Author Topic: Poster rolls credit card debt into bank overdraft  (Read 2923 times)

iowajes

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Poster rolls credit card debt into bank overdraft
« on: February 01, 2017, 11:35:35 AM »
http://disboards.com/threads/found-a-way-to-pay-off-credit-cards-fast.3575495/page-2

Quote
The wife got a job at a bank. Bank employees can get a bank account with an overdraft of $30,000. So what we did was pay off all our credit cards and went into overdraft on the bank account. But the best part is when in overdraft the interest is 0.75%. So her paycheck goes in there and the paycheck deposited makes the payment. And if you need something just use the bank card. You stay in the negative until it's paid off but it's by far the best way and lowest interest that we have found. Everything will be paid off soon.

This thread is just fun to read.  The poster seems completely unaware that maybe there were some reasons NOT to do this.  Heck, maybe it work out okay for them...but man does he seem oblivious.


slugline

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Re: Poster rolls credit card debt into bank overdraft
« Reply #1 on: February 01, 2017, 01:17:30 PM »
I hope that's .75% per annum and not monthly.

Hmmmm . . . if that's per annum, and you can hold $30K out indefinitely (aside from minimum payments) Mustachian might see that as an opportunity to borrow at an ultra-cheap rate and invest?

ketchup

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Re: Poster rolls credit card debt into bank overdraft
« Reply #2 on: February 01, 2017, 01:24:53 PM »
I hope that's .75% per annum and not monthly.

Hmmmm . . . if that's per annum, and you can hold $30K out indefinitely (aside from minimum payments) Mustachian might see that as an opportunity to borrow at an ultra-cheap rate and invest?
Even if it is monthly, that still works out to only 9.4% APR (1.0075^12 = 1.094).  Probably less than their credit cards.

It still sounds like complete madness, don't get me wrong.

iowajes

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Re: Poster rolls credit card debt into bank overdraft
« Reply #3 on: February 01, 2017, 01:28:47 PM »
I hope that's .75% per annum and not monthly.

Hmmmm . . . if that's per annum, and you can hold $30K out indefinitely (aside from minimum payments) Mustachian might see that as an opportunity to borrow at an ultra-cheap rate and invest?

Reading the thread- it is clear he has no idea.  Nor whether or not this "employee benefit" is a good idea to use this way, or if it could in the long run affect his wife's ability to keep her job.

Indexer

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Re: Poster rolls credit card debt into bank overdraft
« Reply #4 on: February 01, 2017, 06:19:51 PM »
If you already have 30k in credit card debt I guess this is a way to save on interest. It would be better to not have the debt in the first place.


Reading the thread- it is clear he has no idea.  Nor whether or not this "employee benefit" is a good idea to use this way, or if it could in the long run affect his wife's ability to keep her job.

It shouldn't impact her job. Employees at a bank aren't suppose to know about each other's accounts. Then they could see each other's direct deposit! Now if they start missing payments or overdraft the checking account, that would appear on a list, and someone might recognize a name. ;)


crispy

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Re: Poster rolls credit card debt into bank overdraft
« Reply #5 on: February 01, 2017, 07:42:18 PM »
There is a reason I quit post on the Dis...the budget board posters were some of the worst.

FIT_Goat

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Re: Poster rolls credit card debt into bank overdraft
« Reply #6 on: February 01, 2017, 09:03:32 PM »
I wonder if the OP will continue to update that thread when this scheme blows up in their face.

Metric Mouse

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Re: Poster rolls credit card debt into bank overdraft
« Reply #7 on: February 02, 2017, 12:27:45 AM »
I'm just impressed... that means that her entire paycheck just goes to pay off debt... Every single paycheck goes 'into the red.' 

Does that make it a 100% savings rate?
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NorthernMonkey

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Re: Poster rolls credit card debt into bank overdraft
« Reply #8 on: February 02, 2017, 06:03:25 AM »
I took out a new Credit card which had a 0% for 32 months offer. I then took the largest balance transfer I could, (15000) and used it to pay off a chunk of mortgage at 3.54%

I don't see this as any different. If you have debt, then you're better off having it at the lowest interest rate possible.

He might have just spent 30k on strippers and coke, in which case his decisions suck, but equally, it could be 30k on doing up a house he is about to flip, and low interest credit is the best way of financing the deal.

