A Margin Lending Account (margin), offered through Merrill, allows you to borrow funds for general cash flow needs, such as paying taxes or making home improvements as well as for the purpose of buying additional securities. Margin offers you a convenient source of liquidity with competitive rates to meet your personal or business financing needs.
The Margin Lending Account is part of a broader suite of cash management services available through a Cash Management Account (CMA). A CMA offers the convenience and flexibility of cash management services (including check writing, Bank of America credit cards and debit cards) combined with a Merrill investment account. Margin borrowing is not for everyone. Learn more below about margin lending, including the potential advantages and risks.
If you aren't planning on using a Margin Lending Account to buy securities, you may want to consider the Loan Management Account® (LMA® account), offered through Bank of America, N.A. instead to help meet your cash flow needs. With an LMA account, you can have access to cash, consolidate any other outstanding loans if desired and gain a clearer picture of your balance sheet.
Margin can help you with funding for:
Borrowing against your assets rather than selling them can help you keep your investment strategy on track and defer any capital gains taxes that might result from selling securities to meet your short-term cash needs. There is no set repayment schedule, as long as you maintain the required level of equity in your account.
Some of these risks include:
Talk to your Merrill financial advisor to discuss whether a Margin Lending Program might be appropriate for you
When you purchase securities, you may pay for the securities in full, or if your account has been established as a margin account with the margin lending program, you may borrow part of the purchase price from Merrill. If you choose to borrow funds for your purchase, Merrill's collateral for the loan will be the securities purchased, other assets in your margin account, and your assets in any other accounts at Merrill. If the securities in your margin account decline in value, so does the value of the collateral supporting your loan, and, as a result, we can take action, such as to issue a margin call and/or sell securities in any of your accounts held with us, in order to maintain the required equity in your account. If your account has a Visa® card and/or checks, you may also create a margin debit if your withdrawals (by Visa card, checks, preauthorized debits, FTS or other transfers) exceed the sum of any available free credit balances plus available money account balances (such as Bank of America bank deposit balances or money market funds). Please refer to your account documents for more information.
Before opening a margin account, you should carefully review the terms governing margin loans. For Individual Investor Accounts, these terms are contained in the Margin Lending Program Client Agreement. For all other accounts, the terms are in your account agreement and disclosures. It is important that you fully understand the risks involved in using margin. These risks including the following:
If you have any questions or concerns about margin and the margin lending program, please contact your Merrill financial advisor.
Securities-based financing involves special risks. You should review the LMA Loan Agreement and related documents and disclosures carefully and consult with your own independent tax and legal advisors.
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. Equal Housing Lender
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