We may earn a small commission if you sign up for a service or product from this page. This does not affect our rankings and it does not cost you anything. Learn more about how we make money and our review process on our advertising disclosure page.
We’ve all seen the credit card flyers in the mail offering a 0% Introductory APY. It sounds like a great deal until you read the fine print on the back that says after a year, your interest rate will jump up to some ridiculous number (the average credit card APY in 2020 was 16.28%!) On top of that, the simple act of applying for (or canceling) the credit card will make your credit score take a hit.
Thanks to many newer FinTech companies, this is starting to change for the (much) better.
M1 Finance, best known for their free robo advisor investing service, also offers a very competitive loan or margin account called M1 Borrow, offering surprisingly low borrowing rates to their customers. To use M1 Borrow in the past, you’d have to have at least $10,000 invested with them, and then you could borrow up to 35% of your account’s value at 3.5%, or 2.0%, if you were an M1 Plus customer. You could then use that money for anything you wanted, including reinvesting it back into your investment account, ideally earning a higher return than the borrowed APY (this is the philosophy behind a margin account.)
But M1 just made a couple of important changes:
M1 Borrow Lowers Account Minimum
M1 just halved their account minimum required to borrow, dropping it down from $10,000 to only $5,000. This opens up a line of credit to many new investors with a lower account balance.
This will help smaller investors take out some quickly-needed cash or allow them the chance to dabble into using a margin account (disclaimer: there are some additional risks to trading on margin that you should be aware of before investing.)
0% APY Promotion
To help drum up more users, M1 Borrow is also offering interest-free borrowing up to $5,000 until the end of June 2021. This means that you can get an interest-free loan or margin for nearly two months if you sign up now.
The same 35% rule applies, meaning if you have exactly $5,000 in M1 Invest, you can only borrow $1,750 – but that’s still a great deal. Since the promotion allows for up to $5,000 borrowed at 0%, your account should be over $14,285 to take advantage of the full promo.
What happens after June?
The 0% promo only runs until the end of June 2021. After that, you can either pay back your balance for a completely free loan or continue to hold a balance.
M1 Plus customers can continue to borrow at a super low 2.0% APY, or non-Plus users can borrow at 3.5% APY.
Here’s the icing on the cake, though. You can get an M1 Plus account for free for the first year by signing up here. After that, it’s $10/month or $95/year per year.
What is M1 Finance?
M1 Finance is a FinTech company offering a range of financial products for investors, savers, and spenders.
Their flagship M1 Invest account has been our favorite overall and free robo advisor service since it was launched due to its flexibility, ease of use, and low barrier of entry.
They also offer M1 Spend; a high-yield savings account offering an unbeatable 3.30% APY for M1 Plus users.
Their optional M1 Plus account costs $10/month or $95/year per year, which includes many additional benefits.