I stumbled upon the article in Wikipedia today about Money Merge Accounts.
While I completely agree that paying for a software program to “manage” this appalling, consumers searching for info on how they can do this for themselves will find the Wikipedia article and not useful information about how this can be accomplished.
I love the idea of this account. In fact my wife and I will be doing it here shortly at my CU to start testing, but we need to educate our members and the general public how this works!
For those of you new to this concept, the basic premise is that you dump your entire mortgage into a line of credit. You also combine all of your checking and savings accounts into this line. So when you get paid, your direct deposit goes directly into your line, immediately lowering your principal balance. As you pay your bills throughout the month, you withdraw money from you line to fulfill those needs.
Over time, you will pay dramatically less interest on your line because your average daily balance of your line is much lower that what it normally would be. Would you rather receive 2% interest on your money market account or “earn” 7% interest having the money in your line instead?
It takes a very fiscally responsible person to do their finances like this. This type of program will only work if you are a net saver.
I encourage anyone looking to do something like this to visit The One Account. If you can get over the whole pounds thing, you can use the calculator and figure out how fast you’ll pay off your house. (My wife and I will do it in 12 years.)
And for those in the CU industry: we need to go change the Wikipedia article to have it actually explain the concept behind The One Account/Money Merge Account and not scare off consumers. Once (if) CU’s can really start adopting this product, we really need to make sure that we can educate the public and our members about the true benefits of this program.