Velocity Banking

Superhoopza

OP, I get the method. Don't worry about the people who don't get it, they are usually the first ones to tell you if you don't do things their way then you aren't getting it.

Long and short is, instead of paying for things on your debit card (or other forms of non cash), after you get paid, make a big payment on a CC and then use that for things you'd of ordinarily purchased. You're saving the payment (i.e. £1k) worth of interest and then slowly building it up throughout the month, where interest only occurs at time of purchase. 

Not sure why it's called a certain technique, for me it's just common sense to use non interest credit to reduce interest occurring credit.

Pitfalls have been mentioned such as your creditor reducing your credit facility, that's rare. I've never had any of mine reduced. 

You still have the same funds available to you for emergencies, just if it's sitting in a non interest occuring account it's not helping to clear any interest occuring balances, i.e. not reducing your interest payments.

Plenty of people saying you should review your use of credit, probably not wrong, but not relevant or helpful for this specific conversation.

Superhoopza

You can get around direct debits been taken out by moving to a minimum payment. Or just make a second payment, the amount you were going to pay off minus the direct debit amount. Not earth shattering stuff.

CouldntResist

Superhoop91 said:

OP, I get the method. Don't worry about the people who don't get it, they are usually the first ones to tell you if you don't do things their way then you aren't getting it.

Long and short is, instead of paying for things on your debit card (or other forms of non cash), after you get paid, make a big payment on a CC and then use that for things you'd of ordinarily purchased. You're saving the payment (i.e. £1k) worth of interest and then slowly building it up throughout the month, where interest only occurs at time of purchase. 

Not sure why it's called a certain technique, for me it's just common sense to use non interest credit to reduce interest occurring credit.

Pitfalls have been mentioned such as your creditor reducing your credit facility, that's rare. I've never had any of mine reduced. 

You still have the same funds available to you for emergencies, just if it's sitting in a non interest occuring account it's not helping to clear any interest occuring balances, i.e. not reducing your interest payments.

Plenty of people saying you should review your use of credit, probably not wrong, but not relevant or helpful for this specific conversation.

Superhoop91 said:

OP, I get the method. Don't worry about the people who don't get it, they are usually the first ones to tell you if you don't do things their way then you aren't getting it.

Long and short is, instead of paying for things on your debit card (or other forms of non cash), after you get paid, make a big payment on a CC and then use that for things you'd of ordinarily purchased. You're saving the payment (i.e. £1k) worth of interest and then slowly building it up throughout the month, where interest only occurs at time of purchase. 

Not sure why it's called a certain technique, for me it's just common sense to use non interest credit to reduce interest occurring credit.

Pitfalls have been mentioned such as your creditor reducing your credit facility, that's rare. I've never had any of mine reduced. 

You still have the same funds available to you for emergencies, just if it's sitting in a non interest occuring account it's not helping to clear any interest occuring balances, i.e. not reducing your interest payments.

Plenty of people saying you should review your use of credit, probably not wrong, but not relevant or helpful for this specific conversation.

It's called velocity banking because it was designed to use one form of credit to pay of another one more quickly than otherwise would have been possible ie with velocity. But in original form it used excess cash which might have gone into savings instead being used to pay debt (so you really gained by bringing forward future savings). People with offset mortgages could possibly be described as velocity banking especially if using a CC for day-to-day expenses.

But I've not really seen that excess payment aspect features in this implementation and the only benefit seems to be a small gain due to effectively paying your upcoming bill in advance. So not that people don't get it, it just seems a lot of effort for minor gain

Superhoopza

CouldntResist said:

Superhoop91 said:

OP, I get the method. Don't worry about the people who don't get it, they are usually the first ones to tell you if you don't do things their way then you aren't getting it.

Long and short is, instead of paying for things on your debit card (or other forms of non cash), after you get paid, make a big payment on a CC and then use that for things you'd of ordinarily purchased. You're saving the payment (i.e. £1k) worth of interest and then slowly building it up throughout the month, where interest only occurs at time of purchase. 

Not sure why it's called a certain technique, for me it's just common sense to use non interest credit to reduce interest occurring credit.

Pitfalls have been mentioned such as your creditor reducing your credit facility, that's rare. I've never had any of mine reduced. 

You still have the same funds available to you for emergencies, just if it's sitting in a non interest occuring account it's not helping to clear any interest occuring balances, i.e. not reducing your interest payments.

Plenty of people saying you should review your use of credit, probably not wrong, but not relevant or helpful for this specific conversation.

Superhoop91 said:

OP, I get the method. Don't worry about the people who don't get it, they are usually the first ones to tell you if you don't do things their way then you aren't getting it.

