The Bank Run

Well, that was interesting.  Over lunch, I went to my local credit union at which I am a member.  I met with the branch manager (but I’m not sure if she was the actual manager or just had a manager title).  Anyway, I explained the mortgage situation and she said she would have to refer me to an outside department that would call me back probably on Monday.  That’s not good enough.  I didn’t want to be handed off.  I wanted to discuss my issue.

“Orrrr…” I interjected.  Then I pitched her the idea of a personal loan.  She asked how much I needed and I told her $34k.  Something in her face told me that wasn’t a good number.  I asked, “too much?”  and she said their personal loans only go up to $20k.  I pressed a little further, “never more than 20?”  And she said, unless it’s an exception.  Well, let’s get ourselves an exception.

We started in on the application process and, as expected, my credit qualified me for the maximum of $20k.  Then we move to the exception part.  She wrote in an application note the details of why the loan needed to be $34k and sent it to underwriting.  Soon (pretty quickly, I thought), they responded with some questions.  Those got answered.  Then more questions.  More answers.  I emailed them a copy of my latest paycheck.  I gave them balances of other funding accounts.  And we waited and chatted.

I ended up leaving to give her time to have lunch and let them munch on the credit risk.  But while we were talking about this loan, she said to herself, “I should have submitted it that way.”  What’s that?  Well, It’s a pretty damn clever idea, that’s what.

The idea is:  She submits the application for a credit card, then, when approved, immediately does a cash advance into my checking account.  You’re probably thinking, what the fuck?  A cash advance on 34K at probably 18-22%?  Insanity!  But the credit union is running a cash advance promo, 4.5% for 36 months until the end of this year.  That’s pretty good.  That’s a better rate than the personal loan.

Oh, but wait, it’s for 36 months, not 5 years.  How the hell can I pay that?  Jesus, that’s $1,000/mo.  But no, it’s a credit card.  Your minimum payment is only 2% of the balance, which is $680, a little less than the $700/mo for the personal loan.  Hey, that’s pretty awesome.

Oh, but wait.  I ask, “But how will it get paid off at 2% a month?”  She smiled and said, “It won’t.”  And I realized, it’s a credit card.  Just like every other credit card.  Your minimum payments will take a balance into timelines approaching infinity.  I know that very well and I‘m surprised I even had to ask the question.  Still, a clever idea and still a potential option.  It’s actually a pretty good option because I really only need some floating money until I can get the home equity loan.  36 months is plenty of time.

There’s one real significant risk with the credit card approach and it’s one that most people would not consider.  A fair amount (30-45%) of your credit score is based on credit utilization.  I’m talking about adding 34k to my available credit and immediately using 100% of it.  My credit availability isn’t bad, spread over five cards, but we’re still talking a utilization level well over 30%, which is traditionally when bad things start to happen.  But the negativity isn’t permanent; nothing ever is.

So, when I left, I hoped I had all the questions answered.  The bank manager would call me when she had more information.  This is all dependent on whether my offer is even accepted.  On that front, my sales agent told me it wouldn’t be any issue to switch the payment in the contract to cash after it’s accepted.  So that’s good.

Then I got the call back from the credit union.  I was only approved for $20k, not the $34k I needed.  I had to tell her that wasn’t good enough.  To her credit, she said she would call them back and plead my case.  I fired off an email saying I would accept $30k.  That will lower the war chest to $6,000, still enough for a hot water tank and insurance.

Then I got a call back from another person at the credit union.  I’m not sure it was a return call from my previous attempt or from today’s visit.  It was someone from their mortgage department, though.  So, I switched gears (this took a little umm-ing and hold-on-let-me-think pauses) and talked again about a loan that would let me buy without having the required stuff installed.  It seems the more I discuss it, the more the story changes.  It becomes more matter-of-fact and less oh-my-god-what-do-I-do.  A lot of the things I thought were important early on are not important to mention now.  The lady was helpful in that she listened and seemed to try to come up with solutions for me, but not helpful in that she didn’t have something she could sell me.  We left that conversation with her going to do more research.

You can’t say I’m not trying.