The Basics of Borrowing

Harnessing Your Borrowing Power
Using debt to your advantage can help you achieve certain financial goals sooner than you would by using only cash. And actually, using cash for purchases like a new car or a house is just not realistic for most people. Borrowing and paying off a loan, or consistently paying on-time can be a great way to establish an excellent credit history.

It's also important to know the difference between "good" and "bad" debt. "Good" debt can help you grow your net worth or improve your quality of life over time – like a mortgage, school loan or business loan. "Bad" debt is often associated with debt that is acquired for things you don't need and can't afford. High-rate credit cards often fall into this category, because if not paid in full each month, any outstanding balance becomes increasingly difficult to repay.

We’re big believers in using credit the right way. If you need more information about the tools you have available to you, contact your local financial advisor today.

The Dangers of Too Much Debt
There are different comfort levels when it comes to the use of debt, and the same can be said about accumulating too much of it. Borrowing irresponsibly has serious consequences, evidenced by the number of homes in foreclosure, repossessed cars and bankruptcies. And just like a good credit record can help you qualify for a job and better loan rates, a poor credit record can have negative ramifications. The perils of debt are tough lessons to learn, but there are many ways to avoid them as well.

Edward Jones offers various borrowing solutions, including our Personal Line of Credit, which is a margin account. Borrowing against securities has its risks and is not appropriate for everyone. If the value of your collateral declines, you may be required to deposit cash or additional securities or the securities in your account may be sold to meet the margin call. Interest will begin to accrue from the date of the loan and will be charged to the account from that point. Available only on certain types of accounts.