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90 thoughts on “Does The Velocity Banking Strategy Actually Save You Money? | Does Velocity Banking Actually Work?

  1. So what if you have access to both cc and LOC’s ( very good rates)? Should you attempt to start with the cc and then pay it off with the LOC in full and then pay the LOC over 6 months? I guess in your videos when you reference cc and LOC’s, it makes it. Bit confusing. Otherwise, great videos! 🙂

  2. I have trouble believing you made this video just because of my comment on the other one, but if so that is pretty cool and I appreciate the effort you put in.

    Now let me point out what you did wrong.
    First, the 1260 interest on the loc is just for the first month, not all six months, and it means that of the 2000 you paid off in the first month only 740 goes to reducing your loc balance.
    (edit: My mistake, that is in fact for all 6 months, everyone feel free to ignore this one)

    Second, you once again made the comparison between using velocity banking and making minimum payments.
    The argument was never that velocity banking did not save you interest vs making minimum payments but that it costs you more in interest than using the 2000 a month to pay down the principle directly. Which I already demonstrated it did.

    Third, you misrepresent how loan and credit card interest work. Both are basic compounded interest, not simple interest and not the imaginary amortized interest. Amortization is a repayment type not a type of interest.

    While I appreciate the effort to refute my argument that this process does not work, you did not actually address my argument, you simply repeated the dishonest comparison you made before. Work out the process of paying down the loan directly to compare or just copy and paste where I already did it.
    I try to give people the benefit of the doubt and assume ignorance over dishonesty but if you are going to strawman my argument here that assumption gets really hard to maintain. Address my actual argument, admit you were wrong, or just ignore me and keep tricking people. I don't actually care which anymore but it would be interesting to see where you think I actually made a mistake in my calculations if you plan to refute them and continue claiming that what I demonstrated to be true is in fact false

  3. You are better off just sending the $2K every month to be applied to your principal payment of the mortgage loan

  4. Yes, very nicely done Sir.. Working on this change of mindset strategy in motion and creating generational wealth and opportunities.

  5. I have a 2nd lien heloc that I am chunking with.. if I were to have my credit union pay my mortgage off and do a 1st lien HELOC would I still use the chunking method?

  6. Hey Mike. Thanks for the video. If the user is able to achieve a balance transfer for 0 apr for 1 yr for a 3% fee then the user would also save a lot of simple interest money. Am I right?

  7. Mike, would you recommend using the velocity banking technique during escrow? Most, if not all, escrow companies want to see the funds seasoned in your bank account for two months prior to close. Would the constant movement of cash in and out of a personal line of credit raise any red flags with the escrow company? Thank you for sharing your knowledge on this channel.

  8. Hello Sir

    I am looking to buy a brand new construction single family home for $55-60k my bank currently offers 3.3% 30 year mortgage, and i make $2.2k per month expenses are $1k per month. What type of LOC should I get?

  9. I'm having trouble obtaining a line of credit, but no morgage. I'm trying to register a business as well but just running around in circles. Do I need thousands to start up? I can't just register my business? I need to pay fees for startup plus obtain my products? I need a good amount of capital just to get an official registered business is this correct?

  10. Mike shouldn't the interest savings be calculated based on the Net Present Value not the full future amount of interest you showed?

  11. This was a good explanation of this method. I had been researching this for the last 2 years. I had to do several things before starting. First, I had to stop spending on everything. I only bought the basic life supporting things, no clothing, shoes, vacations, etc. I then had to pull all of my debts together and see what I actually had. I began to pay on my debts and keep them current. During this time I joined a credit union. At some point I applied for a line of credit. I wanted $10,000. I ask for $12,000. They gave me $5000.00. I was happy with that. Little by little I used the line and my pay check to clear the other debts. I am almost debt free accept for my mortgage. I decided to clear credit cards first . It works if you work it. I had to study it over time. You have to

  12. Let me finish: I had to quietly manage my situation and research my situation. If I didn't trust something that a Youtuber said I would read up on it , until it made sense for my situation. Finally, I thank God that I kept it between me and God until I was sure this was a help and not a hindrance. Sometimes we talk too much . Just listen . I learn a wonder lesson and I am continue on the journey until my mortage is paid off. I have wasted more money than the interest involved, I have learn how banks work, cc , and credit union. They work for me now. God Bless Us all.

