Lines of Credit for Medical Students (Scotia is the best option)

[Eudaimonia]

1 hour ago, PhD2MD said:

I was told that revolving credit was different, ie: anything you've got that's revolving credit is taken dollar-for-dollar from the credit cards.

I suppose it could be taken from your credit card limit, or from LOC limit (latter was my case). Keeping in mind that the minimum limit for their credit cards is 5000 and you can only have 10000 of revolving credit with Scotiabank. To have any more would decrease your LOC limit (did that happen to you?), so it seems the limits on these two products are sort of interchangable 

[NeuroD]

2 minutes ago, Eudaimonia said:

I suppose it could be taken from your credit card limit, or from LOC limit (latter was my case). Keeping in mind that the minimum limit for their credit cards is 5000 and you can only have 10000 of revolving credit with Scotiabank. To have any more would decrease your LOC limit (did that happen to you?), so it seems the limits on these two products are sort of interchangable 

I closed all of my non-soctia debt, so I'm not sure.

[Eudaimonia]

9 minutes ago, PhD2MD said:

I closed all of my non-soctia debt, so I'm not sure.

That's 10000 of Scotiabank revolving credit, and I believe you said you had 15000, but sounds like your LOC limit didn't decrease

[ScotiabankMedsAdvisor]

20 minutes ago, Eudaimonia said:

I suppose it could be taken from your credit card limit, or from LOC limit (latter was my case). Keeping in mind that the minimum limit for their credit cards is 5000 and you can only have 10000 of revolving credit with Scotiabank. To have any more would decrease your LOC limit (did that happen to you?), so it seems the limits on these two products are sort of interchangable 

As of today any outside revolving credit that you wish to keep open reduces the line of credit limit.  The reduction is dollar for dollar for the limits you keep open.  Outside credit cards do not affect the credit card limits at all.  This is also supposed to be tweaked for the better with the changes.

[la marzocco]

35 minutes ago, Eudaimonia said:

That's 10000 of Scotiabank revolving credit, and I believe you said you had 15000, but sounds like your LOC limit didn't decrease

Tbh, credit cards and LOC are both revolving credit instruments.. - credit is credit. so they should and would be treated the same. For me, they said once I close my non-Scotia cards, I need to just provide proof it has been closed and they would up the LOC back to $275K, but.. at this point, I haven't even bothered asking them to increase it back as I am not even close to $265K (.. nor do I want to be..)

 

[docdurrr]

Hey everybody, 

i’m a newly admitted medical student and am trying to chose between banks to open a line of credit. Although the title of this thread says scotia is the best option, can anyone tell me which bank they have found to be the best and why?

also some other small questions:

what is considered a “good” interest rate?

do you get offered (or are eligible for) a cool credit card with nice plans when you open a line of credit this big? If so, what banks give the best offers (no annual fees, travel or cash back plans)?

 

Thanks everyone!

[NeuroD]

52 minutes ago, docdurrr said:

Hey everybody, 

i’m a newly admitted medical student and am trying to chose between banks to open a line of credit. Although the title of this thread says scotia is the best option, can anyone tell me which bank they have found to be the best and why?

also some other small questions:

what is considered a “good” interest rate?

do you get offered (or are eligible for) a cool credit card with nice plans when you open a line of credit this big? If so, what banks give the best offers (no annual fees, travel or cash back plans)?

  

 Thanks everyone!

Don't mean to be rude, but that's kind of what we've been talking about....scroll back a few pages and you'll find people's take on the various options available. Not much has changed in the last couple of days.

[yellowbee]

D

[GTA Med Advisor]

12 hours ago, yellowrose said:

Does Scotia offer a 2 year grace period by contract? Because, the adviser I am talking to gave me a contract with a 1 year grace period on it, and said the grace period extension is optional, but didn't give me the option to add it to the contract.

It's not updated in our credit agreement yet, but we do offer the 2 years.

