So you’ve got a few credit cards, and you’re quite happy with them overall. Still, wouldn’t it be nice to save a little money on interest? It all adds up over time, and more quickly than you’d think. If you’re a good customer, you’d be surprised how easy it is to get a better rate.

Pay on Time, But Not Everything.

The most desirable customers for the credit card companies are the ones who make a payment on time every month – but don’t pay off the whole balance. After all, running no balance every month means that you pay no interest, and the company makes no profit. If you keep up the pattern of running a relatively small balance each month, then the companies will start falling over themselves to offer you better interest rates.

Threaten to Go to Their Competitors.

Have you ever noticed that it seems like every company offers a credit card? That makes the credit card industry extremely competitive. Collect ads and offers for better rates than your company has given you, and then phone them up and tell them all about it. A good rouse is to start the conversation like this:

“Them: Hello, what can I do for you today?
You: Oh hi, I was just calling to ask if there’s anything that you need to do to transfer my balance to this new card I’m getting?
Them: Well… may I ask what card that is?
You: Oh, I got the offer in the mail this morning. [Tell them all about the great interest rate and everything. You could even make things up – they won’t know].
Them: And you’ve accepted that offer?
You: I’m just about to, yes.
Them: Well, hang on… we might be able to offer you a better rate on the card you’ve got…”

The trick is in getting the company to think you’re just another fool who responds blindly to advertising, and they’re in danger of losing you as a customer. Don’t whine about how you’re such a good customer – they already know what kind of customer you are, but they definitely want you to stay their customer.

A fun alternative is to phone your current company, get an offer from them, and then phone around more and try to get them to beat it. Once it’s beaten, call your company back and let them know.

Drive a hard bargain, and be prepared to walk away (well, hang up). If you turn down their so-called ‘best offer’, hang up and wait half an hour, there’s a good chance that you’ll get a call offering you a better one!

It isn’t just on credit card companies that these tricks get results. It works because it costs a company so much to get a new customer (the ‘cost of acquisition’), and so it’s cheaper for them to offer you a better deal, just to keep you. Try it with your Internet Service Provider (ISP) sometime.

For all people shop around for the best rate, there are few who have taken the time to sit down and add it all up. After all, why would you bother? The answer is that understanding just how interest rates work can help you see how important small differences in rates and payment amounts can be.

Interest Rates are Compound.

It is important to remember that what you owe is compounded – that means you pay interest on the interest you owe from the month before. That means that if you’re paying 2% per month in interest, you’re not paying 24% per year – you’re actually paying 26.82%. Charging interest monthly instead of yearly is a trick to make it feel like you are paying a very low price for your borrowing.

A Thought Experiment.

Here’s a question: would you rather have $1 million, or $10,000 in a savings account earning 20% per year in compound interest?

Well, let’s see how that $10,000 would grow. After 10 years: $61,917. 20 years: $383,375. 30 years: $2,373,763. 40 years: $91,004,381. 50 years: $563,475,143.

So after fifty years, you’d have over $500 million?! Well, not so fast. Of course, you have to take inflation into account – if we say inflation is 5%, then that money would have the buying power that $10,732,859 does today. Still, that’s not a bad return on your investment of $10,000, is it?

That’s the power of compound interest, and the way the credit card companies make their money (it’s also the way pensions work, and the reason the prices of things seem to rise massively as you get older). Be very, very afraid of compound interest. Or, of course, you could start saving, and be very glad of it…

Compound Interest Adds Up.

Let’s work through an example on a more real kind of scale. Let’s say you have an average unpaid balance of $1,000 on a card at 15% APR.

You will owe $150 in interest for the first year you borrow. However, this amount is then added onto the balance, and interest is charged on that. The second year, you’d owe another $172.50, for a total of $1322.50. It goes on, with totals like this: $1,520.88, $1,749, $2,011.35.

After just five years at 15%, you’d owe double what you borrowed. And after 10 years, you’d owe four times what you borrowed! Bet you weren’t expecting that. If you let something like that carry on for long enough, you’ll end up paying back that credit card for years afterwards, paying back what you borrowed many times over and still not clearing the debt. Most people don’t work this out, and feel that the payments must simply be their fault for spending too much money to begin with.

One Percent of Difference.

One more thing. You might think there’s not that much difference between a card that charges 15% APR and one that charges 12% APR. Let’s see the difference the lower rate would make to that $1,000 borrowed for five years. Remember, after five years at 15%, you owed $2,011.35.

At 12%: $1120, $1254.40, $1404.93, $1573.52… $1762.34 after five years. So you’ve saved $249.01 from that 3% difference in APR – in other words, you’ve paid almost 25% less interest.

If you are in financial difficulties with numerous creditors hounding you for money that you simply do not have then it is essential that you look for a low interest debt consolidation program. Obviously, if you are falling behind on a handful of credit card repayments that have an average interest rate of 16%, say, then you don’t want to pay even more interest to clear the debt and you need a low interest debt consolidation solution.

Any low interest debt consolidation offer will seem fantastic to a person who is heavily in debt but you need to bear one important point in mind – the duration you are going to have the low interest debt consolidation in place for is likely to be a substantial amount of time. In reality a low interest debt consolidation does not save you as much money as you may first think on interest payments because they are in place for years, rather than months. To put it simply, the lower the interest rate, the longer the repayment terms.

