Say you have a credit card with a 55-day interest free on it, and the credit limit thing is say $10,000. If you have a cash management account that calculates interest daily.
Can you max out your card, put the whole 10grand in the cash management account. Gain interest for 55 days. Then pay the 10grand back into the credit card so you ahev no interest to pay. Then the next day grab the money back out and put back in the cash management account. Can you do this(is it legal?).
Coz if you could, then you are using there money to make you moeny for free. And if you can really get lots of cards with big limits you could cash in on some massive interest and it would help to raise funds for a deposit.
I got this idea from a book called wizard wealth, i just started reading yesterday. Ive kinda expanded a bit on it.Christopher.
If you take out Cash from your CC you Pay Interest from Day ONE
“Money is a currency, like electricity and it requires momentum to make it Effective”
Online Positive Cashflow and Renovating CalculatorsHello DraconisV
Maybe what the authur of Wizard Wealth was actually suggesting was that you use your CC to pay all expenses and then pay it off just before the end of your interest free period.
The idea being that you get to keep all your income (salary, rental income etc.) in an offset account longer and so save yourself interest on your mortgage loan.
Cheers [smiling]
ElkaI get it now. But i dont get why you said that you pay interest on your CC from day one, there is a 55-no interest free thingy.
Also with that offset account, that is used to help calculate the loan, what if you fill that with money from the CC’s(with free days in em), and that will like lower your repayments.
Is this right??, or should i just do what you said elkam.Christopher.
You need to read the fine print .
You get 55 days interest free if you pay for things with your CC.
However, as Redwing said, if you take out cash on it interest starts from day 1. NOT a good idea.
Banks (or CC companies) get a commission on every item you charge on your CC from the people that offered you this method of payment. That’s how come they encourage you to use your card by offering you an interest free period.
They get no commission if you take out cash on your card. What they get instead is a big interest paymenet from you starting from day 1.
See, banks aren’t that stupid [glum] [smiling]
ElkaYou just need to refine the strategy a bit. Get 2 credit cards.
Get a cash withdrawal from card A for $10,000. Transfer the balance of this card to card B – chose one with a 6 month interest free period for balance transfers. Now you have $10,000 interest free for 6 months. You may have to pay a few days interest on card A before the transfer kicks in.The $10,000 can then be deposited in your 100% offset account secuared against your home loan.
But, in 6 months you may only be saving $350 in interest! ($10,000 x 7%pa). Is it worth it? You must also take into account the fees on the credit cards.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
hmm this sounds too much trouble with little benfits. Hmm, i htink i can spend my time doing much more(like educating myself in another way).
Hey DV
Try doing a search on Still in Schools Posts; he had some great posts early on in the piece and who knows you may find a *gem*
“Money is a currency, like electricity and it requires momentum to make it Effective”
Online Positive Cashflow and Renovating CalculatorsTerry do u even need to do a cash withdrawl from card A?
Once I did a balance transfer but forget and paid out card A before the transfer and found the card A simply went into credit for the tx amount. Card B confirmed they dont check the amount card A is in debit first.Grant
Hi Grant
yes good point, they just Card B would just make a payment into Card A, regardless of the balance outstanding. So you wait for this to happen, and then make the withdrawal.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
woah woah woah, all this card A, card B, card A did this and then Card B did that. Whats going on here. Im totally lost here, can someone explain the whole situation between these cards(that in my opinion want to murder each other).
hi all
if you use these cards on development sites you can do the following.
1. pay a contractor with the card for say 5k not cash but via credit this does get the 55 days
2. do your usual draw down from your lender
he pays you back your 5k into your account.
3.use this 5 k to pay for cash items in that 55 days and on day 40 do the next draw down with your lender with the 5k worth of cash receipts
4 lender pays you the 5k back
5 the 5k goes off the card card is neutral
6 day 45 line up next account to be paid via card so the contractor starts earlier and pay him via card on day 56 via credit and start all over again.
you have 10k worth of free cash per month do this and when the bank asks to increase you card max it out each time.
get up to a gold visa card with 25k and you have very good cash flow.
at no cost.
if you want to be really smart ask your builder to apply for the credit facility as part of his quote and that you will pay via your card there is alot you can do with this credit.
most of the large suppliers you can pay with a card so use it.
thats my .002here to help
If you want to get involved in some of the projects I’m involved in email to [email protected]
currently looking for up front money at 15% p/a pm me if you wishThere is a name for this – ‘stoozing’.
And Terry, $700 pa would be considered by many to be quite cashflow positive…
F.[cowboy2]And imagine all the points you would receive in Gross’ example.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
With your example Gross you could renovate a house with just the points accumulated.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
