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Email this8:15 pm
Hello Everybody,
I was curious about everyone's experience with their bank or credit union regarding lines of credit.. How often does everybody use their LOC here? Do you prefer the credit card? I received what I suspect to be standard TD LOC offer.. Was just curious how it compares to everything else out there.. I'm not sure if I'm able to even secure a LOC as I own no home.. I suspect I'd have to sit down with somebody to get a good rate or best possible? I think I saw a notice a few months back about peoples rate's going up at TD.. I have no debt currently to transfer.. Would I even be able to get the "special rate" or are these rates for people transferring debt? I think having a LOC is important.. I have two evil cards currently though.. Payment on time in full consistently.. Although I do use the 1 card alot...
Offer posted below..
Thanks,
8:22 pm
On page 2 it looks like standard rate is going to be TD Prime +5.50% for standard unsecured... Is it possible to secure a LOC with stock/funds or is this not acceptable?
11:02 pm
December 12, 2009
Offline
You could talk to TD about about using stocks or bonds as collateral potentially, to see if that's something they offer for a secured/partially secured LOC. However, it does get more complicated the bank then has to 'margin' (as it is called) your LOC regularly (usually weekly, biweekly or monthly though more likely monthly) by adjusting the LOC limit up or down as the value of your portfolio rises or falls otherwise there may be situations where your portfolio value may have fallen to a point where the security value was less than the outstanding balance owed on the LOC and TD would potentially have to make pay/no-pay decisions on any subsequent debit entries to your LOC. As this would need to be constantly monitored, if it were something TD offered - and again, you'd have to talk to them regarding this as it really is something that is up to the banks on an individualized basis - they would likely, at a minimum, require you to use their own self-directed discount or full-service brokerages.
That said, if you have stocks and bonds you'd be willing to transfer into one of their brokerages, you may be able to negotiate a better than their posted Prime+5.5% unsecured LOC offer. Banks love to offer substantially discounted rates based on the parameter of you transferring in, and maintaining, your wealth business with them, particularly mutual funds or self-directed/full service brokerage assets. Combined with a great credit rating, it would not be outside of the realm of possibility to expect potentially being able to negotiate Prime+2% on an unsecured LOC or maybe Prime+0.50% on a secured LOC basis, I would think. 
Hope that helps,
Doug
7:56 pm
I took their standard offer for now.. How are payments calculated exactly? Interest is charged immediately upon use at the daily rate?
8:57 pm
December 12, 2009
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Yeah, that's usually how the interest is accrued, calculated daily based on the closing balance at a specified time (usually between 6 and 9 pm Pacific Time, depending on the FI).
Unsecured credit cards minimum payment is (usually) 3% of outstanding monthly balance (minimum $50) whereas secured credit cards are usually interest only.
Some banks charge chequing account fees on LOCs because the LOC is attached to a chequing account. Do TD LOCs charge a monthly fee or no? If not, could you use it as a "free chequing" account by keeping it in a credit balance (positive balance)?
Cheers,
Doug
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