Long and short is, instead of paying for things on your debit card (or other forms of non cash), after you get paid, make a big payment on a CC and then use that for things you'd of ordinarily purchased. You're saving the payment (i.e. £1k) worth of interest and then slowly building it up throughout the month, where interest only occurs at time of purchase. 

Not sure why it's called a certain technique, for me it's just common sense to use non interest credit to reduce interest occurring credit.

Pitfalls have been mentioned such as your creditor reducing your credit facility, that's rare. I've never had any of mine reduced. 

You still have the same funds available to you for emergencies, just if it's sitting in a non interest occuring account it's not helping to clear any interest occuring balances, i.e. not reducing your interest payments.

Plenty of people saying you should review your use of credit, probably not wrong, but not relevant or helpful for this specific conversation.

It's called velocity banking because it was designed to use one form of credit to pay of another one more quickly than otherwise would have been possible ie with velocity. But in original form it used excess cash which might have gone into savings instead being used to pay debt (so you really gained by bringing forward future savings). People with offset mortgages could possibly be described as velocity banking especially if using a CC for day-to-day expenses.

But I've not really seen that excess payment aspect features in this implementation and the only benefit seems to be a small gain due to effectively paying your upcoming bill in advance. So not that people don't get it, it just seems a lot of effort for minor gain

Thanks for the response. I've seen plenty of people say they don't understand it.

DjangoUnchained

rlm1234 said:

DjangoUnchained said:

i can only think that this would require such absolute control , easily ruined by the odd unexpected expense and before long it would be out of control. Im sure in theory its a great idea but a distraction from the real reason most people are on this forum in the first place.

Hi, thanks for the reply.  I'm doing this myself and honestly you can deal with the odd unexpected expense, we've just been through Christmas for example.  I actually feel I have a lot more control.  Just be very clear about what you need to do and what you're aiming for. 

I wish you good luck with it. Myself, had been in debt for many years, out of it now, been debt free for several years apart from one debt recently turned statute barred. I have money in the bank, paid off house but it would scare me senseless to start what i see as juggling with credit cards and risk going back to where i was. I used to fool myself by opening 0% cards convincing myself they would be paid off before interest accrued, it never worked that way. Not telling anyone what they should do but i think that the small savings that may be made shouldnt cloud the issue of debt that people on this forum want to escape from.

rlm1234

Superhoop91 said:

OP, I get the method. Don't worry about the people who don't get it, they are usually the first ones to tell you if you don't do things their way then you aren't getting it.

Long and short is, instead of paying for things on your debit card (or other forms of non cash), after you get paid, make a big payment on a CC and then use that for things you'd of ordinarily purchased. You're saving the payment (i.e. £1k) worth of interest and then slowly building it up throughout the month, where interest only occurs at time of purchase. 

Not sure why it's called a certain technique, for me it's just common sense to use non interest credit to reduce interest occurring credit.

Pitfalls have been mentioned such as your creditor reducing your credit facility, that's rare. I've never had any of mine reduced. 

You still have the same funds available to you for emergencies, just if it's sitting in a non interest occuring account it's not helping to clear any interest occuring balances, i.e. not reducing your interest payments.

Plenty of people saying you should review your use of credit, probably not wrong, but not relevant or helpful for this specific conversation.

Thanks very much for your reply and very well put!  I guess people get frightened when they see the words 'credit cards' and switch off at that point.  

born_again

Superhoop91 said:

Long and short is, instead of paying for things on your debit card (or other forms of non cash), after you get paid, make a big payment on a CC and then use that for things you'd of ordinarily purchased. You're saving the payment (i.e. £1k) worth of interest and then slowly building it up throughout the month, where interest only occurs at time of purchase. 

That relies on you having a debit balance that is greater than the amount being paid to CC. As you can not put a CC in a credit balance (against T/C)
It also relies on you not spending more than you paid in the 1st place.

While you are correct that you are saving some interest on the amount you have paid over, still paying on the remaining outstanding balance. You still have to be careful with spending.

sourcrates

There are many ways to deal with debt, and if you find a system that works for you, that`s great.

Others may not agree, some prefer more traditional methods, and that`s fine as well.

Occasionally debt busting can be contentious, whose method is best, well it doesn't matter in the end, as long as it works for you.

Superhoopza

sourcrates said:

There are many ways to deal with debt, and if you find a system that works for you, that`s great.

Others may not agree, some prefer more traditional methods, and that`s fine as well.

Occasionally debt busting can be contentious, whose method is best, well it doesn't matter in the end, as long as it works for you.

Exactly. Advice is exactly that, advice, it's still up to the individual in regards which route is best for them.