using the full $5,000 could create a margin debit because only $3,000 is identified as available without margin impact.
That could lead to:
- Margin interest
- A margin debit balance
- Additional margin requirements
- A margin call if the account falls below the required equity level
These figures are illustrative. The trading screen and account agreement at your brokerage determine the amount available for a specific order.
Which Securities May Require Non-Margin Buying Power?
Securities that cannot be bought with borrowed margin funds may require non-margin buying power. Common examples include:
- Certain penny stocks
- Some options positions
- Mutual funds that have not met the broker's margin-eligibility holding period
- Newly issued securities
- Securities with low liquidity or high volatility
- Securities assigned a 100% house margin requirement
The classification varies by broker. A security that is marginable at one firm may have a higher requirement or be non-marginable at another. FINRA states that some securities cannot be purchased on margin and require the customer to deposit 100% of the purchase price. Those securities may still be held in a margin account.
Non-Margin Buying Power vs. Margin Buying Power
| Feature | Non-margin buying power | Margin buying power |
|---|---|---|
| Used to buy | Non-marginable securities | Marginable securities |
| Can the purchased security support a margin loan? | Generally no | Generally yes, subject to requirements |
| May the trade create margin debt? | Yes, in a margin account | Yes |
| Is margin interest possible? | Yes, if the trade creates a debit | Yes, when borrowed funds are used |
| Typical risk | The full purchase amount must be funded | Losses can exceed the cash deposited |
| Main balance to monitor | Non-margin buying power and the margin-impact-free balance | Margin buying power and margin equity |
Margin buying power is the amount available to purchase eligible securities using cash and, where permitted, borrowed funds. Margin borrowing uses account assets as collateral. Losses can lead to margin calls or forced liquidation.
Why Can Non-Margin Buying Power Be Lower Than Expected?
Several account events can reduce non-margin buying power:
- Open orders can reserve part of your buying power.
- Recent purchases or sales may not have settled.
- Cash withdrawals or deposits can change the available balance.
- Changes in the market value of marginable securities can affect account equity.
- Broker-specific house requirements can reduce buying power.
- Options approval levels and cash-reserve requirements can limit available funds.
- Concentrated or volatile positions may trigger higher requirements.
Most U.S. securities transactions use T+1 settlement, meaning eligible trades generally settle one business day after the trade date. Some products and transactions follow different rules, so the balance shown by your broker remains the controlling figure.
How Can You Avoid Accidentally Borrowing on Margin?
You can reduce the risk by checking the cash and margin balances before and after each trade:
- Check available to trade without margin impact, not only non-margin buying power.
- Keep the purchase below the cash or settled-funds amount shown by your broker.
- Review the trade preview before submitting the order.
- Check whether the security has a 100% margin requirement.
- Avoid selling recently purchased securities before payment obligations are satisfied.
- Review the account after the trade for a margin debit or margin-interest charge.
In a cash account, you generally cannot borrow from the broker, but you must pay for purchases in full under applicable settlement and cash-account rules. Trading with unsettled proceeds can create violations or restrictions, including problems associated with free-riding.
Bottom Line
Non-margin buying power tells you how much capacity the account has for securities that the broker will not lend against. It does not necessarily show how much you can spend without borrowing.
To avoid margin interest, treat available to trade without margin impact, cash available to trade, or the equivalent broker balance as your spending limit. Then review the order preview and the post-trade account balances. Your broker's balance definitions and account agreement control the final result.