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

[JohnGrisham]

30 minutes ago, hbmed said:

Wait could you elaborate on this? I (and my family) are super unfamiliar with how these work and was originally planning on getting loan insurance

Read a bit more about finances online.

Loan insurance protects the bank, not you, in most cases.     If you were planning on getting it, what was the reason why you were thinking of doing so? Maybe explaining your thought process and information that led you to that conclusion,  can then provide a better picture.    Me just telling you its not a good idea won't stick as well, if you explain and defend your point of view, and then i tell you why I *think* it may not be correct

EDIT: Well @rmorelan beat me to it typing at the same time  

[hbmed]

4 minutes ago, rmorelan said:

it is a trap

The point in insurance is to cover a rare but severe loss to yourself. That is why we have disability, fire, life, property.......insurance. Tragic events regarding all of those are rare but if they occur it would be very expensive. 

The key here is there MUST be a loss though. No loss then no point having insurance. 

In the case of your death as tragic as it might be doesn't have an associated critical loss, or at least doesn't for most people who are med students. Your estate would have to pay the loan - extremely likely it couldn't and then the bank would be forced to take the rest as a loss. Beyond that nothing happens - and as long as your estate doesn't have to pay for anything really that is fine. 

You can argue ok, so wait - I do have financial obligations in my death (say you are married for instance). Ok that is rarely true for med students but if it is true they you may need life insurance - however you would need clearly much more than the value of the LOC and it is usually cheaper to just get a policy directly for that. 

Bank charge interest on loans to cover profit + risk on their investment. All investors are doing that actually with any investment, and the bank has already factored the risk of your death when giving you the LOC. When you pay for insurance on the loan, you are reducing the banks risk - they will now get paid even if you are killed. However they do not offer in return anything to you for reduction - your interest rate stays the same. You are giving them something for nothing - which is in most cases stupid. If the banks cared about your death then they should be the ones getting the insurance (which actually they do indirectly). 

They may argue wait - if you die there are expenses - like your funeral even. Fine that may be true - but you can get a small life insurance policy, make your parents the receivers of it outside of the estate and cover that. All for vastly cheaper than any LOC insurance - and you can provide your parents for instance with whatever amount you want to accomplish other tasks as well. All without dealing with your LOC - again an investment which the bank has already charging interest to cover their risk. 

This overall is another lesson in personal finance - ha so PAY ATTENTION - banks, people that sell insurance or investments and so on often present products that make NO sense and cost you vast sums of money (this is just a small example, but still it reveals the pattern you must be aware of). This is in effect how their business often operates and you must assume that is what is going on so you must always educate yourself. Failure to do that will cost you a horrifying amount of money and the downstream time or freedom that money represents (hundreds upon hundreds of thousands of dollars here).

Thank you so much for the detailed explanation! This makes a lot of sense. We had talked about a small life insurance policy too, but were considering not worrying about that when we saw the LOC had an option for a protection plan- definitely will be avoiding the latter now! I know I have a lot more learning to do with regards to personal finance... hard to know where to start sometimes as a first gen student/MD hah, so thank you for the primer! 

[rmorelan]

11 minutes ago, JohnGrisham said:

Read a bit more about finances online.

Loan insurance protects the bank, not you, in most cases.     If you were planning on getting it, what was the reason why you were thinking of doing so? Maybe explaining your thought process and information that led you to that conclusion,  can then provide a better picture.    Me just telling you its not a good idea won't stick as well, if you explain and defend your point of view, and then i tell you why I *think* it may not be correct

EDIT: Well @rmorelan beat me to it typing at the same time  

Ha! well your point is valid - and if I may add part of what is being said here is this

Banks are a business - so why are they trying to sell me XYZ (what exactly is the angle). Really make sure you know that.

This is not to say that there aren't good advisors, bank people etc out there and so on. There absolutely are - but you need to approach them like an equal. The greatest advantage that I have when dealing with such people is the fact that they know that I know this stuff. That changes the dynamic completely. 

Edited June 13, 2020 by rmorelan

[rmorelan]

1 minute ago, hbmed said:

Thank you so much for the detailed explanation! This makes a lot of sense. We had talked about a small life insurance policy too, but were considering not worrying about that when we saw the LOC had an option for a protection plan- definitely will be avoiding the latter now! I know I have a lot more learning to do with regards to personal finance... hard to know where to start sometimes as a first gen student/MD hah, so thank you for the primer! 

