I think the idea behind it is that your money normally sits in your checking account earning little or no interest in preparation for paying upcoming bills. Instead, you have your direct deposit go into a checking account that is tied to your mortgage payment. As the money sits in there, it accrues a decent interest rate, which helps to automatically pay down the mortgage.
This will only really work for people who have more money coming into the account than leaving it. A direct deposit automatically pays down the principal, but should you need to then pay a bunch of bills, it’s the equivalent of taking out a HELOC.
Seems like an interesting idea and I’d love to hear from anybody that has actually looked into or had one of these.