[jfdes]

On 6/18/2018 at 3:37 PM, ScotiabankMedsAdvisor said:

As of today any outside revolving credit that you wish to keep open reduces the line of credit limit.  The reduction is dollar for dollar for the limits you keep open.  Outside credit cards do not affect the credit card limits at all.  This is also supposed to be tweaked for the better with the changes.

So you don't care how many credit lines we have open, you would just reduce the LOC by the combined credit limits of the cards? Even if it is say 20k - 30k in credit limit over 5+ cards?

How does this policy work with "open" cards, e.g. Amex charge cards that do not have a credit limit because you are required to pay the balance off in full every month?

[finallymed2018]

Hi guys. Just wanted to add my 2 cents!

I have been a lurker on this thread for a long time (probably because I'm super frugal with my money) and I see that a lot of people in this forum are debating between the Scotia LOC and the RBC LOC. I have been leaning towards Scotia for a long time but I just spoke with an advisor from RBC who clarified the following:

Yes, the perks of Scotiabank's credit cards and no mandatory monthly LOC payment seems very attractive at first. However, what many students don't account for is compound interest.  Since Scotiabank adds your monthly interest to the principal borrowed amount at the end of every month, your interest is being compounded. 

Let's say that both banks are offering you interest at prime - 0.25 calculated daily with prime being 3.45: 

$10000 * (3.45%-0.25%)/365*30 = $26.30

With Scotiabank, you are borrowing $10000 in September to pay for your school tuition. At the end of September, your balance becomes $10026.30. At the end of October, your balance becomes 10026.30 + 27.25 = $10053.55. At the end of November, it is $10079.99, and by Christmas, your balance is: $10,107.36. You have accumulated $107.36 interest.

Now with RBC, you are also borrowing $10000 in September to pay for your school tuition. However, you are required to pay your interest at the end of every month. Thus, at the end of September, you must pay $26.30. This means that your principal borrowed balance REMAINS at $10,000. At the end of October, you pay an interest of $27.18. November, you again pay $26.30, and December, you pay $27.18. For the four months, you have paid a total of $106.96 in interest. 

This might seem minimal, but over 4 years of MD + 2-5 years of residency...

(Let's go with $100,000 for 6 years)

With compound interest (Scotia): you will be paying at total of $ 121,166.03 ($21,166.03 in interest over 6 years). 

With no compound interest but monthly payments (RBC), you will be paying a total of $119200.00 ($19,200 in interest over 6 years). 

Note that it will may take 10...20 years until your line of credit is fully paid off. Maybe I'm just overthinking (maybe you can save just as much with the credit card perks...) but I just wanted to share my knowledge with the rest of you because reading some of your comments these past few months have been very helpful. Thanks for reading : )

PS: If someone can confirm this is true, that would be great and would really help me pick a suitable institution! 

[dantheman24]

6 minutes ago, finallymed2018 said:

Hi guys. Just wanted to add my 2 cents!

I have been a lurker on this thread for a long time (probably because I'm super frugal with my money) and I see that a lot of people in this forum are debating between the Scotia LOC and the RBC LOC. I have been leaning towards Scotia for a long time but I just spoke with an advisor from RBC who clarified the following:

Yes, the perks of Scotiabank's credit cards and no mandatory monthly LOC payment seems very attractive at first. However, what many students don't account for is compound interest.  Since Scotiabank adds your monthly interest to the principal borrowed amount at the end of every month, your interest is being compounded. 

Let's say that both banks are offering you interest at prime - 0.25 calculated daily with prime being 3.45: 

$10000 * (3.45%-0.25%)/365*30 = $26.30

With Scotiabank, you are borrowing $10000 in September to pay for your school tuition. At the end of September, your balance becomes $10026.30. At the end of October, your balance becomes 10026.30 + 27.25 = $10053.55. At the end of November, it is $10079.99, and by Christmas, your balance is: $10,107.36. You have accumulated $107.36 interest.

