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Monday, May 30, 2011

Need a line of credit? Why you should stay away from BMO Bank of Montreal

I have this 5 000$ line of credit with BMO Bank of Montreal. The line of credit came with a MasterCard banking card. I of course used up all of the 5 000$ for investment purposes. Imagine, my interest rate is only of 4.5%. I got this line of credit while working at BMO Bank of Montreal while working at their Montreal messy call center. Whatever I can get at a low interest rate I take it and use it. Everything is pack in my non registered portfolio, you know that. And I have a good feeling that I might finish the day at 170 000$ or close by in asset. It’s something I will try to figure out tonight when I come back to work.

This being said, I have a good feeling about my investment portfolio, but I don’t have the same good feeling when it comes to BMO Bank of Montreal. As a poorly manage financial institution, maybe the worst in North America, BMO Bank of Montreal manage its line of credit product like if it was a MasterCard credit card. Whenever you withdraw from the 5 000$ that already been used, you pay the monstrous interest rate of 19.5%.

Here’s an example: I had borrowed 5 000$ at 4.5%. The money had been used a long time ago. On each month, BMO Bank of Montreal request the minimum payment of 100$ of that line of credit. Ok, no problem, I can manage a minimum payment of 100$. But where it’s going nasty is over here: the interest rate on the amount you withdraw from the minimum payment is being charge like a cash advance. And for a cash advance with a line of credit, the interest rate is of 19.5%. This is truly disgusting. Knowing that BMO Bank of Montreal request a minimum payment that exceed the interest paid on the loan, user should be able to withdraw from the exceeding payment at the same rate as for the line of credit, 4.5% in my case. See, Bank of Montreal does not worth it.

TD Canada Trust and RBC Royal Bank don’t have such a bad credit line system. With TD Canada Trust, I can withdraw, and the money withdraw is being charge at the same interest rate as for the line of credit. No hassle. With RBC Royal Bank, it’s even better, for their line of credit, I only pay monthly the interest own on the money.

Ok, you might say to yourself that I have too much debt, but too much is barely enough, knowing where the money is. Small investors like myself should had been giving all of the best possibilities in the world and BMO Bank of Montreal, once again, is ruining the perfect scheme. In other world: for your credit needs, go with TD Canada Trust who offer close to a 24 hours a week banking services in their branches or go with RBC. As for Scotiabank, they are extremely difficult to get credit from. Bank of Nova Scotia, just like BMO Bank of Montreal, is poorly managed.

You need to get to know your banker first before jumping in.


2 said...

wow!!! .... you keep wowing me on every post.

Anonymous said...

BMO is shockingly unethical

Anonymous said...

Could you make it a bit clearer as to how you pay a 19.5% on the 100 min. payment. It is not very clear as to what you are paying the 19.5% on. Break it down a bit more so it makes more sense. Example. you have used all of the 5000 line of credit. You are asked to make a 100 payment........where exactly does the 19.5 come into play. You should only still be paying 4.5% on the remaining minus the 100 payment and every payment after that. At least that is how it should be.

Sunny said...

19.5% is the interest rate on cash advance.

Anonymous said...

That sounds more like a credit card than a line of credit (LOC). It's normal for credit cards to have different interest rates for purchases versus cash advances, but not LOCs.


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