Getting a Line of Credit with a 660-719 Credit Score in Canada
A credit score of 660-719 puts you in a strong position for line of credit approval in Canada. All major banks, credit unions, and online lenders offer personal lines of credit at this level, and you’ll qualify for competitive rates that make a LOC one of the most cost-effective borrowing tools in your financial arsenal. This guide focuses on getting the best rate and structure for your situation.
At 660-719, you’re a mainstream line of credit candidate. Every major financial institution has products designed for your credit profile, and the competition between lenders works in your favour. This is the score range where a LOC transforms from “hard to get” to “shop for the best deal.”
What a 660-719 Credit Score Means for Lines of Credit
Approval odds: Good to excellent everywhere. Banks (60-80%), credit unions (75-90%), online lenders (80-90%).
Typical interest rates: Unsecured personal LOC: prime + 2% to prime + 6% (approximately 7.99%-12.99%). HELOC: prime + 0.5% to prime + 1.5%.
Credit limits: Unsecured: $5,000-$35,000 depending on income. HELOC: up to 65-80% of home equity.
At 660-719, a personal line of credit at prime + 3% to prime + 5% is a realistic target. This makes a LOC cheaper than almost any other unsecured borrowing option. The key is comparing offers from multiple lenders — rate variation of 2-4% between institutions is common, and that difference translates directly to dollars saved.
Where to Get the Best Line of Credit
Big Five Banks
All five major banks — RBC, TD, Scotiabank, BMO, and CIBC — offer personal lines of credit for borrowers in this range. TD and Scotiabank are often cited as offering competitive unsecured LOC rates. Existing customers with direct deposit and other products may receive preferential rates. Banks typically offer limits of $5,000-$50,000 based on income and score.
Digital Banks
Tangerine and Simplii Financial offer lines of credit with competitive rates and no annual fees. Their digital-first approach means fast applications and quick decisions. Tangerine’s LOC starts at competitive rates for qualified borrowers and has no fees.
Credit Unions
Credit unions remain competitive with rates often matching or beating banks. The advantage of a credit union LOC is often in the flexibility — more favourable terms, no annual account fees, and personalized service. Meridian, Desjardins, and Coast Capital all have strong LOC products.
HELOCs for Homeowners
At 660-719, bank HELOCs are readily available at prime + 0.5% to prime + 1.5%. This makes a HELOC the cheapest revolving credit available. All major banks and credit unions offer HELOCs with competitive terms for homeowners in this score range.
Ask about “rate lock” features on your line of credit. Some lenders allow you to lock in a fixed rate on a portion of your LOC balance while keeping the rest variable. This gives you the flexibility of a LOC with the payment certainty of a fixed loan for specific amounts. TD, BMO, and some credit unions offer this feature.
Securing the Best Possible Terms
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Get Quotes from at Least Four Lenders
Apply or pre-qualify with your current bank, a competing bank, a digital bank, and a credit union. Rate variation between lenders is significant — don’t assume your primary bank offers the best rate. Many lenders offer soft-check pre-qualification for lines of credit.
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Leverage Your Banking Relationship
If you have your mortgage, investments, or daily banking with an institution, use that relationship to negotiate. Banks regularly offer 0.5-1% rate reductions on LOCs for clients with multiple products. Ask specifically about “multi-product pricing” or “relationship rate.”
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Negotiate the Rate
LOC rates are negotiable, especially for borrowers in this range. If one bank offers prime + 4% and another offers prime + 3%, bring the lower offer to your preferred bank and ask them to match it. Many will accommodate to keep your business.
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Choose the Right Product Type
Unsecured personal LOC, secured LOC, or HELOC — each serves different needs. For everyday flexibility, an unsecured LOC is most convenient. For larger credit needs and the lowest rate, a HELOC is unbeatable. For investments, a dedicated investment LOC may offer tax-deductible interest.
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Check for Fees and Conditions
Some LOCs charge annual fees ($50-$100), inactivity fees, or minimum balance requirements. The best LOCs have no annual fees and no penalties for zero balance or inactivity. Read the terms carefully and factor fees into your total cost comparison.
Smart Strategies for Using Your Line of Credit
Emergency Fund Enhancement
A LOC supplements your emergency fund, providing instant access to funds without needing to liquidate investments or savings. Many financial planners recommend maintaining 1-2 months of expenses in savings and a LOC for additional emergency capacity.