Making assumptions on why he needs 30k of credit doesn't change the fact that having that much at such low interest in a fantastic deal,

jinga nation

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Re: Poster rolls credit card debt into bank overdraft
« Reply #9 on: February 02, 2017, 06:23:28 AM »
I took out a new Credit card which had a 0% for 32 months offer. I then took the largest balance transfer I could, (15000) and used it to pay off a chunk of mortgage at 3.54%

I don't see this as any different. If you have debt, then you're better off having it at the lowest interest rate possible.

He might have just spent 30k on strippers and coke, in which case his decisions suck, but equally, it could be 30k on doing up a house he is about to flip, and low interest credit is the best way of financing the deal.

Making assumptions on why he needs 30k of credit doesn't change the fact that having that much at such low interest in a fantastic deal,
It is a fantastic deal if you know what you're doing. However, most people have great intentions and flawed executions.
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Paul der Krake

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Re: Poster rolls credit card debt into bank overdraft
« Reply #10 on: February 02, 2017, 07:03:00 AM »
That's some great arbitrage right there. Provided everything checks out, I would love to get my hands on 200-500k of money at 0.75%. The overdraft agreement would need to be very closely examined first, maybe have an attorney take a look.

Tasty Pinecones

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Re: Poster rolls credit card debt into bank overdraft
« Reply #11 on: February 02, 2017, 07:20:04 AM »
I wonder if she loses her job or gets fired if that affects the payback terms.

LalsConstant

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Re: Poster rolls credit card debt into bank overdraft
« Reply #12 on: February 02, 2017, 07:42:51 AM »
I'm just impressed... that means that her entire paycheck just goes to pay off debt... Every single paycheck goes 'into the red.' 

Does that make it a 100% savings rate?

Well he says they can just use their debit card to cover expenses like normal, so effectively what they're doing is making a payment and then taking on more debt.

If the former exceeds the latter that's going to be fine, but a problem with people who have trouble managing credit card debt (I was one so I know the hard way) is they tend to grow to the size of the capacity they are given for said debt.

I hope this ends well for them.  CC debt is no fun.

Metric Mouse

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Re: Poster rolls credit card debt into bank overdraft
« Reply #13 on: February 02, 2017, 10:18:59 PM »
I wonder if she loses her job or gets fired if that affects the payback terms.
That is very much a real concern.
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MustacheMathTM

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Re: Poster rolls credit card debt into bank overdraft
« Reply #14 on: February 03, 2017, 12:28:43 AM »
If you already have 30k in credit card debt I guess this is a way to save on interest. It would be better to not have the debt in the first place.
Reading the thread- it is clear he has no idea.  Nor whether or not this "employee benefit" is a good idea to use this way, or if it could in the long run affect his wife's ability to keep her job.
It shouldn't impact her job. Employees at a bank aren't suppose to know about each other's accounts. Then they could see each other's direct deposit! Now if they start missing payments or overdraft the checking account, that would appear on a list, and someone might recognize a name. ;)

I suspect that the bank would prefer employees to have their debts with the bank on low interest where the security team can see them rather than at high interest elsewhere that might make the employee vulnerable to bribes.

Metric Mouse

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Re: Poster rolls credit card debt into bank overdraft
« Reply #15 on: February 03, 2017, 12:30:59 AM »
If you already have 30k in credit card debt I guess this is a way to save on interest. It would be better to not have the debt in the first place.
Reading the thread- it is clear he has no idea.  Nor whether or not this "employee benefit" is a good idea to use this way, or if it could in the long run affect his wife's ability to keep her job.
It shouldn't impact her job. Employees at a bank aren't suppose to know about each other's accounts. Then they could see each other's direct deposit! Now if they start missing payments or overdraft the checking account, that would appear on a list, and someone might recognize a name. ;)

I suspect that the bank would prefer employees to have their debts with the bank on low interest where the security team can see them rather than at high interest elsewhere that might make the employee vulnerable to bribes.
And possibly more amenable to less than ideal working conditions.
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MustacheMathTM

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Re: Poster rolls credit card debt into bank overdraft
« Reply #16 on: February 03, 2017, 01:20:26 AM »
If you already have 30k in credit card debt I guess this is a way to save on interest. It would be better to not have the debt in the first place.
Reading the thread- it is clear he has no idea.  Nor whether or not this "employee benefit" is a good idea to use this way, or if it could in the long run affect his wife's ability to keep her job.
It shouldn't impact her job. Employees at a bank aren't suppose to know about each other's accounts. Then they could see each other's direct deposit! Now if they start missing payments or overdraft the checking account, that would appear on a list, and someone might recognize a name. ;)
I suspect that the bank would prefer employees to have their debts with the bank on low interest where the security team can see them rather than at high interest elsewhere that might make the employee vulnerable to bribes.
And possibly more amenable to less than ideal working conditions.

