General Goals 1) to be debt free in 3.5 years 2) save lots of money

Wednesday, January 12, 2011

TD Line of Credit and GST

Yesterday I got my GST cheque in the mail which is $62. 50. I planned to put it in to my TD line of credit, yesterday but didn't have time to go to the bank. So when I am next there it will do it. I got my updated statement in the mail. My line of credit is at $-32, 915.15 not including the $230.00 I put on it  Dec. 31 which will show up on next month's bill.  When I called TD the current balance was 32,685.15, this includes the $230 and will be on the number I will update my tracker to on the right.

When I called TD to get my updated line of credit amount for my net worth numbers I asked the guy what my monthly bills will look like once they add the principle.  Every time I have called them or walked into a branch no one will given me an answer to the question or even explain to me how they calculate the principle amount. Now this I find rather strange, after all TD is a bank and they are in the business of making money not giving it way for free. The lack of information TD has been willing to share about the process of paying them back has been minimal. Any ways I finally got it out of him, grudgingly. It was like pulling teeth.

So hears how it works: Lets assume that I stop paying anything into the principle now and only pay the interest. When Sept. 2011 roles around my line of credit will have an outstanding balance of -32,685.15. Now they factor min. payments of 1% of the balance. So this would mean $326.68, how he explained it to me was that this would also include my interest payments which are currently $126.12 a month.  If you calculate that 326.68-126.12= 200.56 will be the amount that goes directly into the principle amount each month.  The interest is calculated at a rate of 4.5% a month and this also assuming that the intrest stays the same for the next X number of years. If these factors all stay the same it will take me 1184.24 months or  98 years (1184.24/12 months a year) to pay it off.  98 YEARS!!!!

This sounds a bit crazy to me so he said no I think they make you pay 326.68 plus the interest each month. If this is the way they do it then it would be a payment of 326. 68+ 126.12 = 452.80. This is of course assuming that the interest of 4.5% stays the same from now until Sept. 2011. If this is the case then it will take me 100. 05 (32.685.15/ 326.86)  months to pay it off OR 8.33 years (100.05 months/ 12 months in a year). THUS 8.33 YEARS!!!!!

Now how much will I have paid in interest.... I have no idea. If some one is good with numbers and wants to solve that riddle, be my guest.... actually please do as I would love to know myself. Also I would love to know if my calculations are correct.

As I write this down I am getting a budget facial... Max comes highly recommended if anyone wants to give it a go! ;)


  1. Your first calculation sounds right to me but then again, I don't know their rules, you'd have to read the fine print.

    They like to drag out interest payments, like a credit card.

  2. I think your first calculation is a BIT off. It should take you 13.58 years to pay it off at the minimum rate ($200 capital paid off per month + interest). That's assuming your payments would decrease over time due to paying less interest. If you kept your payments the same ($326.68), it should take 10 years, 7 months(which would be a good idea). I'm assuming the interest rate is 4.5% per year, rather than monthly as that would be extreme! :-)

  3. ya I thought the first calculation was a bit off which is why I talked to him about the second one. The guy at TD said the second one was accurate. As for paper and 'fine print' that's the problem I don't have any. Nothing that talks about how the repayment process works. Even the contract I sighed when I first got it doesn't talk about the repayment process... its all kinda sketch.

    Moneyfreedomlife if your cal. are correct and it is 10.7 years... that's even more depressing then my 8+ years calc.

  4. Sarah paying back money and especially the interest is depressing. So now you know that by putting extra into your debt it will be paid back so much quicker and you,ll save heaps in interest
    so do you think thats info the banks want us to have ????
    No on your bloody life ...