The Line of Credit
Posted by Richard | Filed under Richard
I called the bank today, for a little old-fashioned telephone banking. (Actually, I live a block away from a branch that’s open on Saturday’s, so I do most of my banking in person, because I like making the bank use my lack of interest on my chequing account to employ people in entry level positions.)
I called about my line of credit. Initially my line of credit got me through University when the education savings dried up. It helped to have a source of credit to tap as I worked my way through, and developed my knowledge of finance. (My father cosigned: Thanks Dad!)
Anyway, after I graduated, and got my first real job, and learned the virtue of paying off deb,t I cleared it out. But I didn’t get rid of it. I got my father removed as a co-signer, so it was just me, but there it sits in my bank account, right under my Visa card when I go online to make sure everything is about right. And so I’ll use it to help shuffle money around, since it’s a (relatively) low source of debt holding when I need it. I don’t think I’ve had more than $1,000.00 in debt there since the wedding: but it was plenty useful for the wedding when all those bills hit the credit cards at once, and the tax refund was still a couple months away.
Actually, on a bit of a lark, four years ago I asked the bank to increase my line of credit, and grinned from ear-to-ear when assetless-me turned out to be trustworthy for almost $20,000.00. That’s pretty cool right there. Logging in to internet banking and seeing all the debt I’m not using is a vicarious little thrill.
I called the bank about the line of credit because I’ve had to take some large bills on the credit card of late, and I’d rather pay 5% interest as I get rid of them than the 15% interest on my credit card. But, this means I’d have to become very attentive to the line of credit, and so I wanted something set up automatically that I wouldn’t have to routinely think about, and wouldn’t risk missing a payment.
It turns out the best the bank can do is sign me up for ensuring my minimum monthly payment happens each month. So, it looks like I’ll have to do some intensive management if I want this paid off in any sensible amount of time. (See: this is why try to I bank in person, the bank absolutely has no vested interest in helping me keep my money: so why shouldn’t I make it as expensive as I can for them to do so?)
Now, I’ve gathered that normally lines of credit are tied to assets… like a house or a condominium… with a particular view to if you get hit with major repairs like “replace your roof” or “excavate your entire foundation” you don’t lose your property, but instead can take liquid cash directly from the bank to do maintenance work.
And, of late, people have started using them to do fun things like “pay off your credit cards” or “vacation in Puerto Rico for two weeks.” And that explains a lot of the indebtedness ratio that’s creeping into Canada.
So, I am wondering: do you have a line of credit, and what do you use it for?