# LOC interest and min pymt



## Harper77 (Nov 11, 2009)

I was hoping someone could help me with this:

I have an unsecured LOC with CIBC, balance on it is 11K. Interest rate on it is 
6.750%. My minimum pymt is over 300 bucks per mos! 

Am I out in left field to think that the minimum pymt is too high for this? Is my interest rate too high? Could I get lower?


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## HaroldCrump (Jun 10, 2009)

Your interest rate is high, true, but whether it is too high or not depends on your relationship with the bank, your credit file etc.
I think you can do better than that, esp. since you carry a balance and pay interest.

Can you convert the unsecured to a secured LOC or HELOC?
Have you tried negotiating with the bank?
Have you shopped around through a broker?


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## Harper77 (Nov 11, 2009)

HaroldCrump said:


> Your interest rate is high, true, but whether it is too high or not depends on your relationship with the bank, your credit file etc.
> I think you can do better than that, esp. since you carry a balance and pay interest.
> 
> Can you convert the unsecured to a secured LOC or HELOC?
> ...



I can't convert to a secured because I just bought my first place in March. The bank said I don't have enough equity built up in the house yet.

Who do I speak to regarding the interest rate getting lowered at the bank?

I am not sure if this has an effect but a few times I have been short so to ensure I don't go into overdraft on my cheqing acct I transfer funds from the LOC - could that boost up the interest charged, such as if you take a cash advance on visa?


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## the-royal-mail (Dec 11, 2009)

Not sure you have many options. I tried negotiating a lower rate with my bank and the answer I got was a clear 'no' with a mere explanation of why they feel it should be what it is.

Why are you regularly short in your regular account? I try to keep a float of $1000-2000 in there so that doesn't happen. Save LOC for dire emergency.


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## Harper77 (Nov 11, 2009)

Honestly - I have been an idiot with my money and I am finally tired of it. I have tried to live and keep up with "the Jones's" and, in reality, its all fake! Like the sound by The Who, Eminence Front - he says "Its a Put On"

I never kept track of anything and basically just kinda shuffled through life, never taking ownership. I just turned 34 and I need to grow up! 

I just bought Gail Vaz-Oxlade's book on getting out of debt and also thought I would come back on this forum and try and get all the help I need.

I am laying everything open here and need all the help I can get. Suggestions and council is very much appreciated.


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## MoneyGal (Apr 24, 2009)

This isn't a matter of the interest rate, but the size of the outstanding balance and the minimum payment requirement on that account. 

A typical LOC (not HELOC) has a monthly minimum repayment of 3% of the outstanding balance. However, borrowers with a good relationship with the lender and excellent credit history can negotiate that down to 2% or even 1%. 

The simplest way for you to reduce your minimum monthly payments is to pay down the outstanding balance. 

The other route you could try is to wait it out - ensure your credit score keeps increasing and deepen your relationship with your lender. Then you can ask for a reduced minimum monthly repayment arrangement. If they say no, ask them what *specifically* you can do to improve your chance of a "yes" response, and ask them *when* you should come back for another review (i.e., "if you maintain your credit score of xxx, come back in 4 months and we'll see what we can do.")


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## MoneyGal (Apr 24, 2009)

Step no. 1: get books out of the library, not from the bookstore.


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## Harper77 (Nov 11, 2009)

MoneyGal said:


> Step no. 1: get books out of the library, not from the bookstore.


LMAO!
I knew someone would say that sooner or later!


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## MoneyGal (Apr 24, 2009)

Heh. I guess it was sooner, then.


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## the-royal-mail (Dec 11, 2009)

Harper77 said:


> Honestly - I have been an idiot with my money and I am finally tired of it. I have tried to live and keep up with "the Jones's" and, in reality, its all fake! Like the sound by The Who, Eminence Front - he says "Its a Put On"
> 
> I never kept track of anything and basically just kinda shuffled through life, never taking ownership. I just turned 34 and I need to grow up!
> 
> ...



Well, you're not "new" by your post count but you are still (obviously) quite welcome to post your profile and questions here and I will do my best to help. Others around here I'm sure feel the same way, Glad you decided to join us on your journey towards a financial awakening. 

You're so right about it being fake to try and keep up with others. Really, nobody cares. If you have the same as them, I suppose it makes for good social interactions but at the end of the night if is YOUR budget you have to face. And based on what I've read here and in the news, people aren't as rich as they think. Yes, we are fortunate but we also have record debt to show for it. $500K mortgages, absolutely nuts.

Have you read up on the 3 tier savings plan? Does that sound like something you would be able to attempt?


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## carverman (Nov 8, 2010)

Harper77 said:


> I was hoping someone could help me with this:
> 
> I have an unsecured LOC with CIBC, balance on it is 11K. Interest rate on it is
> 6.750%. My minimum pymt is over 300 bucks per mos!
> ...


Most LOC accounts require 3% of the outstanding balance to be repaid
each month or a minimum of $60 if the 3% is less..ie: you borrow $500
from the LOC (3% would be around $15), but they will specify $60 minimum
payment. 
In the case of 11K borrowed from a LOC, it probably is around $330 as
mentioned. Having an unsecured LOC means you will be
paying a higher interest rate than with a secured LOC or savings
on deposit with them. 

I have a President's Choice (administered by CIBC) LOc and the current
rate is PRIME 3.00 + 2.25 that the bank tacks on as their interest service
charge (5.25% per annum).

You can try to negotiate a lower interest rate, but that also would depend
on your debt load to income ratio. 

BTW..arranging for a secured LOC (secured against your property or other
assets you owe) also means a discharge fee $75 (or more )that the bank
will charge you if you should decide to cancel that secured LOC as they
have to go through legal process to "secure" their interest in your property.
I ran into that with a secured LOC with CIBC when I decided not to continue
banking with them and wanted it closed out with a final payment by check.

They also charge daily interest on the outstanding amount until the 
discharge is finally processed by head office, even though they took the
money out of my account within 3 banking days.. It took around 20 days
to receive the discharge papers from the bank and that was after I called
the branch manager to "light a fire" under them for taking so long. 

I felt that was unfair..but these are Canadian Banks.


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