poor person question

whats the point of using a deposit at one bank as collateral for a personal loan from another.

any other reason other than the deposit is locked up as a CD?? i can understand if someone has an investment portfolio and just needs cash, but why go to a different bank?


is there money to be made by trading CDs and loans between banks?

i know rates vary, but just seems that with such low rates + any fees its not worth it for a few million dollars.

You take out a sum of money, post it as collateral, use it to borrow a larger sum; rinse and repeat. If you can manage to pull this off before the first loan hits the credit report, you can borrow a substantial some of money.

I think the point is just to show that you have enough assets such that a $3 million loan is not a big deal.

In banking, some people wanting a loan use CDs as collateral – just like they’d put up their house or car. And what Bpdulog said.

Why would you take out a loan to buy a new car when you have $25000 in the bank?

Because you pay it back over time, not depleting your assets all at once.

You can keep the CD as emergency cash, for example.