Debt Consolidation
Moving credit card debt from 19.99% to a LOC at 8-12% generates immediate savings. On $10,000 of credit card debt, the difference between 19.99% and 10% saves approximately $1,000 per year in interest.
Investment Leverage
If you use LOC funds to earn investment income (in a non-registered account), the interest may be tax-deductible under Canadian tax law. This can further reduce the effective cost of borrowing. Consult a tax professional before implementing this strategy.
Cash Flow Management
For variable income earners, a LOC smooths cash flow fluctuations. Draw during lean periods, repay during strong ones. The interest-only minimum payment provides maximum flexibility during tight months.
Maintaining and Improving Your LOC Over Time
Once you have a line of credit, responsible management opens the door to improvements. After 12 months of responsible use, request a rate review — your score may have improved, qualifying you for a lower rate. Request limit increases as your income and credit improve. A LOC limit increase doesn’t affect your credit score negatively (unlike a new credit application) and provides additional flexibility.
Monitor your LOC rate annually. As market conditions change and your credit profile strengthens, your rate should reflect your improved standing. Don’t hesitate to negotiate or switch lenders if you find a significantly better offer.
A line of credit at 660-719 is one of the most versatile financial tools available. It provides low-cost revolving credit, builds your credit profile, and creates financial flexibility. As your score crosses 720, you’ll qualify for even better rates — making the LOC increasingly valuable over time.
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Frequently Asked Questions
For borrowers in the 660-719 range with moderate to strong income, realistic rates are prime + 2.5% to prime + 5.5%. At current prime rates, that translates to approximately 8.5-12%. Credit unions and digital banks tend to offer the lower end. Big Five banks typically start at prime + 3% to prime + 5% for this tier. If you’re being quoted above prime + 6%, shop elsewhere — you can do better. If your score is at the higher end of this range (700-719), push for prime + 2% to prime + 3%, which many lenders offer for near-excellent credit.
Yes, this is actually ideal timing. Applying for a LOC when you don’t urgently need one means you can shop for the best terms without pressure, and having available credit you don’t use positively impacts your credit utilization ratio (keeping it low). A LOC sitting unused costs nothing if there are no annual fees and serves as a financial safety net. The best time to get credit is when you don’t need it — lenders are more favourable, you negotiate from a position of strength, and you have the product available when a genuine need arises.
Having a LOC impacts your borrowing capacity in two ways. Positively: it adds to your credit mix and builds payment history, both of which strengthen your score. Negatively: lenders include a portion of your LOC limit (typically 3% of the limit as a monthly obligation) in your debt service ratio calculations, even if the LOC has a zero balance. This means a $20,000 LOC effectively adds $600/month to your debt obligations in mortgage calculations. If you’re planning a mortgage application, consider whether the LOC limit impacts your qualification. You can temporarily reduce the LOC limit before applying for a mortgage and increase it again afterward.
Understanding How Canadian Credit Bureaus Evaluate LOC Applications
When you apply for a line of credit in Canada, lenders pull your credit report from either Equifax Canada or TransUnion Canada — and sometimes both. Understanding what these bureaus report and how lenders interpret the data gives you a strategic advantage in your application.
Equifax Canada vs. TransUnion Canada Scoring Differences
Your Equifax score and TransUnion score can differ by 20-50 points even though both use data from the same creditors. This happens because each bureau uses slightly different scoring models, and not all creditors report to both bureaus. For LOC applications, most Big Five banks pull from Equifax, while some credit unions and alternative lenders check TransUnion. Knowing which bureau your target lender uses allows you to check that specific score before applying and avoid surprises.
If your Equifax score sits at 680 but your TransUnion score is 710, applying to a lender that pulls TransUnion gives you access to better rates. You can check both scores for free through services like Borrowell (Equifax) and Credit Karma (TransUnion) without any impact on your credit.
What Lenders Look at Beyond Your Score
Your credit score opens the door, but lenders evaluate several additional factors before approving a line of credit and setting your rate. Understanding these factors helps you prepare a stronger application.
Income verification: Lenders require proof of stable income, typically through recent pay stubs, T4 slips, or Notice of Assessment from CRA. Self-employed borrowers need two years of T1 General tax returns and potentially business financial statements. Most lenders require a minimum household income of $35,000-$50,000 for unsecured LOC approval.
