Reduce the cost of your loans and debts
December 11, 2007
Most of us have debts of one sort or another, whether it is a mortgage, secured loan, unsecured loan, credit card, or even a combination of financial commitments. In many cases we end up paying a fortune on our debts, particularly when we have high interest debts such as credit cards and store cards.
However, even debts such as your personal loan or mortgage may be set at a higher rate of interest than you actually need to pay, so you may find that collectively you are paying far more than you need to each month on your debts.
In the current financial climate it is more important than ever to try and cut back on outgoings. Many households are struggling to make ends meet as a result of higher mortgage repayments, higher living costs, and even higher fuel prices.
Therefore any savings that you can make on your outgoings could prove to be a real help when it comes to managing your finances. In fact, cutting back on your repayments could help you to avoid missing or making late repayments, thus enabling you to avoid damaging your credit.
Mortgages and loans
If you have a mortgage or loan that charges a high rate of interest then it may be well worth looking to switch to another lender. Although the choice of loans and mortgages may be lower than in the past as a result of some lenders withdrawing products because of the effects of the credit crunch, you may still be able to find more competitive deals out there, and you could save money by switching from your current provider to another provider.
However, do bear in mind that with mortgages and secured loans you may face costly set up charges and fees with some lenders, not to mention financial penalties from your existing provider for early settlement, so you need to determine what these costs will be and weigh up whether it will still prove viable to switch.
Unsecured loans
If you have a high interest unsecured loan you will not normally face any financial penalty for paying it off early, and therefore it may prove effective to switch to a cheaper loan with another provider. Although unsecured personal loans are more limited at present, with a number of providers withdrawing these products from their range, there are still some good deals on offer if you take the time to compare, so you may be able to find a loan with a far lower rate of interest and reduced repayments.
Credit cards and store cards
Credit cards and store cards are known for their high interest rates, and you may find that you are paying a fortune in interest each month as well as over the term of the finance if you tend to spread your repayments. You could save money by consolidating your credit and store cards with a low rate consolidation loan, with which you can pay off your card balances and close the accounts.
Alternatively, if you do not have store cards you can transfer the balances from high interest credit cards onto a 0% balance transfer credit card. You can get some good deals on cards such as the Abbey, which offers 13 months interest free credit on balance transfers, the Barclaycard Platinum, which offers 14 months interest free credit, and Virgin Money, which offers 15 months interest free credit on balance transfers.
Alan Wright
11th December 2007
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