Is it worth to keep open a $20k LOC for $12 a month?

Discussion in 'Loans & Mortgage Brokers' started by skyfall, 16th Jul, 2021.

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Is it worth to keep open a $20k LOC ?

  1. Yes, it might come in handy

    3 vote(s)
    60.0%

  2. No, it's not worth paying $12 a month

    2 vote(s)
    40.0%
  1. skyfall

    skyfall Well-Known Member

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    I've got a $20,000 Viridian LOC with CBA which I don't use these days. I got it back in the 1990's when $20k was a significant amount. I recently cancelled my annual wealth package so now I get charged $12 a month to keep this facility open, regardless if any of it is drawn down or not. This works out to 0.72% per annum (144/20,000*100) when nothing is drawn down. In the old days I used it to pay my rates, body corp, renovations etc. Should I close it and save $144 per annum in fees, or keep it open for 'emergencies' ? Please vote
     
    skyfall, 16th Jul, 2021
    #1
  2. Trainee

    Trainee Well-Known Member

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    There is no refinance option.
     
    Trainee, 16th Jul, 2021
    #2
  3. Stoffo

    Stoffo Well-Known Member

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    No, I don't have a good response
    Was going to say "Yes, you can lend me the $20K for $20pm :D"
    But that may earn me a holiday :rolleyes:
     
    Stoffo, 16th Jul, 2021
    #3
  4. jaydee

    jaydee Well-Known Member

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    only worth retaining if you need the buffer.

    I have several CBA LOCs which are largely undrawn and which I will eventually get rid of as they are tied to properties for security.

    I also have the wealth package so no fees on any accounts, however, for some reason the $395 fee was waived this year (?)
     
    jaydee, 16th Jul, 2021
    #4
    See Change likes this.
  5. Ruby Tuesday

    Ruby Tuesday Well-Known Member

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    Yes, Would you walk past 20k lying in the street. 20k can still become a very serious amount. Depending on what the interest rate is. It is only costing you 0.7% if the interest rate is 4% still cheap money. Should be able to earn multiples of that and get compounding on top to make serious money Could double it in 3 or 10 years. it doesnt really matter how long it takes.
     
    Ruby Tuesday, 16th Jul, 2021
    #5
    skyfall likes this.
  6. Chris B

    Chris B Well-Known Member

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    Only you know if you are likely to have a use for the funds. Either you are throwing away $144 a year or you have reasonably cheap access to emergency funds.

    Third option is to use some of the funds to invest. You could look at high yielding shares, which may allow you to get a return that covers your costs and generates a profit but this is not without risk. DYOR
     
    Chris B, 17th Jul, 2021
    #6
  7. skyfall

    skyfall Well-Known Member

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    Yes I'd like to draw down $15,000 and put it on a stock. Can you recommend anything, maybe a potential 2-5 bagger if possible.
     
    skyfall, 19th Jul, 2021
    #7
  8. skyfall

    skyfall Well-Known Member

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    OK after looking at the 10 bagger thread I ended up buying 125,000 NVA at .12
     
    skyfall, 19th Jul, 2021
    #8
  9. skyfall

    skyfall Well-Known Member

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    NVA up 73% today. I will sell
     
    skyfall, 11th Oct, 2021
    #9