Line of Credit

[DavidC]

RBC pre-approved me for a line of credit, for 10k CDN.

I have a math question for you guys, and I looked through their agreement terms and pulled out a couple of interesting clauses:

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-They charge interest daily. If the billing period ends on a non-business day and you give them payment on that day, they process the payment on the next business day, and charge you interest while they wait to process your payment.

-If you exceed your limit, you have to pay the over-balance as soon as you become aware of it.

-If they have to pay any legal expenses to get their money / your property, in the event of a default, you agree to pay for those expenses ("reasonable expenses").

-If at any time they ask you, you have to pay off the entire loan (it's an "on-demand" loan).

-If you notice any mistakes on your bill, you have to tell them within 45 days of the statement date. If you don't, their records are considered accurate. If they accidentally put money on your account, they can change the mistake at any time.

-If you don't get your statement, you have to tell them after 10 days past the date you normally receive it. You still have to pay them on-time, even if you don't get your statement on-time.

-If you have correspondence electronically, you agree that for legal purposes, it's considered to be "in writing" and "signed". If they receive electronic correspondence, it is considered to be from you, even if it's not from you.

-You agree to give them correct information about you, financially, and to notify them immediately upon any negative changes to your ability to pay them.

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A math question:

They charge 7% annually (currently).

They compound their interest daily.

Does this mean:

(0.07 / 365 + 1) ^ 365 ~= 7.25% per year?

Just curious, if anyone can help me with the math part of this that would be cool.

--Dave.