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Posts: 7,644
Registered: ‎06-20-2015

Re: How do you use LOC?

CO_NATIVE wrote:

AverageJoesCredit wrote:
So a Cloc from Navy federal would be more for show than use? Ive noticed you say most banks / cu's would prefer you not use it. I just see alot of people here raving and trying to get the cloc from Navy Fed. Always wondered point of these ploc and clocs.

Yes, that is my assumption. Most folks here are rebuilding (another assumption) and are looking to pad their available credit so that they have a favourable debt-to-credit ratio. NFCU is extremely popular here for precisely that reason as they are known to give $25K limits on cards and $15K limits on the CLOC fairly easily. I am not sure how long you have lurked here or been a member, but most of the flavours of the month/bandwagon cards/products go viral as they usually give high limits to people who otherwise would not qualify (PSECU, Duck/Beaver cards, BBVA NBA card and NASA FCU to name a few-I've been lurking since 2011 LOL). 


Some here have even admitted that they will either not use their NFCU CLOC or will only use it for small amounts to keep it active. NFCU seems to be the most popular LOC here on the boards but most banks/cu's offer them in some form. 


As far as banks/cu's preferring their customers not use the LOC, that is another assumption but I think it depends on the bank/cu. Take NFCU for example; they call theirs a CLOC and they make it somewhat difficult to use it outside of overdraft. Or my local bank, they only let me use it for overdraft. I suppose I could transfer my checking balance to savings, leaving $0 in checking and then make a debit card, ACH or check purchase to allow the LOC to cover it-but again, they have set this up to be primarily for overdraft. Then you have the PenFed's, Wells Fargo's and US Banks of the world that want you to use your PLOC as it gives them interest and fees. It really depends on the financial institution. Basically, if they call theirs a checking line of credit or overdraft line of credit, then that is primarily what they want you to use it for. If they call it a personal line of credit then they want you to use it and collect interest from you. 

Great synopsis!  Smiley Happy


This basically outlines the reason I skipped over the NFCU CLOC... I got my credit card with them, and it was approved with a nice SL (since bumped to $20k) and a relatively low 10.99% APR, later raised due to Fed increase, then lowered again at my one-year anniversary to 10.24% - still my lowest rate card.


With the NFCU CLOC, at this time the rate can be from 13.9% APR to 17.9% APR, so in my case even if I were to qualify for the lowest rate (which isn't likely) it would still cost me more to use the CLOC than my credit card... which just doesn't make sense.  I'll add that I'm not in need of a 'buffer', but if I was the CLOC would be a great option.


Nothing is ever one-size-fits-all, and on here it's easy to get caught up in the frenzy, especially if you are just coming out of a 'bad' spell credit-wise and suddenly you have options you've not had in a while (in my case 17 years).  It was hard (and sometimes still is) to pass over things that just a couple of years ago I would have jumped on with both feet.  Smiley Happy

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