Be Sensible About Interest Rate When Borrowing
Monday, May 2, 2011, 2:00 AM | Leave Comment
A day doesn’t pass when we don’t see advertisements for interest rate. It has become a way of life for many folks to know how much interest rate has changed on a daily basis in case they need to borrow money. Much of the press coverage concerns the Federal Reserve (Fed) and its chairman, Ben Bernanke, since he became the chairman in 2006. The Fed monitors the economy and makes changes to the key overnight loan rate that influences interest rates throughout the economy. Actually interest is the back bone of modern economy.
Interest rates play a major role not just in our economy but in our daily lives, especially when it comes to borrowing. And that’s what wee see and feel. It affects directly when it’s time for us to borrow money.
Develop smart strategy when borrowing
Use credit smartly to your own advantage, for your benefits. Use it as an important part of your financial strategies.
- Don’t use common sense. Use your own sense. Common sense got millions of folks in trouble to begin with. That means they borrowed more than they could pay back. Prioritize borrowing based on long-term value.
- Understand all terms and fine print. Review all terms and conditions and read all the fine prints before you sign the papers.
- Seek help immediately when the need arises. If your borrowing gets out of control, take immediate steps, seek help to solve the problem. Contact lenders directly to work out a repayment plan. Test yourself if you need credit counseling and then seek the help of a qualified and reputable credit counselor.
Mortgage interest rates
Interest rate is at historically low levels even though recently it has inched up. Mortgage rates are still low, as are home equity rates. Now may be a good time to get mortgage for your new home, refinance your present mortgage, or use your home’s equity to make home improvements, pay for education expenses, or consolidate debt. All come with potential tax advantages. To get a loan, first try your local bank or credit union. They might give you a better deal. Plus small banks and credit unions are involved in the betterment of the neighborhoods. So we help them, they help us.
Credit Cards
All credit cards are not created equal. There are differences in fees, interest rates. All benefits for using the card should be considered when choosing the one that makes most sense for you. With an average balance of $5,000, the difference between an 8 percent and an 18 percent rate means $500. You owe it to yourself to make comparison and select the one that’s good for you. Here again, your local banks may offer you a better deal. So check them out first.
In a Nutshell
Interest rate plays a big part in the national economy as well as in individual finances. Do your own research and borrow to your own benefits. Always check out your local banks and credit unions first for better deals.
