What are the overnight financing costs on index CFDs?
Verdict
- At Pepperstone, as at other CFD providers, index CFDs held past the daily cut-off (10 pm UK time for its UK accounts) pay an overnight financing charge worked out on the full value of the position.
- The charge is interest-based: an annual rate applied to your exposure, split across the year and booked for each night you hold.
- Forwards and perpetual CFDs handle holding costs differently: Pepperstone's forwards have wider spreads (UK100-F from 3 points vs 1 on the cash index), and its perpetuals use a funding rate and are Professional-only in the UK.
- Our fact pack holds no fixed financing rate for any broker, so check the long and short rates your platform shows for each index before holding.
Overnight financing is the price of keeping a leveraged index position open after the daily cut-off. Pepperstone charges it on UK index CFDs and spread bets held past 10 pm UK time. Below: how the charge is built, a worked example on a Germany 40 position, and when a forward contract can be the cheaper way to hold.
How Pepperstone applies the charge
Pepperstone's UK costs page says overnight fees apply to positions held past 10 pm UK time. Close an index trade before then and you pay only the spread, because Pepperstone's index CFDs carry no commission. Hold through the cut-off and a financing amount is debited, or on some short positions credited, for each night. Pepperstone Limited is authorised by the FCA (684312), and the same rule covers its spread bets. For index traders who mostly trade within the day, that cost structure is simple and cheap, which is why Pepperstone is our pick.
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The building blocks of an index financing charge
Rates differ between firms, but the structure is broadly common across the industry:
- Position value: contracts or stake per point multiplied by the index level. It is your full exposure, not the margin you posted.
- Annual rate: a benchmark interest rate for the index's currency, plus the provider's markup for longs, or minus it for shorts.
- Day count: the annual rate is divided by the days in the year; the convention varies by currency and provider.
- Weekends: those nights still count, so check which weekday your provider books them on.
A worked example on the Germany 40
Take a long GER40 CFD position worth €20,000 and assume an all-in financing rate of 6% a year. That rate is purely illustrative, not a Pepperstone figure.
- At the UK retail cap of 1:20, that €20,000 position ties up €1,000 of margin.
- Sixty nights of financing would therefore eat roughly a fifth of the margin, before any market move.
| Nights held | Approximate financing |
|---|---|
| 1 | €3.29 |
| 5 | €16.44 |
| 20 | €65.75 |
| 60 | €197.26 |
Forwards and perpetuals: two other ways to pay for time
Pepperstone's index-fees page lists forward index CFDs next to the cash indices. By design, a forward builds the cost of carrying the position into its price instead of charging night by night, and you pay for that with a wider spread. That page sits on Pepperstone's Australian site, so check that the '-F' symbols appear in your UK account before planning around them. Perpetual CFDs on the NAS100 and US500 use a funding rate that Pepperstone sets weekly in advance and applies daily at 5 pm New York time; in the UK they are open to Professional clients only.
| Index | Cash | Forward |
|---|---|---|
| UK100 | 1 | 3 |
| GER40 | 0.9 | 3 |
| US500 | 0.4 | 1 |
| NAS100 | 1 | 3 |
| US30 | 2 | 5 |
| JPN225 | 7 | 16 |
Keeping index holding costs down
- Close intraday trades before 10 pm UK time and the charge never applies.
- For a view lasting weeks, compare the total nightly financing on cash with the one-off extra spread on a forward, if your account offers one.
- Size positions on exposure, not margin: financing grows with leverage.
- Shorts receive the benchmark rate minus the markup, so they can earn a small credit when rates are higher than the markup.
Sources
Do index spread bets also pay overnight financing?
Yes. At Pepperstone, spread bets still open after 10 pm UK time pay overnight fees, just as CFDs do.
Is there a swap-free option for UK index traders?
Not at Pepperstone: its swap-free account is limited to residents of 23 listed countries, and the UK isn't one of them.
Why is my financing bigger than I expected?
Because it's charged on the full position value. A 1:20 position has twenty times the exposure of its margin, and the rate applies to all of it.
Trading leveraged products such as CFDs and spread bets can lose you money quickly. Nothing here is investment advice. The financing rate in our example is an assumption; real rates are set by each firm and change over time.