Interest rates have been historically low for the past few years and the federal funds rate – which is what other interest rates are based on – is currently close to 0% and the Federal Reserve has mentioned that there are plans in place to keep it this low until at least 2023.
When interest rates are this low, it provides you with the ideal opportunity to use them to your advantage. Here are some ways in which you can do this:
Consolidate your Debt
if you’re unfortunate enough to be carrying balances on several credit or store cards, applying for and obtaining a debt consolidation loan can help get all of these repayments under control. Debt consolidation loans will often carry lower interest rates than those being charged on store and credit cards and you’ll also only have to worry about making a single repayment each month instead of juggling multiple installments.
Transfer Credit Card Debt
Should you not be keen on the idea of obtaining a consolidation loan, you may still be able to reduce the amount of money that’s being paid towards interest charges by using a credit card that has a lower interest rate.
Some credit cards have introductory offers whereby you will only be charged interest after a predetermined period of time – and this can be anywhere between 12 and 18 months. If you’re confident that you’ll be able to repay your existing consumer debt within that time, this option could save thousands of dollars in interest charges.
Refinance Existing Loans
If you have an existing mortgage or student loan(s), now is the time to think about refinancing them wherever possible. Your new loan will carry a lower interest rate, which will save a fair amount of money over the long term. Whenever possible, see if you’ll be able to lock in the lower interest rate by means of a fixed-rate loan.
Purchase a Home
If ever there were a time to purchase a home, now would be it. While home prices have been steadily rising in some parts of the country, the historically low interest rates have made it easier than ever to purchase your very own piece of real estate.
Before purchasing a home though, ensure that you’ll be able to comfortably make the repayments without going into debt if interest rates suddenly rise at a later stage. If possible, apply for a fixed-term mortgage to help prevent this from happening.
Save or Invest More
Lower interest rates mean that you get to keep just a little bit more of your hard-earned money than before. However, if you want to use this windfall to your advantage, the best way to do so will be to place it into a savings or investment account. This will enable you to boost your savings without having to scrimp or save elsewhere in your budget.
As you can see, there are several ways in which the currently historically low interest rates can be used to your advantage. If you’d like to learn more about investing any surplus funds you have, contact us today.Continue reading