Debt service ratios: Your Total Debt Service (TDS) ratio should ideally be below 40% for LOC approval. This includes all monthly debt payments (mortgage, car loan, minimum credit card payments, student loans) divided by your gross monthly income. Lenders also calculate your Gross Debt Service (GDS) ratio if you have a mortgage, which should stay below 32%.
Employment stability: Lenders prefer applicants who have been with their current employer for at least one year. Recent job changes, even to a higher-paying position, can raise flags. If you recently changed jobs, wait until you have passed your probation period before applying.
Existing credit utilization: Even with a strong score, high utilization on existing revolving credit can reduce your LOC approval amount or increase your offered rate. Aim to bring all credit card and existing LOC balances below 30% of their limits before applying.
Canadian lenders must follow the Bank Act and provincial consumer protection legislation when offering lines of credit. The Financial Consumer Agency of Canada (FCAC) requires lenders to provide clear disclosure of interest rates, fees, and terms before you sign. You have the right to receive a written agreement with all terms spelled out, and in most provinces, you have a cooling-off period (typically 2 business days) after signing a LOC agreement to cancel without penalty.
Provincial Considerations for Lines of Credit
Credit regulations and lending practices vary by province in Canada, and understanding the rules in your province can save you money and protect your rights.
Ontario
Ontario’s Consumer Protection Act provides strong protections for LOC borrowers. Lenders must disclose the total cost of borrowing, and unfair business practices are prohibited. Ontario borrowers benefit from access to the Financial Services Regulatory Authority of Ontario (FSRA) for complaints about provincially regulated lenders. Credit unions in Ontario, such as Meridian and Alterna, often offer LOC rates that compete directly with Big Five banks, particularly for borrowers in the 660-719 range.
British Columbia
BC’s Business Practices and Consumer Protection Act governs LOC agreements. The province has a strong credit union presence — Vancity, Coast Capital Savings, and BlueShore Financial are major players that frequently offer competitive LOC rates. BC credit unions operate under provincial regulation rather than federal, which means they sometimes have more flexibility in approving LOC applications for borrowers with non-traditional income sources.
Alberta
Alberta’s consumer protection framework is governed by the Consumer Protection Act and the Fair Trading Act. The province has no provincial sales tax, which does not directly affect LOC terms but means your borrowing dollars stretch further. ATB Financial, Alberta’s Crown corporation bank, offers competitive LOC rates and is particularly accommodating for Alberta residents with moderate credit scores. Servus Credit Union is another strong option with competitive unsecured LOC products.
Quebec
Quebec operates under the Consumer Protection Act (Loi sur la protection du consommateur), which provides the strongest consumer protection framework in Canada for borrowers. Quebec law limits certain fees that lenders can charge and provides extended cooling-off periods. Desjardins, the largest credit union federation in Canada headquartered in Quebec, offers competitive LOC products with terms often favourable to members. The Office de la protection du consommateur handles complaints and provides resources for Quebec borrowers.
Atlantic Provinces
New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador each have their own consumer protection legislation. Credit unions play a particularly important role in Atlantic Canada, where branch banking can be limited in rural areas. Provincial credit unions like East Coast Credit Union and Atlantic Edge Credit Union may offer more personalized LOC terms. The smaller market means less competition, so shopping between your local credit union and national banks is especially important.
Prairie Provinces (Manitoba and Saskatchewan)
Manitoba’s Consumer Protection Office and Saskatchewan’s Financial and Consumer Affairs Authority both regulate lending practices. In these provinces, credit unions have a particularly strong market share — in Saskatchewan, credit unions hold over 40% of all deposits. This strong presence means competitive LOC offerings from institutions like Conexus Credit Union and Affinity Credit Union. These credit unions often offer rate-matching policies where they will match or beat a competitor’s LOC rate for qualified borrowers.
Provincial credit unions often have the authority to offer more flexible LOC terms than federally regulated banks. If a Big Five bank quotes you prime + 5% on an unsecured LOC, take that quote to your provincial credit union. Many credit unions have rate-match policies and the internal flexibility to approve slightly lower rates for borrowers who bring their full banking relationship. This is particularly effective in provinces where credit unions have strong market presence — Saskatchewan, Manitoba, Quebec, and British Columbia.
Common Mistakes to Avoid When Applying for a Line of Credit
Borrowers in the 660-719 range sometimes make avoidable mistakes that result in higher rates, lower limits, or outright denials. Here are the most common pitfalls and how to sidestep them.