Now with RBC, you are also borrowing $10000 in September to pay for your school tuition. However, you are required to pay your interest at the end of every month. Thus, at the end of September, you must pay $26.30. This means that your principal borrowed balance REMAINS at $10,000. At the end of October, you pay an interest of $27.18. November, you again pay $26.30, and December, you pay $27.18. For the four months, you have paid a total of $106.96 in interest. 

This might seem minimal, but over 4 years of MD + 2-5 years of residency...

(Let's go with $100,000 for 6 years)

With compound interest (Scotia): you will be paying at total of $ 121,166.03 ($21,166.03 in interest over 6 years). 

With no compound interest but monthly payments (RBC), you will be paying a total of $119200.00 ($19,200 in interest over 6 years). 

Note that it will may take 10...20 years until your line of credit is fully paid off. Maybe I'm just overthinking (maybe you can save just as much with the credit card perks...) but I just wanted to share my knowledge with the rest of you because reading some of your comments these past few months have been very helpful. Thanks for reading : )

PS: If someone can confirm this is true, that would be great and would really help me pick a suitable institution! 

Hmm I see where you're coming from but I personally (and I could be wrong) don't see any difference between the two. Let's take Scotia for example, they say they take your interest payment out of your LOC to make it easier for you. I'm sure if you have savings you could pay the 26-27 dollars per month for you 10k credit and not have to worry about compound interest. The reverse is also true for RBC. Let's say now you're with RBC and you don't have savings and cannot pay the 26-27 dollars per month. Then you simply take the money out of your LOC and pay off your interest which then leads to compounding as you mentioned. 

So from what I see, the only difference is whether someone has their own money (savings etc) to pay their monthly interest or if they're going to use the LOC. So the bank you choose shouldn't matter in that case. Can someone correct me if I'm wrong? Thanks!

[xiphoid]

13 minutes ago, finallymed2018 said:

Yes, the perks of Scotiabank's credit cards and no mandatory monthly LOC payment seems very attractive at first. However, what many students don't account for is compound interest.  Since Scotiabank adds your monthly interest to the principal borrowed amount at the end of every month, your interest is being compounded. 

The RBC advisor I met with told me the same thing when I flat out told her that Scotiabank offered better perks than RBC (which wasn't news to her, she had a response already prepared). However, this is on the condition that you pay interest on the amount you've already borrowed from your LOC each month for RBC. As a medical student, unless you have income coming in on a regular basis every month (which isn't the case for most students), the money to pay down the interest will come from the LOC itself. Ultimately, it ends up working out to be the exact same (even the RBC advisor conceded that it was the same unless you had regular income during the year). You just have the added monthly hassle of making sure you transfer funds from your LOC to pay the interest with RBC.

[finallymed2018]

2 minutes ago, xiphoid said:

The RBC advisor I met with told me the same thing when I flat out told her that Scotiabank offered better perks than RBC (which wasn't news to her, she had a response already prepared). However, this is on the condition that you pay interest on the amount you've already borrowed from your LOC each month for RBC. As a medical student, unless you have income coming in on a regular basis every month (which isn't the case for most students), the money to pay down the interest will come from the LOC itself. Ultimately, it ends up working out to be the exact same (even the RBC advisor conceded that it was the same unless you had regular income during the year). You just have the monthly added hassle of making sure you transfer funds from your LOC to pay the interest ever month with RBC.

We might have talked to the same advisor seeing as I went with the same approach  

8 minutes ago, dantheman24 said:

Hmm I see where you're coming from but I personally (and I could be wrong) don't see any difference between the two. Let's take Scotia for example, they say they take your interest payment out of your LOC to make it easier for you. I'm sure if you have savings you could pay the 26-27 dollars per month for you 10k credit and not have to worry about compound interest. The reverse is also true for RBC. Let's say now you're with RBC and you don't have savings and cannot pay the 26-27 dollars per month. Then you simply take the money out of your LOC and pay off your interest which then leads to compounding as you mentioned. 

So from what I see, the only difference is whether someone has their own money (savings etc) to pay their monthly interest or if they're going to use the LOC. So the bank you choose shouldn't matter in that case. Can someone correct me if I'm wrong? Thanks!

