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Restructuring and consolidating debt

Manage your balance sheet to support your goals

To reach your financial and other life goals, it’s important that you periodically review both sides of your balance sheet — the things you own (assets) and the money you owe (liabilities). Student loans, car loans, unsecured bank loans, mortgage payments and credit card balances are common liabilities.

As you review your balance sheet, consider how much debt you have overall, how much each debt is costing you in interest and how long it will take you to pay it off. If you decide that retiring or restructuring debt would make sense now, you may have a number of choices with different pros and cons. For example, if you tap into your cash savings or sell investments, would that affect your overall financial strategy? What other options are available through Bank of America?

Your financial advisor can help you review your overall financial situation and discuss additional options from Bank of America to potentially lower your borrowing costs and strengthen your balance sheet.

If you’re thinking about restructuring your debt, here are some options to consider:

Bank of America® Premium Rewards® credit card1
  • This option may only be suitable for consolidating balances from other credit cards or other short-term loans with higher interest rates.
  • Credit cards have the highest interest rates among the options described here.
  • If a credit card balance is not paid in full each month, interest charges can compound quickly, which may be counter to a goal of reducing debt.
Loan Management Account® (LMA® account)2
  • Depending on your financial picture, this option allows you to borrow against the combined value of your eligible assets held at Merrill to pay down one or more existing debts.
  • You can choose from multiple variable- and fixed-rate loan options,3 which you can manage through a single account.
  • You maintain access to your investments even while you’re using them as collateral, subject to certain restrictions.
  • Note that securities-based financing involves special risks and is not for everyone (see below).
Home Equity Line of Credit (HELOC)
  • If you have considerable equity in a home you own, this option allows you to borrow against the equity with your home as collateral to pay down one or more existing debts without taking out a traditional mortgage.
  • Our HELOC has a variable rate that comes with a Fixed-Rate Loan Option4
  • You can draw as much or as little as you need, up to your available credit limit.
  • You can lower your interest rate if, prior to closing, you set up automatic payments from your Bank of America bank account5 and by enrolling in Bank of America® Preferred Rewards program.6
  • You should take note of the loan terms and risks associated with HELOCs.
“Cash-out” Mortgage Refinance
  • If you have available equity in a home you own, this option allows you to refinance your home for a higher amount than you currently owe and receive the difference as cash to pay down one or more other debts or use as you wish.
  • Mortgage closing costs will apply and should be included in comparing the cost of this debt consolidation option with other options.


Examples of situations to consider when thinking about restructuring debt

Current situation Considerations
You're in the last 10 years of a 30-year, fixed rate mortgage. Your current mortgage payments mainly go toward retiring principal debt. If you refinance now, your new mortgage payments will mainly go toward paying interest.
Your existing loan has early repayment penalties. Make sure that the new lower rate you would pay by restructuring debt will offset early repayment penalties.
You would move from a loan with tax-deductible interest to a loan with non-tax-deductible interest. Talk to your tax advisor and compare the impact on your tax bill with the benefits of restructuring the debt before you decide.


Learn more

If you would like to learn more about restructuring and/or consolidating debt that you may have, you can contact your Merrill Lynch Wealth Management Advisor to find out what financing options may be available. Consult your legal or tax advisor for additional guidance on tax implications of debt restructuring options.7



LMA Borrowing

Securities-based financing involves special risks. Clients should review their LMA Loan Agreement and related documents and disclosures carefully and consult with their own independent tax and legal advisors.

  1. A decline in the value of collateral assets may require the client to provide additional funds or securities to avoid a collateral maintenance call. Clients can lose more funds than are held in the collateral account. The LMA account is a full recourse loan and the account holder will be liable for any deficiency.
  2. The Bank can force the sale or other liquidation of any securities or other investment property in the collateral account and, unless otherwise required by law, can do so without first contacting the account holder.
  3. The account holder is not entitled to choose which securities in the collateral account are liquidated or sold.
  4. The Bank can change its collateral maintenance requirement at any time without notice to clients. 
  5. Clients are not entitled to an extension of time to satisfy the Bank’s collateral maintenance requirement.
  6. There may be adverse tax or other consequences to clients if securities are sold or otherwise liquidated by the Bank.
  7. The LMA account is an uncommitted facility, although loans to individuals and trusts may be committed in an amount not to exceed $100,000. The Bank may demand full or partial repayment at any time, and any commitment may be immediately terminated.
  8. For fixed-rate advances and term loans, principal payments made in advance of the end of the applicable fixed-rate period, whether voluntarily or involuntarily (due to demand or liquidation by the Bank), may be subject to a substantial breakage fee as determined by the Bank.
  9. Some restrictions on the use of LMA account proceeds may apply under the terms of loan documents and applicable laws and regulations. The LMA account cannot be used to purchase marketable securities unless specifically agreed by the Bank.



