With interest rates at record lows, you face a number of choices for managing your money. Whether you want to save, spend or invest, consider your options and choose the strategies that best suit your particular financial circumstances. Here are five tips for low-interest-rate periods:
• Consolidate debt. With interest rates at historic lows, it makes sense to consolidate debt into one low-interest loan. For example, if you have outstanding balances on several credit cards, consider transferring those balances to one credit card with the lowest interest rate. If you qualify, it may be a good time to apply for a home equity line of credit to consolidate debt or make a home improvement.
• Shop around for credit cards with the best interest rates. You may be able to get one with better terms than the one you are currently using. Or ask your credit card issuer to lower your interest rate to make it more competitive.
• Make large purchases now. If you’ve been thinking of making a major purchase like a house or a car, today’s low-interest rates make it a good time to finance big-ticket items. However, make sure you have a good credit record and can pay off the loan before applying.
• Order a free copy of your credit report. Review the report carefully to verify its accuracy and dispute any errors. Errors in your credit report may affect your credit score, and higher credit scores can mean lower interest rates. To order a free copy of your credit report from each of the three major credit bureaus every 12 months, and to purchase your credit score, visit www.AnnualCreditReport.com or call toll-free (877) 322-8228. If your score is lower than you’d like, pay down your balances and pay bills on time to raise your score.
• Keep saving. Just because standard savings accounts aren’t paying a lot of interest now doesn’t mean you should stop saving for your future. Your savings will still accrue, you’ll be less likely to spend it, and you know it will be safe. If you can afford to lock up your money for a while, longer-term Certificates of Deposit (CDs) typically pay the highest interest rates.
Information provided by Webster City Federal Savings Bank, 820 Des Moines St., Webster City, 515-832-3071, www.webcityfed.com.