Applying to Too Many Lenders Simultaneously
Each hard credit inquiry reduces your score by 5-10 points. While multiple inquiries for the same product type within a 14-day window are typically grouped as a single inquiry by scoring models, applying to six or seven lenders over several weeks creates multiple hits. Strategy: gather pre-qualification offers (soft checks) first, narrow your choices to two or three lenders, and submit formal applications within a two-week window.
Ignoring Your Debt-to-Income Ratio
Your score might be 700, but if your monthly debt obligations consume 45% of your gross income, lenders will either decline you or offer unfavourable terms. Before applying, calculate your TDS ratio and work to bring it below 40%. Paying down a credit card balance or making a lump sum on your car loan before applying can meaningfully improve your ratio.
Not Negotiating the Offered Rate
Many borrowers accept the first rate they are offered. In the 660-719 range, rates are almost always negotiable. Banks build margin into their initial offers, and advisors typically have authority to reduce rates by 0.25-1.0% without requiring management approval. Simply asking “Is there any room on the rate?” can save hundreds of dollars annually.
Choosing the Wrong LOC Type
A common mistake is applying for an unsecured LOC when a secured LOC or HELOC would serve you better. If you own a home, a HELOC at prime + 0.5% saves thousands compared to an unsecured LOC at prime + 4%. Conversely, if you only need $5,000-$10,000 in revolving credit, the costs and complexity of setting up a HELOC (appraisal fees, legal fees) may not be justified.
Forgetting About Account Fees
Some LOCs carry annual fees of $50-$100, monthly account maintenance fees, or inactivity fees if you do not use the LOC for a specified period. These fees can add up and erode the rate advantage. Always ask for a complete fee schedule and compare the total annual cost — not just the interest rate. The best LOC products from Tangerine, Simplii, and most credit unions charge zero annual fees.
Never use your line of credit to fund speculative investments, gambling, or purchases you cannot afford to repay within a reasonable timeframe. While a LOC offers flexible repayment, the interest-only minimum payment option can trap you in a cycle of revolving debt. For every dollar you draw from your LOC, have a clear repayment plan — ideally paying the balance within 12-24 months. The FCAC reports that Canadians who use lines of credit without a repayment plan carry an average balance for 7+ years, paying far more in interest than they anticipated.
Step-by-Step Action Plan: Getting Your Best LOC Rate
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Week 1: Prepare Your Documentation
Gather your two most recent pay stubs, your latest Notice of Assessment from CRA, a recent bank statement showing your monthly expenses, and your current credit reports from both Equifax and TransUnion. If self-employed, prepare two years of T1 Generals and any business financial statements. Having all documents ready speeds up the application and demonstrates financial organization to lenders.
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Week 1-2: Check and Optimize Your Credit Reports
Review both credit reports for errors — approximately 1 in 5 Canadians have at least one error on their credit report that could affect their score. Dispute any inaccuracies directly with the bureau. Pay down any credit card balances above 30% utilization. If you have a small collection account under $500, some lenders will overlook it at this score range, but paying it off removes a red flag.
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Week 2-3: Gather Pre-Qualification Offers
Use online pre-qualification tools from Tangerine, your primary bank, and at least one credit union. These soft-check tools give you an estimated rate and limit without affecting your credit score. Record each offer including the rate, limit, fees, and any special conditions. This creates your comparison baseline.
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Week 3: Submit Formal Applications
Based on your pre-qualification results, submit formal applications to your top two or three choices within a single week. This ensures multiple inquiries are grouped together on your credit report. Provide complete and accurate information on each application — inconsistencies between applications can raise fraud flags.
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Week 3-4: Compare Offers and Negotiate
Once you receive formal offers, compare them side by side: interest rate, credit limit, fees, rate-lock features, and payment flexibility. Take the best offer to your preferred lender and ask them to match or beat it. Be specific: “Bank X offered me prime + 3% with a $25,000 limit and no fees. Can you match that?” Most lenders will work to retain or win your business.
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Week 4: Accept and Set Up
Accept the best offer, review the written agreement carefully (checking for any terms not discussed verbally), and set up your LOC access. Ensure you have cheque-writing privileges, online banking access, and understand the payment schedule. Set up automatic minimum payments to avoid any missed payment, and create a voluntary higher payment plan to manage the balance proactively.
