3 ways to lower your interest rate

Jennifer Barrett
A free video tutorial from Jennifer Barrett
Acorns Chief Education Officer
4.5 instructor rating • 1 course • 26,059 students

Learn more from the full course

Acorns' Guide to Personal Finance

5 Steps to Building Wealth: Budget Better, Pay Off Debt Faster, Save and Earn More Money and Invest Wisely

46:33 of on-demand video • Updated January 2018

  • How to calculate your net worth.
  • How to start a successful side hustle.
  • How to set goals—and build a budget that will help you reach them.
  • How to ask effectively for a raise or a better job offer.
  • How to pay off debt faster—and pay less in interest.
  • All the basics of investing in stocks and bonds.
  • How to cut your expenses without feeling the pinch.
  • How to build a low-maintenance portfolio that will help you build wealth.
  • How to save more money (101 ways!).
English Paying less in interest on any debt you owe can help you pay down your debt even faster, and save you thousands in the process. So, how can you pay less in interest on the debt... you owe? One: Negotiate. If you have credit card debt, sometimes all it takes is calling your lender to get a better rate. Of course, it helps if you have good credit, a good payment history and a balance transfer sign-up offer... from a competitor. A 2016 creditcards.com survey found that three of four people who asked for a lower rate, got it. We've included a sample script in our resources section. A second way to get your interest rate down... is with a balance transfer offer. If you find that you can get a balance transfer offer from a competitor for a significantly lower interest rate... than you're paying now on your credit card debt, and you're unable to use that offer to convince your current company to lower your rate, it's worth doing the math to see if you should move your money over to a competitor and take advantage of that balance transfer offer. Here's what to consider. 1 How long does the special rate apply? If it's just one year, you need to be 100 percent sure you can pay the debt off fully by then. Once the special period ends, the rate usually jumps up significantly. It could even apply retroactively. So, check the fine print or ask the credit card company directly. Two: How much is the balance transfer fee? It's often a few hundred dollars or a percentage of the amount you're transferring. So take that into consideration when you're weighing how much you'll actually save. If your credit is really good—and we'll talk more about that in the coming lessons—you can ask them to lower the fee. It never hurts to ask. More than 44 million people have outstanding student loans worth about $1.4 trillion altogether. That's a lot of debt, and a lot of money you're paying an interest. Even if you're paying as little as $200 to $400 a month, you could potentially save thousands of dollars over the life of your loan by refinancing. Let's say you refinance $35,000 in student loan debt from a 7-percent to a 5-percent rate, with a 10-year term. You could save $4,218 in interest paid, and reduce your monthly payments by $35! Check online lenders like Sofi, Earnest and Commonbond, which often boast the lowest rates. Again, before you apply, make sure your credit is in great shape. I'll show you how to check it—and how to improve it—in the next section.