So this came up in the discussion about the gloating never pay credit card lady https://www.ozbargain.com.au/node/767026
@KangaDrew and @rumblytangara mentioned it so I thought id make another thread
Original video (but not sure its the original account that posted it?):
https://www.tiktok.com/@indiigoassetmanagement/video/7207709…
Scott Pape / the Barefoot Investor guy mentioned it in the same newsletter as credit card woman
The questions came in like a hurricane.
They were all asking about a viral TikTok video by an Aussie who had uncovered an ingenious ‘trick’ to beat the banks and stop paying interest on your home loan.
It quickly amassed 5.1 million views.
(That’s, like, 5 million more people than watch The Project each night.)
So I clicked on the link.
A bearded dude was sitting in front of an impressive bank of computer screens filled with stock market charts.
He began:
“Hey everyone. I don’t usually do these sorts of things. I’m not a big TikTok user, but what I am good at is finance and understanding how to beat the banks. So I’ve got a couple of people that I’ve given this advice to and everyone’s been telling me that I should make it public. So here we go.”
And then he went on to reveal his big secret:
You can ‘stop’ compound interest accruing on your loan completely by simply … paying your normal repayment plus $1 per day.
Huh?
He continued:
“You will pay a big fat zero in interest, absolutely zero in interest, and you will end up cutting your mortgage from 25 years down to about five … and you can do this with credit cards, you can do this with car loans. Anything that has a variable interest rate, you can do it and you can beat the banks.”
And just in case you missed the point, here it is again:
“Just stop paying interest. Nobody out there needs to be paying interest.
I know what you’re thinking – surely the banks would HATE this knowledge being leaked, right? I mean they would go broke (or broker, in the case of Credit Suisse).
Don’t worry, he’s onto it:
“So the banks don’t like this. They don’t like this knowledge being out there, and they will try to stop you. They will send you ‘cease and desist’ letters. They will try to stop you from doing it, but at the end of the day, they can’t. If you get a cease and desist letter, once you start doing this $1 a day payment thing to your financial institution, ignore it. What are they going to do? Take you to court and say, ‘Oh, Your Honour, he’s paying too much’. It’ll get laughed out of court. So if you want to beat the banks, beat them by not paying compound interest.”
Okay, in our home, ‘stupid’ is a swear word, but I’m going to call it what it is:
This is STUPID!
You cannot stop interest by paying $1 a day on your home loan.
Still, that won’t stop people from trying. There are thousands of comments under the video saying things like: “Not sure if it works, but I’m giving it a go!”
Which reminds me of another viral ‘secret’ for glowing skin:
Some internet gurus suggest you stick coffee beans up your quoit.
(Seriously, google it … just maybe not at work.)
Does it work?
Erm, no!
Meanwhile, you’re walking around with a short black up your clacker.
Now the fact that this video got 5 million views tells me three things:
One, people are desperate for solutions to higher interest rates.
Two, just because a video goes viral doesn’t mean it’s true – it just means it’s riding the TikTok (AKA the Chinese babysitter) algorithm.
Finally, I have a hell of a lot more work to do when it comes to financial literacy in this country.
Look, the only way you can pay your home loan down quicker is to get a lower rate, and make extra repayments … preferably more than $1 a day.
And if you’re struggling to make extra repayments, give up the coffee – it’s no good for your skin anyway.
Tread Your Own Path!
It really doesn't make sense to me.
Also if you pay $1 more than your speeding fine and never cash the refund cheque, the demerit points never get posted.
(/s obv)
This sort of sh*t used to get passed around by word of mouth, then email forward chains, then messages. Now it is posted on TikTok. Doesn't make it any more reliable.