Author Topic: Emergency Fund? : My Bank Visa Card & Chase Slate  (Read 986 times)

JenniferW

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Emergency Fund? : My Bank Visa Card & Chase Slate
« on: August 31, 2018, 03:45:01 PM »
So I have a VISA credit card with my credit union, with zero balance and 10.4% interest.  They do not charge me any money at all to cash advance from it!  So if an emergency happened, and only then, I could draw out $7500 at the bank and only start paying interest on it.

If I did do that, I could then immediatly open a Chase Slate account with $7500 credit limit and do a balance transfer for free from my TTCU credit card with 0% interest for 15 months.

I'd then have 15 months to pay off the $7500 interest free.

Does this seem feasible for Emergency Fund?  So I can start investing my cash now and actually have it working for me?  Rather than saving $5k in savings account at bank that gives me less than 1% interest.

« Last Edit: August 31, 2018, 03:48:40 PM by JenniferW »

bryan995

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Re: Emergency Fund? : My Bank Visa Card & Chase Slate
« Reply #1 on: September 04, 2018, 04:38:12 AM »
CC terms could change at any time, which could affect your plan.  I would personally just keep the EF money as cash, in a savings account, and invest other money.  You can use the cash-advance + cc as a emergency EF in case something very serious ever happened and you needed money ASAP. 

p.s. Ally bank is paying ~1.8% for savings accounts now, not too horrible. 

Villanelle

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Re: Emergency Fund? : My Bank Visa Card & Chase Slate
« Reply #2 on: September 04, 2018, 04:51:46 AM »
I think it's useful to keep in mind as one leg of your emergency fund stool.  But the card terms could change, or the situation that created the emergency could also cause you to no longer qualify for these things (job loss, for example).  So it's not what I would rely on entirely to fund an emergency. 

JenniferW

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Re: Emergency Fund? : My Bank Visa Card & Chase Slate
« Reply #3 on: September 04, 2018, 10:29:41 AM »
Thanks for the replies.  You all made some good points.  I'll stick with a cash emergency fund.

CC terms could change at any time, which could affect your plan.  I would personally just keep the EF money as cash, in a savings account, and invest other money.  You can use the cash-advance + cc as a emergency EF in case something very serious ever happened and you needed money ASAP. 

p.s. Ally bank is paying ~1.8% for savings accounts now, not too horrible.

I am in Oklahoma and don't see a location for Ally bank here.  Love that interest rate.  I just don't know how I'd quickly get the cash if I had an emergency.  I bank at local credit union.

Frankies Girl

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Re: Emergency Fund? : My Bank Visa Card & Chase Slate
« Reply #4 on: September 04, 2018, 10:43:14 AM »
Ally Bank is online only. There are no physical brick and mortar locations. It is a solid institution tho.

They also do 1 business day transfers to any other bank/credit union. Better than most out there actually.


Retire-Canada

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Re: Emergency Fund? : My Bank Visa Card & Chase Slate
« Reply #5 on: September 04, 2018, 11:03:51 AM »
So I have a VISA credit card with my credit union, with zero balance and 10.4% interest.  They do not charge me any money at all to cash advance from it!  So if an emergency happened, and only then, I could draw out $7500 at the bank and only start paying interest on it.

If I did do that, I could then immediatly open a Chase Slate account with $7500 credit limit and do a balance transfer for free from my TTCU credit card with 0% interest for 15 months.

I'd then have 15 months to pay off the $7500 interest free.

Does this seem feasible for Emergency Fund?  So I can start investing my cash now and actually have it working for me?  Rather than saving $5k in savings account at bank that gives me less than 1% interest.

I opened a $30K line of credit which I use as my EF. Costs nothing to open or have sitting ready. It's not tied to my home equity so not affected by changes in home value. I keep $0 in cash for emergencies. That said I have $900K+ in investments to tap into including $200K+ in accounts with no or minimal tax implications if I sell.

I'm a fan of using credit for an EF, but I like it to be back stopped by something else. So if you want to pursue your plan maybe invest that $5K in a taxable account so it's earning for you, but it's still available easily. Even with a 50% market crash $5K would be $2.5K if you really really needed it and $10K would be $5K. I'm from Canada so I am not familiar with all the various investment account types in the US. There may be a better option than taxable, but make sure you can get access to that money if you need it.

You'd then take the following steps in in an emergency:

1. cash flow if possible
2. use credit for what you can't cash flow
3. pay back credit from income
4. only sell investments if none of the above solves your problem

Your investments will grow over time so that a market crash would have less and less impact.