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Margin lending at Merrill® is a flexible line of credit that can be used for almost any purpose. Learn more below about margin lending, including the potential advantages and risks.

What is margin lending?

When you think about managing your cash flows and investments, you may want to consider how margin lending may help you find the right mix. Let's take a tour.

What is margin lending?

Margin is an extension of credit, using margin eligible securities as collateral. You can use margin loans to buy other securities or for various personal needs.

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Most brokerages have rules about the kind of securities you can use as collateral for a margin loan. Usually, this includes a minimum price per share, specific exchanges and market capitalization. For example, shares from a Fortune 500 company would likely be margin eligible while a penny stock would not.

Why consider margin lending?

Margin isn't for everyone. It can be quite risky. You could lose money. But in the right circumstances, a margin loan could be a useful tool to use when managing your money.

Clients should understand and consider all risks associated with margin.

Margin risks & advantages

How margin lending works

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Assets used to back a loan. For a margin loan, the collateral includes the securities purchased, other assets in your margin account and assets in other accounts, excluding retirement.

Margin costs
Remember to factor in charges for the interest on a margin loan and trading commissions. They can add to possible losses and take a bite out of any profits.

Let's take a closer look at what can happen when you buy stocks with the help of margin versus cash only.

How margin lending works

One transaction uses $5,000 in cash to buy 500 shares in XYZ Company at $10 each. The margin transaction uses $5,000 in cash plus $5,000 in margin to buy 1,000 shares.

At the start, each buyer uses the identical amount of cash. But the investor who also uses a margin loan purchases twice as many shares.

Watch what happens when the price of XYZ Company falls by 10% to $9 a share and the stock is sold.

The all-cash investor loses $500 on the $5,000 investment, or 10%. The investor who used margin loses twice as much. Here's how that works: The $10,000 investment drops in value to $9,000. After the investor repays the $5,000 margin loan, there's only $4,000 left. The loss for the cash + margin buyer: $1,000, or 20%.

$5,000 cash
$5,000 margin loan
$5,000 cash






Merrill loan






Gains/losses do not include commissions or margin interest charges.

Interactive margin illustrator

Enter how much cash and how large a total investment you want to make or how much margin you want to use when you buy stock at $10/share. Move the stock price slider to see for yourself how margin can amplify losses and gains when the stock price changes.

Gains/losses do not include commissions or margin interest charges.

Your cash investment $2,000 min. -
$99,000 max.
% of total
  • 0%
  • 10%
  • 20%
  • 30%
  • 40%
  • 50%

    Remember: Initial margin availability is usually limited to 50% of the total investment.In some cases, the limit can be lower. Additional minimum maintenance requirements apply. Which are not covered in this illustration.





    Learn what actions may result in margin interest changes.
    Manage your margin loan to avoid unexpected collateral calls.
    It may be beneficial to use a margin loan to:
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    The actual loan amount in a margin account.

    Purchasing additional securities or withdrawing funds greater than the cash available in your account, resulting in a margin loan.

    You don't need to max out the margin available to you. Keep track of your debit balance and margin equity. Be ready with cash from other sources for potential margin calls.

    Fill in short-term cash needs—not long-term financing. It also may help you diversify or hedge a concentrated portfolio.

    Stay ahead of the curve

    Understand and study the Merrill Margin Handbook.

    Margin lending Rewind

    Let's do a quick review of margin lending basics.

    You invest $5,000 cash and use a $5,000 margin loan to buy $10,000 worth of stock. The value of the stock drops by 50%. You sell it. Approximately how much of your original $5,000 investment are you left with in the end?


    The value of securities in your margin account falls below the minimum collateral requirement. Merrill will:


    The maximum amount I can lose is limited to the amount borrowed plus any interest charges.


    Which of the following can cause the value of your account to fall below the designated requirement?

    Thanks for joining us on this introductory tour!
    Remember: These are just the basics.

    Want to learn more? Consult the Merrill Margin Handbook.

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    Here's how the math works:
    Initial investment: $10,000
    Current stock value: $5,000
    Margin loan: $5,000
    You must sell your stock & repay your margin loan to close the transaction.
    $5,000 (proceeds from sale of stock)
    -$5,000 (margin loan)

    $0 (amount of cash remaining)
    Plus, you still owe interest on the loan and commissions!
    2. Merrill can sell securities without contacting you if the value of the collateral in your account drops below required levels. You are not entitled to an extension.
    False. If the price of the security falls far enough, you could lose the amount you invested and the amount you borrowed, and you could still owe money to Merrill, in addition to any charges such as interest, commission and fees.
    All of the above. If you withdraw cash from your margin account, the account could dip below the minimum equity requirement. If the value of the collateral falls, the same thing could happen. Merrill would only permit the check to be paid if there is sufficient equity in your account.
    Gains/losses do not include commissions or margin interest charges.

    How does margin work?


    • Margin is an extension of credit, using margin eligible securities held as collateral.
    • In general, there is no set repayment schedule. You can repay any loan amount at any time by making a deposit or selling securities, as long as you maintain the required level of equity in your account.
    • You can use your margin loan to buy additional securities or withdraw funds for other purposes.
    • Margin interest is charged on the money you borrow over the time the loan remains outstanding. Margin interest rates are based on the total loan amount and are subject to change at any time.
    Ways to use margin loans*
    Investment financing
    • Market opportunities
    • Portfolio diversification*
    • Advanced trading strategies**
    Overdraft protection (margin loan)
    • Visa® card transactions
    • Checks and Bill Pay transactions
    Short-term borrowing
    • Unexpected expenses
    * Diversification does not ensure a profit or protect against loss in declining markets.
    ** Examples of advanced trading strategies may include certain types of options trading and short selling. For more information, please refer to the Merrill Margin Handbook (PDF).

