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LOC and Credit Cards

Discussion in 'Finance & Banking' started by Triu, 26th Sep, 2006.

  1. Triu

    Triu Well-Known Member

    Joined:
    1st Sep, 2006
    Posts:
    161
    Location:
    WA
    Can anyone help with the best way to pay off Credit Card for business Expenses through LOC. Set up loan with RAMS but can't transfer across money to pay out credit card after using for business expenses. Trying to keep money trail easy for ATO. Any suggestions should i set up another savings account?

    Thanks any advice!
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    It's a bit difficult if your lender won't allow things like BPay or direct debit and such directly from your loan facility.

    Do you have an offset account ? It works well to have one set up against one of your loans so that you can park cash there and still have it working for you (reducing your interest costs). Then you can have your credit card paid from the offset account and transfer funds from your LOC to the offset account to top it up as required.

    It works with any normal account too - you just don't get the benefit of the offset interest. Bit of a pain maintaining a cash balance in another account just to pay the credit card.

    For my trust, I have a bank account set up that I maintain a working balance of around $10K in (I need that much because of the amount of loan payments that go through the account each month). All loan interest payments come out of that account. All rental income goes into the account. Some expenses (eg land tax, etc) that can't be paid via credit card are paid directly out of that account.

    Once a quarter I submit an expense claim to my trust for expenses I've paid for on my own credit card, which is reimbursed to me from that account. Alternatively, if I had a separate "investment only" card, I would have it paid automatically from that account.

    Every so often, I top up the balance of that account from my LOC if required.

    If I ever lend money (interest free) to my trust, it gets deposited into that account before it is used for investment. Any repayments of that money come out of that account.

    See the pattern ? Every transaction goes through that account in some form ... it makes it easy to track the money and how it is being used.