HELOC, Credit Cards, and Money Merge
Posted by ~Ray @ 2008-10-24 09:05:24
I have searched around trying to find an answer as to whether a Money Merge Account will work with a credit card rather than a HELOC. I was not able to find any answers. I considered calling Jubilee as they have answered my questions before but I decided instead to make a post on my site and see if anyone could offer any comments as well as give them the opportunity to ask questions about the same subject.
Because we teach about the concept of interest cancellation and we sell the Money Merge Account product from United First Financial we get this question a lot. The Money Merge Program is NOT effective when credit cards are used in place of the HELOC. There are a couple of reasons for this.
1.) Most credit cards charge a different rate for a cash advance than they do for a normal credit card transaction and that interest rate generally begins at the time of the transaction. Remember that there is a grace period (generally 28 days) for most purchases on a credit card.
In nearly every situation those two factors would negate the positive effect gained on a mortgage from the Money Merge Account software.
We do teach a strategy which uses a credit card along with the HELOC AND the Money Merge Account software. The basic principle of the Money Merge Account program is to deposit as much money into the ALOC (this is either a HELOC [Home Equity Line of Credit]. PLOC [Personal Line of Credit] or BLOC [Business Line of Credit] as possible and leave it there for as long as possible. This minimizes the average daily balance on the ALOC reducing the interest charge.
An effective strategy for doing this is to make all possible purchases on a credit card which will give you points miles rewards etc. Then pay the credit card off on the due date completely using the ALOC. It’s best if the payment from the ALOC to the credit card is done just prior to a deposit into the account. This maximizes the power of the Money Merge Account and minimizes the interest of the ALOC and eliminates the interest on the credit card. You get the best of all worlds.[ADVERTHERE]Related article:
http://micah.xebedee.com/still_life/?p=14
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