Found a way to pay off credit cards fast!

[nelson84]

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.

 

[Southernmiss]

Hmmm...does this look negatively on your wife's new employee status? Former bank employee and I would think it might. Overdraft Checking accounts of employees notices were sent to human resources.

Just because you can do something doesn't always mean you should.

 

[DLgal]

Um, yeah, this does not seem like a good idea.

Are there no fees associated with overdrafting?

Makes no sense for a bank to allow this when they probably also sell loan products with significant interest rates. You might find out that this was a BAD move pretty soon...

 

[nelson84]

Credit cards some are 20% switching it to bank account at 0.75%? I would think that's a no brainer.

Heck people are buying cars and putting their credit cards in with their car payment. But this works better.

 

[nelson84]

Um, yeah, this does not seem like a good idea.

Are there no fees associated with overdrafting?

Makes no sense for a bank to allow this when they probably also sell loan products with significant interest rates. You might find out that this was a BAD move pretty soon...

It's an employee perk with the 0.75% interest everybody else pays 5% interest on overdraft.

 

[DLgal]

It's an employee perk with the 0.75% interest everybody else pays 5% interest on overdraft.

And it's for an unlimited amount of time? What bank is this?

 

[Mackenzie Click-Mickelson]

I would seriously look into the rules on this account.

Is there a time limit for using the account meaning would they let you use for 6 months, 12 months, 24 months, etc with no issues?

Is there a limit to how many times you can utilize this account type?

What is the company's policy for using this account..not just word of mouth but actual written company policy.

I agree with PP that depending on the company it could be something they look at for employee performance. For example my past job they allowed same-day PTO usage and it was a perk to try and allow flexibility...you could ask off for time through the computer and while there was no company policy against using same-day PTO they ended up deciding mid-year to have the supervisors look at that as part of employee performance....use too many same-day PTO days and you would counciled and could even be terminated for that...perks don't always mean you can use it without consequence.

 

[ImDMous]

I definitely wouldn't think of that as a perk, more of a courtesy to those who work there. If something bad happened or a mistake was made and you overdrew the account, they know where you work so the risk is less then the general public that you'll pay it back. I would not be taking advantage of their generosity.

 

[nelson84]

This is in Canada it's a credit union. It's basically a credit line attached to your bank account at 0.75%. It's the only one like it in my area.

 

[nelson84]

There is no time limit. It sure boosts your credit score.

 

[SueInBoston]

Hmmm...does this look negatively on your wife's new employee status? Former bank employee and I would think it might. Overdraft Checking accounts of employees notices were sent to human resources.

Just because you can do something doesn't always mean you should.

Life long Bank employee here, employee accounts are flagged and under higher scrutiny due to AML regulations, unless it's a tiny local bank. But a local bank wouldn't grant 30,000 OD with no repayment structure.

 

[perditax]

Either this is a very bad idea, or it's a loophole that will be closed if too many people brag about it online.

Possibly both.

 

[nelson84]

It's the same principle as a credit line but attached to your bank account. Just better interest.

 

[nelson84]

Life long Bank employee here, employee accounts are flagged and under higher scrutiny due to AML regulations, unless it's a tiny local bank. But a local bank wouldn't grant 30,000 OD with no repayment structure.

A credit line isn't structured but does have a minimum payment. But the wifes paycheck deposited far exceeds the minimum payment. You say you are in the bank business but you have never heard of a credit line

 

[Jen and Ashwin]

It's the same principle as a credit line but attached to your bank account. Just better interest.

Are you sure that this is .75% APR? I thought overdrafts fees compound daily.

 

[SirDuff]

A credit line isn't structured but does have a minimum payment. But the wifes paycheck deposited far exceeds the minimum payment. You say you are in the bank business but you have never heard of a credit line

Where did she say that she had never heard of a credit line?

 

[nelson84]

Where did she say that she had never heard of a credit line?

She is in the bank business and never heard of lending money without a payment structure so I pointed out a credit line. Only thing you have to do is pay the minimum payment.

 

[nelson84]

Are you sure that this is .75% APR? I thought overdrafts fees compound daily.

It's basically a credit line attached to a bank account with a 4% discount on the interest rate for employees. You can get it seperate but you would have to go online and make a payment this way your entire paycheck is the payment and you can access more funds whenever like a credit line. But I pay all the other bills so her paycheck hits the credit cards put on this hard and in a year or less they will be all gone.

 

[ISUamanda]

To be clear, you didn't pay anything off...you just shuffled your debt around. Might work out if you can actually pay it off in a reasonable amount of time.

I hope it works to shorten your payoff time.

 

[SirDuff]

She is in the bank business and never heard of lending money without a payment structure so I pointed out a credit line. Only thing you have to do is pay the minimum payment.

Where did she say that she had never heard of lending money without a payment structure?

She said "Life long Bank employee here, employee accounts are flagged and under higher scrutiny due to AML regulations, unless it's a tiny local bank. But a local bank wouldn't grant 30,000 OD with no repayment structure."

A very specific instance (small bank and very large overdraft) where it wouldn't be done without a repayment structure is very different than your claim of her saying that she's never heard of lending money without a payment structure.