27 Apr Use Your Line of Credit and Turn the Tables on Your Bank!
You’re ready to shop around for the best deal for your line of credit. If you’ve already have a line of credit but haven’t used it, you’re ready to ask your banker a few key questions so you can begin putting your lazy dollars to work.
But first, allow me to digress for a moment.
If someone were to ask you what’s so special about CashMap’s cash management strategy, what would you say? Here’s a suggestion. Tell them, “I’m making every one of my hard earned dollars work for me 24/7. This means doing to the bank what they’ve been routinely doing to me.” My guess is that you’ll get the person’s attention.
A couple of days ago, a good friend of mine from Canada called me asking for financial advice. His home mortgage is 5.5 percent. He wants to take advantage of the low mortgage rates and refinance his mortgage. He also is considering consolidating the debt from his line of credit into his mortgage. Next year his mortgage term expires. If he refinances his mortgage now, he estimates that he’ll pay a $2,800 prepayment penalty. He’s considering a ten-year term. (In Canada, the maximum term on for a traditional mortgage is seven years. If you want the lowest interest rate, you take a shorter term, a variable interest rate and agree to prepayment penalties.)
Since my friend had purchased CashMap a couple years ago, my immediate response was, “Use CashMap”. I was shocked when he told me that he didn’t want to be bothered. I politely listened.
When he was finished, I asked why his money was sitting in his checking account doing nothing? Why would he pass on the opportunity to turn the table on his bank and do to them what they’ve been doing to him for years?
There was a long pause.
Banks use your money that is sitting in your checking and savings account and borrow anywhere from two to eight times that amount to create loans. The interest rate they get is extremely low. How low? As of today, in the United States the Fed Funds Rate is approximately .25%. The benchmark rate for Canada is one percent.
What a great business model for making money! Pay someone next to nothing to leave their money with you, borrow two to eight times the amount deposited at .25 percent and then lend these dollars to someone else at an interest rate of anywhere from five to ten percent.
By making a few small changes in the way we manage our money, we can turn the tables on the banks. Unfortunately, most of us don’t want to be bothered. Amazing!
My friend immediately got the point. He saw how easy it is to implement the CashMap strategy. They are the perfect candidates to turn the table on their bank. He and his wife already know what they want to achieve. They have a budget. They follow it.
In just thirty minutes, we walked through the steps that he’ll follow to create and automate his process. He’s ready to get started.
How about you?
Ready to start your journey towards financial freedom? Get started today!
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