Tuesday, February 07, 2006

Lower Your Mortgage With Your Credit Card????

There are lots of financial vehicles out there that are dumb for most people. Universal Life Insurance comes to mind. But as I logged on to my mortgage company's website today, I see they are offering a credit card with points. The points don't go toward a new car or your alma mater, they go to reduce your mortgage. How dumb is this? "Because you borrow from us at 20% on your credit card, we going to help you pay down your 5% mortgage!".

Does this make financial sense to anyone? Sure I can come up with a bizarre scenario where the card is used for business and paid off every month and so someone wants to reduce their mortgage instead of get airline points, but that is a really small minority. Look how long it takes to get $500 in airline tickets, will this really do anything for your mortgage? Perhaps with ideas like this, loan sharking will make a comeback. After all, if a loan shark finally kills you, they don't go after your estate for the debt!

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