Author Topic: I can save nearly $2000 using my new LOC!! WTF??? Seriously????  (Read 3102 times)

Malkynn

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So, I got a 2 page letter from my bank the other day informing me that I was pre-approved for a 30K LOC at ~7%.
Ok, cool. I'll take it.

Anyhoo, I proceed to read the 2 pages of fucking NONSENSE that accompany this pre-approval notification.

There's this huge bolded section explaining how using this LOC will easily save me nearly $2000 every year!
How you ask?
By balance transfering the 30K in credit card debt that I'm obviously carrying with no intention of ever paying off.

Seriously?
Like, this wasn't just one calculation that they put on the sheet explaining the possible benefits of having an extra 30K in revolving credit, this was THE ONLY selling point that they dedicated 2 whole pages to explaining.

This isn't some little predatory lender either, this is one of the Big Three Canadian banks (Royal Bank), and literally the ONLY scenario that they had in their LOC glossy promotional 2 page letter was that of carrying huge consumer debt for at least a year.

Are you fucking kidding me?
Is the market for high earners with multiple maxed out credit cards really so large that it warrants being the ONLY selling point for an LOC offer? I mean, it's not even a low interest rate!

*facepalm*

What the hell is this world coming to?

FIRE@50

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #1 on: March 07, 2019, 09:08:27 AM »
Is the market for high earners with multiple maxed out credit cards really so large that it warrants being the ONLY selling point for an LOC offer? I mean, it's not even a low interest rate!
This was the first thing that came to mind for me. There really is no other reason to take a 7% rate.

ChpBstrd

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #2 on: March 07, 2019, 09:35:55 AM »
IDK, might be a good move for some of the people who write case studies here about being in a debt spiral. For example, somebody who suddenly "got it" after living a payday loan or credit card fueled lifestyle, divorcees of gambling addicts and shopaholics, or U.S. people with massive medical debts. Might also make sense for people about to lose their home equity to foreclosure and need to buy a few months' time to sell the house.

Of course, many such people would have bad enough credit they'd never be approved for the loan, just as they couldn't get a no-interest on balance transfers CC. So probably this product's marketing makes sense because the product itself is only useful in extremely narrow circumstances.

And doesn't the bank know their target customers' credit is about to plummet? The only customers who would ever pay off these debts are born-again mustachians. Anyone else carrying $30k in CC debt is on their way to the next $30k. Is the bank holding these soon-to-be-subprime loans or spinning them off to bebt dealers?

Finances_With_Purpose

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #3 on: March 07, 2019, 09:41:53 AM »
Why would you assume large banks aren't predatory?  Check out their balance sheets and see what percentage of their banking income is pure fees...

Malkynn

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #4 on: March 07, 2019, 10:12:04 AM »
Why would you assume large banks aren't predatory?  Check out their balance sheets and see what percentage of their banking income is pure fees...

Oh, they're plenty predatory, but I live in a neighbourhood with the highest concentration of payday loan places in the entire country, so it's all relative.

Mississippi Mudstache

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #5 on: March 07, 2019, 10:33:21 AM »
Ha, I just got an offer today from Discover:

Quote
you’ve earned the opportunity to apply for a fixed-rate Discover personal loan!

Oh wow, me??? I've earned it?! The opportunity to apply for a $35,000 loan at 7% interest? Oh boy, where do I sign up? After all:

Quote
You could save hundreds — or even thousands — of dollars on interest by using your funds to pay off higher-rate bills, loans and credit cards.

Lololol. I haven't carried a loan at 7% interest in my entire life. GTF outta here.
« Last Edit: March 07, 2019, 12:33:14 PM by Mississippi Mudstache »

FIRE@50

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #6 on: March 07, 2019, 11:41:25 AM »
Why would you assume large banks aren't predatory?  Check out their balance sheets and see what percentage of their banking income is pure fees...
A business with fee income is predatory?

Alternatepriorities

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #7 on: March 07, 2019, 11:55:13 AM »
Those things crack me up and piss me off a bit at the same time. Several years ago I got a mortgage at 3%. Every couple of months the bank sends me a letter explaining how I could save money by refinancing... I feel slightly insulted but I've never been bored enough to call the bank and ask them to walk me through the savings...

JAYSLOL

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #8 on: March 07, 2019, 12:03:16 PM »
So, I got a 2 page letter from my bank the other day informing me that I was pre-approved for a 30K LOC at ~7%.
Ok, cool. I'll take it.

Anyhoo, I proceed to read the 2 pages of fucking NONSENSE that accompany this pre-approval notification.

There's this huge bolded section explaining how using this LOC will easily save me nearly $2000 every year!
How you ask?
By balance transfering the 30K in credit card debt that I'm obviously carrying with no intention of ever paying off.

Seriously?
Like, this wasn't just one calculation that they put on the sheet explaining the possible benefits of having an extra 30K in revolving credit, this was THE ONLY selling point that they dedicated 2 whole pages to explaining.

This isn't some little predatory lender either, this is one of the Big Three Canadian banks (Royal Bank), and literally the ONLY scenario that they had in their LOC glossy promotional 2 page letter was that of carrying huge consumer debt for at least a year.

Are you fucking kidding me?
Is the market for high earners with multiple maxed out credit cards really so large that it warrants being the ONLY selling point for an LOC offer? I mean, it's not even a low interest rate!

*facepalm*

What the hell is this world coming to?

Yep, I get those $30k pre-approved LOC ads in the mail from them all the time too, and tellers always ask me why I haven't gone for it every time I'm in the bank.  The funny thing is I doubt I'd be getting pre-approved for it if I did have $30k in high interest debt, so are they hoping I'll start maxing out my card and transferring it to their LOC?  I dunno. 

