Lowest cost lines of credit

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capilano
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Joined: Wed Nov 24, 2021 1:31 pm

Lowest cost lines of credit

Post by capilano »

Which banks or brokerages provide the lowest cost Securities Bases Lines of Credit? (SBLOC).

I use this in lieu of margin, and find the rates much lower.

Any other thoughts on SBLOCs?
xraygoggles
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Location: SoCal

Re: Lowest cost lines of credit

Post by xraygoggles »

I use Schwab pledged asset line, and love the flexibility. Margin loan rate varies based on amount in balance, but starts at 4.6% for 100k account.

https://www.schwab.com/pledged-asset-line
BHawks87
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Joined: Mon May 07, 2012 2:03 am

Re: Lowest cost lines of credit

Post by BHawks87 »

xraygoggles wrote: Wed Nov 24, 2021 5:09 pm I use Schwab pledged asset line, and love the flexibility. Margin loan rate varies based on amount in balance, but starts at 4.6% for 100k account.

https://www.schwab.com/pledged-asset-line
I am interested in this but this part looks pretty scary:

"What are the risks?
Entering into a Pledged Asset Line and pledging securities as collateral involve a high degree of risk. At any time, including in the event that the loan value of collateral is insufficient to satisfy the minimum loan value of collateral or to support the outstanding loans, Schwab Bank may demand immediate payment of all or any portion of the outstanding obligations, or require additional cash or securities to be added to the Pledged Account maintained at Charles Schwab & Co., Inc.

If a Demand is not addressed, the pledged securities may be immediately liquidated without further notice to you, which may result in tax consequences."
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whodidntante
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Re: Lowest cost lines of credit

Post by whodidntante »

PALs seem unnecessarily complex and more expensive to me compared to margin on Interactive Brokers Pro. With margin, you are not required to make payments at all. There is a promo that starts you out at tier 2 margin rates.
oldmotos
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Re: Lowest cost lines of credit

Post by oldmotos »

I have a LOC with a local bank secured by a commercial building. The rate is currently 3.25% and is tax deductible.
bsteiner
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Re: Lowest cost lines of credit

Post by bsteiner »

oldmotos wrote: Wed Nov 24, 2021 6:02 pm I have a LOC with a local bank secured by a commercial building. The rate is currently 3.25% and is tax deductible.
How is it tax deductible?
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camillus
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Re: Lowest cost lines of credit

Post by camillus »

For reference, I and many bogleheads have HELOCS. Many have rates lower than me. Mine is 100k at 3%.
51% US / 34% ex-US / 15% “bond”
cat_guy
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Re: Lowest cost lines of credit

Post by cat_guy »

M1 Plus is 2% https://www.m1finance.com/how-it-works/m1-plus/

I think I've seen folks on the forum talk about someone else who is a little less than that but I can't find it.
Wedemeyer
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Re: Lowest cost lines of credit

Post by Wedemeyer »

camillus wrote: Wed Nov 24, 2021 8:26 pm For reference, I and many bogleheads have HELOCS. Many have rates lower than me. Mine is 100k at 3%.
+1 on using HELOC if you can. Mine is 3.25%.

My margin account is 8.325% with Fidelity.
cashheavy18
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Re: Lowest cost lines of credit

Post by cashheavy18 »

E*Trade at a rate of 1.6%
Gill
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Re: Lowest cost lines of credit

Post by Gill »

bsteiner wrote: Wed Nov 24, 2021 8:07 pm
oldmotos wrote: Wed Nov 24, 2021 6:02 pm I have a LOC with a local bank secured by a commercial building. The rate is currently 3.25% and is tax deductible.
How is it tax deductible?
I’m wondering the same thing.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
Average Investor
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Re: Lowest cost lines of credit

Post by Average Investor »

Schwab PAL currently at 1.3%.
Tomorrow never knows.
UpperNwGuy
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Re: Lowest cost lines of credit

Post by UpperNwGuy »

oldmotos wrote: Wed Nov 24, 2021 6:02 pm I have a LOC with a local bank secured by a commercial building. The rate is currently 3.25% and is tax deductible.
Please tell us more. Especially about the tax aspects.
Gill
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Re: Lowest cost lines of credit

