20000 Line of Credit at 7.70%

[ncvaalgirl]

@danxox You're forgetting the tax deduction. You need a much smaller return if you factor that in

 

[maximus242]

@danxox There are a couple of instances where it might be worthwhile. You could use it for rrsps, then use the tax refund to pay some of it off, and your regular rrsp contributions to pay the rest down. It lets you move up your contributions, effectively. Whether that actually works out mathematically depends on the exact numbers.

Also helps with, say, a bonus (my situation) that you'd want to put into rrsps. Since a bonus is taxed first, you can't put the whole bonus in rrsps. So you borrow from the loc to match the taxes, and then pay it off with the refund.

 

[new_christian]

@maximus242 I got the same offer. Did you accept it?

 

[maximus242]

@new_christian Haven't decided yet. Might work well with my annual bonus that I want to direct to retirement savings anyway, but gets taxed before it gets to me.

 

[soulsearchingservant]

@christian_follower My husband and I are both with scotiabank and we got the same offer but it was a RRSP catch up LOC. we will never accept it because we don’t even have room but it’s not a good deal anyway because apparently we would need to invest in their MFs. Plus borrowing at 7.7% and expect higher returns in the market is risky, especially on to of their fees. Just make sure it does not say that in the offer.

 

[tbdude65]

@soulsearchingservant You can open a self-directed iTRADE account and still use the catch up account and get the 7.7% interest rate. You can buy whatever you want. However, if the capital is less than $25,000, you get charged a $113 annual fee for the RRSP, which is silly imo.

 

[soulsearchingservant]

@tbdude65 Good to know but i don’t have room anyway. And honestly i prefer to stay away from the banks when it comes to investing.

 

[richlaw]

@tbdude65 You can not buy whatever you want, it’s pretty limited

 

[ronnie32]

@christian_follower Damn that’s good. I have personal line for 11.25% with a really good credit score

 

[beardeddarnell]

@ronnie32 I wonder if we can negotiate the LoC's

 

[hamarr]

@beardeddarnell I tried with Scotiabank. I have this 7.7 percent loc. They wouldn't lower it.

 

[lingkinghenry]

@beardeddarnell You absolutely can, they may not lower it but it is done often

 

[mommabee68]

@ronnie32 I have something similar as well, OP should accept it even if it’s with Scotiabank

 

[cosmic6942]

@christian_follower That's a very good rate for unsecured LOC (Prime+0.5%). Accept it.

 

[theonlyatheistonhere]

@christian_follower It is most likely an RRSP catch up LOC. there would be certain criteria to using it though. As in you can only use it to top up your RRSP.

 

[lbeemer86]

@christian_follower Sounds like a HELOC?

 

[christian_follower]

@lbeemer86 I thought the same but then my mortgage is with TD not Scotia so I was surprised to see this notification pop up. Unfortunately I can't attach an image to this post.

 

[josecuellar891]

@christian_follower This sounds like an “RSP Catchup LOC” Scotia has started offering them out when you sign in the last few days… If this is the case this is not an unsecured line of credit, and the funds can only be used to make an RSP contribution.

Edited: Grammar

 

[myjammyboy]

@christian_follower Just don’t give them your password or security key over the phone if they call you to finalize things.

 

[hamarr]

@christian_follower I have this Heloc with Scotiabank. It's a good rate but they won't lower it