Investing

RBC Direct Investing is letting me proceed with a trade even with no fund in my acct?

  • Last Updated:
  • Jan 5th, 2018 3:55 pm
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[OP]
Deal Addict
Sep 5, 2010
2347 posts
370 upvotes
Toronto

RBC Direct Investing is letting me proceed with a trade even with no fund in my acct?

I have about $50 in cash in my RBC DI account. I don't have a margin account.

Yesterday, I tried to test and see what would happen if I tried to buy $2000 worth of a certain stock. I thought it would block me and say I don't have enough funds. But it actually let me proceed, but of course, I cancelled the order and didn't click on 'Confirm'

What is going on? it was late at night so I didn't call RBC DI to ask them. I am assuming if I clicked 'Confirm' , the order would go through. If there was a problem, it would have told me in the step before (where it shows you the details of your quote and what it will cost)

The question is, if it does let me proceed, and since I don't have a margin account, where would it take the money from?
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12 replies
Deal Addict
Apr 21, 2012
1172 posts
366 upvotes
Markham
Yes, no margin doesn't mean no borrowing. If you are approved for margin, your interest rate will be around 4.xx%. However, without margin, be it cash account, TFSA, RRSP and the likes can still borrowing fund, but at 21% rate. I have been using RBC DI for around 8 years, and I know how it works.

Another thing about no margin accounts is that there is no margin calls. I am not 100% sure of this because I haven't borrowed anything over $50 in non margin accounts.
[OP]
Deal Addict
Sep 5, 2010
2347 posts
370 upvotes
Toronto
Uranium101 wrote: Yes, no margin doesn't mean no borrowing. If you are approved for margin, your interest rate will be around 4.xx%. However, without margin, be it cash account, TFSA, RRSP and the likes can still borrowing fund, but at 21% rate. I have been using RBC DI for around 8 years, and I know how it works.

Another thing about no margin accounts is that there is no margin calls. I am not 100% sure of this because I haven't borrowed anything over $50 in non margin accounts.
Interesting! And yes it is an RRSP account.

Thanks
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Penalty Box
Apr 16, 2012
3565 posts
687 upvotes
Greely
That's because it's giving you the estimate cost of the transaction.

Once you click confirm, then it will probably deny you.
[OP]
Deal Addict
Sep 5, 2010
2347 posts
370 upvotes
Toronto
techcrium wrote: That's because it's giving you the estimate cost of the transaction.

Once you click confirm, then it will probably deny you.
I thought so too, but didn't want to click 'confirm' just in case it goes ahead and executes the order.

I will give them a call later today to confirm.
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Deal Fanatic
May 22, 2003
8206 posts
5078 upvotes
Vancouver
Yes, RBC will allow the transaction to go through. When I put through an order without sufficient funds, it will give me a warning that there is insufficient funds. However, I can still over-ride to proceed with transaction. Once the order goes through, my balance will show a negative balance, but the I just transfer funds into the account right after
Deal Addict
Apr 21, 2012
1172 posts
366 upvotes
Markham
Jermyzy wrote: Yes, RBC will allow the transaction to go through. When I put through an order without sufficient funds, it will give me a warning that there is insufficient funds. However, I can still over-ride to proceed with transaction. Once the order goes through, my balance will show a negative balance, but the I just transfer funds into the account right after
Actually, you didn't need to transfer fund into it. I have had negative balance in my TFSA and RRSP for ages. Actually, until the next dividend payment. But they will charge you 21%, just keep that in mind. The interest begins to calculate after market closes.
[OP]
Deal Addict
Sep 5, 2010
2347 posts
370 upvotes
Toronto
Jermyzy wrote: Yes, RBC will allow the transaction to go through. When I put through an order without sufficient funds, it will give me a warning that there is insufficient funds. However, I can still over-ride to proceed with transaction. Once the order goes through, my balance will show a negative balance, but the I just transfer funds into the account right after
Interesting and that begs the following two questions:

-How long do you have to deposit the money?
-Are you charged interest while the money is outstanding?
My Signature is empty. My signature space is not for sale. You may not contact me to advertise your RFD-related activities here. I repeat, this signature-space is not for sale, unless it is a ......day
Deal Addict
Apr 21, 2012
1172 posts
366 upvotes
Markham
Woodbridge905 wrote: Interesting and that begs the following two questions:

-How long do you have to deposit the money?
-Are you charged interest while the money is outstanding?
I answered that.
[OP]
Deal Addict
Sep 5, 2010
2347 posts
370 upvotes
Toronto
Uranium101 wrote: I answered that.

Thank you yes I saw that.

But isn't 21% too high? I am assuming you only do this when you really need to buy a certain stock, but even then, it is a bit too much, isn't it? or do you time it so it is close to the day you can deposit the money back in again?

I am just trying to find a scenario where I can justify borrowing to trade at 21% interest!
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Deal Addict
Dec 28, 2007
1087 posts
630 upvotes
The trade should settle in 3 business days. As long as you deposit cash into your brokerage account within 3 business days, you shouldn't be charged interest.
Deal Addict
Nov 22, 2012
1624 posts
1500 upvotes
VANCOUVER
It'll let you buy and when it settles, it'll draw funds from your current account or the other currency account (USD/CAD).
Newbie
Jan 4, 2018
1 posts
Uranium101 wrote: Actually, you didn't need to transfer fund into it. I have had negative balance in my TFSA and RRSP for ages. Actually, until the next dividend payment. But they will charge you 21%, just keep that in mind. The interest begins to calculate after market closes.

When do they retrieve the negative balance on an rrsp DI account? and how often? 21% per annum? Thanks

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