Thursday, October 28, 2010

Interest Rates on Old Lines of Credit

I have a 17-year old line of credit that has seen very little use. I have it “just in case”. A recent temporary need for money led me to use it instead of selling investments, but I never actually checked on the interest rate. The rate turns out to be prime+4.5%. Ouch.

I’m not exactly up on appropriate interest rates for unsecured lines of credit since the credit crisis, but this seems a little high. Perhaps the problem is that the bank is determining the interest rate partially on 17-year old information I gave them when I opened the line of credit. Or maybe they are just hoping that I won’t notice.

Either way, I’ll be off to the bank to try to get a better rate soon. Anyone else who has an old line of credit but hasn’t looked at the interest rate lately might do well to check it and possibly try to get it lowered.


  1. I have the opposite effect, that I have an Unsecured LOC that was Prime + 0.5% for the longest time, but is now Prime +1.0% because I opened it with Canada Trust. Every time I go in the bank and someone sees it they ask, "How did you get that?".

  2. @Big Cajun Man: Well, you've given me some hope that I can narrow the 3.5% gap between my interest rate and yours.

  3. Apparently banks are very patient for a client to borrow from a line of credit. On a related note, did you know that a tick can wait up to three years between bloodmeals? :-)

  4. @Gene: Your tick analogy is priceless. Hopefully, my 17-year tick won't find the blood meal it gets from me very filling.