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<blockquote data-quote="POKE1911" data-source="post: 2947149" data-attributes="member: 24536"><p>So what I mean by that is using a savings as a collateral for a loan. Some banks do it some do not, you also have to get favorable rates to be worth it. But when you borrow against your own money you get a much lower rate because there is no risk to the bank as the funds are there. An example (hypothetical %) of this is - let's say you have a 5 year CD that pays 2% APY. You could borrow against that for 3% APY. So the net of that is having a loan at 1% APY. So you could have cash at a low interest rate or if you put it in savings account that nets 1% APY. it's a wash. The only reason you would do this is if you needed emergency cash at a very low interest rate without tapping into your savings. Or to establish, build, or maintain credit without really going into debt.</p><p></p><p>Again it's awesome that you will be debt free! Credit reports are used for much more than credit/dept but often it's looking at the file rather than the number. I know some utilitiy companies do not require a deposit for people with great credit etc.</p></blockquote><p></p>
[QUOTE="POKE1911, post: 2947149, member: 24536"] So what I mean by that is using a savings as a collateral for a loan. Some banks do it some do not, you also have to get favorable rates to be worth it. But when you borrow against your own money you get a much lower rate because there is no risk to the bank as the funds are there. An example (hypothetical %) of this is - let's say you have a 5 year CD that pays 2% APY. You could borrow against that for 3% APY. So the net of that is having a loan at 1% APY. So you could have cash at a low interest rate or if you put it in savings account that nets 1% APY. it's a wash. The only reason you would do this is if you needed emergency cash at a very low interest rate without tapping into your savings. Or to establish, build, or maintain credit without really going into debt. Again it's awesome that you will be debt free! Credit reports are used for much more than credit/dept but often it's looking at the file rather than the number. I know some utilitiy companies do not require a deposit for people with great credit etc. [/QUOTE]
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