|
|
Attractive
Rates
Margin generally allows you to borrow up to 50% of the value of eligible securities
in your account, at attractive rates. These rates are often competitive with
credit card or other personal loan rates. Because of this, margin borrowing
can be an effective source of low-cost financing.
Ridge Clearing
Margin Loan Rates vs.
National Average Consumer Loan Rates
Gold
Card - U.S. Average 16.45%*
Unsecured Loan 13.92%*
Ridge Clearing Margin Loan Rate 7.75%**
*Source: Banxquote.com; May 2001
**Ridge Clearing margin loan rate on $10,000-$24,999 debit balance as of May
2001
Tax
Advantages
Interest from loans made against securities may be deductible against investment
income. You should consult with your tax advisor for further information on
how this may benefit you.
Convenient
Borrowing
When you are approved for a Valet account, you are automatically approved
for margin, whether or not you elect to use it. You can take out a margin
loan for whatever purpose-to purchase additional securities, consolidate your
debt, or pay for tuition. You also have the convenience of accessing an instant
credit line without having to go through a lengthy loan application process.
Simply write a check or use your Visa debit card to access funds immediately.
Risks
of Borrowing
Margin borrowing has many advantages, and used prudently, it can be an effective
tool to help you achieve your financial goals. However, margin has certain
associated risks and is not appropriate for all clients.
|
|
|
Because
margin involves borrowing against the value of securities in your account,
if the value of those securities rises or falls, the amount that you may
borrow may also increase or decrease. You should also be aware of the following:
-
By
borrowing against the collateral in your account, you increase your risk
of loss and you can lose more funds than you deposit in the account if
the value declines;
-
You
may be sent a margin call requiring you to deliver to your brokerage firm
additional collateral in the form of cash and/or securities to maintain
your outstanding margin loan;
-
You
may not be given an extension of time in which to meet your margin call;
-
Your
securities may be sold without giving you the option to decide which securities
should be sold from your account;
-
You
margin maintenance requirements may be increased at any time;
-
You
will be obligated to pay interest on the amount of money that you borrow;
-
Interest
charges will be deducted from your account;
-
Your
current margin debit balance will appear on each account statement sent
to you;
-
You
will be charged interest on a monthly basis, and the interest rate and
total interest charge will be included on your monthly statement
|
|
|
