What Is the Federal Funds Rate and How Does It Affect Pluang Leverage Fees?
The Federal Funds Rate is the benchmark interest rate that banks in the United States use to lend to and borrow from each other overnight in the federal reserve market. It is set by the Federal Open Market Committee, or FOMC, which is the US Federal Reserve's rate-setting body. Pluang uses this rate as the reference point for its Daily Leverage Fee, so the rate you pay to hold a 2x leveraged US Stock position overnight is anchored to US monetary policy rather than fixed permanently. When the FOMC adjusts the Federal Funds Rate, Pluang's Daily Leverage Fee rates can move with it, and this can happen at any time without prior notice. The rates in effect since 26 December 2025 are 4.5% per year for Pluang Plus and 7.5% per year for Regular users.
- Definition: The benchmark rate US banks use to lend to each other overnight in the federal reserve market.
- Who sets it: The Federal Open Market Committee (FOMC), the US Federal Reserve's rate-setting body.
- Why Pluang uses it: It is the reference point Pluang anchors its Daily Leverage Fee rates to.
- What it affects: Only 2x leveraged positions held past the market close — 4x Day Trade is never charged the fee.
- Change without notice: FOMC decisions can move Pluang's leverage fee rates at any time, with no prior notice.
- Current rates: 4.5% per year for Pluang Plus and 7.5% per year for Regular users, effective 26 December 2025.
Related questions:
Q: How does the Federal Funds Rate reach my leverage fee?
Pluang treats the Federal Funds Rate as the benchmark that its annual leverage rates are anchored to. Those annual rates then feed the Daily Leverage Fee formula, which divides them by 360 to produce a daily charge. So a change in US monetary policy flows through the annual rate, into the daily rate, and finally into the amount deducted from your USD Margin Balance each day. None of this touches your standard transaction fee, which is governed by your membership tier instead.
Q: Who decides when the rate changes?
The Federal Open Market Committee, the US Federal Reserve's rate-setting body, meets periodically and decides whether to raise, lower or hold the Federal Funds Rate. Pluang does not control these decisions — it references them. Because FOMC meetings follow the US policy calendar rather than Pluang's, a change can land at a moment that has nothing to do with your own position.
Q: Will Pluang warn me before the leverage fee rate changes?
Not necessarily. Pluang's published rates are explicitly subject to change in line with FOMC decisions and may be adjusted at any time without prior notice. If you hold 2x positions overnight for extended periods, it is worth treating the current rate as a snapshot rather than a guarantee, and re-checking it rather than assuming the figure you first saw still applies.
Q: Does this rate affect anything other than the Daily Leverage Fee?
In the context of Pluang leverage, the Federal Funds Rate matters as the benchmark behind the Daily Leverage Fee on 2x positions. It does not change your standard transaction fee, which is set by membership tier, and it does not apply to 4x Day Trade positions, since those are force-closed before the market close and never incur the daily charge at all.