No problem 

and where to start - don't let that seem overwhelming. Honestly you could walk into any book store, buy any basic finance book, read it in 2-3 hours and know VASTLY more than most people. 

The rules of basic finance - can fit on a cue card, and if you follow them you will be absolutely perfectly fine. It isn't that hard - but it is made to look that hard. Anything in personal finance so confusing you don't understand it - is another trap. 

[premed72]

I ended up going with scotia cuz most other banks required me to pay interest payments every month (at least that's what I got from their plan). This didnt sit well with me cuz I'll have no source of income (or maybe very minimal) throughout school and I dont have family that can dish out payments for me every month. Scotia allows to start paying off after the grace period but the catch is that the interest is compounded. But whatever I'll just take the hit. Also the credit card plans that Scotia offered were very attractive and when you finish training the LOC turns into a personal LOC with same interest rate. Other banks might do this but still. Overall I thought this was the best plan personally. 

[pacerpacer1]

15 minutes ago, premed72 said:

I ended up going with scotia cuz most other banks required me to pay interest payments every month (at least that's what I got from their plan). This didnt sit well with me cuz I'll have no source of income (or maybe very minimal) throughout school and I dont have family that can dish out payments for me every month. Scotia allows to start paying off after the grace period but the catch is that the interest is compounded. But whatever I'll just take the hit. Also the credit card plans that Scotia offered were very attractive and when you finish training the LOC turns into a personal LOC with same interest rate. Other banks might do this but still. Overall I thought this was the best plan personally. 

It’s one of those again where the bank tries to manipulate you but you do know you still pay for the line of credit interest right? The interest just accumulates in your LOC. With other banks, sure they take out the interest from the checking account but you’re free to take the payments out from your line of credit and transfer to your checking. In the end, it’s exactly the same - the next interest accumulates on the LOC for Scotia and all the other banks, if you did not have any other source of payments.

This was actually what kind of ticked me off with Scotia as well. They make it seem like it’s such a better deal and you don’t make payments. But you do - the payments are paid by your LOC for their LOC and other banks. Some people I talked to completely think they save way more money with Scotia but really the whole deal was just worded in a confusing way. Good thing my bf has some sort of financial acumen and explained this to me. 
 

[JohnGrisham]

3 minutes ago, pacerpacer1 said:

It’s one of those again where the bank tries to manipulate you but you do know you still pay for the line of credit interest right? The interest just accumulates in your LOC. With other banks, sure they take out the interest from the checking account but you’re free to take the payments out from your line of credit and transfer to your checking. In the end, it’s exactly the same - the next interest accumulates on the LOC for Scotia and all the other banks, if you did not have any other source of payments.

This was actually what kind of ticked me off with Scotia as well. They make it seem like it’s such a better deal and you don’t make payments. But you do - the payments are paid by your LOC for their LOC and other banks. Some people I talked to completely think they save way more money with Scotia but really the whole deal was just worded in a confusing way. Good thing my bf has some sort of financial acumen and explained this to me. 
 

It is more so a "peace of mind" that you dont forget to make the 2 clicks to move your money from the LOC to chequing for the interest payment each month.

[premed72]

19 minutes ago, pacerpacer1 said:

The interest just accumulates in your LOC

Ya I mentioned this in my post. And like what JohnGrisham said, I think this is way easier for me to handle. I also have finance friends with finance acumen and they told me the plan is great.  

[Medico22]

So, I am talking with "health care specialists" at both RBC and Scotiabank.  Both are advisors recommended  by the university.  

The RBC advisor stated that "presently, the rate will remain at prime -0.25% while you are a student, resident, and doctor".  Obviously, the rate float with prime. But, she also said that they (RBC, and any other institution) are unable to guarantee the rate of prime minus 0.25% in the future and that even once starting the LOC the rate could change.

Meanwhile, the Scotiabank advisor stated quite clearly that if I take the loan "the rate will remain at prime minus 0.25% forever" even after finishing the grace period and converting to a personal line of credit.

Differences here - anyone else encounter this?

