Banking VS Borrowing

[HyenaDave]

Hi all,

I am in the process of closing on a BWV purchase. And I would like to hear your take on banking vs borrowing.

Initially I was convinced that banking was in my best interest so I'd always have a stash of points just in case. But I recently read a post indicating that stripped contracts tend to be overvalued and loaded ones undervalued. So that got me thinking......

Since we had to finance, I would feel like I got more for my extra money early on (while paying it off) by borrowing points. If I borrow 25% points a year it would take 4 years to catch up an by then I've paid off the loan and we can always add a smaller contract then if we get spoiled. I also have to factor in that I won't get my first years points until December and my UY is June so I may have to bank some any ways extending my calculations.

Do most people bank, borrow, or only use what you have?

Thanks,

Dave

 

[beer dave]

Hi all,

I am in the process of closing on a BWV purchase. And I would like to hear your take on banking vs borrowing.

Initially I was convinced that banking was in my best interest so I'd always have a stash of points just in case. But I recently read a post indicating that stripped contracts tend to be overvalued and loaded ones undervalued. So that got me thinking......

Since we had to finance, I would feel like I got more for my extra money early on (while paying it off) by borrowing points. If I borrow 25% points a year it would take 4 years to catch up an by then I've paid off the loan and we can always add a smaller contract then if we get spoiled. I also have to factor in that I won't get my first years points until December and my UY is June so I may have to bank some any ways extending my calculations.

Do most people bank, borrow, or only use what you have?

Thanks,

Dave

I try to do neither one. Let me get your math straight.... lets assume 100 points a year... the first year, you borrow 25 from the next year to get 125. The following year, you have to borrow 50 points to get 125... and 75 the next, and all of them in 4 years. Then you need to buy another contract, or not go for a year... If this is the plan, I would buy 25% more points. If you plan to sell the contract stripped in the 4 years, then maybe this will be beneficial. I don't know how the sales is reflected by loaded/stripped, but I wouldn't pay the same for the stripped contract as I would loaded.

 

[disfanforlife]

So far, I have only banked not borrowed points. For us, it is just a matter of how many points we need for our trip. If there any left over I bank them. We were lucky though because we bought in direct and had an extra set of point the first year that we banked so we ran ahead for a few years that way.

 

[hollypoast]

Hi all,

I am in the process of closing on a BWV purchase. And I would like to hear your take on banking vs borrowing.

Initially I was convinced that banking was in my best interest so I'd always have a stash of points just in case. But I recently read a post indicating that stripped contracts tend to be overvalued and loaded ones undervalued. So that got me thinking......

Since we had to finance, I would feel like I got more for my extra money early on (while paying it off) by borrowing points. If I borrow 25% points a year it would take 4 years to catch up an by then I've paid off the loan and we can always add a smaller contract then if we get spoiled. I also have to factor in that I won't get my first years points until December and my UY is June so I may have to bank some any ways extending my calculations.

Do most people bank, borrow, or only use what you have?

Thanks,

Dave

We always borrow ahead. I don't ever want to risk letting pts go unused. This way, if we can skip a year we don't have to worrying about it. (We bought points with this in mind.)

 

[disneynutz]

IMO most use what they need.

Disney mind control will soon kick in and you will be short points for your multiple yearly Disney vacations.

You aren't using money, only points so overspending is guaranteed!

Bill

 

[Msmithmd]

If you're buying in with a plan from the start to bank or borrow, you should reconsider and adjust the amount of points you want to buy- UNLESS you are specifically buying a small contract that you only want to use every other or every third year.

There are too many potential risks inherent to continually banking and borrowing to make this a recommended strategy for any new purchaser.

 

[Minniesgal]

I always work with a two trip plan at least loosely in my mind. I usually know pretty much what I wan to do and always make sure that I don't borrow so much for the first trip it makes the second trip difficult. I bank a ad borrow depending on circumstances but have always been able to make out trips work.

 

[bwvBound]

Do most people bank, borrow, or only use what you have?

I don't know how most members behave, but in our 10 years of membership, we [/i]mostly[/i] bank and then splurge every ~3 years to bring things back into alignment. Our 2013 UY (now just barely behind us) was our year of splurging and it was extremely fun!

 

[Geomom]

IMO most use what they need.

Disney mind control will soon kick in and you will be short points for your multiple yearly Disney vacations.

You aren't using money, only points so overspending is guaranteed!

Bill

So True! We bought with the plan of going April of one year, then February of the next, to get 2 uses of an AP...that soon changed to...we'll add a fall trip since the tix and room are paid for...and then they had that PAP deal a couple years ago...so we added a summer trip as well to use the water park perk! Now we're in the process of buying more points so we can do all the stuff we want to do--inviting family and friends which means bigger rooms and more points.

To answer OP--we tend to borrow some points (but not all of them) each year--our original resale contract didn't have many pts. left in the current year so we had to borrow and we've never gotten out of that hole.

 

[HyenaDave]

Thanks for all the replies! I didn't buy in with the intent to borrow, as a matter of fact I was thinking I'd try to bank as often as possible in order to splurge.

But I started thinking, my first year I deifintly have to bank because of only having points for six months of my first UY, not sure what would be available. But after that I can borrow enough points to squeeze an extra visit a year until it's paid off. Making me feel I'm getting more bang for my buck while more $ is coming out of pocket. Also my babies are only 2 so we would get more time with them at WDW before school even starts.

So far it looks split between all three options.

 

[dzorn]

We try to not do to much of either. If plans change I don't like to be left with points in a year that I may not be able to use. I will be banking a bit this year as the school band should go to Disney next year and I would like to have plenty of points for us to stay when the band go home.

Denise in MI

 

[HarrietSLP]

We have been members since 1996 and I always end up borrowing. It has worked well for us but I guess that last year of our contract we won't have many points.....lol.

 

[rocketriter]

You might be overthinking this. We plan our vacations based on whatever time we can get off from work and what we can afford. Sometimes trips are closer together, sometimes farther apart. So we simply bank or borrow in response to our schedule and our needs, rather than trying to conform to a theoretical value model.

 

[jmkeeku]

I don't know how most members behave, but in our 10 years of membership, we [/i]mostly[/i] bank and then splurge every ~3 years to bring things back into alignment. Our 2013 UY (now just barely behind us) was our year of splurging and it was extremely fun!

We going to bank and borrow in 2016 so we can splurge for Aulani!

 

[DreamerWDW]

We plan our vacations based on whatever time we can get off from work and what we can afford. Sometimes trips are closer together, sometimes farther apart. So we simply bank or borrow in response to our schedule and our needs, rather than trying to conform to a theoretical value model.

I agree with this. As much as I love planning, I've found that plans change from what I 'thought' would happen in the year or two ahead. I just plan my vacations around our schedule and affordability and use the points as needed. I'd say I've banked and borrowed about equally, but that is just the way it has worked out.

 

[DizBub]

We have been members for 5 years now and have never borrowed ahead, just added a couple of contracts.

For me it's psychological, I just hate the thought of starting a new UY at a deficit. Love being able to bank points ahead as a cushion into the coming year. We have had to cancel trips during low points times and reschedule during more point costly times and we have been able to afford those adjustments.

We won't be skipping a year in the foreseeable future and if we do have to cut down on the frequency of our trips we will just be able to afford larger villas and/or stay longer when we do go.