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Subject: INteresting concept

Fri Nov 09, 2007 2:33 am

Ok, I read somewhere that this will raise your credit score...i put this in this forum because it's sort of miscellaneous. I read that say you deposit $500 in a savings account then take out a loan for the same amount, $500 that is borrowed against the principal in your savings and go ahead and deposit that money in the savings account. Make arrangements with your bank to have your loan repayment amount directly taken out of your savings account and forget about the original $500 in there...not only do you earn interest, you're helping your credit score raise some points. how much I do not know...wish I could try this as I don't $500 right now and i think this depends on your credit wouldn't it? i mean your credit would have to be good or you're interest is going to stink essentially taking away from the original deposit. oh well, just putting this out there...

Guest

Fri Nov 09, 2007 2:36 am

I also meant to add that the amount withdrawn to pay back the loan should be paid back during the course of 12 months...

Laura

Joined: 21 Jun 2007
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34560 Magic Points

Fri Nov 09, 2007 3:29 am

Well altogether then the amount in my savings account becomes $1000 right? From this amount the loan repayment will take place.

Well well. in this case what will be the interest that will count while repaying the loan? I hope that does not exceed so much so that in order to repay a loan of $500 I lose my deposit of $500 as well. What exactly raises the credit score and how do we earn an interest on this?

I know this is full of questions but I find this concept pretty controversial. Lots to be answered guest Smile

. Another one....which banks are offering this concept?
_________________
Regards,
Laura.

debtstinker

Joined: 03 Nov 2007
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Fri Nov 09, 2007 1:13 pm

Morning Laura...I was the one who wrote this not realizing that I wasn't signed in twice LOL Smile

Ok...I read this somewhere and by no means advocate it. i would think youre credit has to be stellar to do this and yes if you're not careful your principal could be dug into easily. I was astounded at this concept. I'm not sure any banks offer this and the thing is if you don't have decent credit you're not going to get a loan, or if you do your interest will be higher. that's why i put this in the forum to see people's responses as it wasn't appropriate for the other forums.

goodnatured

Joined: 03 Nov 2007
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Sat Nov 10, 2007 1:30 am

It makes sense to me, if you are trying to build credit, the monthly payments on the loan would have to be reported to the credit reporting agencies. Don't know if the intrest rate on the loan would be higher than the intrest on the savings though. Would have to do some looking into it if you planned on doing it. May work if you could find a high intrest bearing certificate of deposit or that type of account. I guess if your in a real need of building credit it would work. Just would take some leg work to make sure that you are not losing money.

Guest

Sat Nov 10, 2007 9:38 am

Yes Debtstinker, The issue is pretty interesting. It sounded so controversial that I asked those questions.

goodnatured

Joined: 03 Nov 2007
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Sat Nov 10, 2007 12:17 pm

I think it would work, this would be a good idea for a younger person too who is trying to build up the credit and what a lesson this would be, learning to use collateral with a loan.

debtstinker

Joined: 03 Nov 2007
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Sat Nov 10, 2007 12:22 pm

that's true...i think it could work for some people, even those just starting out.

goodnatured

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Sat Nov 10, 2007 1:10 pm

I couldn't do it right now, I am actually thinking the only way I could save is to give it to my husband and he can put it in the gun safe, LOL, I am always looking to pay something down, so Maybe I ought to treat it like a bill and give him a few hundred every pay to put away. The intrest would be terrible, but at least I would have savings right.

debtstinker

Joined: 03 Nov 2007
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Sun Nov 11, 2007 3:19 am

Whatever works for you...that's the key. do what works for your family. some people have credit unions take money out of their pay, or have so much money directly taken out of paychecks to go to an actual savings account or a Christmas fund. For me, I had to take pay directly out of my check towards my 403b and now i'm glad i did that 2 years ago because we had to cash the little that i accumulated in. if it weren't for that we'd be living solely on credit, would not have been able to have a major repair done on our suv, and would be starting the whole terrible cycle of accumulating debt, something we fought so hard on as a couple to get out of. bad enough we have student loans adn things we had to have debt on, rent, car payment, etc. but we try to eliminate unnecessary stuff. so whatever works for you, you will be grateful for. You just never know, you may need it for a rainy day and your hubby will have it for ya! I mean if you start that you won't miss it after a while Smile

goodnatured

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Sun Nov 11, 2007 4:11 am

I know, but, there is that three letter word. LOL, I may start it after the holidays, I have a few things I need to do before I even think of that. In a few months I should be ok. Looking forward to that time frame.

desiree15

Joined: 10 Nov 2007
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Tue Nov 13, 2007 12:32 am

three letter word? Wink

just kidding i think that's a neat idea to give monies to your husband. My mom (i'm 24) has an account for me and she puts money in when she can. I don't touch it unless I need to and i'm so grateful that she's willing to help me out. I know there's a small nest egg in our account that can help for a rainy day

goodnatured

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Tue Nov 13, 2007 11:30 am

Wow, how nice, that is great that your parents help you out like that. Even better that you show your appreciation for it, you are a wonderful daughter! Alot of kids take parents for granted.

debtstinker

Joined: 03 Nov 2007
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Tue Nov 13, 2007 2:58 pm

I hear you there good and I used to deal with them on a daily basis when I worked for my former employer. They have this sense of self entitlement which i posted on before in another post. Des15 that's really nice AND to your credit you don't wipe that account out either, r ather you're very smart and use it only when you need to! I know my parents didn't have a lot of money growing up and are on a fixed income so when we got money it was really valued and still is. money is hard earned, and lots of ours is going to gas in our cars Sad

gas is supposed to spike quite a bit in the next two weeks!

desiree15

Joined: 10 Nov 2007
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Wed Nov 14, 2007 12:50 am

I am so grateful to my parents. if it weren't for them I would be in some serious trouble. I just now got my first credit card this year and i'm 24. I ddin't get one in college which was a mistake because I think I would have had an easier time getting one not to mention get better interest rattes, etc. when I got out of college it was really hard to find a card that allowed me to start building my credit. I didn't have the money for those that charge all those fees just for the privaledge of having one. thankfully good old capital one came through

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