[JohnGrisham]

22 minutes ago, Medref said:

So, I am talking with "health care specialists" at both RBC and Scotiabank.  Both are advisors recommended  by the university.  

The RBC advisor stated that "presently, the rate will remain at prime -0.25% while you are a student, resident, and doctor".  Obviously, the rate float with prime. But, she also said that they (RBC, and any other institution) are unable to guarantee the rate of prime minus 0.25% in the future and that even once starting the LOC the rate could change.

Meanwhile, the Scotiabank advisor stated quite clearly that if I take the loan "the rate will remain at prime minus 0.25% forever" even after finishing the grace period and converting to a personal line of credit.

Differences here - anyone else encounter this?

Both banks have the right to change their terms whenever they want - it's just that if one bank does it, you can then leverage that a different bank isn't doing it and that you would simply move to them.

No functional difference.

[rmorelan]

On 6/15/2020 at 3:09 PM, Medref said:

So, I am talking with "health care specialists" at both RBC and Scotiabank.  Both are advisors recommended  by the university.  

The RBC advisor stated that "presently, the rate will remain at prime -0.25% while you are a student, resident, and doctor".  Obviously, the rate float with prime. But, she also said that they (RBC, and any other institution) are unable to guarantee the rate of prime minus 0.25% in the future and that even once starting the LOC the rate could change.

Meanwhile, the Scotiabank advisor stated quite clearly that if I take the loan "the rate will remain at prime minus 0.25% forever" even after finishing the grace period and converting to a personal line of credit.

Differences here - anyone else encounter this?

sure....but read the contract itself. It will say they can change the rate etc at any time. 

This doesn't mean either side is lying though - Scotia intends to keep it at prime -0.25 - they really do. RBC can change it at any point (so can scotia) but intends to keep it at prime -0.25. However NEITHER will ever be different because if they are you can pack up and go to the other one even though EITHER can change it at any time. 

This is why I am not particularly concerned by all this - the only thing in the end that protects you is the competition and any working relationship you develop with any particular banker. 

Also I should mention one thing so it doesn't come as a surprise. The reason in part it is prime -0.25 is there was a point in the past where banks didn't drop the rate as much as the Bank of Canada did. The gov dropped the rate 0.5% in total, and the banks dropped it less. This entire prime -0.25 is really just a correction to really get them back to actually prime. Now they are a bit trapped and stuck using less than prime (prime in the past was literally as low as you could go - that is why it was the prime rate). At some point they must get rid of the saying prime -0.25 and just make new prime = old prime - 0.25. so the language again makes sense. 

 

 

Edited June 17, 2020 by rmorelan

[petmegoat]

Has anyone been able to secure the Passport Visa Infinite card from Scotiabank this year? My advisor informed me that they are no longer waiving the $60,000 minimum income.

I've been told that I can only get the gold AMEX + a normal Scotiabank Visa Rewards card. Would love to hear from other Scotiabank customers to know if it's an issue w/ my advisor or if they really just changed the criteria this year.

[JohnGrisham]

16 minutes ago, petmegoat said:

Has anyone been able to secure the Passport Visa Infinite card from Scotiabank this year? My advisor informed me that they are no longer waiving the $60,000 minimum income.

I've been told that I can only get the gold AMEX + a normal Scotiabank Visa Rewards card. Would love to hear from other Scotiabank customers to know if it's an issue w/ my advisor or if they really just changed the criteria this year.

Go to a different advisor, the are wrong

[petmegoat]

2 minutes ago, JohnGrisham said:

Go to a different advisor, the are wrong

I called the medical financial partner of Scotiabank (MD Financial or something) and they confirmed that the $60,000 minimum income holds. Any suggestions as to what I can do?

[DrOtter]

Just now, petmegoat said:

I called the medical financial partner of Scotiabank (MD Financial or something) and they confirmed that the $60,000 minimum income holds. Any suggestions as to what I can do?

They're defs wrong. I worked with an advisor for UOttawa (look up Kyu Tompkins at Scotia) and he hooked me up with an LOC, gold Amex and the Visa Infinite Passport right away. I don't think you need to be at uOttawa to work with him, or he can refer you to someone who knows their stuff better. 

