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
