Interest free bank 'loan' or am I fooling myself?

Les_Debt

Hi
this is my first post and I wondered if you could help with this one, as a 'method' for reducing debt by in effect getting an interest free loan from your bank.

ok so you have such and such debt as i have, you are paying minimum payments on your credit card + loan debts, occasionally you pay extra. Along with this you actually save money each month from your wage to fund your annual Thailand holiday !!

So on the last day of the month you have a surplus from your previous wage that is sent directly to your savings account (in my case Barclays ex Ing) to fund the holiday and also save for things like xmas, dentist, clothes, glasses etc

you now have Zero in your bank account, you would like to pay off more from the loan debt but you dont want to break into your hard earned savings.

So you are paid your salary the next day, £1500 in the black,
So you decide to pay £250 extra off the loan debt, (besides the normal minimum payment that is taken by DD.

at the end of the month you still have a bit of surplus say £50 which goes to your savings account, but you wished you had the £250 to add to the savings or to play with

So you are Zero bank account again (but not in the Red)

You get paid again and are in the black so you 'take' £225 extra out of the account and give it to your savings or use it for your general monthly budget, so each month then you take 'extra' money out at say £25 less until the £250 has in effect been paid back, i.e for the next month you would take out £200 then £175, £150 etc until after 10 months the £250 has been paid back,

As long as your account never goes red the bank as far as i can see would not notice, so you wouldn't pay any overdraft fee, your loan debt would be reduced by £250 and you would also pay less interest on that loan therein.

If for some reason you realized your account would go into the red in any one month you would quickly move an amount from your savings to allow for that, so you would still be in the black, when you got paid again you would move those savings back to your savings account.

Cheers LD

[Deleted User]

I don't see how you are getting any sort of a loan from your bank. All you seem to be proposing is to use your own money and split any surplus across debts and savings.

Or am I missing something?

gb12345

What the !!!! are you on about?

[Deleted User]

gb12345 wrote: »

What the !!!! are you on about?

That's another way of putting it....

dealer_wins

I think he means lending money from himself (Savings) to himself (debts).

imoneyop

I think he's been smoking something "herbal".

gb12345

Les_Debt wrote: »

Hi
this is my first post and I wondered if you could help with this one, as a 'method' for reducing debt by in effect getting an interest free loan from your bank.

ok so you have such and such debt as i have, you are paying minimum payments on your credit card + loan debts, occasionally you pay extra. Along with this you actually save money each month from your wage to fund your annual Thailand holiday !!

So on the last day of the month you have a surplus from your previous wage that is sent directly to your savings account (in my case Barclays ex Ing) to fund the holiday and also save for things like xmas, dentist, clothes, glasses etc

you now have Zero in your bank account, you would like to pay off more from the loan debt but you dont want to break into your hard earned savings.

So you are paid your salary the next day, £1500 in the black,
So you decide to pay £250 extra off the loan debt, (besides the normal minimum payment that is taken by DD.

at the end of the month you still have a bit of surplus say £50 which goes to your savings account, but you wished you had the £250 to add to the savings or to play with

So you are Zero bank account again (but not in the Red)

You get paid again and are in the black so you 'take' £225 extra out of the account and give it to your savings or use it for your general monthly budget, so each month then you take 'extra' money out at say £25 less until the £250 has in effect been paid back, i.e for the next month you would take out £200 then £175, £150 etc until after 10 months the £250 has been paid back,

As long as your account never goes red the bank as far as i can see would not notice, so you wouldn't pay any overdraft fee, your loan debt would be reduced by £250 and you would also pay less interest on that loan therein.

If for some reason you realized your account would go into the red in any one month you would quickly move an amount from your savings to allow for that, so you would still be in the black, when you got paid again you would move those savings back to your savings account.

Cheers LD

Are you related to the OP of this thread by any chance?

Tixy

gb12345 wrote: »

Are you related to the OP of this thread by any chance?

Noooooooooo - I've just wasted half an hour reading that thread thanks to your link (I admit after page 11 I skipped to the last page)

JimmyTheWig

gb12345 wrote: »

Are you related to the OP of this thread by any chance?

I wondered that. Very similar style.

Deleted_User wrote: »

I don't see how you are getting any sort of a loan from your bank. All you seem to be proposing is to use your own money and split any surplus across debts and savings.

Or am I missing something?

I think they've already got the loan which they are paying off at the end of each month.
I think they're suggesting that you pay it off at the beginning of each month instead.
Thus decreasing the amount they owe for longer. Which will (depending on the terms of the loan, but certainly if it's a credit card, etc) result in less interest paid. But I would have thought that was just common knowledge!

DCFC79

gb12345 wrote: »

What the !!!! are you on about?

Yes I thought the same, all i saw is the moving money from 1 account to another.

[Deleted User]

I see. But what if he paid a sum off the debt on the 31st of the 1st month, then paid the next sum off on the 30th of the second month and kept moving a day earlier each month?

Then surely he would be accruing a day's less interest each month, and still able to go on holiday in August to Paris, when it's closed?