When placing a CFD, you’re using leverage. This means you are effectively being lent the money required to open your position, outside the initial deposit you’ve paid.
Using the example of CFDs, let’s say you’re using a cash CFD, designed primarily for short-term positions. If you want to keep it open overnight, you will be charged for the entire position.
The charge will be triggered once you pass the daily cut-off time (typically 10pm UK time, although this may vary for international markets and local markets). If you close your position on the same day before this time, there is no funding fee.
Note, overnight funding is only paid on cash CFDs. For future products, or those with an expiry date, you don’t pay this charge – instead, they have a wider spread.