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Standard Chartered Personal Credit

I have been receiving "cheques" from Standard Chartered Bank lately.

Basically, these cheques are given to me in letters which they have been sending.

So far, I have received 2 cheques.

The instructions states: Simply bank in the attached cheque and enjoy cash at 0% interest for six months with just a nominal fee of 2.5% on the cheque amount.

No gimmicks, No hidden cost?

It says that the promotional rate of 0% interest is valid for 6 months and thereafter, the prevailing interest rate applies. I am not too certain what is the prevailing interest rate for this credit line.

Still, it sounds like a pretty attractive option doesn't it?

I get a cheque for $8000. The 2.5% nominal fee adds up to $200.

So after 6 months, all I need to pay back will be $8200. If I am able to use this money to buy some stocks and the stocks happen to rise in price... I will be using Other People's Money to make money!

But of course, the reverse could happen where the stock prices are depressed after 6 months and I could be stuck in a serious quandry. To liquidate the stocks at a loss and still pay up the $8200.

4 comments:

  1. Avoid leverage. I am sure there is some fine print involved. Banks never loan money without getting a higher than inflation return back to themselves. They are profit-making machines and are not prone to do charity work. Hahaha.

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  2. Hmm Musicwhiz,

    I think some element of leverage is good .

    But 2.5% for six months that means about 5% per year.

    Do we have to pay back some portion of principal+ interest per month?

    I dont think they will allow you to pay back only at the end of 6 months from my experience.

    In this case the reward to risk ratio not really worth it.

    SGDividends

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  3. 2.5% for 6 months to buy stocks with leverage?

    I think it you seriously seriously want to do that, it's much better to do so with CFD. Depending on the type of share, the amount could be lesser.

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  4. Thanks for all the comments. Yup, I am leaving leveraging to a later date when I am more comfortable and confident in my investing strategy.

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