How a Line of Credit Affects Your Credit Score Over Time
A line of credit is one of the most credit-score-friendly borrowing products available, but only if managed properly. Understanding the mechanics helps you maximize the positive impact.
Positive Effects on Your Score
Credit mix improvement: Credit scoring models reward borrowers who manage different types of credit. Adding a LOC (revolving credit) to an existing mix of installment loans (mortgage, car loan) and credit cards demonstrates your ability to manage diverse credit products. This can boost your score by 10-20 points over time.
Credit utilization reduction: When you open a LOC but keep the balance low or at zero, you increase your total available credit while keeping your total borrowed amount the same. This lowers your overall credit utilization ratio, which accounts for approximately 30% of your credit score. A $20,000 LOC with a zero balance significantly helps your utilization ratio.
Payment history building: If you use your LOC and make consistent, on-time payments, each positive payment adds to your credit history. Payment history is the single most important factor in your credit score, accounting for approximately 35% of your score calculation.
Potential Negative Effects
Initial score dip: The hard inquiry from your application and the new account opening will temporarily reduce your score by 5-15 points. This effect diminishes within 3-6 months as positive usage history builds.
High utilization risk: If you draw heavily on your LOC (using more than 50% of the limit), it can negatively impact your utilization ratio. Keep your LOC balance below 30% of the limit for optimal score impact, and below 50% to avoid negative effects.
Minimum payment trap: LOCs require only interest payments as a minimum. If you make only minimum payments, your balance never decreases, and the revolving debt can gradually lower your score. Treat your LOC like an installment loan — set a target payoff date and make principal payments accordingly.
Using Your Line of Credit for Tax-Efficient Borrowing
One of the most powerful strategies available to Canadian borrowers in the 660-719 range involves using your LOC for purposes that make the interest tax-deductible. Under Canadian tax law, interest on money borrowed to earn investment income is generally deductible.
The Smith Manoeuvre
Homeowners with a readvanceable mortgage and HELOC can implement the Smith Manoeuvre — a strategy where you gradually convert your non-deductible mortgage interest into tax-deductible investment loan interest. As you pay down your mortgage, the available HELOC room is used to invest in income-producing investments. The interest on the HELOC portion used for investment becomes tax-deductible, effectively reducing the after-tax cost of your mortgage.
This strategy requires careful record-keeping, discipline, and typically guidance from a financial advisor or accountant familiar with the technique. It is not suitable for everyone, but for borrowers in the 660-719 range with a HELOC and a long-term investment horizon, it can save tens of thousands of dollars over the life of a mortgage.
Business Use Deductibility
If you use your personal LOC for legitimate business expenses (and you operate as a sole proprietor), the interest on the business-use portion is deductible against your business income. Maintain a separate LOC or meticulous records documenting which draws were for business purposes and which were personal. CRA requires clear documentation to support interest deductibility claims.
Investment Account Funding
Drawing from your LOC to invest in a non-registered investment account that earns dividends, interest, or capital gains makes the LOC interest tax-deductible. This does not apply to RRSP contributions (the RRSP deduction already provides a tax benefit) or TFSA contributions (where investment income is already tax-free). The investment must have a reasonable expectation of earning income — speculative investments or capital-gains-only investments may not qualify for interest deductibility.
Tax deductibility of interest is subject to CRA scrutiny. You must maintain clear records showing the borrowed funds were used directly for income-producing purposes. Do not commingle LOC funds used for investment with funds used for personal expenses. Consult a Canadian tax professional before implementing any interest deductibility strategy. The rules are nuanced, and errors can result in reassessment and penalties.
Timeline and What to Expect
Understanding the typical timeline for a LOC application helps you plan and set realistic expectations.
Pre-qualification: Instant to 24 hours for online pre-qualification tools. No credit score impact.
Formal application: 15-30 minutes to complete, either online or in-branch. A hard credit inquiry is performed at this stage.
Approval decision: Digital banks (Tangerine, Simplii) typically respond within 1-3 business days. Big Five banks respond within 2-5 business days for straightforward applications. Credit unions may take 3-7 business days due to manual review processes.
Documentation verification: If additional documents are requested (income verification, employment confirmation), this can add 3-5 business days. Having documents ready at the time of application minimizes delays.
LOC activation: Once approved, your LOC is typically active within 1-2 business days. HELOC setup takes longer — 2-4 weeks due to property appraisal and legal requirements.
