# Calculate Interest on Line of Credit with TD Canada Trust



## Joker Eh (Jan 22, 2008)

Hope someone who works for a bank and maybe even TD Canada Trust can offer me some insight on how interest is calculated on my line of credit. 

The reason I am asking is because the interest that is being added to my account is higher than anyway I calculate it. So basically I think I am being overcharged.

The way I calculate the interest payment is as follows.
(Balance Owing * Interest Rate) / 12 months = Interest Payment

Is this calculation correct?

Now there is ** beside the Interest Payment but Have no idea what it means.

**Minimum payment displayed is calculated only on the revolving, or non-fixed rate portion of the Line of Credit balance.

Can anyone help?


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## Sonal (Oct 2, 2003)

Most lines of credit requires a 2% or 3% repayment of principal in addition to the interest owing.


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## Joker Eh (Jan 22, 2008)

The minimum payment on lines of credit for TD is the interest added/calculated. The problem is the interest being added to account is higher than what I can calculate.


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## Sonal (Oct 2, 2003)

What's in the fine print of the original LOC agreement?

We deal with TD a lot. There's always fine print.


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## lara (Mar 15, 2009)

I am no accountant, but....

Is it possible that TD calculates interest on a daily or weekly basis even though you pay monthly? Something called compounding may be at work here.

Or (speculating even more here), maybe TD is including the interest amount into the total amount owed even though you pay within the "grace" period.


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## Brain21 (Jan 20, 2010)

I thought it was like a mortgage, and you pay mostly interest every month and just a little of the amount you owe. The next month, because you payed a tiny bit of the original loan, you pay a little less interest and a little more principle loan?


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## GratuitousApplesauce (Jan 29, 2004)

I would assume the interest is compounded daily, not that I know that for a fact. I just figure that if there is a way the bank can maximize what they bill me, they will. For all I know maybe they compound it hourly or by the second or nanosecond. 

Your question made me wonder about my LOC, so I found a daily interest calculator on the web. It seems to match what I'm paying.

Daily Interest Calculator


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## Dr T (May 16, 2009)

Yikes, I use credit cards for cash flow, but pay it all off once I receive the monthly statement. I have thought that is the normal use of a credit card.

Thus seems to be incorrect. What is the typical balance you lot leave on your cards? $1K? 2K Surely not $3K?


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## Joker Eh (Jan 22, 2008)

Dr T said:


> Yikes, I use credit cards for cash flow, but pay it all off once I receive the monthly statement. I have thought that is the normal use of a credit card.
> 
> Thus seems to be incorrect. What is the typical balance you lot leave on your cards? $1K? 2K Surely not $3K?


Credit cards and loc are different. 18% versus 7% and only have to pay the monthly interest at least for TD. And I pay my CC off every month in full.


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## Joker Eh (Jan 22, 2008)

GratuitousApplesauce said:


> I would assume the interest is compounded daily, not that I know that for a fact. I just figure that if there is a way the bank can maximize what they bill me, they will. For all I know maybe they compound it hourly or by the second or nanosecond.
> 
> Your question made me wonder about my LOC, so I found a daily interest calculator on the web. It seems to match what I'm paying.
> 
> Daily Interest Calculator


I tried that one and its off. It is the same amount i calculated. Hmm this might mean a phone call to TD on Monday.


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## Lichen Software (Jul 23, 2004)

Look at your agreement to see specifically how interest is calculated.

Mortgages are semi annually and not in advance - S not easy to calculate.

I would I agine a line of credit should be monthly. Your documentation should tell the tale.

lso, have signed up for some sort of insurance on the balance?


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## ertman (Jan 15, 2008)

The interest is calculated on the daily balance owing and is paid monthly. This could affect your calculations, not referring to compounding but to the term you are using for calculations.

ex.
(balance owing) * r/365 = daily interest 

Also, generally for repayment TD tends to want 3% of what is owing, but that isn't what you are asking.


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## TD_Canada (Oct 3, 2011)

Joker Eh said:


> Hope someone who works for a bank and maybe even TD Canada Trust can offer me some insight on how interest is calculated on my line of credit.
> 
> The reason I am asking is because the interest that is being added to my account is higher than anyway I calculate it. So basically I think I am being overcharged.
> 
> ...


Hi Joker Eh. It's Chris from TD. That's a great question and we want to ensure you understand how interest is calculated on our Line of Credit accounts. You can view some basic interest calculation information online at TD CanadaTrust - Products & Services - Banking - Loans & Credit. However, if you have questions regarding the interest on your own account, we'd encourage you to give us a call. Credit Specialists can be reached through EasyLine at 1-866-222-3456, option 2. They would be happy to help you better understand your interest and review your account with you. Hope to hear from you soon and have a great day! ^CT


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