Following on from HUB's 1/6 and 2/6 is Bank Strategies 3/6, Interest Accumulation.

Even though this bank strategy can be used any time by anyone, it is one of the main strategies (in combination with the other 5) needed to pay off debt fast for anyone that does not have a HELOC (Home Equity Liine of Credit) or any other type of Line-of-Credit (LOC) besides a credit card.

I think we all realize that banks never pay us more than what they charge us, when it comes to interest. So it makes good common sense to pay off debt a.s.a.p. before we can truely build savings or retirement security or wealth for ourselves.

In fact, in the 25th Anniversay of FORBES magazine, 75% of the 400 richest people in America say that "becoming and staying debt free is the #1 key to buiding wealth"

In the first scenerio portrayed in HUBS 1/6 and 2/6, Mr. Homeowner had a mortgage and a Home-Equity-Line-of-Credit. However, there are thousands, if not millions of Americans and Canadians who have neither of these or have a mortgage but no HELOC or other LOC and so this bank strategy 3/6 - interest accumulation works in reverse of the first bank strategy, cancelling interest charges.

Here is the key fact: Most people think that they can only be earning interest on money they have put aside for later; put aside for savings, retirement, a rainy day, emergency fund etc. but the fact is, you can actually have every dollar you earn either saving you interest charges or earning you interest dollars.

Every dollar you earn could be working for you 24/7/365 if you understood the value of small amounts of interest accumulation and were willing to move your money a little differently than how you are now. This bank strategy could get you out of debt faster, especially if it is used in combination with the other 5 bank strategies..

Let's now see how this might work for Ms. Homebuyer who has no HELOC or LOC to borrow money from.. Ms. Homebuyer only has a cheque account, a savings account and a credit card..

Let's say Ms. Homebuyer has a $5,000, income, and $4,800 worth of monthly expenses and a mortgage which includes the same characteristics as Mr. Homeowner's mortgage, $200,000 @ 6% for 360 months (30 Years) with a monthly payment of $1199.10.

Ms. Homebuyer has a credit card with a 12% interest rate. She also has a savings account that earns 3% and a cheque account.

Ms. Homebuyer is not going to borrow any money to make a principal only payment to her mortgage like Mr. Homeowner did. She is going to have to use her own money to accumulate interest by moving her $5000 income cheque, from her chequing account, into her savings account.

While her income is now working for her, accumulating interest, she is floating Mr. Credit Cards money to pay for her monthly living expenses the same way Mr. Homeowner did while he was cancelling interest charges on his borrowed money.

Earning small profits on multiple transactions may not seem impressive but it does build up and it is similiar to arbitrage. It will help you to get out of debt sooner rather than later without changing your budget, but just by rearranging your budget.

* $5,000 in chequing account which is month 2's income

* $5,012 in savings account which is month 1's income + $12 @3% interest accumulation - Bank strategy - Interest Accumulation

* Credit Card with $4,800 owing after spending it on month 1's monthy living expenses. This will be paid off with month 2's income thereby Ms Homebuyers credit card will be charged $0 interest charges. Bank strategy - Interest Float.

* Mortgage balance owing of $199,801. 1st month's principal portion of monthly payment is $199.

Now Ms. Homebuyer will pay off the credit card with month 2's income, leaving $200 in the cheque account, and $0 owing on the credit card. This of course cancels all interest charges from Mr. CC. which is called Interest Float

Next Ms.Homebuyer will transfer $3,789 from her savings account, to her cheque account, leaving a balance of $1,223 in her savings account.

Next Ms. Homebuyer transfers $3,989 as a principal only payment to her mortgage with her month 2 mortgage payment.

See below for the effect of that funds transfer. Ms. homebuyer just cancelled interest charges of $18,746.21 and knocked 18 monthly mortgage payments of $1,199.10 off the back end of her mortgage. - Bank strategy - Interest Cancellation

By the way, how much did this movement of money that has saved Ms. Homebuyer $18,746.21 cost her out of her budget? ZERO! 

cheque account balance $0 ----------- started with $0

savings account balance $1,223 ----- started with $0

credit card balance $0 ------------------ started with $0

mortgage balance owing $195,613 --- started with owing $200,000

Do you think Ms.Homebuyer would mind moving her money a little differently so she could accomplish such impressive interest savings?

If you want to learn about a system that utilizes and incorporates all 6 of the bank strategies I have been, and will be covering in my 6 HUB bank strategy series, click on UFirst Money Merge Account.

My next HUB can be found at Bank Strategies 4/6 -Time Value of Money

(Jennifer Bhala Hansen is new to internet social networking. But, if this hub article has been interesting or helpful to you, a thumbs up rating and a comment would be much appreciated!) Thanks.

This hub post holds the intention of helping all who read it to learn, research, grow, and love our fellow humans/animals.

Information provided here is for EDUCATIONAL PURPOSES ONLY and is in NO WAY intended to replace proper financial advice. IT IS NOT to be construed as instruction on how to pay-off debt or overcome any financial situation the reader may be in.

Every individual is different, thus what may work for one may not work for another person. The writer of this hub post will not be held accountable in anyway if and when the readers of this hub post chooses to apply the information they read for their own personal use. Consult with the professional financial authorities of your choice.

Remember, taking responsibility for your own wealth is your own personal decision: do your research and choose wisely. I commend you!