3 Ways to Save By Finding the Best Interest Rates
Interest Rates (Photo credit: 401(K) 2013)
Saving money does not have to be rocket science. Even if you have traditional consumer debt such as a mortgage, auto loan, and credit card debt, you can still save money while paying down those debts. Ask questions, and know your account terms for best results. There are three basic ways that most consumers can save money by asking questions, comparing new rates and understanding their account terms – if you’re in Canada, RateSupermarket.ca is a great comparison resource.
Re-Financing Your Debt
Long term interest rates are at all time lows. If you have a mortgage rate over 5%, chances are, you can do better in a re-finance. In order to take advantage of premium rates, check your credit for dings or mistakes before beginning the mortgage application process. As you enter the process, be certain to ask about fees, rates, and pre-pay penalties structured into your loan. As you consider your options, keep in mind that interest rate savings should outweigh the cost of the re-finance. Keep in mind also that if you are looking to re-locate, refinancing may not be your best move, as the short term savings will get eaten up by fees.
Re-financing an automobile is quite simple when compared to a home. Fees often consist only of a title transfer fee which is typically under $50. Many consumers never consider this option. Explore all options that will save you money such as a reduced interest rate, and reduced loan term. While auto loans typically do not have pre-payment penalties, most people do not systematically pay more on their loan. If you are able to cut your term by re-financing, it may be wise to proceed so that you can pay off your debt quicker.
Credit Card Interest Rates
Many consumers do not know that you can often get your interest rates reduced simply by calling up your credit card company and asking for a lower rate. If you are a student or AARP member, be certain to tell the card issuer, you may qualify for a lower rate simply based on this information. If you hold cards with particularly high interest rates, and the card issuer will not reduce the rate, consider canceling the card once the balance is paid off.
When speaking with your credit card company, ask about interest rates for purchases, as well as for balance transfers. Depending on terms, it may be helpful to transfer the balance on one card to another in order to save interest and pay down the debt quicker. Use caution if you employ this strategy and ensure that you understand when the rates expire, and ensure that your budget lines up with that timeline.
Savings Accounts
Most people have a checking account that they use on a day to day basis. Consider adding a savings account to your banking relationship. Ask about minimum balances for high yield savings accounts as well as interest rates for standard account balances. As with any banking account, ask about any monthly maintenance fees or service charges.
These fees can often erode any interest earned. Some smaller banks and credit unions will offer interest on traditional checking accounts. Depending on terms, it may be wise to consider changing banks in favor of the potential interest to be earned. If you use features such as online banking and bill pay, ask your new bank if they offer these features as well before switching.
Category: Credit Card, Mortgage
Well information! Thank you so much for this information. I really appreciate this. 🙂