[JohnGrisham]

14 minutes ago, petmegoat said:

I called the medical financial partner of Scotiabank (MD Financial or something) and they confirmed that the $60,000 minimum income holds. Any suggestions as to what I can do?

Yes, technically i'm sure the 60k minimum is there, but almost every single advisor will just waive that, because its apart of the package anyways for medical professionals. 

[rmorelan]

16 minutes ago, petmegoat said:

I called the medical financial partner of Scotiabank (MD Financial or something) and they confirmed that the $60,000 minimum income holds. Any suggestions as to what I can do?

MD Financial? I mean scotia bought them but since when would they be directly dealing the LOCs at that level. 

I would hope they won't be frankly. 

and I haven't run into that kind of restrictions you mentioned before myself. 

 

Edited June 17, 2020 by rmorelan

[hehe123]

39 minutes ago, petmegoat said:

Has anyone been able to secure the Passport Visa Infinite card from Scotiabank this year? My advisor informed me that they are no longer waiving the $60,000 minimum income.

I've been told that I can only get the gold AMEX + a normal Scotiabank Visa Rewards card. Would love to hear from other Scotiabank customers to know if it's an issue w/ my advisor or if they really just changed the criteria this year.

tell them that literally every other advisor is giving that card this year

[MDLD]

Is interest calculated daily with these lines of credits? Does anyone know of an online tracker to calculate the LOC interest. I am just trying to get an understanding of how much interest I will have to pay after my residency if I use x amount of the line of credit. 

Sorry if these are easy answers but I don't know much about finances and thought I would ask here before I start my own searching. I would love to be able to have an excel file sheet that I could use to so I can see how much interest I will have to pay back in 8-10 years. 

[DrOtter]

55 minutes ago, MDLD said:

Is interest calculated daily with these lines of credits? Does anyone know of an online tracker to calculate the LOC interest. I am just trying to get an understanding of how much interest I will have to pay after my residency if I use x amount of the line of credit. 

Sorry if these are easy answers but I don't know much about finances and thought I would ask here before I start my own searching. I would love to be able to have an excel file sheet that I could use to so I can see how much interest I will have to pay back in 8-10 years. 

 

https://apps.royalbank.com/uaw0/personalloans/payment

RBC has this really handy calculator here. But the interest rates and payment terms are largely identical between banks so you can use the tool anyway! I'm expecting about 20-30k of interest for sure by the end of school LOL.

Also here's a sample of the excel sheet: https://www.vertex42.com/Calculators/line-of-credit-tracker.html

Also I think the amount of interest will vary depending on how long it takes us to pay off the loan. So it'll probs accrue while in residency but as staff, we'll be able to pay it off a lot faster.

[MDLD]

42 minutes ago, DrOtter said:

I'm expecting about 20-30k of interest for sure by the end of school LOL.

My heart just stopped . 

Will have to get comfortable with this i guess  

[DrOtter]

3 minutes ago, MDLD said:

My heart just stopped . 

Will have to get comfortable with this i guess  

 

 

lol yeah I know.... I tried putting in 25-year amortization on a 200k debt and it gives out 70k interest LOL  

[med_gods]

I was wondering if there are any special promos banks are doing for med student LOC? I heard in previous years they gave out iPads or cash back, but from my own research, it seems like so far, there aren't any special back to school offers yet. Thanks!

[popfossa]

11 hours ago, med_gods said:

I was wondering if there are any special promos banks are doing for med student LOC? I heard in previous years they gave out iPads or cash back, but from my own research, it seems like so far, there aren't any special back to school offers yet. Thanks!

RBC gave out Ipads last year but no indication of that yet. Scotia is offering 300 dollars in cash if you open with them by July 30th, 2020. 

[med1234med]

Hey a little late to this talk but I am also looking for the best bank for the LOC. 

From my understanding Scotia bank has the best credit cards and rewards. However, when I talked to RBC they said they have a whole team of healthcare specialist at your disposal for free advise for help with basically anything. Buying a new car, paying off your med debt or more medical related things. They were very much about their holistic approach to help you and the idea you had one team there for you the whole time, very easy to contact. 

Does scotiabank offer that to? When I talked to them they didn't really mention that, they mentioned their partnership with MD finance but is that help free?

I'm a little lost about this who thing.