SavvySugar

Find Out If You Could Qualify For Lower Interest Rates

SavvySugar — Tue, 26 May 2009 04:30:01 -0700

The APR on your credit card determines how much interest you'll be charged on your balances. So why pay more if you don't have to? If your credit score reflects your ability to use credit responsibly, then you should at least have an APR equal to other borrowers with your score.

Find out if your card has an APR that's higher than the rate you deserve by checking out cardtrak.com. The site lists the average interest rates for your credit card; for example, the average APR for credit scores 760 or higher is 7.45 percent. If you're paying a rate higher than the average, perhaps it's time to call your credit card company and negotiate a lower APR.

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Credit Scores by the Numbers: The Good and the Bad

SavvySugar — Mon, 16 Mar 2009 13:30:32 -0700

It's simple: the higher your credit score, the lower the interest rates accessible to you. Now that lenders have started being more attentive to the credit histories of potential borrowers, there's one more reason for you to pay more attention, too. Once you know your credit score, you should do everything you can to raise your number so that you save as much money as possible on interest rates. Here are a few more facts about credit scores according to FICO.

The median credit score in the US is 723.
The highest possible score is 850, while the lowest possible score is 300.
Most lenders require a score of at least 760 to get the best rates.
After 760, interest rates increase according to these score brackets: 700-759, 680-699, 660-679, 640-659, 620-639.
Interest rates increase significantly with a score below 620, because at that point lenders consider you to be in the subprime category.

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Ask Savvy: What to Say When Asking For a Lower Interest Rate

SavvySugar — Fri, 22 Aug 2008 09:30:07 -0700

Dear Savvy,

I currently am trying to pay off a high revolving balance on my Citibank MasterCard. I have a good credit rating (730-740) and am current on all my bills with no late payments. My current credit card interest rate is 14.99 percent. I heard that if you contact the credit card company and say that you are receiving offers for lower rates in the mail they would lower your interest rate. I would do this but I don't know what to say or what would be considered a reasonable interest rate. Can you help?

See my answer when you read more.

Because you're a reliable customer who pays her bills on time, you should be able to get your credit card company to lower your interest rate. Right now you're an ideal customer because you haven't defaulted on payments but you're also paying them interest, and Citibank wouldn't want to lose you to one of their competitors.

Say something along the lines of the script CBC News gave to shoppers during their mall experiment and led to six of ten shoppers getting their interest rates reduced. Here's the spiel: "I think I've been a good customer. I'd like to stay with you, but I really want you to lower the rate on my card. Can you help me?" If the customer service rep dares to say no, ask for a supervisor and repeat the script.

Three of those shoppers rates were offered rates half of what they used to be. While getting your 15 percent rate cut in half may be a long shot, you really have nothing to lose. The customer service rep will likely offer you a new rate first but that doesn't mean you should accept it, so aim low! With your medium to low risk credit score I'd estimate that you would be able to get at least a few percentage points knocked off, if not a handful. Don't hang up until you've gotten a good deal.

Have any of you had experiences with trying to get your interest rates lowered?

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Interest Rate Cut Not the Best News For Your Savings Account

SavvySugar — Thu, 01 May 2008 04:27:04 -0700

Yesterday the Federal Reserve announced its seventh interest rate cut since September, lowering the federal funds rate by a quarter-point to 2 percent. Interest rates are now at their lowest since 2004 and reflect the Fed's ongoing concern about a weakening economy. The prime lending rate that affects consumers and businesses dropped correspondingly, which could have a positive effect on some credit cards and loans. Also, homeowners with adjustable-rate mortgages should have benefited from the seven rate cuts as rates would have been reduced as the Fed has made their moves.

The rate reductions are bad news for savers, because the interest rates available on savings accounts are lower than they used to be. The average rates barely keep up with the country's 4 percent inflation, which essentially means you're losing money by saving. But don't take that too literally and abandon your savings efforts - shop around for the best interest rates, and keep in mind that earning any interest is better than earning no interest.

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What the Fed Interest Rate Cut Means For You

SavvySugar — Thu, 03 Jan 2008 15:41:31 -0800

It's a big deal whenever the Federal Reserve decides it's going to cut rates, and not in the pretend way that Christian on Project Runway thinks he's a big deal. Think of the Fed as a really powerful puppeteer with Chairman Ben S. Bernanke as the leader, and instead of controlling weird puppets, they determine courses of economic action. The economy touches so many parts of your life and well being, so when the Fed makes an announcement, you should definitely care.

