ATM or credit?
i was reading a book today and it caused me to think of the popular phrase “the housing ATM”, used to refer to people refinancing their homes, withdrawing equity, and using it for consumer purchases. it’s not really an ATM, because when you use that card you are not increasing a balance. a debit card decreases the balance of the account, and a credit card increases the balance when you use it. sure, you can view the transaction from the standpoint of either the amount owed on the loan, or the amount of equity built up. when you call it the housing ATM, i guess it rings more like sound money management, even if it may not be.
the book, by the way, was talking about the days when credit card interest was tax deductible, and how the US eliminated this deduction but made up for it with tax-deductible mortgage interest payments, so the shopper with a home could retain a tax-advantaged position.
September 15th, 2006 at 12:43 pm
I’d rather use acredit card because it is more comfortable and i limit my cost in spending and it is more accesible
December 8th, 2006 at 7:13 pm
I have refinanced to pull cash out for a major purchase before, but I only did it once. And when I did it I wnet to a lower mortgage intrest rate so my payment would be lower. In addition, the amount I financed at the lower rate did not make my payment go up. So the transaction worked for me but it certainly is not advised for just any reason - a la ATM.
January 5th, 2007 at 11:32 pm
I have used re-financing to fund my 1/2 my business. The other 1/2 has come from credit cards with low introductory offers. But I think it’s pretty clear to most now that credit card companies has some very tricky things up their sleaves. It’s good that the government discourges being able to write off their interest: it would encourage more people to use them for financing.