Rates for Line of Credits

[donna007]

Hi all, so I recently recieved a letter from my bank stating that they will increase my rate for my unsecured line of credit, an incease of almost 2%. I was wondering will I be able to go to my bank and negotiate this increase? Has anyone ever tried with success? And if anyone knows, how are these rates determined? If anyone knows the average rate going for individual banks?
Thanks in advance

[brwonsugal]

everything is negotiable.

[MortgageQueen]

Because it's unsecured, they can pretty much do as they please. Check your L of C agreement. It'll probably say something to the effect that they reserve the right to change the rate and/or terms.
That said, I wouldn't lay down on this one. I'd call to find out why?? the rate increased so dramatically. Were you late or miss a payment? Sometimes that's all it takes (much like credit cards) for the rate to increase.
You could always threaten to move your business to another bank too.
IF you have a mortgage and IF you have equity in your house, you can also consider attaching your Line of credit to your home mortgage when you re-finance. Rates vary for this too, but I generally get 1/2 percent above prime for these "secured" line of credits. . . if that's any help. .
Let us know what happens. . .

[ahatt]

I have an LOC with TD and I haven't received anything yet saying if my rates are going up. I did read an article on moneyville.ca that said TD and CIBC are changing their LOC's. TD is increasing their rates for about 60% of their customers. Is your LOC with TD by chance?

[tjthemanto]

Hi all, so I recently recieved a letter from my bank stating that they will increase my rate for my unsecured line of credit, an incease of almost 2%. I was wondering will I be able to go to my bank and negotiate this increase? Has anyone ever tried with success? And if anyone knows, how are these rates determined? If anyone knows the average rate going for individual banks?
Thanks in advance

See this article by Ellen Roseman in Toronto Star..not only the rates are increasing CIBC is even going to start charging a big discharge fee just like the one they charge for mortgages when you pay it off and close your LOC.

http://static.thestar.com/article/11...-cost-you-more

[tjthemanto]

I have an LOC with TD and I haven't received anything yet saying if my rates are going up. I did read an article on moneyville.ca that said TD and CIBC are changing their LOC's. TD is increasing their rates for about 60% of their customers. Is your LOC with TD by chance?

Here's the artcle.

http://static.thestar.com/article/11...-cost-you-more

[tjthemanto]

They are doing this when the Bank of Canada's lending rate is at a historic low...nothing but pure greed on the part of the commercial banks especially the big 5

[pandora1437]

Here's the artcle.

http://static.thestar.com/article/11...-cost-you-more

What does this mean "Meanwhile, CIBC is adding a $260 discharge fee for those who close out lines of credit or loans secured by real estate."

[ashedfc]

They are doing this when the Bank of Canada's lending rate is at a historic low...nothing but pure greed on the part of the commercial banks especially the big 5

True, Banks operating in Canada have access to money at 1%rate & those Canadian banks having operations in US have access to money at 0% (yes 0%) that's the Federal Reserve interbank lending rate.
Loc rates are being increased in preparation of expected defaults which might occur in the future. It's a modern day govt sponsored robbery. & other than negotiation with your lender, there's nothing you can do. Yes, you can close the loc, probably this is what the banks want, this way they can reduce their overall risk exposure...

[donna007]

Thanks everyone for all your info links and advice. I'm planning to go to the bank in a few days to inquire about this increase and give an update =)

[donna007]

Because it's unsecured, they can pretty much do as they please. Check your L of C agreement. It'll probably say something to the effect that they reserve the right to change the rate and/or terms.
That said, I wouldn't lay down on this one. I'd call to find out why?? the rate increased so dramatically. Were you late or miss a payment? Sometimes that's all it takes (much like credit cards) for the rate to increase.
You could always threaten to move your business to another bank too.
IF you have a mortgage and IF you have equity in your house, you can also consider attaching your Line of credit to your home mortgage when you re-finance. Rates vary for this too, but I generally get 1/2 percent above prime for these "secured" line of credits. . . if that's any help. .
Let us know what happens. . .

Thank you so much for all the info, it definitely helps. You're always full with info =) I will let you know what happened.

I have an LOC with TD and I haven't received anything yet saying if my rates are going up. I did read an article on moneyville.ca that said TD and CIBC are changing their LOC's. TD is increasing their rates for about 60% of their customers. Is your LOC with TD by chance?

ahatt, yes, my LOC is with TD, but do you know why the increase are only for their 60% customers? I don't think its fair...

[LovelyLaeticia]

I got this letter too... ticked me off. We're going to be switching to a different bank for our LOC, and are planning on getting a secured one, rather than unsecured.

[lovelikewinter3]

My LOC is with TD as well, and the interest just went up from ~5.75% to ~7.80%, no known reason. If anyone has had success with negotiating their increase, can you please share it here? I would greatly appreciate it

[MortgageQueen]

My LOC is with TD as well, and the interest just went up from ~5.75% to ~7.80%, no known reason. If anyone has had success with negotiating their increase, can you please share it here? I would greatly appreciate it

That rate just makes steam come out of my ears. Holy cow! Banks just seem to have no end to their greed.
If ANYBODY is getting charged this kind of rate and are holding a fair amount of a balance on their LOC, you really should consider getting a "secured" LOC if you have enough equity in your home.

Below is an example of $20,000.00 balance in a line of credit. Payment is based on Interest ONLY.

Interest rate Monthly Payment Money u would SAVE w/Lower Rate

7.5 $125.00 $800.04 in just 1 year

5.5 $ 91.67 $400.08 " "

3.5 $ 58.33 Lowest rate

That is considerable savings and that is only based on $20,000.00 Most people have a higher balance then that . . . .

[MortgageQueen]

I just learned that 60 percent of TD customers will be getting the same notice of increase. . .and 40 percent will see a decrease. Apparently if you have higher profile products with TD you get the decrease. . otherwise too bad, so sad. Love banks. .

If you are with CIBC and have an secured line of credit (by real estate) they will be adding and Additional $260 discharge fee starting April 1st (appropriate date) So now's the time to get out if you want to avoid it. . .