PLC interest rate increase WHY?

Banking and Saving strategies, maximizing interest rates, budgeting, GICs, HISAs.
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Posts: 1
Joined: 16 May 2017 17:13

PLC interest rate increase WHY?

Post by 2vix » 16 May 2017 17:32

Hello everyone. New member here. I received a letter from my bank regarding my unsecured line of credit, and wanted to see if I could get some opinions on how to react.

In November 2015 I applied and was approved for a $15,000 line of credit to purchase a used vehicle. Since that time I've used the line of credit quite often, but have never maxed it out or been late with the payments. My current balance on the PLC is less than 10% of the limit. Yesterday I received this letter from CIBC:

"We are writing to advise you that the annual interest rate on your unsecured CIBC personal line of credit (PLC) account noted above will be changed to CIBC prime +11.30% effective June 19, 2017.
This change is made in accordance with the personal borrowing agreement and this interest rate will apply to all amounts owing on your PLC.
If you have any questions about your PLC or would like to discuss alternative borrowing options, such as a secured CIBC line of credit, please contact us at blah blah blah."

My current interest rate is 9.8% plus prime, so this letter is to inform me that my interest rate is going up by one and a half percent. I don't understand why? Is this how the banks operate? You take out a loan, you make all your payments, and they increase your interest rate as a result? My credit rating is 50 points higher than it was when I applied and last year I made more money than the year before, so I don't understand why the bank is punishing me.

I'm planning to phone them to inquire about this, but thought I'd reach out to people on this board and see if anybody has any advice or info for me. Thank you very much.

Gold Ring
Gold Ring
Posts: 2528
Joined: 21 Feb 2005 20:54

Re: PLC interest rate increase WHY?

Post by ig17 » 16 May 2017 18:58

Those are eye popping rates. I can't imagine paying prime +9.8%, never mind +11.3%. Either you have a dismal credit rating, or you are being robbed in the daylight.

Negotiate a better rate with another bank. Don't limit your negotiations to one bank. Approach 2-3 at the same time.

Check out redflagdeals to see what other people are paying: ... 834473/15/

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