Personal Finance

Personal Line of Credit charges difference between banks

  • Last Updated:
  • Aug 27th, 2014 2:37 pm
Newbie
Aug 25, 2014
4 posts
Toronto, ON

Personal Line of Credit charges difference between banks

Hello
First post sorry if it is in the wrong place. Just wanted to compare and ask somethings.

I am with Scotiabank and have an unsecured ploc 15k at prime+2

Have not used it at all but was just about to use it and had questions about how PLOC at other banks work.

So the Scotiabank rep told me that if I borrow 10,000 I would immediately be charged interest my 5% rate so 500 so 10,500 would be the actual charge. On top of that I would be paying daily interest charged monthly on the balance whatever the balance maybe until it is all paid off.

So lets say my first Scotiabank statement would say 10,000+500+42 interest would be on the 10000 not the 500 so if i paid 1542 then the following statement would say 9000+38 and so on until paid off.

I was told by someone that CIBC DOES NOT take that percent upfront but instead just charges you interest on the balance monthly. So CIBC would be 10,000+42 pay just 1042 then 9000+38 and so on until paid off.

Not the best at math so my calculations could be wrong I rounded up.

My main concern is, is Scotiabank bank the only bank doing this or do they all do it and I was just given wrong information?
Anyone with CIBC unsecured PLOC confirm this?
Anyone with Scotiabank tell me how you where charged?

The account was opened last December so it has been unused.

If this is correct is Scotiabank really that bad that they do this while other banks do not?
If other banks do it then fine but if it is true that CIBC doesn't then that is a complete rip off banking with Scotia.
What about other banks how where you charged on your unsecured PLOC loans?

Thank You in advance.
8 replies
Deal Expert
User avatar
Jan 27, 2004
52935 posts
18144 upvotes
ONTARIO
Each bank will have their own way of charging the interest. I don't see how its a rip off?
In the end its still the same interest rate calculation. 10% of $100 will always be $10.

Expect to pay at the least... The interest payment per month. Sometimes its either interest only or a higher % based on your balance.
Deal Addict
User avatar
Jun 22, 2007
1504 posts
943 upvotes
London, ON
You are not charged a fee up front. What the csr means is that interest starts to accumulate immediately after the transaction is made unlike a credit card that has a grace period to pay off the transaction.
Newbie
Aug 25, 2014
4 posts
Toronto, ON
davethegr8 wrote: You are not charged a fee up front. What the csr means is that interest starts to accumulate immediately after the transaction is made unlike a credit card that has a grace period to pay off the transaction.

This is what I thought but i asked the csr 3 times and he said I am immediately charged 5% on the 10,000 then interest would be daily charged monthly. He said it would be 10000 + 500, then monthly interest as usual. So I want to know if someone with scotiabank ploc has this or is he wrong and doesn't know what he is saying.
Newbie
Aug 25, 2014
4 posts
Toronto, ON
UrbanPoet wrote: Each bank will have their own way of charging the interest. I don't see how its a rip off?
In the end its still the same interest rate calculation. 10% of $100 will always be $10.

Expect to pay at the least... The interest payment per month. Sometimes its either interest only or a higher % based on your balance.
It wouldn't be the same at all if they do charge me immediately then again monthly I would be paying scotiabank so much more then I would CIBC.
Deal Fanatic
Aug 22, 2005
7963 posts
1142 upvotes
You received wrong information.
Deal Addict
User avatar
Oct 4, 2004
4349 posts
1588 upvotes
Vancouver
You were given wrong information.

First, I have this account and use it. Second, that would be an absurd way of using a LoC. Third, as with everything in life, RTFM! All the official terms and conditions are included every time you open a new account.
Removed external link in signature.
Deal Addict
User avatar
Jun 22, 2007
1504 posts
943 upvotes
London, ON
I have a Scotia loc and can assure you that there is no up front fee. Some of these bank reps need to be trained properly.
Newbie
Aug 25, 2014
4 posts
Toronto, ON
Yup I got the wrong info. Because this account comes with the visa access card the rep must have thought it was like a cash advance and gave me wrong information. Was just confusing because the first rep was so sure. Apparently this visa card use to have the 21 day interest free grace period but scotiabank got rid of that and it is just like all other PLOC interest starts building by the day no grace. The rep was confused and confused me in return.

Thanks for the answers.

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