One of the things that really amazed me during this recession was the level to which interest rates dropped and I was able to take advantage of the decreased cost of borrowing money. My credit cards have reasonable interest rates (9.15% and 16% respectively) but my lines of credit were able to give me interest rates of 7% so I took the balance from my credit card that had the 16% interest rate and moved it to my line of credit. By doing this I’m able to save on the interest that I’ll be paying the bank while I repay the money. If I keep my payments the same as they were before I’ll pay my credit cards off that much sooner. This simple balance transfer is a great example of taking advantage of the great interest rates around.
Rates are going up
My simple example is just one way that I’ve used the current economic situation to save myself a bit of money on the debt that I’ve been carrying for years. While its never a great thing to carry consumer debt at least this way I’m not paying as much in interest for it. But rates are starting to go back up, at least in Canada they are. If you’re going to take advantage of these unbelievably low rates you might need to do it now before the rates go up too much. If you don’t know if you can do this or what your options are just go to your bank and talk to a financial adviser.
Paying down consumer debt
The whole idea behind moving balances from where I had them into different areas was done for a couple reasons: to decrease the interest I pay on them and to improve my cash flow. I have the consumer debt and there’s not much I can do about it the fact that I have it, but I can optimize how quickly it’s paid down and make sure that I’m not living from paycheck to paycheck. Now that the money moves have been done all I have to do is keep paying the same amount as before and I’ll be able to repay my debt that much faster.
Now that I’m going to be making more money I’ll also start paying more onto the debt as to get rid of it. The idea is to use the low interest rates to my advantage and maybe get rid of my bad debt once and for all.