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

[rmorelan]

1 hour ago, champagnepapi said:

Does anyone know how interest accuses on our LOC per year, and a rough conversion factor? I saw an earlier thread from 2014 that every $1000 borrowed you have to pay 30$ annually in interest.  This will vary depending upon the prime rate and the amount you borrow, and when in your schooling you decide to borrow (year 1 vs year 4/carms expenses), but as school is starting around the corner, and expenses begin to pile up, I am trying to gage whether its worth borrowing from the LOC right away right now, and how much interest will accrue annually. I have tried googling, but cant find a straight answer for this. Thank you! 

Roughly on  300K of LOC debit you end up paying at the current interest rate about 560 dollars a month (a bit less actually). That isn't based on math so much as I know people with that level of LOC and know their payments

you can use that to scale up or down in terms of interest and LOC amount. Also I ALWAYS have to warn people that the interest is very low - it may stay there for a bit but one issue with the rate being so low is any increase proportionally feels like a big deal (a standard 0.25% increase ups you immediate interest amount by over 10% for instance). That matters if you need to use this LOC for potentially upwards of 10 years (4 years med, 5 residency, 1 fellowship year - and then you still may need it a bit to get set up etc). Be careful out there - these 350K LOC are a very dangerous weapon. 

 

[bruh]

Just got my LOC from Scotia. If anyone is looking for a good advisor in Toronto, here are the details:

Branch: Toronto

Advisor: Abraham Philip, abraham.philip@scotiabank.com

LOC Amount: $350K, fully available at account opening, no limit on what it could be used on. Up to $50K extra LOC available during residency/fellowship (amount will depend on specialty)

Interest rate: Prime-0.25% for life, even after residency. No interest payment required until 2 years after residency.

Perks: Preferred Chequing account (Fee waived for life). Passport Visa Infinite and Gold American Express credit cards (fees waived for life). Preferred Mortgage rates available from last year of medical school. Get to keep all my old credit cards, including those with TD and BMO. Unfortunately couldn't get the $300 cash incentive, missed the deadline 

[rmorelan]

13 minutes ago, bruh said:

Just got my LOC from Scotia. If anyone is looking for a good advisor in Toronto, here are the details:

Branch: Toronto

Advisor: Abraham Philip, abraham.philip@scotiabank.com

LOC Amount: $350K, fully available at account opening, no limit on what it could be used on. Up to $50K extra LOC available during residency/fellowship (amount will depend on specialty)

Interest rate: Prime-0.25% for life, even after residency. No interest payment required until 2 years after residency.

Perks: Preferred Chequing account (Fee waived for life). Passport Visa Infinite and Gold American Express credit cards (fees waived for life). Preferred Mortgage rates available from last year of medical school. Get to keep all my old credit cards, including those with TD and BMO. Unfortunately couldn't get the $300 cash incentive, missed the deadline 

No interest payment until 2 years after residency? I have to think that is supposed to be something else? 

Otherwise this should be as I understand it what scotia will offer. Looks pretty good

Edited July 31, 2020 by rmorelan

[bruh]

13 minutes ago, rmorelan said:

No interest payment until 2 years after residency? I have to think that is supposed to be something else? 

Otherwise this should be as I understand it what scotia will offer. Looks pretty good

I don't have to make any payments until 2 years after residency is finished (interest will just accumulate). Is that what you assumed I meant?

[VivaColombia]

42 minutes ago, bruh said:

Just got my LOC from Scotia. If anyone is looking for a good advisor in Toronto, here are the details:

Branch: Toronto

Advisor: Abraham Philip, abraham.philip@scotiabank.com

LOC Amount: $350K, fully available at account opening, no limit on what it could be used on. Up to $50K extra LOC available during residency/fellowship (amount will depend on specialty)

Interest rate: Prime-0.25% for life, even after residency. No interest payment required until 2 years after residency.

Perks: Preferred Chequing account (Fee waived for life). Passport Visa Infinite and Gold American Express credit cards (fees waived for life). Preferred Mortgage rates available from last year of medical school. Get to keep all my old credit cards, including those with TD and BMO. Unfortunately couldn't get the $300 cash incentive, missed the deadline 

Does that mean you get to keep the LOC for life? With the CCs/account type fees waived indefinitely?

[rmorelan]

31 minutes ago, bruh said:

I don't have to make any payments until 2 years after residency is finished (interest will just accumulate). Is that what you assumed I meant?

Sure - it is wording ha - I would say you are still making interest payments, they are just put onto the LOC. You don't have to make any principle payments. 

I have that LOC - and two years post residency they still aren't directly taking any payments - it is all just going on the LOC. What eventually is supposed to happen is that it gets converted to a professional LOC - same limits/rules etc. They don't seem to be in any hurry to get principal payments started (not that I am waiting for them to ask ha). 

and yes it seems I have that LOC withe current rules indefinitely and similar accounts etc. Nothing has really changed. 

[bruh]

32 minutes ago, VivaColombia said:

Does that mean you get to keep the LOC for life? With the CCs/account type fees waived indefinitely?

