Lines of credit

What is a line of credit?

A line of credit is a preauthorized loan that you can access at any time, in whole or in part, to carry out a project, pay bills or simply avoid the inconvenience of a rejected transaction.

Whenever you withdraw money from your line of credit—either by a direct payment at a retailer, with a cheque, with an ATM withdrawal, at the counter or online—you pay interest on the amount of money withdrawn. Your available line of credit is adjusted based on the repayments you make, up to the limit you agreed on with your caisse.

Example:
Your line of credit limit is $5,000.
You withdraw $2,000, which means there is now $3,000 available on your line of credit.
If you repay $1,000, the amount available will immediately increase to $4,000.

As soon as you repay your line of credit, the amount of your repayment becomes available to be reused.

How the interest is calculated

The interest on a line of credit is calculated on the daily balance at end of day and is payable at the end of each month.

Line of credit repayment terms

Usually, you must make a minimum payment each month. You can also repay the total amount, at any time, without penalty. If you do not repay the total balance of your line of credit (including principal and interest), your repayment will be applied first to the principal and then to the interest.

Why is your payment applied first to the principal? So you have less interest fees to pay. See the example:

On September 15, you have a balance of $500 on your line of credit with interest fees amounting to $25. This interest is only due on September 30. You want to repay $300.

If you repay the interest and the principal
Your repayment would be applied first to the interest ($25), then to the capital ($275). After your repayment, the balance of your line of credit would be $225. At end of day, the interest would be calculated on your new balance of $225.

If you repay the principal
After your repayment, the balance of your line of credit is $200. Interest accrued (due only on September 30) is still $25. At end of day, the interest is calculated on your new balance of $200, which saves you money.

How to repay your line of credit

You can repay your line of credit at a caisse counter, at an ATM or on AccèsD Internet.

How to get a line of credit

Apply for a line of credit online or talk to an advisor at your caisse. An advisor can help you evaluate your financial situation and needs to determine the credit limit the caisse.

Insurance

To ensure that repaying your line of credit never becomes a problem for you or your loved ones in the event of disability or death, you can take out line of credit insurance.