HELOC, Credit Cards, and Money Merge
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.
My understanding is that the Money Merge Account will not work with a credit card, but I’ve heard it can be amplified with a credit card. I don’t know how that works, but it seems to make sense that a HELOC would be needed as it backs up the program. It is something real, whereas a credit card is backed by nothing. It isn’t real money.
Sunday, December 2nd 2007 at 6:03 pm
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.
2.) There is normally a fee associated with cash transactions 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.
Hope that helps.
Travis
Thursday, May 28th 2009 at 8:47 am
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Sunday, January 24th 2010 at 9:27 am
Great reading material. I’ve learned a lot by reading here. Thanks!
Thursday, April 8th 2010 at 4:25 pm
It only goes to show where there’s will there’s a way. Keep on trying. – Here comes the orator with his flood of words and his drop of reason. – Benjamin Franklin 1706 – 1790