Les taux d'intérêt sont-ils toujours importantsJanuary 24, 2018

Are Interest Rates Always Important

Interest rates are an important aspect of any loan or credit card account. The interest rate is how much you will have to pay when you borrow the money or make a purchase using your card. In very basic terms, if you borrow $100 and your interest rate is 11%, at the end of one year, you will have paid $111 ($100 principle plus $11 interest). 

Interest rates are certainly important, but they might not always be as important as people think they are. It depends on how quickly you can pay back what you have borrowed and how much you borrow in the first place. 

Avoid credit card interest

When you make a purchase with a credit card, you have until the due date after the end of the billing period (usually one month) to pay off all your purchases. If you pay off the entire balance for the month by the due date, you will not incur any interest charges. If you can do this month after month, it does not matter what the interest rate is on the credit card. 

Don’t borrow more than you need

Likewise, if you can pay off the loan in a few months, you will pay interest, but you will not pay a significant amount of interest. The key to taking advantage of this is to never borrow more than you really need to borrow. 

This can sometimes be difficult with loans. Peer-to-peer lending sites and bank personal loans usually only approve loan applications that ask for more than the minimum amount. This minimum varies, but it is usually over $1,000. Online personal loans are a good option for people who want to follow the strategy of not borrowing more than they need. These loans can be for as little as you need. The maximums are usually between $500 and $750. 

The interest rate could change

Another thing to keep in mind is that your interest rate could change. There are two types of interest rates: variable interest rates and fixed interest rates. Variable rates could change, but fixed rates will not change for the life of the loan. You could qualify for a lower rate, but you may be stuck with a variable rate that could change from month to month. Fixed rates are often higher than variable rates, but fixed rates will never change. You may pay a little more now, but if the variable rate moves upward, you will be paying less if you have a fixed rate. Of course, variable rates could also go down.

You should certainly understand the difference between fixed and variable rates and understand the “gamble” that you are making with a variable interest rate. 

Whether you are stuck with a variable rate that is headed in the wrong direction or you have improved your credit score and can qualify for a lower interest rate, it is always possible to transfer your loan to another place. For example, if you have a low balance (below $1000), then you can get an online personal loan to pay off the remaining money.

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