Post by Gill »

UpperNwGuy wrote: Thu Nov 25, 2021 4:03 pm
oldmotos wrote: Wed Nov 24, 2021 6:02 pm I have a LOC with a local bank secured by a commercial building. The rate is currently 3.25% and is tax deductible.
Please tell us more. Especially about the tax aspects.
:sharebeer
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
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William4u
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Re: Lowest cost lines of credit

Post by William4u »

Alliant CU is 4% for a HELOC. A little high I think.
cat_guy
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Re: Lowest cost lines of credit

Post by cat_guy »

cashheavy18 wrote: Thu Nov 25, 2021 3:30 pm E*Trade at a rate of 1.6%
Average Investor wrote: Thu Nov 25, 2021 4:00 pm Schwab PAL currently at 1.3%.
I must be googling for the wrong thing, I can't find either of these offerings anywhere...
sco
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Re: Lowest cost lines of credit

Post by sco »

Wedemeyer wrote: Thu Nov 25, 2021 2:56 pm
camillus wrote: Wed Nov 24, 2021 8:26 pm For reference, I and many bogleheads have HELOCS. Many have rates lower than me. Mine is 100k at 3%.
+1 on using HELOC if you can. Mine is 3.25%.

My margin account is 8.325% with Fidelity.
I’d you have any kind of taxable balance at all, call and ask for lower on the Fidelity margin rate. They will give you a better rate.
NuBogleHead
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Re: Lowest cost lines of credit

Post by NuBogleHead »

cat_guy wrote: Thu Nov 25, 2021 4:54 pm
cashheavy18 wrote: Thu Nov 25, 2021 3:30 pm E*Trade at a rate of 1.6%
Average Investor wrote: Thu Nov 25, 2021 4:00 pm Schwab PAL currently at 1.3%.
I must be googling for the wrong thing, I can't find either of these offerings anywhere...
Same
Average Investor
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Joined: Fri Jul 13, 2012 11:27 am

Re: Lowest cost lines of credit

Post by Average Investor »

NuBogleHead wrote: Thu Nov 25, 2021 10:40 pm
cat_guy wrote: Thu Nov 25, 2021 4:54 pm
cashheavy18 wrote: Thu Nov 25, 2021 3:30 pm E*Trade at a rate of 1.6%
Average Investor wrote: Thu Nov 25, 2021 4:00 pm Schwab PAL currently at 1.3%.
I must be googling for the wrong thing, I can't find either of these offerings anywhere...
Same
I was able to negotiate a rate discount related to moving assets to Schwab. Others have reported getting a similar rate in other threads.
Tomorrow never knows.
cashheavy18
Posts: 218
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Re: Lowest cost lines of credit

Post by cashheavy18 »

NuBogleHead wrote: Thu Nov 25, 2021 10:40 pm
cat_guy wrote: Thu Nov 25, 2021 4:54 pm
cashheavy18 wrote: Thu Nov 25, 2021 3:30 pm E*Trade at a rate of 1.6%
Average Investor wrote: Thu Nov 25, 2021 4:00 pm Schwab PAL currently at 1.3%.
I must be googling for the wrong thing, I can't find either of these offerings anywhere...
Same
I contacted my E*Trade rep this summer when I saw posts on this board of the available rates. He came back and said the best he could do is 1.6% (inclusive of the spread at 1.5%). We've been given a large line of credit (based on our taxable account), but have only drawn a small amount. The only slightly annoying thing now is that any action I want to take in our taxable account, I have to contact E*Trade for the rep to do it, vs. self serve online (due to the draw on the account).
sco
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Re: Lowest cost lines of credit

Post by sco »

sco wrote: Thu Nov 25, 2021 8:43 pm
Wedemeyer wrote: Thu Nov 25, 2021 2:56 pm
camillus wrote: Wed Nov 24, 2021 8:26 pm For reference, I and many bogleheads have HELOCS. Many have rates lower than me. Mine is 100k at 3%.
+1 on using HELOC if you can. Mine is 3.25%.

