Banking is no longer dominated by the banks. People around the world are discovering how to use alternative banking strategies and concepts to regain control of their finances.
There are two financial strategies people are discussing: Velocity Banking and Infinite Banking. Both are popular Canadian wealth strategies for paying down debt and covering life’s expenses, but which one is better?
Both aim to accelerate your financial freedom but are fundamentally different in their approaches. Let’s compare these two popular banking strategies to learn which is better suited to your financial goals for long-term wealth building and control.
What Is Velocity Banking?
Velocity banking is a short-term financial strategy that utilizes your line of credit, such as a Home Equity Line of Credit (HELOC) or a personal Line of Credit (LOC), to expedite debt repayment and reduce interest paid. It’s typically used to pay off a mortgage in large lump sums, but can also be used for other loans.
Your cash flow is deposited directly into your line of credit, which becomes your primary expense account, eliminating the need for a separate savings account. This strategy enables you to pay off your mortgage more quickly and with lower interest payments.
Velocity banking isn’t for everyone, though. It works best for those with a stable income and disciplined spending, as you can easily increase your debt load faster than you can pay it off. It is also heavily reliant on fluctuating interest rates. For example, you may open your HELOC with an interest rate of 5%, but a year later, that rate may increase to 8%, resulting in higher required minimum payments and interest paid. If you’re not prepared for these potential fluctuations in interest rates, you could lose the interest-saving benefits of this strategy.
While this banking strategy can be effective as a short-term strategy, it’s less reliable as a long-term wealth-building vehicle. An Ascendant Financial advisor summarizes Velocity Banking as “rapid debt payoff…that’s heavily reliant on cash flow discipline and variable interest rates, which can introduce risks if rates rise or cash flow tightens.”
What Is Infinite Banking?
The Infinite Banking Concept utilizes a participating whole life insurance policy to build long-term financial independence. As your policy builds cash value over time, you can use it as collateral for loans to meet your financial needs and goals today, without interrupting the money’s growth inside the policy.
It’s like building your own self-sustaining financial system, eliminating the reliance and uncertainty that come with working with traditional banks and loans. It’s an ideal financial wealth management strategy for those who can make policy payments and want financial stability and long-term growth of their funds.
Here’s how it works: Your whole life insurance policy builds cash value over time, and you can borrow from this cash value to meet your financial needs today, like purchasing a car, investing, and paying for business expenses. You can borrow this money without interrupting the growth of your policy’s value.
Unlike traditional bank loans, borrowing against your policy gives you flexible repayment terms and competitive interest rates compared to conventional lenders with strict repayment schedules.
Infinite Banking:
- Requires maintaining premium payments in a participating whole life insurance policy
- Builds compounding growth over time as you deposit additional funds, known as paid-up additions (PUA).
- Provides tax-sheltered growth
- Your cash value and beneficiary death benefit continue to grow
- Enables flexible policy loans with more favorable terms than traditional banks.
Think of it as creating a personal lending pool by controlling your cash flow. Our team views it as “not just about paying off debt, it’s about creating a perpetual financial advantage.”
Take control of your financial future.
Schedule a consultation with Ascendant Financial and ensure your financial choices align with your long-term goals — before it’s too late.
Key Differences Between Velocity and Infinite Banking
Velocity Banking and Infinite Banking are both financial strategies designed to use your assets (a line of credit or the cash value of your life insurance policy) to pay down debt and fund life’s expenses. However, the methodology behind each one is different:
| Infinite Banking | Velocity Banking | |
|---|---|---|
| Goal | Build long-term wealth, liquidity, and uninterrupted tax-advantaged growth | Pay off debt (usually a mortgage) faster and reduce interest costs |
| Primary Financial Tool | Participating Whole Life Insurance Policy | Line of credit or HELOC |
| Time Commitment | Long-term strategy | Short-to medium-term strategy |
| Success Factors | Ability to maintain premiums and stable income to repay policy loans. | Stable income and disciplined spending |
| Risk Factors | Early years have lower liquidity due to insurance costs, | Variable interest rates |
| Taxation | Cash value grows tax-deferred. Tax loans are usually tax-free | No tax benefits aside from interest deductions |
| Best for | Those with patience who require long-term liquidity and compounding growth. | Short-term savings from interest and those with good credit |
| Relies on | Patience (to see the benefits of compounding) | External credit and interest rates you can’t control |
Which Strategy Is Better for Long-Term Wealth?