Thanks for the input. I think you may be right. Either way, I am going to call Scotiabank to make sure I can make those monthly interest payments if I want to.

Sorry for the mix-up; just goes to show how far my Grade 9 econ class goes...haha. 

 

[Eudaimonia]

11 minutes ago, dantheman24 said:

Hmm I see where you're coming from but I personally (and I could be wrong) don't see any difference between the two. Let's take Scotia for example, they say they take your interest payment out of your LOC to make it easier for you. I'm sure if you have savings you could pay the 26-27 dollars per month for you 10k credit and not have to worry about compound interest. The reverse is also true for RBC. Let's say now you're with RBC and you don't have savings and cannot pay the 26-27 dollars per month. Then you simply take the money out of your LOC and pay off your interest which then leads to compounding as you mentioned. 

So from what I see, the only difference is whether someone has their own money (savings etc) to pay their monthly interest or if they're going to use the LOC. So the bank you choose shouldn't matter in that case. Can someone correct me if I'm wrong? Thanks!

Yes this is all correct. You can pay however much you want whenever you want at either bank, but Scotia just takes care of it in case you forget to make your payment. This backup makes sure your credit score is unaffected. I think this difference between the banks is really a minor one especially if you're good at making timely payments 

[King74]

It sounds to me like the RBC advisor is digging hard & using fancy terms to try to win you over, something I would personally hate to see in an advisor.  In reality most people in this situation are just going to end up taking money out of their LOC once a month in order to pay the interest, like @Eudaimonia & @dantheman24 mentioned.  From experience, it just ends up being more of a hassle than anything because if you had the money to make a payment you would make it immediately, regardless of when the payment is due, in order to minimize interest over time.  The Scotiabank set-up is more efficient, as they realize this is what is happening & do it for you to save you the trouble.  You can otherwise make payments on it whenever you want, just like a credit card.

[rmorelan]

1 hour ago, dantheman24 said:

Hmm I see where you're coming from but I personally (and I could be wrong) don't see any difference between the two. Let's take Scotia for example, they say they take your interest payment out of your LOC to make it easier for you. I'm sure if you have savings you could pay the 26-27 dollars per month for you 10k credit and not have to worry about compound interest. The reverse is also true for RBC. Let's say now you're with RBC and you don't have savings and cannot pay the 26-27 dollars per month. Then you simply take the money out of your LOC and pay off your interest which then leads to compounding as you mentioned. 

So from what I see, the only difference is whether someone has their own money (savings etc) to pay their monthly interest or if they're going to use the LOC. So the bank you choose shouldn't matter in that case. Can someone correct me if I'm wrong? Thanks!

you are right that there is basically absolutely no difference. Almost no one is actually making interest payments in medical school, and BOTH LOC systems require you to pay the interest with the LOC itself which in BOTH cases causes the exactly same compounding effect. 

If you had money each month somehow to pay the interest nothing is stopping you at Scotia from just moving it onto the LOC. Not having to figure out the interest payment each month and move it to your chequing account in advance at RBC personally was a pain - and if you forget you go into overdraft and get a hit from that. It was all just an unnecessary annoyance that could be done with software (as it is at Scotia) automatically. 

[ScotiabankMedsAdvisor]

47 minutes ago, finallymed2018 said:

Hi guys. Just wanted to add my 2 cents!

I have been a lurker on this thread for a long time (probably because I'm super frugal with my money) and I see that a lot of people in this forum are debating between the Scotia LOC and the RBC LOC. I have been leaning towards Scotia for a long time but I just spoke with an advisor from RBC who clarified the following:

Yes, the perks of Scotiabank's credit cards and no mandatory monthly LOC payment seems very attractive at first. However, what many students don't account for is compound interest.  Since Scotiabank adds your monthly interest to the principal borrowed amount at the end of every month, your interest is being compounded. 