  • HELOC funds may not be used to purchase, carry or trade securities or repay debt incurred to purchase, carry or trade securities.
  • Interest rate risk–As a variable-rate loan, interest rates and payments can change. Clients should carefully consider these risks before borrowing.


Mortgage refinance

If you are refinancing to lower your monthly payment or change from a variable-rate to a fixed-rate loan, you should carefully consider the potential increase in the total number of monthly payments and/or the total interest charges paid over the full term of the new refinance loan – especially for borrowers who currently have loan terms less than 30 years.


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1 Bank of America® Premium Rewards® Program Information. How You Earn Points: You earn points when you use your card to make purchases, minus returns, credits and adjustments (“Net Purchases”). The following transactions are not considered purchases and will not earn points: Balance Transfers and Cash Advances (each as defined in your Credit Card Agreement), fees, interest charges, fraudulent transactions and certain other charges. Unlimited 1.5 Points: Earn 1.5 base points for every $1 of Net Purchases (non-Travel and Dining) charged to the card each billing cycle. 2 Points: Earn 2 base points for every $1 of Net Purchases made with the card in the Travel and Dining category, with no limit on the number of points you can earn. Travel and Dining Category: Dining includes Restaurants, including Fast Food, and Drinking Establishments, such as Bars or Taverns. Travel includes: airlines, hotels, motels, timeshares, trailer parks, motor home and recreational vehicle rentals, campgrounds, car rental agencies, truck and trailer rental, cruise lines, travel agencies, tour operators and real estate agents, operators of passenger trains, buses, taxis, limousines, ferries, boat rentals, parking lots and garages, tolls and bridge fees, tourist attractions and exhibits like art galleries, amusement parks, carnivals, circuses, aquariums, zoos and the like. Purchases from some merchants that provide travel-related goods and services will not be eligible, like in-flight goods and services, and duty-free airport purchases. Travel and Dining Category Processing: Merchants are assigned a merchant category code (MCC) based on the merchant’s primary line of business. We do not determine which MCC a merchant chooses to classify itself. We group similar MCCs into Categories to help you earn rewards on purchases made at specific merchants. Your purchase may not qualify to receive the Travel and Dining Category earn rate if the merchant does not process transactions under the MCC that corresponds with the Travel and Dining Category, or your purchase is processed through a third-party payment account, mobile/wireless card reader, digital wallet not supported by Bank of America or similar technology where the technology does not support transmission of MCCs. For those Net Purchases, you will earn 1.5 base points per $1. Not all merchants accept all credit cards. How You Use Your Points: When your points balance is 2,500 points or more, you can redeem your points for cash rewards, including a statement credit, an electronic deposit into a Bank of America® checking or savings account, or for credit to a qualifying Cash Management Account® with Merrill or qualifying 529 account with Merrill. Points may also be redeemed for travel at the Travel Center, or gift cards. Cash rewards shall be issued for a U.S. dollar sum and may be requested on demand. Each point redeemed is worth $0.01 (2,500 points = $25). Points Expiration: As long as your account remains open with active charging privileges, points do not expire. Points Forfeiture: If the owner(s) of the card account voluntarily closes the card account, or if for any reason we close the card account, any unredeemed points associated with the account are subject to immediate forfeiture, unless specifically authorized by us. Rewards Program Rules: Program Rules containing additional terms of your credit card rewards program will be sent to you with your new account materials. Other significant terms apply. Program subject to change. 0620RLL.PR.0620

2 The Loan Management Account (LMA account) is a demand line of credit provided by Bank of America, N.A., Member FDIC. Equal Opportunity Lender. The LMA account requires a brokerage account at Merrill Lynch, Pierce, Fenner & Smith Incorporated and sufficient eligible collateral to support a minimum credit facility size of $100,000. All securities are subject to credit approval and Bank of America, N.A. may change its collateral maintenance requirements at any time. Securities-based financing involves special risks and is not for everyone. When considering a securities-based loan, consideration should be given to individual requirements, portfolio composition and risk tolerance, as well as capital gains, portfolio performance expectations and investment time horizon. The securities or other assets in any collateral account may be sold to meet a collateral call without notice to the client, the client is not entitled to an extension of time on the collateral call and the client is not entitled to choose which securities or other assets will be sold. The client can lose more funds than deposited in such collateral account. The LMA account is uncommitted and Bank of America, N.A. may demand full repayment at any time. A complete description of the loan terms can be found within the LMA account agreement. Clients should consult their own independent tax and legal advisors. Some restrictions may apply to purpose loans and not all managed accounts are eligible as collateral. All applications for LMA accounts are subject to approval by Bank of America, N.A.

