Brentwood Bank is offering unsecured personal loans to people impacted by last month’s floods, and the interest rates are remarkably low. A quick check of other local banks and credit unions showed that Brentwood Bank had the lowest interest rates.
However, as a Facebook commenter pointed out, you could skip the bank loan altogether and save hundreds of dollars in interest and fees by charging your flood recovery costs to credit cards.
But this method is only for people who are extremely organized, with strong budgeting skills, and who don’t mind a little risk.
Seriously—unless you think spreadsheets are sexy and you get a near-perverse joy from carefully allocating your money and you think that FICO scores are a myth perpetuated by the Illuminati, just go get a bank loan.
But for those who dare—here’s how you might save $600 or more as you rebuild/recover from the flood:
You know those 0% interest introductory credit card offers that you get in the mail? Start saving those.
Next, review the stack of credit card offers that you have saved, and apply for a card that gives you 0% interest on all purchases during the first 18 months. If your credit history isn’t awful, it shouldn’t be hard to get one.
Now that you’re armed with your new credit card, go out and charge all of the items and repairs and whatever else you need to recover from the flood.
Then immediately begin paying off your newly amassed credit card debt. If you charged $10,000, you should be making payments of at least $277 per month.
Now skip to 17 months later, when your 0% introductory period is about to expire. Review those credit card offers that you’ve still been saving, and find a card from a different company that offers 0% on balance transfers for 18 months. This time, you will probably have pay a one-time transfer fee—usually 2% to 3%.
If your debt was $10,000 and you’ve been keeping up with your payments, your transfer fee shouldn’t be more than $160.
Keep on making your $277 payment, and by the end of this second 18 month period, your debt will be gone.
If you had gotten a bank loan, it would have cost you at least $791 in interest and fees. The credit card method cost you just $160.
Of course, this assumes that 18 months from now, credit card companies will still be offering 0% balance transfers.
This scenario also assumes that you have been diligently keeping up with your payments and that you didn’t rationalize some crazy purchase just because you got a new credit card.
In reality, people are basically hardwired to make questionable choices. Over the vast course of time, our limbic systems and prefrontal cortexes have evolved keep us alive, make rational decisions and regulate our impulses, but OMG 82-INCH TVS ARE ON SALE AT BEST BUY!!!
Save yourself from yourself. If you need some cash to rebuild, stop by Brentwood Bank.
DISCLAIMER: This information in this article should not be considered as financial or legal advice, unless you’re the sort of person who thinks that the roulette wheel is a viable alternative to a 401k and that juggling chainsaw can’t be that difficult, can it?