The interest rates on all of your credit facilities are there; you were given them when you accepted the credit that you applied for. Did you give much thought to the interest rates you were offered, or did you breathe a sigh of relief that you were approved? You should give it some thought. With the amount of credit that a person repays over their lifetime, any savings will add up. Thousands of dollars in savings if you have a mortgage. Even a small savings of one or two percent on everything will make a difference, I promise.
Using government website mortgage calculators, you can see the difference in a mortgage interest cost savings of one percent. A $300,000 mortgage over 30 years with an interest rate savings of 1% would save over $50,000. Credit card debt of $10,000 carried for 10 years with a 2% interest rate savings would save over $1,000. A $35,000 car loan for 7 years with a 3% interest rate savings would save over $4,800. A $20,000 line of credit utilized for 10 years with a 4% interest rate savings would save $8,000.
When you add up all of the interest cost savings in the preceding example the total amount of savings is a surprising $63,800. If that savings was instead invested in a retirement savings account, it would have been allowed to grow and you would be even closer to your retirement goals. Maybe you want to take a better vacation? This savings would allow you do that. You can’t put a price on a better piece of mind. Or alternatively, you could have other plans for the savings. The point is that it is your choice. You now know that you can have those interest cost savings and you can do with it as you please.
This savings would have cost you nothing but the knowledge of how to qualify for lower interest rates and perhaps some effort in keeping your credit report and score in order. I have heard the saying that knowledge is power. Knowing that you can save money with lower interest rates and then knowing how to get lower interest rates gives you more power. You have more choices when you have more money in your pocket.
My example will not be your current financial picture, it could better or it could be not as good. Your interest rate savings may be higher or lower. My goal is to get you to understand that you have control over the interest rates you are offered and the resulting savings that you receive are yours with relatively little effort. You choose what to do with it, instead of your hard-earned money going into the bank’s vault. I can show you what the banker is looking at when deciding to approve or decline a credit application. Want to know what the banker is thinking during a credit application? I can show you that as well. When you know what is being assessed, it is easy to give the banker what they want to see. You have more control over the credit approval process than you know.