Finances_With_Purpose

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #9 on: March 07, 2019, 02:30:56 PM »
Why would you assume large banks aren't predatory?  Check out their balance sheets and see what percentage of their banking income is pure fees...
A business with fee income is predatory?

Not at all.  Most businesses and contracts have some fees for when things go wrong.  They can serve a purpose.  But there are some businesses and lines of business that might be, particularly the more the business's profits turn on fee income to the exclusion of other things. 

damyst

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #10 on: March 26, 2019, 10:17:12 PM »
Shortly after pulling our savings from the bank (once we realized how damaging the 2% management fees were), we started receiving invitations in the mail to apply for LOC products every few weeks.
Their marketing algorithm must have assumed that we'd put all our money into a down payment, and that we were now house-poor.
Eventually I got tired of it and told their customer service department to cut it out, saying "I have absolutely no interest - pun intended".
To their credit (ha!) we never received another solicitation from them after that.

kelvin

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #11 on: March 27, 2019, 12:36:29 PM »
I recently applied for a LOC with one of the big 5 Canadian banks.

Kelvin's history with LOCs:
-parent cosigned for student LOC when I went to school.
-spent ten years below the poverty line. Good months, the LOC was my checking account. My entire paycheck went there, and I bought groceries off it. Bad months had the LOC making payments on the CC which made payments on the LOC to avoid the "no payments made in 30 days" red flag.
-graduated! Got Real Job! Paid off LOC!
-had major falling out with family (gee, if only I'd never ever listened to them in the first place) and wanted to close down the student LOC as part of the separation.

I wanted another LOC because I'm still building my emergency fund (currently at 3 months and growing). So if something awful happens (Phoenix pay system, car crash, etc.) at least I've got the LOC. I've had this LOC for 6 months and haven't touched it. I hope to never need it.

As soon as I got it, I started getting alllllllll the ads for home renovation products. Apparently the only reason to get a LOC is to buy granite countertops.

@Finances_With_Purpose re: "Why would you assume large banks aren't predatory?" Welcome to Canada, where we respect bankers and actually believe the person behind the till is looking out for the financial well-being of the client. We're right to do so if we're talking to a "Financial Adviser" where "Adviser" is spelled with an "e". That title is regulated in Canada with licenses and standards.

"Financial Advisors", where "Advisor" is spelled with an "o", are not regulated and are just salespeople.

https://www.cbc.ca/news/canada/british-columbia/bank-s-deceptive-titles-put-investments-at-risk-1.4044702

Speaking of the American/Canadian banking divide, apparently some Americans believe our housing market is overinflated (it totally is) and that this means Canada is on the brink of a 2008 style meltdown (HAHAHAHAHAHAHA). They clearly have no idea about how our financial industry is regulated, how the CMHC operates, how our banks are required to protect their balance sheets, etc. We might have a recession, but it won't be the bloodbath that was 2008. Our "socialist" government has made sure of it.

Malkynn

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #12 on: March 27, 2019, 12:43:16 PM »
Not related to my LOC offer, but I just got a *special offer* through my professional association.

I could get an engraved metal platinum AMEX card for the reasonable annual fee of $700!
Gosh, the value deals just keep pouring in!

eljefe-speaks

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #13 on: March 27, 2019, 12:54:17 PM »
Speaking of the American/Canadian banking divide, apparently some Americans believe our housing market is overinflated (it totally is) and that this means Canada is on the brink of a 2008 style meltdown (HAHAHAHAHAHAHA). They clearly have no idea about how our financial industry is regulated, how the CMHC operates, how our banks are required to protect their balance sheets, etc. We might have a recession, but it won't be the bloodbath that was 2008. Our "socialist" government has made sure of it.

+ rec weed!

It won't be long before Canada elects a charlatan, reality TV huckster who promises to "Build That Wall" to keep out throngs of poverty-stricken Americans with no health insurance.

Oh, and more in line with the thread: I bought a motorcycle (face punch!) on an 8.5% loan (double face punch!)! So if I got your 7% offer I would be all over it. Off the cuff, anyone know of some internet lender that would give me a better rate? My credit score is firmly in the mustachian range.
« Last Edit: March 27, 2019, 12:59:00 PM by eljefe-speaks »

BDWW

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #14 on: March 27, 2019, 01:22:57 PM »
Reminds me of "Mint math".  I got hit with a one time $2.00 charge for using my debit card at an out of network ATM. Somehow mint determines that they can save me $903 bucks because of this fee...

Dogastrophe

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Re: I can save nearly $2000 using my new LOC!! WTF??? Seriously????
« Reply #15 on: March 27, 2019, 01:45:15 PM »
Not related to my LOC offer, but I just got a *special offer* through my professional association.

I could get an engraved metal platinum AMEX card for the reasonable annual fee of $700!
Gosh, the value deals just keep pouring in!

I received a similar one from my association.  Had a small (like half the size of a regular envelope) show up this week.  Inside, once unfolded, was a 1/2 poster size ad extolling the virtues of this fancy Amex card and why I should jump at the opportunity to hold this card. 

Few years back I answered a call from one of the consumer financial lenders (at one time we had bought a bed and used the 0% 'financing' through the store which was through the lender).  They told me that I was preapproved for up to $10,000 loan and would I be interested in accessing it.  For shits and giggles I asked them the interest rate .... 29%!  I laughed and told them that I would use my LOC at prime + 1% if I needed a loan.  Person calling said that their loan was structured much better that the LOC because I could make fixed monthly payments against it where my LOC only required interest only payments.  Wait ... wut?  Yeah, ok, thanks for calling.  Please don't call again.