Here at Finance Throttle, we often talk about the concept of Velocity Banking, a strategy used to pay off your $80,000 student loans or $300,000 mortgage in as little as a few years. To use the Velocity Banking Strategy, you need certain tools to be successful. You will need a HELOC OR a no annual fee, 0% introductory “MasterCard” credit card OR extra savings above & beyond your emergency savings account OR Plastiq. In this post, we will focus on Plastiq.
You can’t get a HELOC unless you own a home and have more than 20% equity paid off. You can’t get a no annual fee 0% introductory MasterCard without having a good credit history. Most people don’t have too much money saved up. So how can Plastiq help? Plastiq is a B2B or Business to Business payment platform where you can pay and get paid any way you want, whether its via credit card, ACH balance transfer, wire transfer, or check.
Paying off Debt with Debt
The idea of a HELOC or a credit card is to pay off loan debt with line of credit debt. The way interest rates are charged differs in that you will pay most interest up front with a loan. This is where the concept of velocity banking will help you save thousands of dollars and take years off your loan repayment plan. If you own a VISA, AMEX, or Discover (Diner’s Club) card, you cannot pay loan debt with your line of credit. However if you own a MasterCard, you can totally do a balance transfer between your loan and credit card.
Plastiq Pay is a service that allows you to make loan payments using a VISA, AMEX, or Discover card. In fact, if you need to pay someone who only accepts a check or a wire transfer as a form of payment, Plastiq can pay them for you.
Plastiq Pay’s Fee Structure
While it is free to sign up with Plastiq, they do have more feature rich accounts. The free version allows up to 3 users and the ability to make payments with a credit card. This is what most people will use Plastiq for. For $59 per month, you get quickbooks, unlimited users, a dedicated email inbox, streamlined online bill pay, and more. For $119 per month, you get the full enterprise suite of features.
| ACH Bank Transfers | Free |
| Credit Cards | 2.85% |
| Check Disbursements | Free |
| Domestic Wire Transfers | $5 |
| International Wire Transfers | $39 |
If you want to make a $3,000 credit card payment towards your student loan or mortgage, you can use Plastiq to make that payment. In this scenario, Plastiq will charge you 2.85%, or $85.50 on the $3,000 payment. If you are able to comfortably pay back the credit card quickly, then the 2.85% fee is a no brainer. A $3,000 principal payment towards your mortgage or student loan will save you hundreds if not thousands in interest payments over the loan period.
Plastiq Accept
Plastiq offers another product called Plastiq Accept. Like Plastiq Pay, there are three versions with the same pricing structure. Free, $59/month, or $119/month. With Plastiq Accept, you can accept online payments for your business for FREE! Competitors like Stripe and WooCommerce will charge you a small percentage and/or flat fee with every purchase made on your site. For example, the budgeting and loan amortization spreadsheets available on my site are sold through WooCommerce where I pay both a fixed fee and a commission to WooCommerce for facilitating the payment.
Plastiq Accept includes unique payment links, QR codes, customer support, invoice payments, and more completely FREE. They won’t even charge you, the customer, any fees for making a purchase through their link. In fact, I will be experimenting with converting my online shop to Plastiq Accept in the coming weeks.
Conclusion
If you get a 0% introductory credit card, you won’t need to pay interest on your balance for 12-21 months depending on the credit card. However you will pay either a 3% or a 5% balance transfer fee. While only MasterCard allows balance transfers between loans, Plastiq enables you to use any credit card in this strategy. With Plastiq’s 2.85% credit card fee, they are a low cost alternative to using the 3% or 5% balance transfer feature of a credit card. You will be saving at least 0.15% up front with Plastiq.
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