  13. So your making two payments on your mortgage – chunking the LOC toward your mortgage and still continuously paying your monthly due on your mortgage?

  14. Please correct me if I am wrong : the intuition is that if you can build more equity in your property, you can borrow less. Here it is achieved by taking a line of credit to beef up the equity. This credit line is repaid monthly. The impact is felt over time due to compounding. Is that correct? Tks

  15. Great Piece where were you 10 years ago when I purchase my house how do I get in touch with you I really appreciate the information

  16. Will this work if my only debt is 4k on a credit card and 14k on a car loan? I don't own a house, so no mortgage. Thanks Mike!

  17. Mike I'm very intrigued by this method. My question is how do I make my monthly mortgage payment after I pay the chunk payment?

  18. Sorry I a little confuse, If I send a chunk principal payment, don't I still have to send in the regular mortgage payment still? I don't understand how all your other bills get paid if I am sending all my money to the LOC.

  19. I been using 0% offers to get free money then pay it off within the time limit and no interest. But this might be better.

  20. My first week of doing this and I ran into a slight problem. My credit card company wants to approve any balance transfers, they don't just give out checks. I searched online to see if I could find a card that gives checks out with the account, but it doesn't seem like most of them give that information on their websites. Is this something that I can call and ask them for checks, or should I look into a different card company? Thanks!

  21. Hi Mike. Do I have to pay the first 4 years of the principal on the amortization (as you have explained in the video) so that I would not have to pay for the interest? Thank you.

  22. This is my question. With the Loc you write a check to pay the principal on the mortgage. Now are you responsible for the next monthly payment on the mortgage with the new interest rate factored in plus the Loc?

  23. How do you know what is the best chunk to borrow from your credit card? if the limit of your credit card is 30K instead of 15K would you also double the money to 26K?

  24. Your to stupid to know how stupid u really are. Your math reflects your shin color and average IQ of your race. Paying extra principal payments accomplishes the same thing at a better interest rate and saves a lot of money compared to your absurd idiotic system. The numbers speak for themselves. Come on Martin Luther wanna be, your giving people terrible advice telling them to pay a lower interest loan off with a higher interest rate loan. That's fucking evil. The numbers don't work and u should b ashamed of yourself. Not to mention all a LOC is basically another credit card that normal people will tend to abuse. Fucking idiot

  25. Hey Mike, did you say credit cards could be used as line of credit to pay chunks on the mortgage? Don't they charge a much higher interest rate if you write a check against them?
    How hard is to get an unsecured personal line of credit?

  26. My only concern is the "…access to the capital in the form of leverage…" any irresponsible person will stay in debt if they ever start spending more than what is being put in to pay it down. In other words, that capital in the form of leverage is a two way street. We only want to be going down one of those 2 way streets in terms of LIVING WITHIN OUR MEANS (spend less than what is put in), if we attempt to go the other way of that 2 way street outside of emergencies and leverage; we end up putting ourselves deeper into debt.
    And unfortunately way too many people are irresponsible when it comes to this, including myself. That is why I think the Dave Ramsey way is best, HOWEVER if you can utilize Dave Ramsey's baby steps (especially baby step number 2, paying off debt) with Velocity banking in the way you point out Mike; I can see this working incredibly well.
    I just know that if I do VB allowing for that "two way street" then I will abuse it, like I have done in the past and finally paid it off using Dave Ramsey's baby step method.
    I guess that is my conclusion.

  27. @Mike Adams
    You still didn't answer my initial question from the other video, so let rephrase my question I asked using your example. I understand the point of a line of credit allowing for leveraging that capital, basically have access to the portion of money that I am using to pay off debt for emergencies. But if that was not an issue, then here is my question:

    First you say that we will pay roughly an extra $1300 in interest out of that $12,000 on that line of credit (or credit card) when using our $2000 of cash flow to pay that down for the 6 months.
    However, you did not clarify how much interest we would pay if we paid that $2000 cash flow straight to the Mortgage for those 6 months.
    In other words I would pay the mortgage payment $1200 plus the extra $2000 of my cash flow, to equal out $3200 per those 6 months to the mortgage.

