Spin some house jams.
For one of our most beloved jukes.
This is the one where the bank retail customer yanks the interest hose away from the bank and goes to town.
Tipping the tables and cranking the corners on money management fun yo.
Get double-digit % increase in principal reduction on a slice of your mortgage, 0%APR financing freedom for 15 months, a $150.00 kicker just for doing $500 in 3 months, and the 1-2-3% cash back(no rotates, cats, or expires, + bonuses), all for paying down your mortgage, using the financing of a promotional cash back card. We did. Made us chuckle.
Got a mortgage? Got good credit? Got any itch to slice down your mortgage? Well, you can be paid to use a bank’s money, to pay down your mortgage principal, thus dodging mortgage interest, and receive cash back and maybe that bonus. Anyone can do it.
Soundtrack, “Me Against the World” 2pac.
Tis the season to love your bank. Really. Banks try to help, occasionally. In the holiday season thoughts turn to higher things. How does that go? “Banks help those who help themselves.” Yes. Are 0% APR credit card offers still jamming your mailbox? Here’s one way to make that work for you. It’s you, helping the bank, to help you. Truly we enjoy that. So we came up with this–which we’ve done, and are doing again very very soon.
Think back over the financial year. Take special note of all your bank has done for you this year. Have a house? Then the bank’s charged you interest, and compounded it daily, all at no extra charge–for the math we mean. Your statement posts precisely the amount applied to principal and that applied to them. Do the math. Interest % shifts as you move along the amortization arc. It’s all interest at first, diminishing as one slice of pie facing an opposite.
Principal only” payments do not include interest, can be paid anytime, and have no minimum, or maximum.
When possible we prefer not to pay interest of any kind. “Principal only” payments dodge interest, but require you to continue normal monthly payments.
“Principal only” mortgage payments increase dramatically your punching power. Over time it’s even larger, freaky large. No minimums–any amount counts.
Just now America’s aglow in this rushing holiday round, and soon a year-end assessment of financial levels. It’s only fair to include the support received from all quarters. Again, it’s been your bank that kept your records, held your cash, charged ATM fees high enough to fund healthcare.
New Fed chief, repeated new all-time indexes’ highs, and a prime rate rising in 2018. That means soon all such lovely 0%APR offers will vanish in the wind. Cheap money’s ending.
The writing’s on the wall. Our fed appears ready to hike our prime interest rate four times in ’18. What does that mean to consumers? Increasingly expensive borrowing–and soon, an end to all those 0%APR promotional credit card offers.
At StockJaw we love 0% credit card promotions. With an average FICO score of 832, the offers we see are great. Here’s what we did.
Scanning new offers pouring through our individual mailboxes we hit on the best. We selected the Bank of American Cash Rewards Visa and applied. We called directly to save time. It works. Here’s the offer:
Introductory 15 month 0%APR on purchases and balance transfers(3% fee.) $150.00 bonus when card charges pass the $500.00 mark in the initial three months. 2% cash back. Nice card–the best going now.
Have one of these? Still paying? Check the statement for your current principal vs. interest balance. It’s coming soon.
In fact, mortgage interest has been in the spotlight in the form of “tax reform.” Buckle up because none of the tax plans cooked by this GOP will help those earning less than $75,000, according to the non-partisan CBO. Current commentary suggests the mortgage interest deduction is usable only by the very wealthy few–those capable of itemizing, as a start. Either way, interest is interest. We wanted to pay less.
If you have credit card debt pay that first–always. This technique requires the free income to afford the “principal only” payments, in addition to normal living expenses. The 0%APR provides the extra flexibility to make that payment in a lump-sum.
Making “principal only” payments in a lump sum manner reduces instantly the balance up which the bank compounds what you pay.
Here’s the key. Banks don’t eat typical credit card fees. They shift fees paid by merchants back to the cardholder, when using a card for mortgage payments. So you use the card normally, then pay the bank, not the 0% card.
We used our new 0% APR BofA card for monthly routine purchases, everything you would suspect–gas, groceries, incidentals, online. Meanwhile we grabbed the sum of a year’s worth of mortgage payments. We checked the amortization schedule for the exact interest set to be paid in the next 12 months–for all of 2018. We then subtracted the interest from the total annual mortgage set for payment on the next year. We converted to a percentage. Here’s what happened.
For simplicity we will use round small #s.
Annual mortgage payment……….$18,000.
Interest rate over this period……………50%
(due to amortization schedule.)
Effective repayment value…………………50%
(as a percent of principal reduction.)
Normally people evaluate mortgage interest only over the long term. The investing question is this;
Three basic options exist.
1. Pay down mortgage debt, to avoid interest.
2. Invest long-term, and let the mortgage interest ride. Attempt to beat the % rate over the long haul by investing.
3. Both 1 and 2.
Good equity investing always has the potential over the long term to strongly out perform mortgage interest rates. Yet not all people are comfortable with market risk.
Th e “principal only” move using a cash rewards credit card looks like this.
1. Select a good cash back card.
2. Use normally up to a level you want to shift of your mortgage–an amount you’re comfortable repaying during the 0% card promotion.
3. Pay principal only, interest-free mortgage payment.
4. Use the 0% credit period of card to repay card.
This method has four benefits:
1. Reduction in interest paid. The exact reduction depends on mortgage holder’s position within the amortization schedule. For one of us the savings were 50%.
2. Reduction in mortgage principal.
3. Flexibility in card balance repayment. The 0%APR for 15 months translates into flexibility to work with or around other obligations.
4. Bonus–in this case $150.00(when charging $500.00 within initial three months.) Cash back–2%.
Many good “cash back” cards exist; Bank of America Cash Rewards Visa is our new choice.
Comparecards.com–“10 Best Cash Back Cards.
This move simply shifts a set portion of mortgage debt to the 0% card, where repayment is interest-free; retired mortgage interest, with cash and bonus thrown in for fun. It’s a matter of simply using the card for normal purchases, then allowing that balance to ride on the card for free. That allows the cash normally used to pay the card off, to instead be put against the mortgage principal alone. Nice–very nice. We’ve used this technique many times–in fact it’s an X-Mas present to ourselves. Could be for you too.
Thanks for reading. Keep looking.
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