Swift Money doesn’t advocate for any kind of illegal activity on all matters regarding finances. There is however nothing wrong with using financial loopholes at your disposal. The wealthy 1% use a majority (if not all) financial loopholes at their disposal to get ahead. Everyone should do the same provided it’s legal. If you’re interested in discovering some loan/debt loopholes to get you ahead of the pack, below are some good tips to consider.
a. Get rid of your loans/debts using zero-interest credit cards
Did you know there are 0% interest credit cards? These cards exist to entice people to transfer their balances on old credit cards to the new card. This debt loophole is readily available to individuals who have a good credit score, however, very few individuals know, let alone use this loophole. Getting zero-interest credit cards offering an 18-month interest-free period is possible. If you have a huge loan, you can use multiple credit cards. The secret to using zero-interest credit cards is making sure you pay your debt before the interest-free period is over otherwise, this loophole can easily turn into an expensive endeavour. If you use this loophole like you should, you will be able to get rid of your debt interest-free and enjoy other benefits such as a better credit score.
b. Use your home’s equity
Your home’s equity is calculated as the difference between your home’s appraised value and what you owe your mortgage lender. If you have home equity, use it to borrow instead of getting a typical loan. The rich use this loan loophole all the time. There are many benefits of doing this. First and foremost, it’s easier to borrow using your home equity when you already have a mortgage. Although your lender will need to appraise your home, very little needs to be done for you to get a home equity loan.
Also, the interest payments made on home equity loans are usually tax deductible unlike interest payments made on personal loans. Home equity loans are by far the cheapest types of loans available to homeowners. Depending on the equity in your home, you can get 75% of the total equity as a loan. The loans are great for homeowners whose homes have appreciated greatly.
c. Get reward credit cards
You shouldn’t get a typical credit card if you want to get the best short term loan/debt deals available. Reward credit cards are better because they offer you rewards you wouldn’t otherwise get if you were using a typical credit card. Banks earn a lot of money in fees when you use your credit cards instead of typical debit cards, and most banks are willing to share some of the extra money with their clients in the form of cash backs among other rewards. This loophole is great for cashing in on debt. If your bank doesn’t offer reward cards, it may be time for you to start shopping around.
d. Pay your premiums once
If you have insurance policies i.e. car insurance, life insurance, etc., you should consider paying the premiums once to save a lot of money. It is usually possible to get installment payments, however, the total cost of making monthly repayments usually exceeds the cost of making a lump sum payment by a huge margin (usually 8-9% of the total cost of premiums). It’s worth noting that installment payments resemble miniature loans extended to you at interest. When you consider the fact that the average person has multiple insurance policies, the cost of paying premiums in installments is very high. Unless it makes financial sense to pay your debts in instalments, avoid doing it at all costs.
Incorporating the above loopholes in your day to day activities can help you avoid a lot of unnecessary borrowing costs legally. You shouldn’t pay for any loan/debt expense if you don’t have to so, get a zero-interest credit card, use your home’s equity to get cheap loans, get reward credit cards to get rewarded for using debt and last but not least, avoid instalment payments when you can especially for all your insurance policies.