Velocity Banking Explanations, Lies and Mistruths

Dive into the often misunderstood world of Velocity Banking. I debunk the common myths and expose the inaccuracies frequently shared online. Understand the real mechanics behind Velocity Banking. By clearing up the falsehoods, I aim to provide you with a transparent and accurate understanding of how Velocity Banking works.

00:00 Intro
00:42 Myth 1
04:48 Myth 2

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#velocitybanking #creditcard

[davedurkee]

On month 2, the CC balaance is $9744. Again you make the full $2000 payment: $7744. Lets say you going to pay interest on aproximatly $8744 or $139. ($8744 * 1.6% = $139.) The previous month the interest was $160. In month 2 it means the amount of interest saved was $13.90, but also in month 2 the actual interest was only $139. ( $400 payment: $139 interest: $261 principal) You still pay the full $400 CC payment even when the new CC due is lower. In month 2 you new CC balance is ( 7744-261=$7, 483) is $7483. Month 3 you pay $2000 again and the balance is $5483. Each month you just save interest ==> your paying the saved interest as a prinicpal, causing a compounding on the principal payment)

[davedurkee]

The expences are 1600. The 2000 includes the 400 CC payment. if the interest rate is 20% yearly, thats 1.6% monthly. when you pay a big chunk like $2000 it lowers the amount of interest you pay. Se let's say on a 30 day average your CC balance went down half of the $2000 the monthly interst of 1000 @ 1.6 % is a $16 average saving per month. It's not much when you full balance is is $10, 000. The saving happens because you commit to following through with $2000 payments even as the actual interest goes down ( CC payment of $400; 160 is interest: 240 in principal). Next, month 2 you owe is only $9744. If you had not lowered the average balance, you would have paid and extra $16 in interest.

[stoney]

Exactly dude wasn't adding the int on line of credit

[melissaevans]

Thank you. My credit cards payments are already included in my monthly expenses. Just because I satisfy the minimum payment by using my income to pay my credit cards doesn't automatically turn the minimum payment into "Free" or "Extra" money. What it does is prevent me from having to pay interest on my credit cards. When I first heard this method of velocity banking I was super excited...but then quickly realized I'm not getting this extra money that they claim.

[DenzelNapoleonRodriguez]

Good video Velocity Banking has its benefits and I think some of the other content creators just get excited about talking about the benefits and oversell it or there are bad actors leading people astray.

[Pstmstr]

IF their total monthly expenses included the $400 credit card payment they would pay $2000 and only put $1600 of expenses back on the card. The ONLY time VB works is when the method being used to pay has a lower interest rate than the debt being paid. IF the expenses put back on the card are incurred near the end of the month they could save a little interest in this example. VB advocates never compare apples to apples and people want to believe there is some magic formula for paying off debt. This person needs to get on a budget, pay all they can to the credit card monthly, not just the minimum and get it paid off. I've watched a lot of VB advocate videos, specifically the lies told by Christy Vann. The never suggest getting extra work or trying to make more money. In fact, she talks about going on vacations and not changing the lifestyle to get out of debt. All smoke and mirrors, The monthly interest is just one of many things these people omit. on purpose. Thanks for this video.

[jaimegranero]

It reduces 400 because the 400 are included in the 2000
Also you are right, I hate that they never add the interest, however it does work lowering interest

[Sassycatsoapery]

Thank you for clarifying! It makes more sense if you are stating that the CC pymt comes out of the total expenses.
Questions: if the CC pymt is NOT included in the expenses, then you have no money to pay the CC bill, correct?
If you are negative cash flow, can leveraging other LOC’s (including another CC) help you get out of that negative cash flow…. Or should that person consider a part time job/side hustle?
PS….thank you for the vids! Super helpful

[susan]

This spins my head around. Butt... if you have a 400 minimum and you pay in 2000, of course that satisfies the minimum. If the 400 was a part of the expenses, then you'd put 1600 on the card so it would drop the balance by 400 minus the month's interest, yes?

[VividAbominations]

The biggest wrench in velocity banking, is when the guy has had a balance of $10, 000 on his credit card, sinks $2, 000 of his income taking it to $8, 000.... then the bank lowers his limit to $8, 000 because they aren't stupid. Now he can't borrow it back to pay the rest of his debts...