Yep, nothing says "will take a pay cut and work the crap shifts" like having a 30k overdraft that you can't pay back without the job.

NoStacheOhio

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Re: Poster rolls credit card debt into bank overdraft
« Reply #17 on: February 03, 2017, 08:15:01 AM »
I might consider doing this, but not using the full $30k. I'd definitely also hold an emergency fund elsewhere.
The first step is acknowledging you have a problem, right?

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Indexer

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Re: Poster rolls credit card debt into bank overdraft
« Reply #18 on: February 04, 2017, 09:55:06 AM »
If you already have 30k in credit card debt I guess this is a way to save on interest. It would be better to not have the debt in the first place.
Reading the thread- it is clear he has no idea.  Nor whether or not this "employee benefit" is a good idea to use this way, or if it could in the long run affect his wife's ability to keep her job.
It shouldn't impact her job. Employees at a bank aren't suppose to know about each other's accounts. Then they could see each other's direct deposit! Now if they start missing payments or overdraft the checking account, that would appear on a list, and someone might recognize a name. ;)

I suspect that the bank would prefer employees to have their debts with the bank on low interest where the security team can see them rather than at high interest elsewhere that might make the employee vulnerable to bribes.

The bank does prefer the employees bank there. The benefits aren't that great. When I worked at a bank I kept my money at an online bank, because even with my perks the rates were significantly better at the online bank.

Bank security is less worried about bribes, and more worried about insolvency. If an employee is in serious financial trouble, like pending foreclosure, then stealing becomes a bigger concern. Keep in mind a teller might handle physical cash on a given day that is greater than their annual salary.

Playing with Fire UK

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Re: Poster rolls credit card debt into bank overdraft
« Reply #19 on: February 04, 2017, 10:10:45 AM »
I was thinking of bribes in relation to enabling theft or being an inside person with a heist (my mind goes to interesting places). Presumably it is pretty difficult to take money from a bank as a teller without getting busted?

People can make some really terrible decisions in the face of massive debts.

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Re: Poster rolls credit card debt into bank overdraft
« Reply #20 on: February 11, 2017, 11:38:58 PM »
Oh, iowajes, this is great/terrible!  Would you mind if I quoted your first post on the thread OP Is the Only One Who Doesn't See It?

I took out a new Credit card which had a 0% for 32 months offer. I then took the largest balance transfer I could, (15000) and used it to pay off a chunk of mortgage at 3.54%

I don't see this as any different. If you have debt, then you're better off having it at the lowest interest rate possible.
*snip*

Your logic is sound, but do read the entire thread on related to the quote.  Some other bank employees are saying that having this large overdraft could get his wife fired or have other negative consequences.
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iowajes

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Re: Poster rolls credit card debt into bank overdraft
« Reply #21 on: February 12, 2017, 04:20:36 PM »
Oh, iowajes, this is great/terrible!  Would you mind if I quoted your first post on the thread OP Is the Only One Who Doesn't See It?

I took out a new Credit card which had a 0% for 32 months offer. I then took the largest balance transfer I could, (15000) and used it to pay off a chunk of mortgage at 3.54%

I don't see this as any different. If you have debt, then you're better off having it at the lowest interest rate possible.
*snip*

Your logic is sound, but do read the entire thread on related to the quote.  Some other bank employees are saying that having this large overdraft could get his wife fired or have other negative consequences.

I think it is the thread, and how the OP responds to other people that really makes me think this was a bad idea- they had no idea what they were doing...

Not that moving high interest debt to a low interest is a bad idea.

frugalnacho

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Re: Poster rolls credit card debt into bank overdraft
« Reply #22 on: February 24, 2017, 12:36:36 PM »
I've never seen a bank account that allows you to stay in the red without charging additional overdraft fees. They don't make their money back by charging interest, they make it back by dinging you $35 for each and every purchase that either puts you into the red or keeps you in the red.

If that's not the case then their logic is sound.  I would be surprised if the bank just allowed a perpetual negative balance with no additional charges above the 0.75% interest though.