 

10 minutes ago, rmorelan said:

Sure - it is wording ha - I would say you are still making interest payments, they are just put onto the LOC. You don't have to make any principle payments. 

I have that LOC - and two years post residency they still aren't directly taking any payments - it is all just going on the LOC. What eventually is supposed to happen is that it gets converted to a professional LOC - same limits/rules etc. They don't seem to be in any hurry to get principal payments started (not that I am waiting for them to ask ha). 

and yes it seems I have that LOC withe current rules indefinitely and similar accounts etc. Nothing has really changed. 

What @rmorelan said haha. Several options are available post-residency. I was advised physicians either convert their LOC into a professional credit or take advantage of some tax situations converting it into property equity and something for private practice docs - No idea what he was talking about tbh but I think I have some time until I can figure that out 

[rmorelan]

7 hours ago, bruh said:

 

What @rmorelan said haha. Several options are available post-residency. I was advised physicians either convert their LOC into a professional credit or take advantage of some tax situations converting it into property equity and something for private practice docs - No idea what he was talking about tbh but I think I have some time until I can figure that out 

just a bit of time

[Bud101]

I'm still debating between scotia and RBC but is there any use in waiting until O-week to commit to one? I heard each bank has incentives and promotions when they give their pitches during O-week, but does anyone know if they are actually any different than the incentives they have now? 

[rmorelan]

2 hours ago, Bud101 said:

I'm still debating between scotia and RBC but is there any use in waiting until O-week to commit to one? I heard each bank has incentives and promotions when they give their pitches during O-week, but does anyone know if they are actually any different than the incentives they have now? 

Not usually - for the simple reason that almost everyone already has a LOC by then - now is the time for marketing. 

That is just because people use the LOC for starting costs in a lot of cases - and welcome to that insane tuition. That just keeps getting worse. 

[sportyrichmd]

How does interest work for LOC when it changes? This is probably a really simple question lol but is it like this:

I borrow $10k, and monthly 2% interest is charged (if that's what interest rate is right now). That new borrowed amount becomes $10200.

Next month, interest rate becomes 4%. That month, I am charged 4% on the $10200.

And then the next month, if it goes back to 2%, I am charged 2% from then on.

[MedicineLCS]

Interest accrues daily at the going rate and is charged monthly. So for the days you were at 4% you'd be charged 4%/365, added up monthly of your balance that day. For the days you were at 2% you'd be charged 2%/365, added up monthly. 

However, practically speaking, the Bank of Canada has signaled that interest rates will remain low for the near future, but the LOC rate is still a floating rate so it can go up in the future. It's incredibly unlikely that rates go lower than they are now since the BoC rate is now 0.25% (the Prime rate is always above the BoC rate, but they typically move together, although not always by the same amount), they can't go lower without going negative, which brings with it new issues: https://www.reuters.com/article/us-canada-cenbank/bank-of-canada-sees-economy-below-pre-covid-levels-until-2022-with-rates-remaining-low-idUSKCN24G204

[rmorelan]

34 minutes ago, sportyrichmd said:

How does interest work for LOC when it changes? This is probably a really simple question lol but is it like this:

I borrow $10k, and monthly 2% interest is charged (if that's what interest rate is right now). That new borrowed amount becomes $10200.

Next month, interest rate becomes 4%. That month, I am charged 4% on the $10200.

And then the next month, if it goes back to 2%, I am charged 2% from then on.

 

1 minute ago, MedicineLCS said:

Interest accrues daily at the going rate and is charged monthly. So for the days you were at 4% you'd be charged 4%/365, added up monthly of your balance that day. For the days you were at 2% you'd be charged 2%/365, added up monthly. 

However, practically speaking, the Bank of Canada has signaled that interest rates will remain low for the near future, but the LOC rate is still a floating rate so it can go up in the future. It's incredibly unlikely that rates go lower than they are now since the BoC rate is now 0.25% (the Prime rate is always above the BoC rate, but they typically move together, although not always by the same amount), they can't go lower without going negative, which brings with it new issues: https://www.reuters.com/article/us-canada-cenbank/bank-of-canada-sees-economy-below-pre-covid-levels-until-2022-with-rates-remaining-low-idUSKCN24G204

I will say all that is quite true - I will reinforce that of course over the time span of an LOC (can be upwards of 10 years of training plus pay off time) - really hard to know what you will be paying and when. 

I was very lucky with the rates over my training and to date. Hopefully I and everyone else will continue to be so lucky ha!

[sportyrichmd]

43 minutes ago, MedicineLCS said:

Interest accrues daily at the going rate and is charged monthly. So for the days you were at 4% you'd be charged 4%/365, added up monthly of your balance that day. For the days you were at 2% you'd be charged 2%/365, added up monthly. 

