If you have a Home ELOC, read this...

smckaybiz

Just a suggestion or idea of a way to get your HELOC debt lowered faster. Here I have been taking applications for HELOC's for over three years now and had never heard of this idea until a customer finally brought it up to me:

Most HELOC's calculate your interest based on you average daily balance, so the more days in you statement cycle that your balance is lowered you are being charged less interest so more of your payment is going towards your principal balance. So the idea is to set up a system where directly after you get paid you make a payment towards your HELOC for the same amount. Then istead of using your checking account you would just use your HELOC checks and credit card(if your bank offers this service) to pay your bills and living expences.

You have to figure that most savings accounts aren't paying as much interest as your paying out on your HELOC so why keep any unused money in a savings or in your checking accounts. Its actually a pretty good idea if you think about it, yes a bit time consuming but in the long run it will really help you to pay down your debt faster.

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hi Scott,

It is a good idea to pay off the HELOC faster as in long run you will pay less as interest. But don't you think that the borrower can even use the savings to pay off the high interest rate credit card debt or medical bills?

Best of luck,
Larry

smckaybiz · Posted: Tue May 20, 2008 4:55 pm Post subject:

Good point Larry. I just don't understand how some people out there will keep a large amount of money in their savings accounts earning very little interest while they are clouded in debt where they are being charged higher interest rates on.

But as far as using it as a checking account to help reduce the interest your paying on your HELOC I think its actually a great idea. Why keep in money in your checking account from the time you get paid until the time your bills are due when you could be putting that money to better use.

lisascherzer · Joined: 04 Jan 2008 Posts: 749 0.10 Dollars($)

I agree that more people should do that but I don't think they realize they can.

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