Let's say that both banks are offering you interest at prime - 0.25 calculated daily with prime being 3.45: 

$10000 * (3.45%-0.25%)/365*30 = $26.30

With Scotiabank, you are borrowing $10000 in September to pay for your school tuition. At the end of September, your balance becomes $10026.30. At the end of October, your balance becomes 10026.30 + 27.25 = $10053.55. At the end of November, it is $10079.99, and by Christmas, your balance is: $10,107.36. You have accumulated $107.36 interest.

Now with RBC, you are also borrowing $10000 in September to pay for your school tuition. However, you are required to pay your interest at the end of every month. Thus, at the end of September, you must pay $26.30. This means that your principal borrowed balance REMAINS at $10,000. At the end of October, you pay an interest of $27.18. November, you again pay $26.30, and December, you pay $27.18. For the four months, you have paid a total of $106.96 in interest. 

This might seem minimal, but over 4 years of MD + 2-5 years of residency...

(Let's go with $100,000 for 6 years)

With compound interest (Scotia): you will be paying at total of $ 121,166.03 ($21,166.03 in interest over 6 years). 

With no compound interest but monthly payments (RBC), you will be paying a total of $119200.00 ($19,200 in interest over 6 years). 

Note that it will may take 10...20 years until your line of credit is fully paid off. Maybe I'm just overthinking (maybe you can save just as much with the credit card perks...) but I just wanted to share my knowledge with the rest of you because reading some of your comments these past few months have been very helpful. Thanks for reading : )

PS: If someone can confirm this is true, that would be great and would really help me pick a suitable institution! 

My advice to clients on this is to always use up any money they have sitting in their bank accounts before using the line of credit.  

As medical students you do not have the time to work so where does the money come from to make the interest payments.  It comes from the line of credit.  On paper other banks lines of credit don’t compound because you have to make interest payments.  Don’t be fooled by this as you are going to take money from the line to make the interest payment.

[j17f]

Can someone ELI16 ?

[Laughter]

I recently talked to advisors from both RBC and Scotia.

In regards to the actual line of credit; interest rate, limits, grace period, etc. they are identical. With Scotia they use the LOC to automatically pay the interest every month while with RBC you are charged the interest but could just manually take it out of your LOC (maybe even set up automated payments?). 

The only real differences between the banks are not directly related to the LOC. So types of credit cards, sign-up bonus points, etc. 

One concern with RBC is the credit card fees are only waived for 4 years, while Scotia's credit card fees are waived until the end of the grace period. This is my understanding based on discussions with both advisors, can anyone confirm this? 

[jfdes]

12 hours ago, Jfourn said:

Can someone ELI16 ?

RBC and Scotia offer the most competitive rates and products, Scotia is slightly better because they automate the interest payment process and give you better credit cards (with more years of the fee waived I think). Ultimately you'll just want to go with an option that has a good advisor who is familiar with medical students' needs, but Scotia has enough good advisors that are easy to find that you should probably just go with them.

[j17f]

2 hours ago, jfdes said:

RBC and Scotia offer the most competitive rates and products, Scotia is slightly better because they automate the interest payment process and give you better credit cards (with more years of the fee waived I think). Ultimately you'll just want to go with an option that has a good advisor who is familiar with medical students' needs, but Scotia has enough good advisors that are easy to find that you should probably just go with them.

Thank you for that, but I was making a grade 10 math joke lol.

[jfdes]

1 hour ago, Jfourn said:

Thank you for that, but I was making a grade 10 math joke lol.

Oh oops haha my bad

[coppertone1605]

Has anyone looked into getting (or already gotten) their LOC through MD Financial Management? Are their rates comparable? Are they a good support resource to have? I'm just wondering if going through a system that is dedicated to the MD profession would provide more tailored advice/services than a big bank would.  

[xiphoid]

16 minutes ago, coppertone1605 said:

Has anyone looked into getting (or already gotten) their LOC through MD Financial Management? Are their rates comparable? Are they a good support resource to have? I'm just wondering if going through a system that is dedicated to the MD profession would provide more tailored advice/services than a big bank would.  

Scotiabank bought MD Financial a few weeks ago so it'll all be under a big bank.