How to Avoid Interest w/A HELOC

[Dulce Beltran]

I recently have educated myself on paying down debt at a rapid rate and find myself exploring the creative finance world.

Hypothetical Scenerio

You have two HELOC's both at $100,000 credit line. You use HELOC#1 to Pay off four loans totaling $50,000 w/pymt if $1,000. HELOC#1 payment is now $500 (1% of Bal). You continue to pay the $1,000 payment you're accustomed, hence an additional $500 towards principal reducing the total interest paid on debt. HELOC#2 has no balance.

The whole purpose of the rapid pay down rate is to pay less interest and pay it down rapidly. AND to use financial tools to leverage our flexibility.

Here’s my question:

Who has used HELOC#2 to pay off (entire balance) HELOC#1 and vice versa effectively paying no interest until full $50,000 is paid off?

Correct me if I am wrong, a HELOC works like a credit card, you pay off the balance each month and there is no interest charged. Does this apply to HELOC's?

If you have used this strategy and don’t want to publicly share the details please DM me.

Thanks BP community!

[Bill B.]

Here’s an easy way to find out you’re not smarter than a banker. Take out $10k from the heloc and return it 25 days later. See if they say thanks for paying off your heloc, we won’t charge you for borrowing our $10k, even though that’s the business we’re in. 

Credit cards have grace period becuase they get more than 1% from the merchant every time you use it. So they’re making 12-24% on their money even when they don’t get to charge you interest.