Every year, most American households pay tens of thousands of dollars in interest. This includes credit card loans, mortgage interest, and auto loans. With this kind of money at stake, every point of interest you save counts. Many people don’t realize that there are ways to negotiate lower interest rates. Here’s how to get better rates and how to negotiate the interest on current accounts.
Mortgage Interest Or Loans
Though mortgage interest is tax deductible, you still want to minimize it. Tax savings are nice but not as nice as avoiding the interest in the first place. As explained on Bankrate, you have several options when it comes to reducing mortgage interest. When taking out the mortgage, you can opt for points. Points are an upfront cost that buys down your rate. If you plan to keep the loan for a long time, points are a good option.
For those with a current mortgage, negotiating a better rate is often imperative if they are having trouble affording the loan. Most lenders realize that a lower interest rate is better than taking a loss on a bad loan. You may qualify for a number of Home Affordable Refinance Program (HARP) options. If you do not qualify for HARP, negotiating with the lender directly may produce results, particularly if you involve legal counsel.
Sometimes, it’s better to get away from the mortgage lender completely. Hard money loans provide a way to immediately get out of your mortgage loan while keeping your house. These loans are based on home equity, not credit score. If you have sufficient home equity, you will qualify, regardless of credit score. Hard money mortgages are available even while foreclosure or bankruptcy proceedings are active. When you have equity, it’s always worth saving it through hard money loans. Don’t let anyone scoop your equity through foreclosure.
Credit Card Interest
Punishing credit card interest can break any budget. No one makes enough money to keep up with double-digit rates, let alone penalty rates that can be over 30 percent. The lower your credit card rates, the easier it is to pay them off and get out of debt.
Banks like higher rates because they make more money. They also can keep you in debt, which, in turn, causes you to need more credit. If you have to pay high minimum balances, you’re more likely fall short of money at the end of the month and need to charge more.
To get your credit card interest rates lowered, start by contacting your issuer, recommends finance advisor Gary Foreman in a CreditCards.comarticle. Representatives are often given extensive rules on rate reductions, so it takes some patience. You may need to spend some time explaining your situation in order to match qualification standards. If you have the option of a balance transfer, that’s even better. The bank does not want to lose all of the interest payments on your account. If the representative is unable to help, try a supervisor. The manager may be more familiar with the bank’s programs that allow for rate reductions.
In today’s economy, most Americans are living paycheck to paycheck. Without a sufficient cash cushion, they often turn to credit cards to make ends meet. This can lead to a destructive debt cycle.
Add mortgage interest, auto loan interest, and other loans to the credit cards, and a household soon sees its earning gobbled up by interest. Consumers should fight back by negotiating for lower interest rates. Banks don’t want to see balances transferred and accounts closed. That costs them money. Often, to save these profitable accounts, they are willing to lower interest rates.