3 For fixed-rate and term loans, principal payments made in advance of the due date are subject to a breakage fee as determined by the Bank.

4 Fixed-Rate Loan Option at account opening: You may convert a withdrawal from your home equity line of credit (HELOC) account into a Fixed-Rate Loan Option, resulting in fixed monthly payments at a fixed interest rate. The minimum HELOC amount that can be converted at account opening into a Fixed-Rate Loan Option is $5,000 and the maximum amount that can be converted is limited to 90% of the maximum line amount. The minimum loan term is 1 year, and the maximum term will not exceed the account maturity date.

Fixed-Rate Loan Option during loan term: You may convert all or a portion of your outstanding HELOC variable-rate balance to a Fixed-Rate Loan Option, resulting in fixed monthly payments at a fixed interest rate. The minimum outstanding balance that can be converted into a Fixed-Rate Loan Option is $5,000 from an existing HELOC account. The minimum loan term is 1 year, and the maximum term will not exceed the account maturity date. No more than three Fixed-Rate Loan Options may be open at one time. Rates for the Fixed-Rate Loan Option are typically higher than variable rates on the HELOC.

5 Home Equity Line of Credit (HELOC) interest rate discounts are offered to clients who are enrolled or are eligible to enroll in Preferred Rewards, based on their rewards tier at the submittal of home equity application (for co-borrowers, at least one applicant must be enrolled or eligible to enroll). Amount of discount (0.125% for Gold tier, 0.250% for Platinum tier, 0.375% for Platinum Honors tier, 0.625% for Diamond tier and 0.750% for Diamond Honors tier) is based on the rewards tier at the submittal of home equity application and is not subject to adjustment after the application is submitted. Eligibility will be determined three or more business days after the requirements are satisfied. For details on requirements, visit the Preferred Rewards section of the Personal Schedule of Fees, available at Benefit is non-transferable. Preferred Rewards home equity benefit can be combined with certain other home equity interest rate discounts.

6 To enroll in the Preferred Rewards program you must have an active, eligible personal checking account with Bank of America® and maintain the balance required for one of the balance tiers in your combined qualifying Bank of America deposit accounts (such as checking, savings, certificate of deposit) and/or your Merrill investment accounts (such as Cash Management Accounts, 529 Plans). You can satisfy the combined balance requirement for enrollment with either:

A three-month combined average daily balance in your qualifying deposit and investment accounts.

A current combined balance, provided that you enroll at the time you open your first eligible personal checking account and satisfy the balance requirement at the end of at least one day within 30 days of opening that account.

You must have a qualifying balance of at least $20,000 for the Gold tier, $50,000 for the Platinum tier, $100,000 for the Platinum Honors tier, $1,000,000 for the Diamond tier and $10,000,000 for the Diamond Honors tier. Private Bank clients qualify to enroll in the Diamond tier, and may qualify for the Diamond Honors tier based on their qualifying Bank of America, Merrill, and Private Bank balances. Refer to Personal Schedule of Fees for details on accounts that qualify towards the combined balance calculation and receive program benefits. Eligibility to enroll is generally available three or more business days after the end of the calendar month in which you satisfy the requirements. Benefits become effective within 30 days of your enrollment, or for new accounts within 30 days of account opening, unless we indicate otherwise. Certain benefits are also available without enrolling in Preferred Rewards if you satisfy balance and other requirements..

7 Before taking out any mortgage or line of credit, borrowers should consult their tax advisor to understand the implications of each of their options.

The Premium Rewards credit card program is issued and administered by Bank of America, N.A.

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”) makes available certain investment products sponsored, managed, distributed, or provided by companies that are affiliates of Bank of America Corporation (“BofA Corp.”). MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp. 

Banking, mortgage and home equity products offered by Bank of America, N.A., and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation. Home Icon for Equal Housing LenderEqual Housing Lender. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.


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