    How much interest would we pay during that time on the mortgage compared to the $1300 you say we would pay on the line of credit?

    I fully understand your point in the video, however you leave out the fact that we actually could save more money on interest if we added that $2000 to the mortgage payment; making sure that extra $2000 goes to the principal every month. I mean in four years of your example, using your method; I would have $96,000 of the mortgage paid of in 4 years if I just made sure that $2000 of my cash flow was put straight to the principal of the mortgage.

    Thanks for your response, I do appreciate that you are engaged with your viewers.


    This shit is not better to pay off a home loan. You are better off just taking your cash and making extra principle payments per month.

    Also, chunking works, but not when you pull money from higher interest credit.

  29. Did the calculations and it’s still cheaper to send extra cash straight to principal. Why don’t you just save an emergency fund enough to where you’ll be comfortable with, let’s say $15k like your example of the LOC/credit card, then pay the rest off straight to your principal so you don’t get “stuck like chuck if there’s an emergency. That way the LOC/credit card interest would be completely avoided. At $2k cash flow you should be able to save $15k in 7.5 months. Please enlighten me if I’m missing something here.

  30. I am going to start the process of buying a home soon and I am ecstatic to be learning this method! I have come across another channel that talks about a similar method, but all they give is nuggets here and there … I have watched two videos and I am already devising a game plan. Thank you for simplifying it!

  31. Love how happy you are. You always put me in a good mood. Thank you for the positive attitude and great info!

  32. So let me understand this. If I have a credit card with a max of $5,000, and use it to pay off my bills, say $3,200 monthly. I pay May house payment with it. Then when I pay my credit card for the month I make a payment of $3,200, and continue to pay my house payment monthly with my credit card and bills and I should get ahead, say 9-12 months.

  33. These are amazing ideas!  May I run my scenario past you, quickly?

    House balance $180k 3.675%  $1065 payment 28 years left.
    Car balance $17,700  4.5% $281 payment 6 years left.
    Just opened a HELOC with an 18,000 limit at 3.99% until March when it shifts to 7%.

    My question is whether I should start chunking at the house immediately or maybe the car first to free up the 280 in cash flow?

    I have a $1,000 cash flow to work with each month to go toward the HELOC.

    What are your thoughts?

    Your videos are superb, by the way! I have subscribed and look forward to more! Keep doing what you're doing!

  34. You're paying an extra $2k/mo towards your principle via the HELOC payment. It takes 6 months to pay off $12k because you're paying $2k/mo. It works just paying that $2k to the mortgage. And using the HELOC as a just in case instead of going back and forth between HELOC to mortgage.

  35. What if you pay the extra $2000 to the principle every month without getting the line of credit? You wont be paying interest to the line of credit.

  36. I'm puzzled and wish I could understand better. Seems like one could just take their monthly cash flow and apply it straight to principle and get the same results?

  37. I have been really “focused but not finished” as Chris Hogan would say. Been doing a lot of research comparing velocity banking to the Dave Ramsey method. I understand the pros and cons of each along with how they differ and are similar. My positive cash flow per month is $2000. Dave Ramsey would have me apply the 2K p/m to principle. Velocity Banking would have chunk 12K every 6 months. My mortgage company amortization calculator does not have the option of plugging in 12K every 6 months but it does allow 2K per month or 24K every 12 months. Here are my numbers for comparison.
    Current mortgage balance is $277094.68 month 41 of 360. 4.25% fixed. If I start adding 2K p/m I will save 135077.60 in interest. If I start adding 24K every 12 months I will save 139450.31 in interest. So chunking saves an additional 4372.71 BUT ONLY IF THE HELOC OR CREDIT CARD IS 0%. Any feedback is appreciated and thank you for all you do.

  38. Hi Mike, I would like to get your input. I plan on using the Velocity Banking strategy to pay off a new mortgage, consolidated loan and a personal credit card. I will be using a 0% apr introductory credit line to do so. Would I transfer the consolidated loan and the personal credit card debt to the open line of credit? Or, open two separate lines of credit one for mortgage and other expenses, and another to transfer consolidated loan and credit debt?

  39. Hi Mike, I was about to go ahead and try this out but a friend said that using the line is a cash advance so the interest on this would be really high between 18-25%. Please help as I don't completely understand. Cheers

  40. My issue is that different bills you have to pay want to come from a checking account with a routings number. That means I can’t pay stuff with a credit card for it. How can I get passed that issue?

