60 votes

Is there an advantage to keeping a liquid emergency fund if one also has an untapped line of credit?

An emergency fund is your money, sitting in a bank, that you can use for emergency purposes. A line of credit is somebody else's money, that they've provisionally promised to let you borrow. But ...
user avatar
  • 5,809
48 votes
Accepted

Is there an advantage to keeping a liquid emergency fund if one also has an untapped line of credit?

People treat an emergency fund as some kind of ace-in-the-hole when it comes to financial difficulty, but it is only one of many sources of money that you can utilize. What is an emergency? First, ...
user avatar
  • 831
11 votes

Is there an advantage to keeping a liquid emergency fund if one also has an untapped line of credit?

Stop trying to make money with your emergency fund. It's purpose is to sit there idly waiting for a bad day. A day when you need that cash (liquid) not in a bank or a line-of-credit. The few dollars ...
user avatar
  • 1,004
9 votes

Is there an advantage to keeping a liquid emergency fund if one also has an untapped line of credit?

recommend keeping some amount of money in cash as an emergency fund I see two keywords, with two interpretations here. Cash: Money on demand deposit, not tied up in term investments or anything ...
user avatar
  • 91
8 votes

Is there an advantage to keeping a liquid emergency fund if one also has an untapped line of credit?

Why can't you have both? If you do have both credit and an emergency fund, and an emergency occurs, you can draw from the line of credit first. Having debt + cash is a much more stable situation than ...
user avatar
  • 302
5 votes
Accepted

Is there such a thing as a BELOC (Business Equity Line of Credit), like a HELOC?

A Home Equity Line Of Credit (HELOC) is simply a special type of secured credit. Secured credit is credit provided to you, where the lender has some rights to an associated asset in the event that you ...
user avatar
4 votes
Accepted

Does a declined request to increase my credit limit hurt my credit score?

There are really only two ways that your credit limit will be increased on a standard credit card: You ask for it Most of the time this means you'll see a new hard inquiry on your credit report. ...
user avatar
  • 3,363
4 votes
Accepted

Using a line of credit for long-term investing

Sure, you'd make an $8.33 during that first month with little extra risk. Sounds like free money, right? (Assuming no hidden fees in the fine print.) I don't know that the extra money is worth the ...
user avatar
3 votes
Accepted

If/When the Fed raises the interest rate, how much will this affect my ARM?

Each ARM has a rate that they follow. There is also an offset from that rate so it may be prime +1 or something similar. You can see if there is movement in that base rate. Each ARM also has a ...
user avatar
3 votes

Brainstorming: Homebrew "credit" card?

I can't think of a single advantage to this scheme over having an interest-bearing checking account and a traditional credit card. However, there is a big disadvantage that you missed. Overdraft ...
user avatar
3 votes
Accepted

Can/should you pay the down payment for your house on a line of credit?

A couple of things: the interest rate on my line of credit is only ~5.5% The line of credit is a loan. The lender will have to factor in the line of credit terms when calculating how much mortgage ...
user avatar
3 votes
Accepted

How/why to borrow against assets?

What is the end game? It depends upon the tax jurisdiction that you are subject to. Step Up In Basis v. Estate Taxation In A U.S. End Game In the U.S., if you hold onto a capital asset until death, ...
user avatar
  • 363
3 votes
Accepted

Buying a house with credit line and getting a mortgage later

Technically a mortgage is not a credit to buy a house but a credit that is secured against a house (in case you default in your debt the creditor gets to sell the house to recover it). So there is ...
user avatar
  • 2,425
2 votes

Paying for Spouse's Education with Savings vs Line of Credit vs RRSP (LLP)

Why not a 4th, but arguably better option? Normally with big money decisions there is always another option! Why not Cash flow the 15k? Why you wouldn't go for: Option 1 - Never reduce your ...
user avatar
  • 131
2 votes

Does a declined request to increase my credit limit hurt my credit score?

If the card issuer makes a "hard pull" of your credit history, a new hard inquiry will be added to your report and your score will be affected by a few points. This may or may not have an effect on ...
user avatar
  • 293
2 votes

What can i use as collateral for a secured line of credit except my home

Effectively whatever the issuer of the line of credit is willing to accept. Some more common options are other real estate property, vehicles, CDs or savings accounts, annuities, etc. It boils down ...
user avatar
  • 615
2 votes

Is there an advantage to keeping a liquid emergency fund if one also has an untapped line of credit?

Let me offer what I did in a similar situation - Before refi - $480K @7.625% PMT $3400, annual interest - $36,600 ($100K in bank @ close to zero interest) Post refi - $384K @5.24% PMT $3085 (but 15 ...
user avatar
1 vote

Some companies charge a fee for using their credit card. What is this fee called?

Usually it is called a "convenience fee", but they could call it anything they want I guess. Depending on the card issuer and state, this practice may be against the rules for the merchant to do this (...
user avatar
  • 51.6k
1 vote
Accepted

What can i use as collateral for a secured line of credit except my home

Cars and homes tend to be the 2 things banks like as collateral. Some bank will allow you to open a "secured" credit card by placing the credit limit of the card in a savings account. If you're ...
user avatar
  • 3,861
1 vote
Accepted

Is it possible to use an RRSP mortgage to pay off a line of credit?

Short answer: Probably not. It would cost too much to administer the mortgage. It would be easier to increase your existing mortgage with a financial institution and role your line of credit into the ...
user avatar
1 vote

Should I get a personal loan or a line of credit?

Don't get a loan, just to improve your credit score. Being debt free is one of the best things in life. Avoiding Debt completely: If you don't have emergency fund, first set it up. The remaining ...
user avatar
1 vote

Can a Line of Credit be re-financed? Is it like a mortgage, with a term?

You can often convert the outstanding balance of a HELOC into a fixed-rate home equity loan, generally with the same bank. Doing this can open possibilities to extend the term allowing for lower ...
user avatar
  • 615
1 vote

For a major expensive home renovation (e.g. addition, finished basement, or new kitchen) should one pay cash or finance with a loan? Would such a loan be "good" debt?

Some good points were added here, but in the end its about opportunity costs of money. Let's say you could fully finance, partially finance or pay in cash. The money percentage you put down influences ...
user avatar
  • 939
1 vote

For a major expensive home renovation (e.g. addition, finished basement, or new kitchen) should one pay cash or finance with a loan? Would such a loan be "good" debt?

The reason for borrowing instead of paying cash for major renovations should be the same for the decision about whether to borrow or pay cash for the home itself. Over history, borrowing using low, ...
user avatar

Only top scored, non community-wiki answers of a minimum length are eligible