Low Interest Rates With Balance Transfer

Most Americans today have some type of credit card debt, and the amount owed on average goes up every year. Unfortunately, many individuals find that the amount they owe on credit cards is much higher than it should be with a certain level of income in play. With the lingering effects of the Great Recession still on the minds of many, it makes sense to investigate different options to reduce interest rates for items like credit cards, mortgages, and traditional loans.

Historically Low Interest Rates To Take Advantage Of

Central Banks around the world are providing lots of liquidity and lowering their interest rates. If corporations, banks and businesses can take advantage of these low interest rates, so can you. Right now is the best time to sign up for balance transfers. The lower the term the better. They can only go up from here.

The most common way to save money on a credit card bill will be through one of two ways:

  1. Balance Transfer Options
  2. Negotiating a Lower Interest Rates

Sign Up For A Balance Transfer

A balance transfer option is often the simplest method for reducing credit card bills and the overall amount paid. The credit card company that would be accepting the balance transfer would be making more money from cardholders having a higher card balance.

One caveat to finding a favorable balance transfer option is being able to pay credit cards on time for at least six months to a year is often a prerequisite for being able to transfer successfully funds to a card with a lower interest rate or a favorable introductory period.

Negotiate The Lower Rates

Another method for lowing credit card interest rates and overall payment requirements stems from calling up the credit card company to request a lower interest rate. This isn’t as hard as most people would think, and the process requires nothing more complex than a single phone call and a request for the lower rate.

Credit card companies get requests from customers to reduce interest rates on a frequent basis, and so most have a straightforward and official way to submit applications.

Things to look for when looking at a balance transfer option include:

  1. Introductory periods with zero percent interest rates
  2. Lower interest rates than are currently being paid
  3. Potential credit limit increases due to balance transfer activity

Whether a person decides to save money by transferring a balance or whether they feel a request for a lower interest rate might be a better idea, the amount of interest paid might be lower by anywhere from 5% to 15%. For individuals with significant balances on their credit cards, this could represent hundreds of dollars saved each year on money that would otherwise be paid solely to interest charges.

For example, if a person carried a balance of about $6000 and was burdened with a rate near 30%, his minimum monthly payments could top $170 a month. If that interest rate was lowered to something around 15%, those minimum monthly payments could drop as much as $50 every month, which means that paying that card off sooner would be possible.

Before attempting a balance transfer or trying to get a lower interest rate, it’s a good idea to pay credit cards on time and anything else on time that might impact a credit score. Each month of on-time payments makes it easier to get a substantial reduction on an interest rate.

Online Lending Services

There’s nothing wrong with getting a loan from your local bank. Local branch banks have been around for hundreds of years. The problem is that they have the costs associated with a brick-and-mortar operation. Before the Internet, these costs were a normal part of doing business. However, with Internet banks, you don’t need to go into a physical location to get a loan. Everything is handled right online.

Reputable Online Lending Brands

Ally Bank, ING Direct, Bank of Internet USA, PerkStreet, Connexus Credit Union, Prosper and of course Lending Club are all trusted names in the online lending industry. The sign up process is very easy, and can be completed in a matter of minuted. Because you’re not filling out paperwork, you’re also saving yourself space by not having to add more paperwork to your filing cabinet.

Go with a well-known name when doing business online. One of the criticisms of online banking is that you can’t walk in at any time and talk to your banker. While all banks are regulated and FDIC insured, it doesn’t mean that they won’t fail or that they have excellent customer service. The last thing you want to do is get a loan from an Internet bank that turns out to have poor customer service, can’t process your payments on time, and charges you fees for late payments as a result.

What Can You Do With The Money?

Loans that you get online are typically deposited straight into your bank account. This money can e used to pay off high interest debt, student loans, or consolidate several debts into one. By consolidating several high interest debt loans into one loan, you may be able to lower your interest rate, stretch out the payments, and give yourself some breathing room.

Application Process

The application process for online banks is similar to a loan application for a conventional bank loan. The major difference is that your application is processed online. Because of this, you’ll have to fax, mail, or scan and email all of your documents to the bank. The bank will review your credit score, let you know what documents you need to submit, and then collect any additional information it needs.

Typically, you’ll need to give the bank your most recent pay stub or tax return, your Social Security number, and you may need to provide the bank with a copy of your driver’s license. Any fees that the bank charges for the processing of your application will also have to be submitted though most Internet banks don’t charge fees for loan applications.

Making Your Payments

Before the lender deposits the money into your bank account, you must give the bank your bank’s routing number and your account number. With this information, the bank can then draft your loan payment directly from your checking account. The repayment process is simple and often automated so that you’ll never miss a payment.

Of course, you also have the option of mailing in your payment with some banks, but there may or may not be an additional fee for this. Likewise, payments handled over the phone with a representative may require that you pay a service fee for convenience.

Not only is it possible to get low fixed rate loans from online lending services, it’s the norm. Internet banks and lending institutions that operate completely over the Internet don’t have the overhead that traditional banks do. In a world where bank fees are trending up, this is one instance where savings really do get passed on to the customer.

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