Credit Cards

Pay credit cards via LOC

  • Last Updated:
  • Jun 13th, 2019 6:53 pm
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[OP]
Newbie
Apr 14, 2015
70 posts
149 upvotes
Mississauga, ON

Pay credit cards via LOC

What do you guys think of using LOC as a preauthorized payment for credit cards?
Are there any benefits of doing this (i.e. CLI in the future?)

I'm not in debt or anything. I've recently been pre-approved for LOC and all of my credit cards is currently set up on PAD via my Tangerine account. If LOC is a good route then I'm planning to have my LOC paid automatically via my chequing account.

Thanks in advance.
10 replies
Deal Fanatic
User avatar
Nov 14, 2003
5195 posts
3527 upvotes
LaLaLand
If you also have a mortgage, it is good to have all of your income and expenses to go through the LOC to minimize interest expense.

if your bank will allow it, use a LOC or HELOC. Have everything go in and out of that, including mortgage payments. Additionally to save a few pennies or dollars on interest, prepay your mortgage if you get paid early. Ie. @vkizzle If you get paid on the 20th and your mortgage is due on the 1st, don't waste the 8/10/11 days having your money do nothing. Prepay your mortgage on the 20th, borrow the next payment for a few days until the next pay. The goal should be to keep that balance as close to zero as much as possible. This fully utilizes your capital.

This is assuming your payments are on the 1st of the month, you get paid every two weeks and you have unlimited prepayments. This is what I did.
Last edited by batcave on Jun 12th, 2019 9:51 pm, edited 2 times in total.
Deal Expert
Aug 22, 2011
37042 posts
23015 upvotes
Center of Universe
batcave wrote: If you also have a mortgage, it is good to have all of your income and expenses to go through the LOC to minimize interest expense.

if your bank will allow it, use a LOC or HELOC. Have everything go in and out of that, including mortgage payments. Additionally to save a few pennies or dollars on interest, prepay your mortgage if you get paid early. Ie. If you get paid on the 20th and your mortgage is due on the 1st, don't waste the 8/10/11 days having your money do nothing. Prepay your mortgage on the 20th, borrow the next payment for a few days until the next pay. The goal should be to keep that balance as close to zero as much as possible. This fully utilizes your capital.

This is assuming your payments are on the 1st of the month, you get paid every two weeks and you have unlimited prepayments. This is what I did.
I'm not sure I understand this?
Deal Fanatic
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Nov 14, 2003
5195 posts
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LaLaLand
vkizzle wrote: I'm not sure I understand this?
Money sitting a bank account collecting zero interest has no use. It is actually an opportunity cost. If you can pay down your your mortgage with that amount in your bank account and save some interest, then you're ahead of the game. It is about minimizing interest expense.

Lots of folks do this as there are lots of YouTube videos on the topic.
Deal Expert
Aug 22, 2011
37042 posts
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Center of Universe
batcave wrote: Money sitting a bank account collecting zero interest has no use. It is actually an opportunity cost. If you can pay down your your mortgage with that amount in your bank account and save some interest, then you're ahead of the game. It is about minimizing interest expense.

Lots of folks do this as there are lots of YouTube videos on the topic.
Last time I checked, my LOC had a higher interest rate than my mortgage.
Deal Expert
Aug 22, 2011
37042 posts
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Center of Universe
batcave wrote: Read or reread the second paragraph of my original post.
I kind of get what you're saying, but it's not very clear.
You're basically telling OP to leverage everything, but that requires you to be 100% on top of things, as one day late on the LOC repayment, he's paying interest on a much larger balance.
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May 8, 2009
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Going to the Moon
Better yet link uLOC as bank account to PayTM, and pay all CC's out of that and get PayTM pts.
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Deal Addict
Sep 24, 2018
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titaniumtux wrote: Better yet link uLOC as bank account to PayTM, and pay all CC's out of that and get PayTM pts.
jesus....i never thought of that
Deal Addict
Sep 24, 2018
2330 posts
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aweawea wrote: I thought everyone was already doing this?!
Not PayTM, i do it with my loc, but i was just looking through and seems like im missing out some
Deal Addict
Jan 16, 2016
1476 posts
1134 upvotes
Hamilton, ON
batcave wrote: Money sitting a bank account collecting zero interest has no use. It is actually an opportunity cost. If you can pay down your your mortgage with that amount in your bank account and save some interest, then you're ahead of the game. It is about minimizing interest expense.

Lots of folks do this as there are lots of YouTube videos on the topic.
Then why not invest that cash that is sitting idle instead of paying down a mortgage? It has been shown that you should continue to take the 30 year mortgage and invest your income instead of feverishly paying off your mortgage to become “debt free”.
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Nov 14, 2003
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LaLaLand
Altera wrote: Then why not invest that cash that is sitting idle instead of paying down a mortgage? It has been shown that you should continue to take the 30 year mortgage and invest your income instead of feverishly paying off your mortgage to become “debt free”.
That should have happened with available income before it even reaches this stage. The funds being deposited into the LOC is only for monthly expenses such a mortgage and bills. Thre funds that might be sitting idle are idle for one to thirteen days - not enough time to invest elsewhere.

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