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HiHopes

How to Correctly use LOC

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Hi there,

 

Just wanted to reach out to you more knowledgeable people and learn how to manage this properly. So I had a previous LOC from another bank that I have to close to do business with Scotia. I added that other bank's LOC account number as a payee to Scotia and made a lump sum payment to the account. When I go to the Professional Student Plan LOC within Scotia, it says that what I did was actually a cash advance to the other bank's LOC. Is this how this is normally displayed? I thought Cash Advances were subject to much higher interest rates, and so it was inadvisable for me to be making cash advances? Please advise :D

 

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ok so this is one of those cases where you actually have a profession student loan manager (at scotia in this case) who will make sure it was done correctly and no extra interest charges where made. That is one of the points of these "professional" loans, and it comes down to service which is important (ha, even more important than those free 20 dollar speakers - even if they are cool :) ). 

He/She will take care of it. I suspect that is just the label and no extra interest will be applied at all. If there  your adviser can fix it. 

Edited by rmorelan

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I am with Scotiabank too. Looking back at my statements, I do not think I have been charged any additional fees for Cash Advancements by paying it directly from the LOC. To err on the side of caution, it would probably be best to transfer the money to your Chequing Account, then paying the Payee from your Chequing account.

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You wouldn't think it would incur any additional fees or anything. I actually started wondering if it's because it was the very first transaction made with the Scotia LOC (because as soon as I use it, interest starts accumulating, instead of having an interest-free period like other forms of credit). Will follow up with them this afternoon.

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3 minutes ago, HiHopes said:

You wouldn't think it would incur any additional fees or anything. I actually started wondering if it's because it was the very first transaction made with the Scotia LOC (because as soon as I use it, interest starts accumulating, instead of having an interest-free period like other forms of credit). Will follow up with them this afternoon.

Unfortunately interest starts accumulating the moment you withdraw from your LOC, unlike credit cards where you have an interest free period. 

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That's exactly it. The reason why it shows cash advance is because it's warning clients of how interest counts from the moment that transaction was made. All transactions involving the line of credit are like cash advance in that sense, but their interest is settled as 2.45% . No reason to worry, says the Scotia rep. Hope this dispels anyone else's fears :P

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35 minutes ago, HiHopes said:

That's exactly it. The reason why it shows cash advance is because it's warning clients of how interest counts from the moment that transaction was made. All transactions involving the line of credit are like cash advance in that sense, but their interest is settled as 2.45% . No reason to worry, says the Scotia rep. Hope this dispels anyone else's fears :P

makes sense :)

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Does anyone know what happens to the LOC after residency is over? Can we continue to use the LOC or as some people have mentioned it automatically goes into repayment? 

Sorry for asking here I asked my RBC contact but she never responded. 

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