Free Money From Your Bank

Free Money From Your Bank

No that isn’t a typo – a recent article published online outlines four ways that you can possibly make money for free from your financial institution. These so called “bank hacks” use the bank’s own features to make money but require careful reading of the fine print and management to work. 

Four Ways To Get Free Money From Banks

STRAPPED for cash at this time of year? Join the club.

But there are ways you can get something for nothing, all it takes it’s a little bit of discipline and patience.

“Once you know the ways to do it… it can make a big difference to how much you enjoy the festive season,” said spokesperson Michelle Hutchison.

Here are her top tips to make some extra – legal – cash this Christmas from our friends at the banks.

Request a “cheque to self” balance transfer and save money in a high interest account

This is a quirky little feature only available with Citibank. Users can take out a zero per cent balance transfer credit card, then request the money in the form of a ‘cheque to self.’

Once you have the money, Ms Hutchison said deposit it straight into a high interest saving account, then at the end of the zero balance transfer period transfer the funds back onto the credit card.

This means you pay no interest on the credit card, and any interest earned on the savings account is pure profit.

Ms Hutchison said the only catch is users need to pay the minimum on their credit card to stop the account going into arrears and take into account any fees which could eat into profits.

It’s also important to note the ‘cheque to self’ feature can only be used on 80 per cent of a maximum of $60,000, which is $48,000, reports.

Continuously balance transferring your credit cards

Ms Hutchison said under this strategy users can continue to transfer debt between credit cards to take advantage of the best deals, without actually having to pay it off.

Instead, pay the balance into a high interest savings account and earn money on the interest.

“Let’s assume you initially balance transfer $5,000 for six months at 0 per cent interest and deposit it for six months at 4.40 per cent into a high interest savings account and the card has a $55 annual fee. The interest earn would be about $222 after six months, and after the annual fee you could earn about $167 before tax,” she said.

The only catch is that users need to make the minimum card repayments each month and will need to pay the balance off at some point.

Also, it relies on finding a new provider each time which may affect your approval for other credit cards in future.

Borrow from your home loan and put the money in a high interest savings account

Ms Hutchison said it’s rare, but in some cases savings accounts have a higher interest rate than home loans.

This means if people have equity in their home, they can transfer this to a high interest savings account to take advantage of promotional rates, before moving it back into the home loan.

The only thing to bear in mind is the application fees, which can wipe out any gains, as well as keeping a sharp eye on rates, which can decrease dramatically after introductory periods end.

Use a credit card with 0 per cent interest on purchases and put your savings into a high interest savings account

Ms Hutchison said where people are looking to make large purchases, they could hunt for a card which allows them to make these interest free.

Then instead of paying cash for the item, put it on the interest free card and stash the cash in a high interest account. Once the promotion has ended, use the saved money to pay back the card while pocketing the interest you’ve earned.

But keep a sharp eye on the promotion dates, as the card could start to cost you once this period ends.

This article originally appeared in Money Matters,  a personal finance feature of the News Corp website View similar articles here.

Do you think the potential benefits are worth the risk of using these “bank hacks”? 

Our FREE Course Launches in 2014. Get on the Wait-List and we’ll let you know when we launch the Get Mentored by the Rich Training Program.
Get on the Wait-List >>