#FinancialTip #CreditCardDebt #LineOfCredit #InterestRates
Hey everyone! I recently received an offer from RBC for a line of credit of $15,000 with a 5.49% interest rate. My current credit card charges me a whopping 20% interest, and I’m finding it difficult to make a dent in my debt because of the high interest charges. 🤯
So here’s my burning question – can I use this line of credit offer to pay off my credit card debt? What do you all think? 🤔
I know that I’ll have to repay the $15,000, but a 5.49% interest rate sounds much more manageable compared to the 20% I’m currently facing. Any thoughts or advice on this dilemma would be greatly appreciated! 💭
Possible solution: Consider transferring your credit card debt to the line of credit to take advantage of the lower interest rate, but be sure to have a plan in place to repay the $15,000. This could potentially save you money in the long run and make it easier to pay off your debt. What do you think? Let’s discuss! 💬
Yes, accept the LOC and pay off the credit card. Put the CC away.
5.49% is serioursly low, do pay icc off with it. but know that the 5.49 might be a promo rate that might go up
Check again it’s not 5.49
It works IF and only IF you also address the issues that got you into this mess and don’t simply transfer the debt then run the cards right back up again.
Yes, this is what is called a debt consolidation. It is almost always more advantageous to consolidate higher interest debt into a lower rate solution, assuming you have a structured payment plan as opposed to just moving the balance and letting it sit there.
What another commenter said is that it is likely not 5.49%. The rate quoted is most likely Prime + 5.49%. Someone can correct me if I’m wrong but Prime right now is about 7%. This would put the rate of the credit line at 12.49%. Still better than 20%+, but important to note that it is Prime + this rate.
There are credit cards that have a balancer transfer option typically there’s a 1%-3% transfer fee for 12 months at 0%. You can do this option to buy you an extra year. If the fee works in your favor.
Remember this must be paid off in full by the end of term or there is major interest charged. Continue hammering down payments. Near the end of 12 months transfer whatever is left over to your LOC for the lower rate.
Like others have mentioned you must be disciplined in paying this off for this to work.
[Credit Card Balance transfer rates](https://www.ratehub.ca/credit-cards/todays-best-balance-transfer-credit-cards?utm_source=google&utm_medium=cpc&utm_campaign=en-cc-prospecting-search-types&utm_term=balance%20transfer%20calculator&utm_content=&gad_source=1&gclid=Cj0KCQjwsaqzBhDdARIsAK2gqndSXYV1i2VNQ8ZH6VftwDe43UHFEDvKmJpw9AXv1uwhFSc4OF5GcDkaAiF-EALw_wcB)
Minimum payments have to decrease the balance — they are calculated to be greater than interest & fees. Your credit card agreement will have the specific calculation.
If your balance is increasing, something else is going on.
With a line of credit, you don’t pay interest on the available balance, just on money you withdraw. Similar to a credit card.
Minimum payments have to decrease the balance — they are calculated to be greater than interest & fees. Your credit card agreement will have the specific calculation.
If your balance is increasing, something else is going on.
With a line of credit, you don’t pay interest on the available balance, just on money you withdraw. Similar to a credit card.
5.49% seems crazy low for an unsecured LOC. I’ve not seen less than prime for a ULOC that wasn’t a student ULOC for dental or medical school.
That’s literally how I dug myself out of debt.
If you think you might be able to qualify, a good solution may be to look for another card with a low interest rate that has a balance transfer offer active.
MBNA usually has these offers available – the card would likely have a 13.99% interest rate, but they offer 0% for the first 12 months if you transfer the balance to them. This comes with an up front fee (3%~ of the transferred balance) that guarantees they earn something on the deal if you happen to pay it off in full over the 12 month promo period.
Even if they don’t approve you for a limit that covers the full debt, having them move even a portion would be a savings to you as you work to get things under control – as long as you trust that you won’t be tempted to build another balance. Then any remaining balance could be paid with a line of credit at a lower rate.
If you do complete the balance transfer and aren’t able to pay it off by the time the interest-free period ends, you could still utilize a LoC offer to pay that off & get the lower rate… or find another card offering a balance transfer promo.
Edit: To add, you may also be able to go through a company like Credit Genius that offers cash-back for referrals – you would apply for the card through their links, and then once approved they offer a cash payout. In the past they have had $100 cash offers for approval on the low-interest MBNA card, which will help to offset the cost of the transfer fee.
Are you sure it’s not 5.49 plus prime? Even still, I would use it to pay off credit card
Probabaly 5.49% +prime
One of my friends got LOC from National bank of Canada and its interest rate is lower than others. Maybe, you can ask them as well, as it might save you significant amount compared to RBC LOC.
Get the LOC, pay off and then cancel all your CCs.
If you require a CC then make sure it’s maximum limit is no higher than $500. If you need to make a large purchase on your CC you can preload it with funds ahead of time.
If you get the LOC and keep your CCs active as is you have a strong possibility of racking them up, and having the LOC debt on top. Very dangerous.
Yes. Lower interest is lower interest. Just ensure that your credit card is paid in full every month afterwards.
Yes why not? If they both are at the same bank, they may block you using any promo interest offers but you can always move it to another place and then pay it out using your RBC LOC. Reducing interest really helps pay off debts.
I never look at the minimum. Full cc payment each month. LOC probably more than 5.49% but still much less than cc %, so use LOC to pay off cc. Then pay full cc each month.
If you can’t pay your cc balance down to zero every month, you shouldn’t have a cc.
LOC is probably 5.49+prime, most credit except HELOCs are over 10%, either way use it to pay off CC better option
If you take the RBC offer, you CAN NOT use the card for anything else (read the fine print)
Debt consolidation works well in theory however those that have problems managing credit wont have the discipline to close the accounts after the consolidation.
Yes you can, we do this all the time. Just make sure you pay off the LOC too, you don’t want to compound the problem!
If you can pay off your debts within 12 months, I’d look into a balance transfer card like MBNA’s true line first. There are offers that are for 1% to 3%, and that amount wouldn’t change over a 12 month period the way that line of credit interest can fluctuate
You sure it’s not 5.49+prime?
Yes. Dont be stupid and max out your credit cards after though.
Is it a HELOC?
That’s how I cleared out my residual debt from keeping a sick family member housed and fed when I was earning a lower income. I used my LOC which had a rate of 3.25% at the time to pay off the card and then paid that LOC off over 2.5 years
Take that offer asap while it’s available and use it to pay off the CC. Next thing you know your CC is overdue and you don’t qualify for other credit products. If the CC comes with an annual fee then downgrade to a non fee one.
RBC prime is 6.95% right now. How do you get 5.49%?
As others are saying, the interest may be prime + 5.49%. Find that out first because there are credit cards out there with low interest rates.
That is how I paid off my credit card debt. Had it maxed at 19.99%, applied and got a low interest card for 11% and it helped me pay it off faster. The 11% had a $40 annual fee but the math still worked out cheaper for it. Then I got rid of the 11% one once I had it all paid off.