Old 11th April 2017, 04:50   #1
iomegajaz
Balled and Chained
Alumni
 
Join Date: Jun 2000
Posts: 5,193
Finance question: Why don't more people do this?

A friend™ does the following and I'm wondering why more people don't do the same thing. It goes like this:
  1. Buy house, take out P&I mortgage for $100,000 at 5% p.a. with unlimited redraw facility.
  2. Have a credit card with the same bank, both accessible via online banking.
  3. Sign up for 10 x $10,000 balance transfer credit cards with other banks and credit unions.
  4. Receive the $100,000 in balance transfers into the CC from 2.
  5. Transfer $99,000 from the CC into the mortgage.
  6. Set up monthly transfers (redraws) from the mortgage to each of the 10 balance transfer cards.
  7. When each card's BT period ends (e.g. at 12 mths, 15 mths, 18 mths), transfer its remaining balance (e.g. $5,000) from the mortgage to the BT card and close the card.
  8. Rinse and repeat.
  9. Pay $0 interest on the CCs and pay fuck-all interest on the mortgage (whose principal is down around the $1,000 mark at the outset).
  10. …?
  11. Fucking MEGA PROFIT.

As I say, a friend™ does this, definitely not me; but maybe I should. Why should I not???

"My heart hates uggos." –J.D.
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Old 11th April 2017, 20:48   #2
iomegajaz
Balled and Chained
Alumni
 
Join Date: Jun 2000
Posts: 5,193
Point of odour (Lisa smells) / clarification:
  1. Buy house, take out P&I mortgage for $100,000 at 5% p.a. with unlimited redraw facility.
  2. Have a credit card with the same bank, both accessible via online banking.
  3. Sign up for 10 x $10,000 balance transfer credit cards with X mths interest-free periods through other banks and credit unions.*
  4. Receive the $100,000 in balance transfers into the CC from 2.
  5. Transfer $99,000 from the CC into the mortgage.
  6. Set up monthly transfers (redraws) from the mortgage to each of the 10 balance transfer cards.
  7. Also make regular mortgage payments (e.g. from Checking to mortgage), thereby keeping the mortgage balance as close to $0 as possible.
  8. When each card's BT period ends (e.g. at 12 mths, 15 mths, 18 mths), transfer its remaining balance (e.g. $5,000) from the mortgage to the BT card and close the card.
  9. Rinse and repeat.
  10. Pay $0 interest on the CCs and pay fuck-all interest on the mortgage (whose principal is down around the $1,000 mark at the outset).
  11. …?
  12. Fucking MEGA PROFIT.
* Choose BT cards with $0 annual fee and 0%/$0 BT fee, or fees so low that they're more than offset by the amount of interest that would be saved over the BT interest-free period.

"My heart hates uggos." –J.D.
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Old 13th April 2017, 12:17   #3
Matty8
Junior Member
 
Join Date: Apr 2017
Posts: 8
After "take out mortgage" its already stupid thing that people can do. To live all life in debt, that's a nightmare.
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