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| Trip Paperwork Covers all documentation, carnets, customs and country requirements, how to deal with insurance etc. |
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#1
6 Sep 2007
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Canada-Carnet: Difficulty getting letter of Credit?
Hi folks,
still jumping through hoops to get my carnet from CAA. My bank, BMO, helpful as they usually are, is allowing me to apply for a Letter of Credit. It's going to cost a few hundred $$$ to register it, then they'll charge a QUARTERLY fee of AT LEAST $125 CDN. This is assuming they decide I am not a credit risk. Is this normal? Oh yeah, they want me to post a cash $$$ bond for the letter of credit...hmmm...the bank manager is understanding and is working to sort things out. Argh. Anyone know other banks/credit unions on Vancouver Island, BC, where it is easier to get a letter of credit? These guys have no idea what they're doing, and they're charging me commercial rates to do a personal banking item, because they don't "know how" to do it any other way. Cheers, VI Last edited by Van Isle; 7 Sep 2007 at 06:07. 
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#2
17 Sep 2007
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That doesn't pass the sniff test. I have a personal line of credit with the TD bank that basically allows me to write myself a loan up to 25K. No fees associated with it, other than interest if I use it. Interest rate is attractive too, something like prime plus a few points. Getting this set up was based on a long-term relationship with the bank, so they weren't being fussy about risk. I find that banks are very competitive, and will match what other banks do when confronted with losing business. I did this to eliminate all monthly fees on my chequing account. Anyway, shop around what other banks offer, then talk to your BMO branch manager.
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#3
18 Sep 2007
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A “letter of credit” is basically a open dated, signed, cheque payable - in this case - to the CAA. It is a written guarantee from the bank to the CAA that for whatever reason the CAA calls for the funds from the bank up to the specified amount the bank will issue a cheque to them without question. I used to do a fair amount of these when I was still working for the Banks.
The bank will need cash security – a GIC, stocks, bonds, etc – or real estate. See if the BME can secure the LC by taking a charge against your home. A line of credit may be cheaper but have a good look at it. The only way to use a line of credit for a letter of credit is to use it as cash security or to off set it. If you use it as cash security then you are paying interest on it just like you have spent the money. FYI: a letter of credit is a PITA for a bank to deal with for an individual as the banking system is not really geared for this type of product. It is usually used only for commercial borrowers Hope this helps Kevan
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