Professional Student Lines of Credit

Typically, professional students at university programs can get some preferred rates and terms for Lines of Credit at the big banks. Unfortunately, credit unions aren't particularly on top of things, so you're going to have to deal with the Big 5: TD, BMO, Scotia, CIBC & RBC.

Be sure to deal with their preferred branches (usually near the universities themselves), instead of standard branches which probably just do regular student Lines of Credit, otherwise they might not be too familiar with what is available for you.

Be sure to shop all of them around to see how low their rates go.

Most will give you a free chequing account for at least a couple years.

My Scotia Professional Student Line of Credit Experience:

You can't write cheques directly off the Line of Credit itself. You have to transfer the funds to your chequing account, and write a cheque off of that. This kinda sucks, because you have to start paying interest on it right away before the cheque is cashed/cleared. It probably doesn't make a huge difference in the long run.

The Line of Credit is accessible through an ATM/ABM, but not for Interac purchases. Boo-urns again.

I am assuming that I can make online bill-payments directly off of it, but that doesn't really hugely matter, I can always transfer from the LoC to my chequing account immediately before and not pay any undue interest.

From what I have heard, the TD Line of Credit is basically a chequing account with awesome overdraft privileges. In other words, you can have direct deposit go into it, write cheques off of it, use it for bill payments, Interac purchases etc. Nice to have direct deposits go directly against what you owe, rather than having to transfer it between accounts every couple weeks if you work part time. Some people use a TD Line of Credit as their only bank accounts.

Scotia's terms (for me) were pretty good: You don't have to pay back the interest while you are in school, as long as you don't hit your Line of Credit's limits. You also have 1 year before you have to start paying it back. This length might be different for students that need to do articling or multi-year residencies. The interest rate (Prime + whatever) floats the same once you graduate and when you start paying the principal. For me anyway, it was, if I had <$10000 in balances, I'd have 5 years to pay it off, with unlimited prepayment privileges. If it was >$10000, I'd have 10 years.

Of course, since I could repay any amount at any time, I could always refinance it into something else if I wanted to.

Just for reference, as of September 2008, the Prime rate is 4.75% and most recently was _not_ changed by the Bank of Canada (I know, I know, there is no Bank of Canada set Prime Rate, but bear with me if you're an econ major and see the errors of my terminology)

Scotia did NOT require me to get any kind of life insurance, which I believe it does make some mentions about on their website. They do ask you if you want disability insurance etc, etc, on the loan. Having no estate to speak of, I obviously declined. Keep in mind, that in the event of your unfortunate death or some such, your family or others would NOT be responsible for paying it back, unless they co-signed.

In the event that you _do_ think you should have disability insurance or life insurance, I'd say shop around. Chances are that the rates they offer you right then and there aren't so great. It is an upsell for them.

I also declined Scotia's credit card offerings, the 1% CitiMastercard Cash Back MC is a better deal with less hassles. The Scotia Cash Back Credit card is actually a bad deal. Their gold card doesn't really offer much either.  I'd recommend not having unnecessary credit cards, since having high available balances can make you appear "riskier" if/when applying for a mortgage/car loan.

If I was thinking, I would've tried to ask for them to waive their annual fee on one of their premium credit cards, but even then, I don't spend _that_ much on my credit card.

So, which Line of Credit should YOU choose?

Well, probably whichever has the best interest rate is the ideal choice.

If more than one bank offers the same rate, then go by relevant things like: Repayment periods, not requiring any particular insurance, difficulty of paying things off of the LoC itself and branch locations. If the only place you can go get stuff handled is halfway across town, that could be a pain.

But keep in mind, you can always get a Line of Credit at one bank, and do day-to-day banking at another. Most of the Canadian banks have free bank accounts for students anyway these days, but often, the ones you get with a Professional Student Line of Credit will continue to be free for at least a little while after you graduate.