The Tangerine line of credit is an offering to help cushion the financial strain on Canadians. However, with all that the Tangerine line of credit has been designed to do and the benefits it comes with, ignorance of the concept behind this provision will account for a misappropriation. After all, when purpose is not known, abuse is inevitable.
In the fall of 2019, the world was thrown upside down with the unprecedented outbreak of COVID-19. Businesses, entrepreneurs, families, and governments were plunged into a pseudo-state of uncertainty, and as the pandemic looms, it has caused an increased financial strain.
Lack of finance is one of the significant effects of the COVID-19 pandemic. It necessitated a global lockdown which caused a crackdown in the physical interactions of businesses, thereby creating a disjointed cash flow. Interestingly, banks, well-meaning individuals, governments, and financial institutions have provided persons with low-income structures with aids and help.
One of the many aids to cushion the financial strain of Canadians in this period and beyond is the Tangerine line of credit. In summary, the Tangerine line of credit allows Canadians to borrow a stipulated amount of money to cover expenses of unforeseen circumstances. This article reviews what the Tangerine line of credit is about and how Canadians can enjoy this credit option.
Before we go into the main deal of this article, let me do a brief definition of terms.
What is a Line of Credit?
A line of credit is a credit facility offered by financial institutions to individuals, businesses, and governmental bodies that are customers to the bank. The bank allows the customer to borrow money when they need to settle some unexpected bills.
It is an agreed arrangement between a bank and a client that establishes a maximum loan amount that the customer can borrow from the bank. The loan amount is a credit limit, and banks only offer this credit feature to customers deemed credit-worthy based on specific parameters.
Tangerine Line of Credit
Tangerine offers customers a line of credit feature which lets them borrow specific amounts of money from the bank. In addition, customers enjoy different forms of the line of credit feature with personalized offerings designed to suit their needs.
Line of credit takes different forms and can be called other names depending on its administration. Sometimes it could be referred to as overdraft limit, term loan, demand loan, export packing credit, discounting, and much more. A critical feature of line of credit is that the interest rates are usually lower than other loan agencies.
If you need some form of a quick loan with low interest rates, a line of credit like the one Tangerine offers is an excellent place to apply. However, you can only access the line of credit feature from Tangerine if you are a customer and meet the requirement of being credit-worthy.
Features of Tangerine Line of Credit
I have written about the features of the Tangerine line of credit feature vaguely during my introduction. However, in more precise terms, these are some of the features of the line of credit from Tangerine.
- Low-interest rates
- No annual fees
- Easy access to funds
- Available credit can be used whenever you want
- Easy, seamless online application
An immense promise of the tangerine line of credit offer is that Canadians have access to borrow funds without incurring overwhelming interest rates.
Types of Tangerine Line of Credit
As I hinted earlier, a line of credit comes in various forms and could be called a variety of names. The tangerine bank offers the line of credit feature in two forms, namely:
- Tangerine Interest Only Line of Credit and
- Tangerine 2 Percent Plus Interest Line of Credit
Both forms should not be confused. Even though Tangerine offers them, the bank holds reservations in the application of each form. I looked into each type of the Tangerine line of credit offer, and I have provided a review and some of the differences that are worthy of note.
Tangerine Interest Only Line of Credit
The Tangerine Line of Credit is a revolving line of credit, charging an annual interest rate equal to the Tangerine Prime Rate plus the Adjustment Factor. The annual interest rate for the Tangerine Line of Credit product is calculated by adding together the Prime Rate and the Adjustment Factor. The Prime Rate and Adjustment Factor are subject to change, and if when added together are less than zero, the annual interest rate will always be zero.
Interests on the Tangerine line of credit account will be charged monthly. In other words, any unpaid interest from a Statement Period will be added to the balance of the Line of Credit on the first day of the next Statement Period.
Tangerine 2 Percent Plus Interest Line of Credit
Like the interest-only line of credit, the Tangerine 2 percent only line of credit allows Canadians to access a loan amount for some financial ease and leverage. Interest on the loan is charged based on the Tangerine Prime Rate and the Adjustment Factor. The bank adds the Prime Rate and the Adjustment Factor before deciding what the interest will be.
However, there is a slight difference between the Tangerine Interest Only line of credit account and the 2 percent plus interest line of credit.
Tangerine Interest Only Line of Credit vs. Tangerine 2 Percent Plus Interest Line of Credit
One noticeable difference between both account types is the minimum payment each account allows customers to pay. For the Tangerine Interest Only Line of Credit offer, the minimum payment must be greater than the interest accrued on the total amount of Advances or other transactions (including fees) during the Statement Period plus any past due and Over-limit amounts.
The minimum payment for the Tangerine 2 Percent plus interest line of Credit account must be greater than 2 percent of a customer’s New Balance plus any interest, past due and Over-limit amount. Both accounts ensure that the minimum payment is greater than $25 for New Balances less than $25.
How to Use a Line of Credit
It is easy to fall short in the usage of a line of credit. However, there are simple steps to take to make effective use of a line of credit. Please do not apply for a line of credit because it offers a higher credit limit without knowing how to use it effectively.
I am highlighted a couple of steps to help you master the use of a line of credit limit.
- A Line of Credit is ONLY but a Safety Net
Seeing the line of credit as a chance to have more money is a dangerous thing to do. However, the line of credit offer is nothing short of an opportunity offered by the bank to its customers who would be in emergencies and not financial leverage that makes them more prosperous.
If you do not see that the line of credit is provided as a safety net, you will fall into the error of using the line of credit limit for purposes that may not meet the fundamental purpose of the limit.
Many people see the line of credit limit as a chance to transfer balances from credit cards to the line of credit accounts, and this is because the interest rates for the line of credit accounts can be lower than the interest rates on credit cards. However, this is not an intelligent way to use a line of credit limit.
For instance, assume you have a balance of $10,000 on a credit card with an annual interest rate of 20 percent per year. Let’s say you paid the minimum payment monthly and managed to keep your account around the $10,000 threshold. You would be spending around $2,000 in interest annually.
If you reduce the interest rate on your account to 8 percent, you will pay around $800 in interest annually. The $1,600 in interest charges you are saving can help you tackle debts faster and pay more of your balance.
However, transferring your $10,000 credit card balance to your line of credit account will result in $10,000 on your credit card and another $10,000 in your line of credit account, resulting in a combined debt of $20,000.
- Carry out Home-Improvement Projects
Everything about real estate, home improvements, and renovations has certain levels of return on investments (ROIs). When you invest, say $5,000 in renovating your kitchen, that renovation can add $5,000 and more to the overall value of your house. And as real estate continues to be the real deal in North America, it is wise to use a line of credit offer to renovate your home.
It is important to note that a line of credit loan must not be taken when you do not have the means to repay the loan or do not have a stable income model. In addition, a line of credit loan must not be used to fund short-term expenses like going on a vacation, having a picnic, going on a date, etc.
Final Thoughts on Tangerine Line of Credit
The line of credit loan can be a handy tool to offer some financial leverage if used with caution. However, rather than dwell on using the line of credit account, seek out ways to avoid incurring more debts.
Most importantly, work out a modality to reduce the credit limit on your credit card or completely close other sources of debts. Follow us for more financial advice and share this article if you find it valuable.