Velocity Banking is a relatively new term that has been gaining popularity lately. But what is it, and why should you be interested? Velocity Banking is a system that allows you to use your deposited funds to generate more money without having to wait for the traditional banking process. Instead, it can be done by taking advantage of compound interest and other methods.
So what is velocity banking? Please read on to learn more.
Velocity Banking: Understanding the Concept
Velocity banking is a debt repayment method that employs a home equity line of credit (HELOC) to repay obligations rather than just paying down debts with money earned every month. HELOC means having a line of credit secured by the equity in your home. As a result, the interest rate is generally lower than credit cards and other unsecured debt.
Benefits of Velocity Banking
Now that you know what velocity banking is, here are some proven benefits.
One of the top reasons to use velocity banking is that it can increase profits. You can reinvest it back into your business when more money comes in each month. This extra cash flow can help you hire more staff, buy new equipment, or open a new location.
You’ll also become more efficient because you won’t have to wait as long for funds to cycle through your account. For example, if you have a $500 monthly payment and make that same payment each month, your account will take four months to cycle through completely. However, if you use velocity banking and make a $500 payment every two weeks, your account will cycle through in just two months.
It is a huge benefit because it allows you to put your money to work much faster.
Reduced Fees And Interest Rates
By increasing the velocity of money, you can reduce the fees and interest rates charged on loans and other financial products. As a result, money lenders can offer lower rates to customers who can repay their loans quickly.
Velocity banking can also help you avoid late fees and other charges that can add up over time. You are less likely to incur these charges when you make payments more quickly.
Faster Access to Cash
It is beneficial for small businesses that need quick access to cash to make purchases or cover expenses. For example, if you need to buy inventory or make payroll, you can use velocity banking to get the cash right away instead of waiting for a traditional bank loan.
The increased liquidity provided by velocity banking can help businesses manage their finances better and make it easier to obtain funding.
Velocity banking can also help businesses manage their cash flow better by providing a steadier income stream. Businesses can use the money they receive from customers to immediately pay off debts or expenses, rather than waiting for traditional payment methods to clear.
Velocity banking can be a great tool to improve and manage your finances. Remember to consider all of the factors involved before making any decisions and always consult with a financial advisor to get the most accurate information.