Personal Finance

My Bank Gave Me A LOC Today...Im Not Impressed

  • Last Updated:
  • Jan 21st, 2014 12:08 pm
Sr. Member
Dec 26, 2013
668 posts
58 upvotes
Why wouldn't you want to pay towards the principle? It lowers how much you interest pay overall. I have a LOC with RBC (unsecured) and could pay interest only and that's what I have set up for auto payment. Of course, I make extra payments whenever I want too but it isn't required. I could leave it for a couple years just paying interest (according to the guy who set it up) but that's a waste of money for me. When the principle goes down the interest accumulated does too.

What bank are you set up with?
Deal Addict
User avatar
Feb 23, 2004
2644 posts
109 upvotes
Calgary
Does anyone have a list of LOC from banks that shows their "minimum obligatory payment" rates:

ie: for TD - Balance $7000, min pay per month is $500 (Interest is $384/yr)
CIBC
BMO .. etc

thx
6b 6f 63 6f 6d 61 6e 20 6f 66 20 63 64 6d 61 2d 64 65 76 2d 74 65 61 6d
Banned
User avatar
Feb 15, 2008
26318 posts
3201 upvotes
Calgary
My TD ULOC is interest-pay-only.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Deal Addict
Dec 28, 2008
1354 posts
139 upvotes
Toronto
kocoman wrote:
Dec 30th, 2013 8:16 pm
Does anyone have a list of LOC from banks that shows their "minimum obligatory payment" rates:

ie: for TD - Balance $7000, min pay per month is $500 (Interest is $384/yr)
CIBC
BMO .. etc

thx
CIBC unsecured LOC is 3 percent of principle per month unless you score in the highest internal credit score range then it can be interest only.

$210 per month for $7000 borrowed.
Banned
User avatar
Feb 15, 2008
26318 posts
3201 upvotes
Calgary
BryceS wrote:
Dec 30th, 2013 9:01 pm
CIBC unsecured LOC is 3 percent of principle per month unless you score in the highest internal credit score range then it can be interest only.
Don't know if that's true for TD as well, but kind of nice to know. Since I've never checked my credit score and don't really care about it.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Deal Addict
Dec 28, 2008
1354 posts
139 upvotes
Toronto
Mark77 wrote:
Dec 30th, 2013 9:04 pm
Don't know if that's true for TD as well, but kind of nice to know. Since I've never checked my credit score and don't really care about it.
It's not the general Equifax/TU score.

It's an internal ranking system with tenure of employment, industry, postal code, income, net worth, assets with CIBC, length and depth of banking relationship etc.
Banned
User avatar
Feb 15, 2008
26318 posts
3201 upvotes
Calgary
BryceS wrote:
Dec 30th, 2013 9:12 pm
It's not the general Equifax/TU score.

It's an internal ranking system with tenure of employment, industry, postal code, income, net worth, assets with CIBC, length and depth of banking relationship etc.
Yup. Try explaining that to the mortgage brokers who trolled me a few weeks back for suggesting that the banks do not exclusively rely on equity and Equifax/TU scores for credit granting or credit quality decisions.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Deal Fanatic
Mar 24, 2008
5714 posts
1823 upvotes
Toronto
Mark77 wrote:
Dec 30th, 2013 9:17 pm
Yup. Try explaining that to the mortgage brokers who trolled me a few weeks back for suggesting that the banks do not exclusively rely on equity and Equifax/TU scores for credit granting or credit quality decisions.
Why would mortgage brokers harass you? Are you buying property finally pitz?
Banned
User avatar
Feb 15, 2008
26318 posts
3201 upvotes
Calgary
ksgill wrote:
Dec 30th, 2013 9:40 pm
Why would mortgage brokers harass you? Are you buying property finally pitz?
My name is "Mark77". And the previous thread I was referring to had mortgage broker participants insinuating that the banks do not make credit quality decisions based on factors other than credit scores and equity, in determining the threshold between prime and subprime. BryceS's comments are evidence to the contrary, which most bank insiders also know as well.

Trolls....
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Deal Fanatic
Mar 24, 2008
5714 posts
1823 upvotes
Toronto
Mark77 wrote:
Dec 30th, 2013 10:13 pm
My name is "Mark77". And the previous thread I was referring to had mortgage broker participants insinuating that the banks do not make credit quality decisions based on factors other than credit scores and equity, in determining the threshold between prime and subprime. BryceS's comments are evidence to the contrary, which most bank insiders also know as well.

Trolls....
Troll who? I didn't create this for you mark or pitz.
Banned
User avatar
Feb 15, 2008
26318 posts
3201 upvotes
Calgary
ksgill wrote:
Dec 30th, 2013 10:16 pm
Troll who? I didn't create this for you mark or pitz.
Its just Mark77. Nothing more, nothing less.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Deal Addict
Oct 9, 2005
1839 posts
189 upvotes
I found out today that for ULOCs, RBC uses an inverse relationship between your credit limit and your interest rate. Credit rating aside (which they rank you from A->E = best->worst), if you have a low credit limit, even by choice, you will get a high interest rate. The only way to lower the rate is for them to increase that limit for you.
Banned
User avatar
Feb 15, 2008
26318 posts
3201 upvotes
Calgary
guessaaa wrote:
Dec 30th, 2013 10:25 pm
I found out today that for ULOCs, RBC uses an inverse relationship between your credit limit and your interest rate. Credit rating aside (which they rank you from A->E = best->worst), if you have a low credit limit, even by choice, you will get a high interest rate. The only way to lower the rate is for them to increase that limit for you.
Yeah they have a certain target for return, and those small LOC's cost them significant amounts to administer. I admit, my ULOC has a pretty terrible rate, but I use it so little that the cost is comparable to a personal banking package, with all the freebies associated with such. So is the bank really earning any incremental revenue by lending to me? Not really.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Deal Fanatic
Nov 24, 2013
5683 posts
2297 upvotes
Kingston, ON
Mark77 wrote:
Dec 30th, 2013 9:17 pm
Yup. Try explaining that to the mortgage brokers who trolled me a few weeks back for suggesting that the banks do not exclusively rely on equity and Equifax/TU scores for credit granting or credit quality decisions.
You were suggesting what job you had (e.g. Engineer or Doctor) made you more desirable than another bank customer of equal employment type, tenure, and income with a less desirable occupation (Janitor or Brick Layer). You're skirting over the fact in this thread, as in that one, that the factors that matter are whether you're Full Time or Self Employed / Contractor, and how long you've maintained that work. That's what affects your risk factor; not your occupation.
Deal Fanatic
Jul 1, 2007
8220 posts
1154 upvotes
Gammatron wrote:
Dec 30th, 2013 4:07 pm
Okay can I do this? Lend $5,000 from a LOC to a friend and charge him 10% interest? What stops me from doing this and lending money to 4 people at once and make a profit without touching a penny of my own money.
You've discovered the bank's business model.
Money Smarts Blog wrote:
Nov 29th, 2010 11:18 am
I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.

Top