Overnight Financing Fee
An overnight fee is the financing cost a broker charges for holding certain leveraged positions, such as CFDs or forex, past the daily cut-off time.
An overnight financing fee is what a broker charges, or sometimes pays, when you keep a leveraged position such as a CFD or rolling forex trade open past the daily cut-off. It reflects the cost of the money you effectively borrow. Cut-off times, rates and how fees are shown differ by broker and country, so always check your own provider.
- Category
- Risk Management
- Reading time
- 4 min
- Also called
- Overnight funding, Holding cost, Swap fee
- Updated
Overnight fees in plain words
If you keep a short-term leveraged trade open overnight, you pay a daily interest charge.1
The charge covers the cost of the money you have effectively borrowed to hold the position.2
Depending on the direction of the trade and the rates involved, the charge can be a cost or a credit.3
How to estimate the fee
Know the cut-off
Know the cut-off time — at one broker, positions still open after 10 p.m. UK time are adjusted for interest.1
Find the rate
For shares and indices, the charge is usually a benchmark interbank rate plus or minus the broker's fee.2
Work out the position value
Multiply units by price.
Apply the daily formula
Work out the daily cost: units × mid-price × holding rate ÷ 365, converted into your account currency.3
Check direction
In forex, if the first currency in the pair pays more interest than the second and you are long, you may receive the holding amount rather than pay it.3
Compare with futures
Consider futures or forwards for longer holds: no overnight funding charge, though the spread is usually wider.1
Worked examples
Example 1 — Long index CFD
−4 a nightA hypothetical long position worth 20,000 has an annual holding rate of 7.3%.
| Daily fee | 20,000 × 7.3% ÷ 365 = 4 |
Using the daily formula (units x price x holding rate) / 365, this made-up trade costs about 4 per night.3
Example 2 — Held for 30 nights
−120The same hypothetical position is held for 30 nights.
| Total | 4 × 30 = 120 |
A daily interest fee adds up when trades are held for weeks.1
Example 3 — Credit on a forex buy
+1.5 a nightA hypothetical buy position is in a pair whose first currency pays a higher rate, giving a credit of 1.5 a night.
| Credit | +1.5 |
The long position was in the higher-yielding currency, so the holding amount was paid into the account.3
CFD vs futures holding costs
| Aspect | CFD or rolling forex | Futures |
|---|---|---|
| Overnight fee | Daily charge or credit | None |
| Spread | Often tighter | Often wider |
| Expiry | Usually none | Fixed date |
| Best for | Short holds | Longer holds |
Where traders use it
Cost planning
Adding fees to Trading Fees and Commissions.
Holding period
Choosing between Swing Trading and Day Trading.
Product choice
Comparing a Contract for Difference with Futures Contract.
Leverage checks
Seeing the cost of Leverage.
Advantages and disadvantages
Advantages
- Lets you hold leveraged trades without expiry.
- Can be a credit in some cases.
- Shown clearly on many platforms.
Disadvantages
- Adds up over long holds.
- Rates change with interest rates.
- Cut-off times and rules differ by broker and country.
- Easy to forget in trade plans.
Going deeper
Read as far as you need. Each level builds on the one before it.
Why it exists
Beginner
It is the cost of the borrowed money behind a leveraged position held overnight.2
How it is set
Intermediate
Sign and direction
Advanced
It can be a charge or a credit, depending on trade direction and the rates involved.3 Treatment and disclosure rules differ by broker, product and country.
Common mistakes
Ignoring fees on long holds
Total them up.
Assuming every product charges
Futures do not.
Missing the cut-off
Closing a minute late costs a night.
Using old rates
Rates change.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Overnight fees apply to leveraged trades held past the cut-off.
- They reflect borrowing costs plus an admin fee.
- They can be a charge or a credit.
- Futures avoid them but have wider spreads.
- Rules and rates differ by broker and country.
Frequently asked questions
Is it the same as a swap?
Do day trades pay it?
Why is Wednesday often bigger?
Further learning
- Trading Fees and Commissions
All costs together.
- Contract for Difference
The product it applies to.
- Funding Rate
The crypto cousin.
- Leverage
Why there is borrowing.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- IG. What is overnight funding, how is it charged and how is it calculated? (opens in a new tab) Checked .
- IG. Charges and fees (opens in a new tab) Checked .
- CMC Markets. CFD holding costs (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.