Are Velocity Banking and Infinite Banking the Same? Not Even Close
Are you confused about the difference between velocity banking and infinite banking?
You’re not alone. These two strategies often get tossed around in the same conversations, but they are fundamentally different in purpose, tools, and risk. As Chris Miles, cashflow expert and host of the Money Ripples Podcast, explains, understanding the differences can be the key to creating real passive income while protecting your financial future.
What Is Infinite Banking? Infinite banking is a strategy that uses whole life insurance as a powerful, tax-advantaged savings vehicle.
Here’s how it works:
- You fund a specially designed whole life insurance policy.
- That policy builds cash value that you can borrow against.
- You borrow the insurance company’s money using your cash value as collateral.
- Your money continues to earn dividends and interest as if you never touched it.
This allows you to earn a return in two places at once: on your investments AND in your policy. It’s a popular tool for real estate investors and entrepreneurs who want their cash doing double duty.
What Is Velocity Banking? Velocity banking is an entirely different strategy. It uses a home equity line of credit (HELOC) to aggressively pay down your mortgage by:
- Depositing your entire paycheck into a HELOC.
- Paying bills directly from that HELOC.
- Using excess cash flow to pay down the mortgage balance faster.
The goal is to reduce interest payments and pay off the mortgage in 7-10 years. Velocity banking often sounds good on paper, but it comes with some significant risks.
Where People Get Hurt Chris warns that velocity banking is often sold as a one-size-fits-all solution. The problem? It assumes life is predictable and cash flow is always positive. But what if:
- You lose your job?
- Your investments go south?
- The bank lowers your credit limit during a recession?
Chris recalls clients during the 2008 recession who saw their HELOC limits slashed overnight. Suddenly, their access to liquidity vanished—and with it, their options. That kind of exposure can be financially devastating.
The Safer Play: Infinite Banking. Unlike velocity banking, infinite banking gives you more control:
- Your cash remains accessible.
- Your policy is not subject to sudden changes like a HELOC.
- Your returns are steady, tax-free, and not tied to market performance.
Chris also points out that unlike HELOCs, whole life policies pay you interest even while you borrow against them. That’s what makes infinite banking a true “cash flow strategy” rather than just a debt strategy.
When to Use Each Chris doesn’t throw velocity banking out entirely.
There may be a place for it, especially if:
- You want to access bank money (not your own) for investment.
- You fully understand the risks and have strong cash flow.
But if you’re looking for liquidity, predictability, and long-term growth—especially in uncertain markets—infinite banking wins hands down.
Final Thoughts: Velocity banking and infinite banking are not the same. One uses debt to reduce interest; the other uses a life insurance asset to multiply cash flow and build long-term wealth.
If you want to protect your money, make it grow, and keep it liquid for the opportunities ahead, infinite banking is a much smarter foundation.
Ready to see what that could look like for you?