How to Keep the Interest Low on Your Debt

Lenders charge borrowers an interest rate when they borrow money. This represents the borrowers cost of borrowing money for an automobile or home or using credit cards to make purchases. The interest rate a creditor charges you to borrow money will be based on several factors, including your credit history and the current rate of inflation. Taking steps to keep the interest rate related to your borrowing low can represent a savings over the course of the loan or, in the case of credit cards, a reduction in the amount you have to repay.

Instructions

1

Secure the best possible interest rate by verifying the accuracy of your credit report. Request and review your credit report on an annual basis to stay on top of any possible mistakes or errors that may show up. Take advantage of the ability to order a free credit report each year by visiting AnnualCreditReport.com. AnnualCreditReport.com processes requests for each of the three major credit bureaus. Making sure your credit report is accurate and free of errors will help you achieve the best possible credit score, and thus interest rate, based on your financial history.

2

Shop around for the best rate when applying for loans and credit cards. When applying for home or automobile loans, investigate all of your options. Ask local credit unions and your neighborhood bank if they offer loan products with lower interest rates for credit union members or current customers. Check the interest rate associated with credit card offers against interest rates offered by other credit card companies. Keep your local bank and credit union in mind as well when investigating credit card offers.

3

Stay on top of your credit to keep interest rate hikes at bay. Creditors can increase your interest rate after a late or missed payment. In addition to the interest rate hike that may occur with your current creditors, late and missed payments reported on your credit report can hurt your chances for future opportunities for low interest rate loans and credit cards.

4

Talk to your creditors and ask them for a lower interest rate. Some creditors may offer customers with a stellar payment history a lower interest rate. Consider switching to a card with a lower rate if a creditor refuses to offer you a lower interest rate. Avoid scams offered by companies promising to contact your creditors on your behalf and get you a lower interest rate. These companies often charge a fee and don't deliver on their promises.