lower-interest-rates

New to the Live Richer Challenge: Credit Edition? Learn more about it HERE.

 

Week 3: Credit Maintenance

Day 17: Lower Interest Rates

Today’s Easy Financial Task: Lower your interest rates.

How to rock this task:

  • Learn how to use a balance transfer to lower your interest rate
  • Learn how to use an installment loan to lower your interest rate

 

Hey there, Dream Catcher! A new day, a new task.

Last week, one of our tasks was creating a debt repayment plan. The amount of debt you owe makes up 30% of your credit score, so lowering your debt can do great things for your credit.

During that task, I mentioned this week we would discuss ways to reduce your interest rate while paying off debt. That day has come!

Did you fill out the My Debt List from Day 10? If not, do so now. I’ve created a My Debt List spreadsheet that you can access for free HERE.

Now let’s get to work….

There are two options for lowering your interest rate:

Option #1: You can transfer your balance from one credit card to another card that’s offering a sign on deal. This is called a credit card balance transfer.

Option #2: You can take out a personal loan with a lower interest rate to consolidate your credit card debt.

(If you do decide to do a balance transfer or take out a personal loan, don’t cancel the original card. Keep it open because it’s contributing to your credit history length.)

 

How to Find a Balance Transfer Card

1) Go to http://www.magnifymoney.com/live-richer-transfer to search for a balance transfer card that offers 0% interest for at least six months and has the lowest balance transfer fee.

Some credit card companies offer 0% introductory interest and no balance transfer fee – that’s ideal. A balance transfer fee of more than 3% is too high.

2) When you find a card, make sure you understand from the term online::

  1. The 0% APR introductory period
  2. What the rate will be after the introductory period expires
  3. The balance transfer fee
  4. What happens if you make a late payment (for some credit cards the introductory period will end abruptly, and you’ll even be charged penalty interest indefinitely if you pay late)
  5. How much of your balance is likely to be transferred. They may or may not transfer it all.
  6. That there isn’t any additional fine print

3) Once you’re satisfied with the balance transfer terms, apply for the credit card. Once you receive the credit card, call the number on the back of the card to speak with a representative about transferring your credit card balance.

The information you need to do the balance transfer is your original credit card account number and the balance you want to move.

 

How to Apply for an Installment Loan

We talked about using an installment loan to reduce the amount of debt you owe in Day 10, but it’s worth mentioning again here. Besides reducing your credit utilization, an installment loan is also a good way to reduce your interest rate.

If you qualify for an installment loan with a competitive interest rate, you can use the funds from the loan to pay off your credit card debt. Then, you make monthly payments on the loan until it’s paid off.

Here’s a refresher on how to find an installment loan:

 

1) Go to https://www.magnifymoney.com/shop/budgetnista to search for a personal loan that has low fees and a lower interest rate than your credit cards.

2) When you find a personal loan that has favorable terms, call the lender to confirm:

    1. The loan interest rate
    2. If there are any application or processing fees
    3. How long the loan term is
    4. Whether applying for the loan will trigger a hard inquiry on your report
    5. If there are any fine print or other fees you should be aware of

 

Important Tip: Factors that determine the full cost of an installment loan include the interest rate, fees, your monthly payment, and how long the loan term is.

Make sure to ask how much you’ll pay in interest for the entire loan term to find an installment loan that will save you the most money.

Ready, set, go ahead and get cracking on today’s task!

Transferring a balance and applying for an installment loan the first time can be intimidating, so feel free to reach out to your accountability partners(s) for support.

You can also reach out to our group in the Dream Catcher Forum.

Share what you’re doing today with your tweeps:

Today I’m lowering my credit card interest rates. Day 17: #Liverichercredit Click To Tweet

Live richer,

Tiffany

You can reach out to me here:

Twitter: @thebudgetnista

Instagram: @thebudgetnista

Facebook: The Budgetnista

Private Forum: Dream Catchers : LIVE RICHER

Thanks to our sponsor, MagnifyMoney, for today’s post. You can visit them HERE.


 

*** Need Help? Feeling Overwhelmed? Want to work with someone one-on-one to improve your credit? Netiva “The Frugal CrediTnista” is offering her renowned, full credit improvement services & consultations at a special discounted price just for Dream Catchers! Learn more and get the help you need. Start with Netiva’s FREE consultationHERE. ***

Want to work through the Live Richer Challenge: Credit Edition in a workbook? It’s part of a bestselling series and has already hit #1 on Amazon! Get your copy below.

 

My Lisa Rule: I have 4 sisters and Lisa is the baby (well she’s not a baby anymore). Of all of my sisters, I’m the most protective over her. Before I share any product or service with you, it must pass my Lisa Rule.

What’s the Lisa Rule? If I would not advise Lisa to use a product or service, I won’t advise you to either. YOU are my Lisas. I feel protective over you and your financial journey.

The products and services I recommend pass my Lisa Rule. Yes, I may be an affiliate and earn a commission off of referrals, but I would not recommend a product or service that I didn’t believe was helpful and useful.

 

The Challenge is sponsored by

  • Fijabi Julien-Gallam

    Who wants to be my accountability partner? I need one 🙁

  • MICHEAUX

    If paying off my collection debt wont raise may credit score, Would paying down the total debt on my credit report bring up my score?

  • Leilani Mayfield

    Since I am not employed at the moment, I feel uncomfortable filing for an installment loan. However, I did cash in my 401K so that I can pay off all credit card debt in full.

  • Casey

    I just did a partial balance (due to that particular cards limit restriction) transfer to a 0% percent for 15mo card last week. Even though my monthly payment will be much lower than what the card requires, I chose to take the amount I transferred / by 15. Otherwise, what’s the use, after 15mos I’m going to be paying interest if I didn’t pay it all off.

  • Lanita Brown

    I plan on sitting down tomorrow and processing about 6 balance transfers since NFCU is running a 2.99% for 12 months especially since they just increased my credit limit