Personal Finance

Question For Those With BMO Who Write Personal Cheques

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  • Feb 21st, 2018 4:51 pm
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Dec 15, 2017
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Question For Those With BMO Who Write Personal Cheques

I got a cheque book from BMO. Im on the verge of writing a cheque for $1,200 to a banquet halll. This 1,200 will be placed on my LOC right? Not taken out of my savings? How much interests does BMO charge every month for a $1,200 personal cheque each month? My line of credit is of 6% or 10% I think. If its 10% how much interests are paid monthly on $1200?
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Jan 2, 2015
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Toronto, ON
MusicBox wrote: I got a cheque book from BMO. Im on the verge of writing a cheque for $1,200 to a banquet halll. This 1,200 will be placed on my LOC right? Not taken out of my savings?
The cheque is written against a specific account. Traditionally a cheque is written against a chequing account, but at least some lines of credits come with chequebooks too. So you need to compare the account number in the chequebook with your account numbers for your chequing account and line of credit to see what it's against.

I've never seen a "real" cheque written against a savings account. Void cheques, yes, but not "real" ones. Maybe it's possible, but I would be amazed if that's the case.

If you have money in savings, and the chequebook is against chequing, you need to transfer money from savings to chequing before you sign that cheque. Do not write a cheque and figure the money will get to that account in a day or two. Murphy's Law says you'll get in trouble for that short period of time your chequing account is nearly empty.
How much interests does BMO charge every month for a $1,200 personal cheque each month? My line of credit is of 6% or 10% I think. If its 10% how much interests are paid monthly on $1200?
So let's suppose the cheque is written against your line of credit instead. I'm assuming your line of credit is worth more than $1,200.

You should know what your interest rate is. Each customer gets a different rate; it's not a BMO-wide rate. There's a big difference between 6% and 10%.

You pay 6% or 10% per year. So if you took $1,200 out at 10% interest you would, theoretically, pay $120. In practice, you would pay more (compounded daily interest raises the effective percentage by a fraction of a percent) and the bank would expect minimum payments per month, perhaps 2-3% of the total, making the math more complicated. Your bill would show you the monthly and total amounts owing, and you should pay the entire amount to avoid paying more interest than you need to.

(If you had to pay a minimum of 2% per month, you might pay roughly $24 per month, plus another $10 to cover interest for the month, if the interest rate was 10%. That's a very rough approximation though.)

Why do you need to pay the banquet hall? And why would you use credit? If you can't afford it, maybe you shouldn't be giving them that money.
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Dec 15, 2017
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I only have $6,000 savings and from that account my rent is deducted ($1,300 month) along with car insurance, Rogers internet, cellphone bill, motorcycle bill, 407ETR and sat dish. I don't want to deplete that money with a $1,200 payment.

I rather put that on my LOC and pay it off little by little until my savings account inflates to $20,000 my mid-summer. Hey thanks for the well-detailed heads up!
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Nov 22, 2015
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MusicBox wrote: I only have $6,000 savings and from that account my rent is deducted ($1,300 month) along with car insurance, Rogers internet, cellphone bill, motorcycle bill, 407ETR and sat dish. I don't want to deplete that money with a $1,200 payment.

I rather put that on my LOC and pay it off little by little until my savings account inflates to $20,000 my mid-summer. Hey thanks for the well-detailed heads up!
That doesn't sound like the best idea...

You want to pay interest on the $1200 just so that your savings can sit there and earn less interest than you're getting charged on the line of credit?

Pay it from your savings and you have the line to fall back on if anything happens and you actually need money.
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Dec 15, 2017
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superfresh89 wrote: That doesn't sound like the best idea...

You want to pay interest on the $1200 just so that your savings can sit there and earn less interest than you're getting charged on the line of credit?

Pay it from your savings and you have the line to fall back on if anything happens and you actually need money.
I think you actually make sense. Thanks!

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