Some people think that the only way to save money is to actually put money away into an account of some kind. This can be a savings account at a bank or credit union, or a checking account or even a retirement account of some sort.
Other people think that you can only save money by getting a reduced price on something that they are going to purchase. This can be in the form of
- coupon use
and you see the immediate savings on what your bill would have been.
While those are excellent ways to save money, most people tend to overlook the fact that you can also save money by reducing the interest rate that you pay on any debt you already have. Yes you can save money on your DEBT!!!!!
In order to do this you need to get a reduction on the interest rate that you are paying and while you may not see the immediate results on a bill, you will see them in the long run.
Imagine you are paying 21% interest on a credit card and you are carrying a balance. The best thing to do would be to get rid of that balance as soon as possible but what if you are in a really bad situation and do not have the money to get rid of that balance right away. I know that this happens all the time and I was in that situation some time ago with my own credit cards.
If you can get the interest rate that you are paying down from 21% to 10% you will have reduced your interest payments by about half!!! That amounts to a significant reduction in the monthly payments which will really help your budget.
You not only pay less on a month to month basis but you end up paying less in interest and fees over the remainder of the life of your debt. So now that you know this how can you reduce your interest rate?
Balance transfer: This is where you transfer the balance from one high rate credit card over to a lower rate credit card.
Consolidation: This is where you consolidate your debt into a lower interest debt and this can be in the form of a Low Interest Loan such as those from Lending Club.
Rate Reduction: This is where you get a reduction on the current interest rate on your existing debt.
Those are three of the most common ways to reduce the interest rate on your debt and I will talk about each of those in more detail later. I have used all three of the methods above to reduce my interest rate and save money on my debt before I was able to entirely pay off that debt and there are pros and cons associated with each method.
Please note that the links to Lending Club in this post are affiliate links and I will get a referral bonus if you sign up for the system using my link. Of course you can always go directly to Lending Club and check it out without using my referral but I would really appreciate if you used my link.
Thanks for this tip! I’m really interested to read about how you reduced your interest rates using all three methods.
Thanks for dropping by. The related posts will be coming out on Mondays over the next three weeks.