The average personal debt in this country has increased by 6 per cent to $27,485, and many people have chosen to tackle it by taking out lines of credit so that they can avoid the high interest rates that often come with credit cards.
The interest rates are usually between 1 and 3 per cent above the bank’s prime rate, versus up to 28 per cent for some department store credit cards. Still, the rates are variable and rise and fall depending on your bank's prime rate, so it's important to be aware of this variability.
There are two types of lines of credit for individuals: unsecured and secured. A secured line of credit is backed by GICs, or the equity in your house. Secured lines of credit give you a higher limit and a lower interest rate because they lessen the risk to the bank.
Insurance is available to cover your credit line payments in the event of an injury or death. You can purchase it through the bank that lent you the credit or through an insurance company, which may give you a cheaper price. But is this an insurance policy you should really invest in? There are a few things you need to remember if you're considering line of credit insurance that may greatly influence your decision.(Should You Insure Your Line of Credit? continued...) | 4 comments