Finance

[WebBoard]

From: Mike .


CREDIT CARDS
From: PLL
Date: 8/3/00
Time: 7:19:09 PM

REF : BUILD. WEALTH Storey By Storey p149 The Credit Card

Could someone in simple terms please explain the real advantage of multiple credit cards? Why 6 credit cards? Specifically How can Multiple credit cards benefit investors with Line of Credit loans and IO loans?

Can someone also explain in a little more detail why multiple credit cards are useful for emergencies as stated in Jans book?

Also, can you pay credit with credit? Which institutions allow this? Can transfers be done electronically or via the internet from one institution to another?

Any tips with the use of Credit Cards welcome. I hope there's someone out there who is up to scratch on the real benefits of " The Credit Card"

 

[WebBoard]

Gee Cee

Reply: 1
From: Mike .


Re: CREDIT CARDS
From: Gee Cee
Date: 8/7/00
Time: 7:19:07 PM

The basics of having multiple credit cards is like having a number of credit piggy banks tucked away should a urgent requirement for CASH occur.

If you have say 4 cards with a limit of $15000 EACH THEN YOU HAVE $60K QUICKLY AVAILABLE.

Certainly you are going to pay interest on the credit but if you have not got the cash available or it is tied up in fixed deposits or awaiting property settlement then what else can you do?

You need to be strictly disciplined and not just go out & use them for anything. But it is like having a overdraft without the constant paperwork.

I have even bought cars at Ex Government auctions (a great way to save on near new cars, but that is another story) using my available credit card balances.

Finally you could pay your credit card out with another credit card but I would not do it electronically. I would just get a cash advance of $ xx to myself then go to the bank I owe the money to and payout the card that is due.

Yes it is costly, and yes you must be disciplined but having a number of credit cards with reasonable $ limits can be very useful.

Hope this helps. Gee Cee

 

[WebBoard]

Les

Reply: 1.1
From: Mike .


Re: CREDIT CARDS
From: Les
Date: 8/5/00
Time: 6:11:12 PM

G'day PLL,

PLL> Could someone in simple terms please explain the real advantage of multiple credit cards?

Les> In the context of Jan's book, it seemed ANY Bank would give her $5000 but very few would come straight out with $30,000 on credit. I suspect a borrower's DSR would also tend to limit the amount each Bank would lend. She was wanting to have access to funds for a "rainy day" - and CC's were an alternative to "tying up cash" in Bank accounts.

PLL> Why 6 credit cards?

Les> Dunno! Maybe that's how many she visited that day ;^) Although I think she was trying to obtain $20k - $30k in "available funds" so only 2 or 3 would not have been enough.

PLL> Specifically How can Multiple credit cards benefit investors with Line of Credit loans and IO loans?

Les> Only as a "backstop" - as above. That way, your extra "savings" can buy the NEXT IP instead of skiving off in a Bank account.

PLL> Can someone also explain in a little more detail why multiple credit cards are useful for emergencies as stated in Jans book?

Les> Scenario - you own 5 IP's - you've just purchased #5 so you've had a few extra costs ... Then IP#1 has a blocked drain and the plumber finds the whole drain is cracked (old) and needs replacing. Then IP#2 is wrecked by a tenant as they do a midnight flit (you're covered by Insurance, but claims take weeks, and you need to FIX it). Then Interest Rates notch up another 0.5% .... Then IP#5 gets its new tenants and they find that the hot water lasts for half a shower then goes cold - and the hot water cylinder is leaking - needs replacement ....

Get the idea? You have up to $30k to draw on that will keep you going thru this "tough time". I don't believe Jan set out to get 6 individual CC's, but was looking for $30k - this was one (easy?) way of getting it.


PLL> Also, can you pay credit with credit? Which institutions allow this? Can transfers be done electronically or via the internet from one institution to another?

Les> Sorry, mate - can't help with this one - except to say "I don't think you can do this" - but I'm not sure. I hope others can enlighten us both.

Regards, Les