So, how does the Fed's quarter percent interest rate cut on Dec. 11 affect you? A quarter percent probably seems dinky, but consider that interest rates were at four and a half to begin with. You know how your boyfriend's bad day usually has a direct correlation with the way your night goes? Interest rates act the same way with yields you get on your savings accounts. Yields - the rate of return you get on things like money market accounts, online savings accounts, and certificates of deposits - dropped when the Fed cut the federal funds rate.

The good news is that if you have credit cards with variable rates tied to the prime rate, your APR would have come down a bit. The Fed made it a little cheaper to borrow money when they cut the federal funds rate, so your credit card company should have responded by making it cheaper for you to borrow money with your credit card. Banks follow suit in these situations by cutting their loan rates, which gives you the opportunity to negotiate lower interest loans.

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Better to Put Your Money Under Your Mattress?

SavvySugar — Mon, 07 Apr 2008 06:50:48 -0700

According to the American Bankers Association, the average interest rate on savings accounts has dropped to just .47 percent. The Federal Reserve interest rate cuts may help those homeowners with adjustable-rate mortgages to pay lower interest rates, but the rates on savings accounts have taken a hit as the Fed has taken its actions.

The New York Post came up with this eye-opening example that makes clear just how ineffective some savings accounts can be for someone trying to save. Because ATM fees have continued to increase, making just one out-of-network ATM transaction each month on a $7,500 account would probably cause you to pay more in fees than you're making in interest. And if your account has a lower balance you'd be coming out even further in the red.

Shop around for better interest rates and banks that absorb out-of-network ATM fees. It just doesn't make sense to lose money by simply using your bank account.

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I'm Asking: What's the Interest Rate on Your Most-Used Card?

SavvySugar — Wed, 22 Apr 2009 11:00:32 -0700

All credit card rates are not created equally, whether it's due to your credit history, the carrier's unwillingness to budge on rates, your apprehension to ask for a lower one, etc. Most of you have one to three credit cards, and even among those your rates may vary. What's the interest rate on the credit card you use most?

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Fed Rate Cuts Could Continue

SavvySugar — Fri, 11 Jan 2008 04:07:43 -0800

Federal Reserve Chairman Ben Bernanke's speech yesterday was inconclusive, but he suggested that the Fed is prepared to cut the current short term interest rate by half a percent to keep the economy on track. This would bring the rate down from 4.25 percent to 3.75 percent and implies that he considers weak growth a threat to the economy. The Chairman said,

"The outlook for real activity in 2008 has worsened and the downside risks to growth have become more pronounced. In light of recent changes in the outlook for and the risks to growth, additional policy easing may well be necessary."

Bernanke also explained that the Fed isn't forecasting a recession this year, but it's something that can't really be measured until after the fact. Like how much weight you gain over a vacation. The next Fed meeting is set to take place from January 29 to 30, and that's when any new cuts would be announced. The last time they cut rates was December 11, 2007 when they reduced rates just a quarter percent.

We'll see how this interest rate news plays out at the end of the month.

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News Flash: Fed Cuts Interest Rate Again

SavvySugar — Tue, 18 Mar 2008 12:35:37 -0700

The Federal Reserve cut its federal funds rate this afternoon to 2.25 percent, making its sixth cut in the last six months. A weakening labor market, slowdown in consumer spending, a loss of confidence and crisis in financial markets, and a tight credit market were reasons the Fed used to support this most recent cut. Acknowledging the issues of inflationary pressures alongside a slowing economy, they stated "Uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.”

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News Flash: Fed Makes Emergency Interest Rate Cut

SavvySugar — Mon, 17 Mar 2008 13:03:40 -0700

In an attempt to avoid a financial market meltdown in the US, the Federal Reserve made an emergency rate cut on Sunday. The quarter percentage point cut applies to the discount lending rate to financial institutions, bringing the short-term lending rate from 3.5 percent to 3.25 percent. This cut only covers short-term loans that banks receive from the Federal Reserve and doesn't include loans to individual borrowers. This move called upon a Depression-era clause in the Federal Reserve Act that waives the ban on the Fed extending loans to nonbanks, as the rate cuts are extended to securities dealers, too. Federal Reserve Chairman Ben Bernanke said, "These steps will provide financial institutions with greater assurance of access to funds."

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