what is infinite banking?If you've ever used your credit card to make a purchase, then you've probably heard of or are familiar with the term" Infinite Banking". What does this mean and how can it benefit you? If you use your account to make any type of purchase, then it is called "infinite banking". These types of purchases include items such as gas, groceries, clothing, etc.
"Infinite banking" is a term that refers to accounts that don't have a balance that will cover the initial investment. This type of account is referred to as a "wick" and has no minimum balance requirement. The banks that offer these accounts do so because their clients won't be able to keep up with the payments required for the other types of accounts that they have. It is a win-win situation for both parties.
You see, in most cases banks can earn an income from interest on money that is placed in the bank. How? They can earn interest on both the borrowing and the lending that are done. This means that if two people each lend $100 and put a down payment on a house, then after two years both persons will own the house and have accrued interest. Now imagine two more individuals each putting a down payment on a similar house. Each one of these persons will now own the home after two years and each will have accrued interest as well.
In this example, we are using interest as the earning method. Instead of paying taxes on the money that is withdrawn from our account, what would be the situation if the banks also earned interest on the interest that was paid to them? Wouldn't this be an even better situation? Of course it would. Then why do banks only offer this type of service to us?
The truth is, most banks only offer this type of banking service to those who have at least a college degree. Why? They feel if we have this type of education, we should be able to handle all the complexities of banking, right? Well, while many of us may not have the necessary qualifications to work with banks, we sure do have the necessary qualifications to run our own businesses! So, with the knowledge and education in place, you can start your own business that will not only be based on your own interests, but can earn its own interest as well.
Many banks will provide you with a small loan that will cover the cost of operating your new business. Now what happens is you will add money to this account every month, so when you receive your next pay check, the money that you have added up will be able to pay off the entire principal that you have placed into the account. Now you are not only gaining interest, but you are also earning money, which is what every smart investor is looking for.
View here for more information related to this topic: https://en.wikipedia.org/wiki/History_of_banking.