First rate review: After 12 months of responsible use, you can request a rate review. If your score has improved above 720, you should receive a rate reduction. Mark your calendar for this annual check-in.
Resources and Next Steps
Take advantage of these Canadian resources to maximize your line of credit experience:
Financial Consumer Agency of Canada (FCAC): The FCAC provides unbiased information about lines of credit, your rights as a borrower, and how to file complaints against federally regulated financial institutions. Visit canada.ca/fcac for detailed guides on LOC products.
Credit Counselling Canada: If you are unsure whether a LOC is the right product for your situation, non-profit credit counsellors can provide free, unbiased advice. They can review your full financial picture and recommend whether a LOC, consolidation loan, or other strategy best fits your needs.
Your Provincial Consumer Protection Office: Each province maintains a consumer protection authority that handles complaints about lending practices and provides information about your rights. This is your first point of contact if you believe a lender has treated you unfairly.
Bank Ombudsman Services: If you have a complaint about your LOC terms or treatment by a bank, each Big Five bank has an internal ombudsman. If unresolved, you can escalate to the Ombudsman for Banking Services and Investments (OBSI), an independent body that resolves disputes between consumers and financial institutions.
Additional Frequently Asked Questions
Yes, several Canadian lenders offer a feature called a “fixed-rate option” or “rate lock” on personal lines of credit. TD, BMO, and Scotiabank allow you to convert a portion or all of your LOC balance into a fixed-rate installment within the same account. This gives you the certainty of fixed payments on existing balances while keeping the revolving portion available. The fixed rate is typically higher than the variable LOC rate but lower than a standalone personal loan rate. This feature is particularly useful when you have drawn a significant amount for a specific purpose and want predictable payments.
Most lenders will entertain a rate review once per year, typically after your annual credit score has been updated with a full year of LOC payment history. The best time to request a rate reduction is when your credit score has improved, you have received a competing offer from another institution, or the Bank of Canada has changed the overnight rate. Bring documentation of your improved score or the competing offer when you make the request. If your lender declines a rate reduction, consider whether switching to a competing lender with a better rate makes financial sense — there is no penalty for closing a line of credit and opening one elsewhere.
Losing your job does not automatically affect your line of credit — your LOC remains open and accessible as long as you continue making at least the minimum interest payments. However, if you stop making payments, the lender can demand full repayment and report missed payments to the credit bureaus, damaging your score. Some lenders offer optional LOC payment protection insurance that covers minimum payments during involuntary job loss (typically for 6-12 months), though these insurance products are often expensive relative to the coverage they provide. A better strategy is maintaining an emergency fund that covers 3-6 months of LOC minimum payments.
For debt consolidation in the 660-719 range, the answer depends on your discipline and preferences. A LOC offers lower interest rates (typically prime + 3-5% vs. 8-12% for a personal loan), flexible repayment, and the ability to re-borrow. However, the flexibility is also the risk — without structured payments, many borrowers fail to pay down the balance. A personal loan forces regular principal-plus-interest payments with a defined end date. If you have strong financial discipline, a LOC saves money. If you need the structure of fixed payments to ensure the debt gets repaid, a personal loan is the safer choice. You can also combine approaches — use the LOC for consolidation, then set up automatic payments that mirror a loan repayment schedule.
Yes, and this is one of the smartest uses of a LOC. Most Canadian banks allow you to link your line of credit to your chequing account as overdraft protection. When your chequing account balance drops below zero, funds are automatically drawn from your LOC to cover the shortfall. This costs you LOC interest on the drawn amount (typically 8-12%) rather than the much higher overdraft fees or NSF charges ($45-$48 per occurrence at most banks). Ask your bank to link your LOC to your chequing account — the setup is free and can save you hundreds of dollars annually if you occasionally overdraw your account.
Your line of credit interest rate is directly tied to the prime rate, which moves in lockstep with the Bank of Canada’s overnight target rate. When the Bank of Canada raises or lowers the overnight rate, banks adjust their prime rate by the same amount, and your LOC rate changes accordingly. For example, if the Bank of Canada raises the overnight rate by 0.25%, prime increases by 0.25%, and your LOC rate of prime + 4% increases by 0.25%. This means your LOC interest cost is variable and can increase or decrease over time. You can monitor Bank of Canada announcements (eight scheduled announcements per year) to anticipate changes. If rates are rising, consider using the fixed-rate conversion feature on your LOC to lock in a portion of your balance.
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