    Margin rates and charges

    The margin rate you pay is based on your total loan amount. The applicable margin interest rate fluctuates based on current market conditions, and it is subject to change at any time. The margin interest you are charged is based on the amount of money borrowed and the length of time the loan is outstanding.
    Call 855.332.5920855.332.5920 for more information about our latest rates.

    Advantages & Risks

    Margin borrowing is not for everyone. Make sure you understand the advantages and risks.
    Access to additional funds without selling your securities
    Borrowing against your assets to meet short-term cash needs, rather than selling your securities, may allow you to keep your investment strategy on track, including potentially deferring tax implications that might result from selling securities.*
    *Neither Merrill® nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
    Increased profit potential
    A margin account may increase your profit potential by leveraging your margin eligible securities to buy additional securities on credit.
    Advanced trading and hedging strategies
    Margin provides access to various advanced trading strategies designed to take advantage of short-term opportunities, generate income or hedge against other investment risks.*
    * Examples of advanced trading strategies may include certain types of options trading and short selling. For more information, please refer to the Merrill Margin Handbook (PDF).
    Potential loss and liquidation
    Loss in value of securities held as margin collateral may force the liquidation of securities in your account to satisfy margin calls, and we may do so without contacting you; in addition, margin interest charges will increase your margin debit balance and will decrease your account's value.
    Risk of amplified losses
    Potential losses may be significantly greater due to leverage if there is adverse market movement. Your losses can potentially be greater than the amount that you invest.
    Advanced trading strategies risks
    Advanced trading strategies can be subject to significant price volatility, and trading losses can greatly exceed income or profit potential in some cases. For additional information, please reference the Merrill Margin Handbook (PDF).

    Getting Started

    Open a new account and add margin

    Open a Merrill online investing and trading account.*
    Select the "Margin" option to apply for the Margin Lending Program.
    Fund your account with at least $2,000 in cash or margin eligible securities.

    Add margin to an existing account

    If you already have an existing, eligible Merrill online investing and trading account, funded with at least $2,000 in cash or margin eligible securities, you can easily apply for a margin account online.*
    * Margin cannot be added to Retirement Accounts, UTMA/ UGMA accounts or Merrill Guided Investing accounts.
    Need help? Call us 24/7 at 855.332.5920855.332.5920


    Frequently asked questions

    Your loan, or debit balance, is an open-ended collateralized loan. You may keep the loan open for as long as you choose, provided you comply with the terms of the account and Merrill is satisfied with the conditions of your margin account.
    You can reduce or pay off your debit balance (which includes margin interest accrued) by depositing cash into your account or by liquidating securities. The proceeds from the liquidation will be applied to your debit balance.
    Margin trading can begin once the account is fully approved, and your account is updated to reflect margin buying power.

    Additional resources

    Margin in-depth
    For a detailed understanding of what margin is and how it works, download the Merrill Margin Handbook (PDF).
    Margin rates
    Learn more

    Additional resources

    Margin in-depth
    For a detailed understanding of what margin is and how it works, download the Merrill Margin Handbook (PDF).
    Margin rates
    Learn more

    Important disclosures

    Options involve risk and are not suitable for all investors. Certain requirements must be met to trade options. Before engaging in the purchase or sale of options, investors should understand the nature of and extent of their rights and obligations and be aware of the risks involved in investing with options. Prior to buying or selling an option, clients must receive the options disclosure document "Characteristics and Risks of Standardized Options." Call the Investment Center at 1.877.653.4732 for a copy. A separate client agreement is needed. Supporting documentation for any claims, comparison, recommendations, statistics, or other technical data, will be supplied upon request.

    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 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 include the following:

    • You can lose more funds than you deposit in the margin account. A decline in the value of securities that are bought on margin may require you to provide additional funds to us to avoid the forced sale of those securities or other securities in your account(s).
    • We can force the sale of securities in your account(s). If the equity in your account falls below the maintenance margin requirements or Merrill's higher "house" requirements, we can sell the securities in any of your accounts held by us to cover the margin deficiency. You also will be responsible for any shortfall in the account after such as sale.
    • We can sell your securities without contacting you. Some investors mistakenly believe that they must be contacted for a margin call to be valid, and that securities in their accounts cannot be liquidated to meet the call unless they are contacted first. This is not the case. We will attempt to notify you of margin calls, but we are not required to do so. Even if we have contacted you and provided a specific date by which you can meet a margin call, we can still take necessary steps to protect our financial interests, including immediately selling the securities without notice to you.
    • You are not entitled to choose which securities in your account(s) are liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, we have the right to decide which security to sell in order to protect our interests.
    • We can increase our "house" maintenance margin requirements at any time including on specific securities experiencing significant volatility and are not required to provide you advance written notice. These changes in our policy may take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause us to liquidate or sell securities in your account(s).
    • You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to you under certain conditions, you don't have a right to the extension.
    If you have any questions or concerns about margin and the margin lending program, please contact the Merrill Investment Center at 855.332.5920855.332.5920

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    Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

    Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.
    Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

    This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. Additional information is available in our Client Relationship Summary (PDF).

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    The Merrill® Margin Lending Program is a convenient, easy way for you to streamline and optimize your investments. Learn about margin trading nuances here, including the advantages and risks. merrill margin trading, trading on margin, what is margin trading