Saturday, 7 July 2007

Would you Lend Me This Much Money?

Probably not, but the financial institutions would. Aside from the amounts I owe on our property mortgages and stock portfolio margin loans, I have the following unused credit limits available:

Credit Cards
#1 $9,250 @ 18.99%
#2 $23,000 @ 17.49%
#3 $8,000 @ 14.74%
#4 $45,000 @ 11.99%
#5 $17,000 @ 13.74%
#6 $27,000 @ 12.99%
#7 $20,000 @ 15.95%

Mortgage redraw available
$50,800 @ 7.37%

Portfolio Loan (like a HELOC)
$138,000 @ 7.47%

Stock Portfolio Margin Loan available cash amounts
#1 $85,985 @ 9.15%
#2 $34,859 @ 8.90%
#3 $60,170 @ 8.85%

Overall approved credit available:
$519,064 @ 9.97% average interest rate

It's interesting to see how much the standard rates on my various credit cards vary. Of course most of these cards aren't in use - they were only used for 0% balance transfer arbitrage and have no outstanding balance. The one CC I use for all day-to-day bill payments and shopping usually has a monthly balance of around $2,000-$3,000 which is paid off in full each month.

The margin loans limits are also just for making a cash withdrawal (ie. 0% margin value), if they were used to purchase stocks the available funds would be 2-3x the listed amounts.

I only use credit to purchase investments, and nothing too speculative, but it's easy to see how someone could get into a LOT of trouble if they were to suddenly make use of the credit that is on offer to make "lifestyle" purchases... Of course the lenders aren't too worried since most of this lending would be secured against real estate or company stock, with the maximum possible LVR getting to around 75%-80% if I maxed out my credit.

Copyright Enough Wealth 2007

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