Paid-Up

Paid-up refers to the the status of a customer account when all payment obligations for a security purchase have been completed. When an individual has paid up, he or she has paid for the security in full.

When an investor buys stock, he/she is given two days to pay. This period is known as the two-day settlement period. (In 2017, this period was shortened from three days.) Settlement generally refers to the process transferring the payment for a security to the seller and the transfer of the security to the buyer. When a security is purchased, a clearing process must also occur. Clearing involves updating the accounts of the parties involved in the transaction.

If the investor does not pay the balance owed for the purchase by day two, the brokerage has the right to liquidate the holdings until the balance is paid-up, or paid in full. This also applies to margin accounts with outstanding margin calls and interest charges that need to be paid-up before a broker will allow a client to resume trading in the account.