  41. The biggest drawback to this is that you need to pay off all your other obligations first! Car loans, credit cards, etc.. otherwise you wont get a big enough chunk to pay down the mortgage significantly. For the average person that would be $100- $500 per month. So this process, being truly dedicated to it, may take 12+ years.

  42. Hi Mike I have a question which keeps coming to mind. I am trying to build my credit score and use this method also. Unfortunately the highest credit limit credit card I have is $1000. I want to dump my check in there and pay bills but my mortgage company will not accept cc payments. Also wouldn't doing this hurt my credit utilization? Thx love your videos! 🙂

  43. You should do a video on the difference between chunking and and getting rid of the heloc over the first 6 months tgen just applying the extra 2000 every month or chunking via a savings acct

  44. Can you do a video showing the difference if you just paid the $2000 extra monthly instead of the $12K in 6 month chunks?

  45. No matter how many videos i watch on this i just don't get it. I think it would help if you showed bills on a calendar and the pay check on the calendar and how to manage. Are you paying all debts with credit card at once or paying one off at a time? Do you put your whole check on the credit card and pay for everything on credit or just debts? I much money do you put back on the credit card throughout from week to week if you don't put your whole check on the credit card? I just feel like a lot os left for interpretation which will fuck a lot of people up. I want to understand this

  46. Hi Mike, I've been trying to start this strategy but have hit a couple of high walls. I am with 2 banks and both don't do balance transfer on loans. I'm guessing this will be the same with other banks. I have a 35,000 loan and a much bigger mortgage, are you able to advise me on how to proceed? They have never heard of Balance Transfer Checks. I'm in NZ. I find your videos very helpful

  47. No reason to use a high interest rate credit card to accomplish this…if this person is responsible enough to follow through with this why would they owe 12k on a credit card to begin with while also saving $1400 a month…pay off the credit card first then just put the savings each month towards the mortgage…get a heloc to sit available for emergency fund

  48. You remind me of the Rock. I’m not sure if it’s your voice or what but there is just something about you that reminds me of the Rock…….

  49. Great video… recently subscribed ! Main question I have is how do you determine the amount to chunk? I have a high loan balance ! Thanks

  50. Thanks so much for your time put into doing these videos. I finally understand how this all can work because you made it visual and are good in explaining it.

  51. Why not just throw the extra money that you have at the principal of the mortgage directly instead of at the LOC? You can use the extra to increase the monthly principal payment to the mortgage directly instead of having it go through your credit card..

  52. Mike, I have a principal balance of $526k on my mortgage. I also have about $50k in savings. Can I use that savings as if it is my HELOC account using the velocity system? Not sure if I’m making any sense.

  53. I have 50k left on my mortgage, 10k in savings, 1k monthly cash flow… I was thinking of just making extra payments. Was offer a 5% heloc, getting this heloc and pay off mortgage completely will make more sense?

  54. Is it a good idea to take a small loan from 401k (say 30k) instead of credit card / Heloc 4 velocity banking? This way you'll just end up paying interest to yourself on 401k loan & save on mortgage interest . Would appreciate your perspectives.

  55. You should really explain that if someone is on a budget now that they don’t have a surplus each month, they can’t do this.

  56. Another thing everyone needs to consider. Are you seeing advertisements for HELOCS one your YouTube feed? Why is that? Because banks are tying to save you money? There are no banks out there trying to save anyone anything. They just try to beat another bank to get your business. Just do you due diligence when researching these strategies and look harder at what can go wrong. Seeing it through only the positive lens is asking for a huge nightmare.

  57. I want to use velocity banking with my current card at 0% for 2 years. But my mortgage company doesn't take credit card payments. What should I do? How may checks do the card company's allow?

  58. Yeah but what is the monthly payment on a 12k cash advance on a credit card? Aren't you wipimg out most of your 2k cash flow?

  59. Ok I am trying to understand….if you pay the 12k……towards the principal balance …you would save the 45k ….in the life if the loan?? …meaning in order to actually see it you would have to pay it off which would mean save a few years at the end …unless you sell …and it would pay a smaller pay off??

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