You may be confident that a low interest debt consolidation loan is the right answer for you and, yes, it will take care of your immediate creditors but you will be saddled with loan repayments for a considerable length of time. Your first option may be to talk to your creditors and see if you can negotiate a longer repayment term with them at a fixed interest rate so that you do not simply pay off the interest of the credit each month. This is especially important for credit card bills and may be an alternative to a low interest debt consolidation loan.

A low interest debt consolidation loan should never be secured against your home or other property. This is because the majority of low interest debt consolidation loans are used to repay credit card debts and other unsecured loans and replacing this with a secured low interest debt consolidation loan would be disastrous. There is no sense in risking your home over a few maxed-out credit cards with late payments.

If you have got yourself into serious financial difficulty because you are unable to keep to a strict budget, even for a short space of time, then a low interest debt consolidation loan is definitely NOT the best option for you. Remember that a low interest debt consolidation loan requires you to be able to afford and keep to the repayment plan for a significant amount of time.

Low interest credit cards

A lot of people just look at low interest credit cards when they are looking to get a credit card for themselves. The credit card suppliers too advertise low interest credit cards more that any other kind of credit cards. However, should low interest credit cards be the only ones on your list when you are hunting for a credit card? Probably not. For some people, interest rate or the APR is probably the most important thing to look for when selecting a credit card. However, that doesn’t hold good for everyone. Low interest credit cards are good and should surely be on your list, but APR is not the only thing to look for.

Let’s start with understanding what an APR (annual percentage rate) is and where its importance lies. APR is simply the interest rate that is used to calculate interest on the balance in your credit account with the credit card supplier. There is no interest charge if you make the full payment of your credit card bill (by the due date). However, in case of a partial payment, you will need to pay an interest on whatever you owe the credit card supplier. The APR is backward calculated to get a monthly rate and the same is applied on your balance to calculate the interest for the applicable period.

That means, people who are not sure about being able to pay the full amount, every time, should surely look for low interest credit cards. A low interest credit card helps in reducing your total outgo by curtailing the interest you pay on your balance. So, low interest credit cards help in slowing down the rate at which your credit card debt builds up. Thus low interest credit cards are surely important for a particular group of people, as stated above.

Besides this group, there are others who don’t really need low interest credit cards. These people are capable of (and intend to) pay off their credit card bill in full every month. Their purpose in using a credit card is convenience and other benefits associated with the credit cards. So, be it low interest credit cards or high interest ones; it really doesn’t matter for them.

So the need for low interest credit cards is more felt by a particular group of people. However, even if you go for a low interest credit card, you need to pit the various low interest credit cards against each other (vis-à-vis the other benefits they offer) and then select the low interest credit card that is best suited to your needs.

So, first you need to evaluate whether you need to go only for low interest credit cards and then select the low interest credit card that fulfils your needs. After all, you don’t go hunting for a credit card everyday.

Are you thinking of obtaining a personal loan but you feel that you are not qualified because of your credit history? DO not lose hope, there is still a way for you to get that loan. If you want to obtain a personal loan despite having bad credit, then it may benefit you to read the following tips.

Find a lender

Looking for a lender that provides bad credit personal loans will not be a problem for you since bad credit personal loans have evolved and become competitive. Eventhough there is an improvement on this kind of loans, you will still be paying more compared to someone with a better credit standing since you are considered to be high-risk by the lenders.

Check your ability to pay

Before applying for the loan, you must be sure that you will be able to meet the monthly payments. It is important that you are able to pay regularly to improve your credit record. Make sure that you make the best out of the loan and not make your current status become worse than when you started. It is a good idea for you to make a list of all your expenses like your food stubs, rent, transportation expenses, food, clothing, utilities so that you can prevent yourself from over extension.

Consult with the credit bureaus

When obtaining a loan and you have bad credit, you must be sure that your loan will be recorded by the major credit bureaus since this is an opportunitity for you to improve your credit standing. YOu can also find out your credit score from them, knowing your credit score will help you during negotiation with a potential lender. Your credit score is a big factor that will determine whether the lending company will give you the money or not.

Determine how much you must borrow

Do some projections to determine how much you will borrow using a personal loan. Keep in mind that personal loans have higher interest rates but have shorter payment periods. Because of this setup, you can actually save some money because eventhough personal loans carry much higher interest rates when compared with other loans, the loan can be paid in just a few years unlike other loans that can stretch from 10 to 20 years up.

Personal loan versus credit card

The thing to take into account will be the interest rates for both the personal loan as well as that of the credit card. Most of the time, personal loans have lower interest rates compared to credit cards. Some lending companies do not like giving out personal loans since their is little profit in it but there are still a good number of companies that provide personal loans.
Compare and analyze

It is important that you do not limit yourself to just a few companies. Look around and try to get the best deal that they can offer. List down each lender's rates and deals and get the best one. Do your homework and choosing where to get that persona loan will be much easier.

Always remember to be responsible for all your obligations to avoid from getting ruined or getting dependent from banks that provide you with loans. You have the power to decide where you want your life to go, so you better make the best decision.