However, practically speaking, the Bank of Canada has signaled that interest rates will remain low for the near future, but the LOC rate is still a floating rate so it can go up in the future. It's incredibly unlikely that rates go lower than they are now since the BoC rate is now 0.25% (the Prime rate is always above the BoC rate, but they typically move together, although not always by the same amount), they can't go lower without going negative, which brings with it new issues: https://www.reuters.com/article/us-canada-cenbank/bank-of-canada-sees-economy-below-pre-covid-levels-until-2022-with-rates-remaining-low-idUSKCN24G204

So just so I can tell the difference between accumulating interest and charging interest... if I borrow $100 on the first day and it accumulates interest during the whole month, and then at the end of the month I'm charged 4%/30. Then that interest is charged to my account. Then, starting from that day, I now have $100 + 4%/30 as my principle that is then accumulating interest daily.

[rmorelan]

3 minutes ago, sportyrichmd said:

So just so I can tell the difference between accumulating interest and charging interest... if I borrow $100 on the first day and it accumulates interest during the whole month, and then at the end of the month I'm charged 4%/30. Then that interest is charged to my account. Then, starting from that day, I now have $100 + 4%/30 as my principle that is then accumulating interest daily.

yes - that math is very very close to what actually happens. 

[DrOtter]

On 6/29/2020 at 4:50 PM, popfossa said:

For Scotia's 300 cash offer, would payments from CESB via direct deposit count as one of the criteria? I've pasted the criteria below for reference. 

EDIT: Advisor said ANY direct deposit counts so COVID support counts. 

 

1) Make at least one (1) eligible online bill payment of at least $50 through the Scotiabank Mobile App or through Scotia OnLine, or

2) Set up a minimum of two (2) separate eligible recurring pre-authorized transactions† with a minimum value of at least $50 per transaction which will each recur monthly for a minimum of three (3) consecutive months, or

3) Set up an eligible recurring direct deposit† which will recur monthly for a minimum of three (3) consecutive months.

Hmm pretty strange but I contacted Scotia Help on Twitter and they said that CESB and CERB don't count as recurring direct deposits, only things like payrolls count. 

Can you maybe confirm with your advisor? 

[dh.]

On 8/1/2020 at 9:13 PM, sportyrichmd said:

So just so I can tell the difference between accumulating interest and charging interest... if I borrow $100 on the first day and it accumulates interest during the whole month, and then at the end of the month I'm charged 4%/30. Then that interest is charged to my account. Then, starting from that day, I now have $100 + 4%/30 as my principle that is then accumulating interest daily.

The interest rate is annual, calculated daily, and compounded monthly; if your balance remained the same for the duration of a 30 day month, your interest calculation can be simplified like this:

balance * rate/365 * days_in_month

So if your opening balance at the start of the month is $100, and remains the same, you’ll end the month with a new balance of $100.33.

$100 + 100*0.04/365*30 = $100.33

[Psych]

3 hours ago, DrOtter said:

Hmm pretty strange but I contacted Scotia Help on Twitter and they said that CESB and CERB don't count as recurring direct deposits, only things like payrolls count. 

Can you maybe confirm with your advisor? 

That is weird- my advisor (Kyu) told me that my monthly OTB payment from the government would count. He also said that any direct deposit counts

[DrOtter]

3 minutes ago, Psych said:

That is weird- my advisor (Kyu) told me that my monthly OTB payment from the government would count. He also said that any direct deposit counts

ya I spoke to Kyu and he said it would. Scotia is surprisingly disjointed in their messaging lol 

[popfossa]

1 hour ago, DrOtter said:

ya I spoke to Kyu and he said it would. Scotia is surprisingly disjointed in their messaging lol 

Screenshot the email from Kyu and if they try to give you any fuss in the future then just show them the email. I also emailed him again and asked and he confirmed any direct deposit counts as long as you get it for 3 consecutive months! So we're good!  

[James Nystead]

Any update to the No Passport Visa Infinite bonus offer situation yall

[DrOtter]

4 minutes ago, James Nystead said:

Any update to the No Passport Visa Infinite bonus offer situation yall

 

heyyyy so I got the 30,000 Bonus offer after spending $1000 on that card. but the 5,000 Welcome Bonus is still no there yet. Spoke to Scotia Rewards today and they're still "looking" into it.

[James Nystead]

Just now, DrOtter said:

heyyyy so I got the 30,000 Bonus offer after spending $1000 on that card. but the 5,000 Welcome Bonus is still no there yet. Spoke to Scotia Rewards today and they're still "looking" into it.

Same thing happened to a friend which is odd but they say 2 cycles for welcome award. I assume the same will happen to me. Gonna get them to contact Scotia Rewards and their Scotia person I guess - thanks for update

[DrOtter]

Just now, James Nystead said:

Same thing happened to a friend which is odd but they say 2 cycles for welcome award. I assume the same will happen to me. Gonna get them to contact Scotia Rewards and their Scotia person I guess - thanks for update

Yeah I sent a message to the Pres Office too but haven't heard from there either.

[MDLD]

same here got my 30k for the visa credit cards but no welcome bonus. do you have the email for pres office ill email them in addition to kyu.