My margin account is 8.325% with Fidelity.
If you have any kind of taxable balance at all, call and ask for lower on the Fidelity margin rate. They will give you a better rate.
Wedemeyer
Posts: 89
Joined: Mon Jan 25, 2021 11:14 pm

Re: Lowest cost lines of credit

Post by Wedemeyer »

sco wrote: Fri Nov 26, 2021 12:06 pm
sco wrote: Thu Nov 25, 2021 8:43 pm
Wedemeyer wrote: Thu Nov 25, 2021 2:56 pm
camillus wrote: Wed Nov 24, 2021 8:26 pm For reference, I and many bogleheads have HELOCS. Many have rates lower than me. Mine is 100k at 3%.
+1 on using HELOC if you can. Mine is 3.25%.

My margin account is 8.325% with Fidelity.
If you have any kind of taxable balance at all, call and ask for lower on the Fidelity margin rate. They will give you a better rate.
Thank you for the info! I have around $400K in Fidelity taxable holdings now. Does that level trip a lower rate? The margin balance is around $10k and will be paid off in 30 days.
RubyTuesday
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Re: Lowest cost lines of credit

Post by RubyTuesday »

Average Investor wrote: Fri Nov 26, 2021 2:00 am
NuBogleHead wrote: Thu Nov 25, 2021 10:40 pm
cat_guy wrote: Thu Nov 25, 2021 4:54 pm
cashheavy18 wrote: Thu Nov 25, 2021 3:30 pm E*Trade at a rate of 1.6%
Average Investor wrote: Thu Nov 25, 2021 4:00 pm Schwab PAL currently at 1.3%.
I must be googling for the wrong thing, I can't find either of these offerings anywhere...
Same
I was able to negotiate a rate discount related to moving assets to Schwab. Others have reported getting a similar rate in other threads.
I negotiated when I transferred to Schwab for fed funds plus 1.05 which last I checked was 1.3% total. It was based on matching Interactive Brokers margin rates.
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
sco
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Re: Lowest cost lines of credit

Post by sco »

Wedemeyer wrote: Fri Nov 26, 2021 12:57 pm
sco wrote: Fri Nov 26, 2021 12:06 pm
sco wrote: Thu Nov 25, 2021 8:43 pm
Wedemeyer wrote: Thu Nov 25, 2021 2:56 pm
camillus wrote: Wed Nov 24, 2021 8:26 pm For reference, I and many bogleheads have HELOCS. Many have rates lower than me. Mine is 100k at 3%.
+1 on using HELOC if you can. Mine is 3.25%.

My margin account is 8.325% with Fidelity.
If you have any kind of taxable balance at all, call and ask for lower on the Fidelity margin rate. They will give you a better rate.
Thank you for the info! I have around $400K in Fidelity taxable holdings now. Does that level trip a lower rate? The margin balance is around $10k and will be paid off in 30 days.
Low 5 digits trips about 4%, I’m sure your balance will go lower. I just called the guy listed on my fidelity page and ask him to do it. It’s just my local contact, not a AUM situation. If you have to mention how attractive Interactive Brokers rates are.
vieques
Posts: 56
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Re: Lowest cost lines of credit

Post by vieques »

RubyTuesday wrote: Fri Nov 26, 2021 7:17 pm
Average Investor wrote: Fri Nov 26, 2021 2:00 am
NuBogleHead wrote: Thu Nov 25, 2021 10:40 pm
cat_guy wrote: Thu Nov 25, 2021 4:54 pm
cashheavy18 wrote: Thu Nov 25, 2021 3:30 pm E*Trade at a rate of 1.6%
Average Investor wrote: Thu Nov 25, 2021 4:00 pm Schwab PAL currently at 1.3%.
I must be googling for the wrong thing, I can't find either of these offerings anywhere...
Same
I was able to negotiate a rate discount related to moving assets to Schwab. Others have reported getting a similar rate in other threads.
I negotiated when I transferred to Schwab for fed funds plus 1.05 which last I checked was 1.3% total. It was based on matching Interactive Brokers margin rates.
If you have enough assets at Schwab to qualify for a PAL>$1M, they will easily offer 1.05+SOFR today. I just discussed that with my local banker.
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