Infinite banking is designed for long-term wealth, often spanning generations. In itself, Velocity is a short-term strategy helping you pay down debt and its interest faster. Both can be a beneficial part of your personal banking strategy if you understand when and how you use them.
| Pros | Cons | |
|---|---|---|
| Infinite Banking | Uninterrupted, compounding growthGrowth can be accelerated through additional deposits (PUAs)Provides payable death benefitsBuilds a pool of money you can borrow against during your lifetime.Often pays dividends, which can be used to purchase policy top-ups | Typically takes a few years to borrow from the cash valueRequires uninterrupted payments of premiumsCan be complex as policies must be set up correctlyCan be a stretch to afford if you have a tight budget. |
| Velocity Banking | Pays down debt fasterSaves interestImproves cash flow over timeSimple concept to understand and useWorks alongside other financial strategies | Requires stable incomeRequires disciplined spendingBenefits stop once the loan is paid.No death benefit |
Read more about the pros and cons of Infinite Banking.
Infinite Banking Success Story
Sally and her family used Infinite Banking to pay off $200,000 in consumer debt. They systematically paid off their debt in 44 months, while the cash value of her policy continued to grow, uninterrupted:
“They could’ve followed the traditional route—throwing all their cash at the debt—but instead, they implemented Infinite Banking. By funding a policy with $24,000 annually, they accessed $11,906 as a policy loan within 30 days.”
Here’s the kicker: they didn’t just pay off debt, they built a wealth asset. Sally’s cash policy continued growing daily, creating a death benefit for her family and a cash flow of $3,451 per month. Using this cash flow, Sally was able to repay the remaining policy loan in 18 months.
This approach outperformed traditional debt repayment by creating long-term financial strength and control.
Read more stories and learn more about Infinite Banking.
Switching from Velocity to Infinite Banking Success Story
At Ascendant Financial, we’ve helped people transition from Velocity Banking to an Infinite Banking strategy.
Parminder’s family was using their HELOC to aggressively pay down their mortgage. “While they appreciated the debt reduction, they felt trapped by the constant need to manage cash flow and the risk of rising interest rates,” says their financial advisor.
Our team helped them view their debt strategy and wealth building as a longer-term strategy to build their generational wealth. They redirected their HELOC payments into a dividend-paying whole life policy, while building cash value. This helped them maintain control over their money.
They used their policy loan to pay off their outstanding HELOC and other debts. The process gave them stability, flexibility, and a growing financial asset.
Ready to take control of your financial future?
Speak with an Ascendant Financial Advisor today and start building a strategy that protects your legacy.
Risks and Misconceptions to Watch For
Even with the great benefits, there are many risks and misconceptions to be aware of as you incorporate either of these strategies into your banking portfolio:
Risks and Misconceptions of Velocity Banking
Risk and Misconceptions of Infinite Banking
Why Ascendant Financial Believes in Infinite Banking
Since 2008, Ascendant has been helping individuals and families throughout North America harness the incredible benefits of “Becoming Your Own Banker” using the Infinite Banking System. Founder Jayson Lowe is North America’s most sought-after authority in the Infinite Banking Concept. With his team, Ascendant Financial provides a potent alternative that puts the power of banking back in your hands.
We provide financial education and coaching to help you set up a participating whole life insurance policy utilizing Infinite Banking to build lasting wealth. We’ve earned a 5-star Google Rating score, with over 579 Google reviews, including this one from Jennifer:
“Sebastien has made stepping into the world of IBC an absolute breeze. His depth of knowledge and true care for his clients is what has impressed me the most. While I am fairly new to the world of IBC and only just beginning my journey with Ascendant Financial, I feel much more confident knowing I have a dedicated advisor like Sebastien in my corner 🙂” – Jennifer House
Ready to learn more and see if you’re a fit for Infinite Banking? Start by watching our free on-demand webinar or book a call to discuss more.
Frequently Asked Questions
Is Infinite Banking the same as Velocity Banking?
While both are financial strategies, their uses and purposes differ. Infinite Banking is a long-term wealth-building strategy that utilizes the cash value of your Whole Life Insurance Policy as collateral for paying down debts, covering life’s expenses, and making other investments. Velocity Banking uses your Line of Credit or HELOC to pay down other debts, like your mortgage, faster.
Can I use both Infinite Banking and Velocity Banking together?
Yes, you can use a combination of Infinite Banking and Velocity Banking. Some clients use Infinite Banking as their long-term wealth-building strategy and Velocity Banking to pay down debts more quickly. In our experience, many clients ultimately end up choosing Infinite Banking:
According to our expert advisors, “the key reason often comes down to control and predictability. With Infinite Banking, you’re leveraging a participating whole life insurance policy, which offers guaranteed growth, tax advantages, and uninterrupted compounding. Unlike velocity banking, which relies heavily on variable interest rates and precise cash flow management, Infinite Banking provides a stable, long-term financial foundation that’s unaffected by market volatility.”
Another deciding factor is flexibility. Infinite Banking allows clients to access their cash value at any time for any purpose, without the restrictions or risks tied to traditional debt strategies. Plus, the process of becoming your own banker means you’re recapturing interest and keeping more of your money working for you.
Book a Call with an Advisor at Ascendant Financial
Contact Ascendant Financial today to review all of your financial options.
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