Infinite Banking vs. Traditional Savings Accounts:
There are a few problems saving and spending money with traditional savings or checking accounts that you don’t have with an Infinite Banking policy.
INTEREST EARNINGS: When you’re setting thousands of dollars aside in either a checking or savings account for a large purchase all those dollars are earning an extremely low interest rate.
- Bankrate.com’s November 2022 research showed that the national average interest rate for savings accounts is 0.19 percent! That’s not even one-fifth of 1%!!! If those same dollars were in a properly structured whole life policy they could be earning somewhere between 4-6%. Interest bearing checking accounts are even worse.
- When your money could’ve been earning somewhere between 2005-3057% more in an infinite banking policy (4-6% annually) than in an average traditional banking savings account you’re experiencing some serious opportunity cost.
TAXES: Here’s where it gets way worse. Even on that piddly little amount of interest you’d be earning in a traditional savings account, you still have to pay taxes on those earnings.
- Compare that to tax-free earnings on a properly structured policy. Remember the Buffett’s rules of investing? Rule #1: Never lose money and Rule #2 never forget rule #1.
LEVERAGE: When you use the money in your savings account (withdrawing it to pay for something) you no longer are earning interest on that money. Conversely, when you use the money in your infinite banking policy you are still earning interest on your money because you’re leveraging it.
Besides the many other benefits that infinite banking policies offer, you can probably see why many of my clients shift their savings accounts into their infinite banking policies.