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C4M · 02-25-2005, 05:56 PM

Quote: Originally Posted by meddler

The way it works (I use the same system) is that you have your home loan and a savings account linked to your morgage (offset account). All your income (pay, tax checks, gifts, etc) go into the savings account. If you have a loan of $200k and $10K in the savings account, the bank calculates interest on the offset ammount. ($200k-$10k) So the interest is calculated on $190k. So obviously the more money you keep in your savings account the less interest you pay and the better off you are. Here is where the credit card comes in. You live off the credit card to keep the maximum ammount in your savings account for the maximum ammount of time as stated above. You then pay your credit card out in full at the end of every month (or statement date) In essence you are using the banks money to live off and since the money you would usually spend out of your savings account isn't touched you save on interest. I have heard of people who use this method pay off their 30 year home loan in under 10 years. It's true you still have to exercise control, but you have to think that it is your money you are using even though it is a credit card.
Hope that makes a little more sense to you WizzardPC

Big tick. Thanks for the better explanation.

Now that you all understand that, you'll understand what I mean when I say that my buying a 42" plasma for home on credit contributed $600 toward my mortgage repayments (and that's ignoring the compounding effect over the life of the mortgage).

I had the money in the bank, but instead of using that, I used one of those Harvey Norman (read: big electronics discount store) 16 month interest free deals.

Net result: I get a TV, and someone else pays for it for a while. I pay the loan out in full on the last day.

Credit can make you money. The trick is to use other peoples money whenever possible, and make sure that the cost of using that money is lower than your return.

C!

02-25-2005, 05:56 PM	#24
C4M Maximum Bitrate Join Date: Apr 2002 Location: Sydney, Australia Vehicle: 2003 Subaru Impreza Posts: 823 My Photos: ()	Quote: Originally Posted by meddler The way it works (I use the same system) is that you have your home loan and a savings account linked to your morgage (offset account). All your income (pay, tax checks, gifts, etc) go into the savings account. If you have a loan of $200k and $10K in the savings account, the bank calculates interest on the offset ammount. ($200k-$10k) So the interest is calculated on $190k. So obviously the more money you keep in your savings account the less interest you pay and the better off you are. Here is where the credit card comes in. You live off the credit card to keep the maximum ammount in your savings account for the maximum ammount of time as stated above. You then pay your credit card out in full at the end of every month (or statement date) In essence you are using the banks money to live off and since the money you would usually spend out of your savings account isn't touched you save on interest. I have heard of people who use this method pay off their 30 year home loan in under 10 years. It's true you still have to exercise control, but you have to think that it is your money you are using even though it is a credit card. Hope that makes a little more sense to you WizzardPC Big tick. Thanks for the better explanation. Now that you all understand that, you'll understand what I mean when I say that my buying a 42" plasma for home on credit contributed $600 toward my mortgage repayments (and that's ignoring the compounding effect over the life of the mortgage). I had the money in the bank, but instead of using that, I used one of those Harvey Norman (read: big electronics discount store) 16 month interest free deals. Net result: I get a TV, and someone else pays for it for a while. I pay the loan out in full on the last day. Credit can make you money. The trick is to use other peoples money whenever possible, and make sure that the cost of using that money is lower than your return. C! __________________ http://carpc.riposte.net I reserve all rights in connection to each post I author, without exception.