Lower the Rate on All Your Loans

The Feds’ efforts to inject more life into the economy have torpedoed savings yields. But the flip side is lower rates for borrowers.

Credit cards. The average rate on an outstanding balance was recently 13%, but you can probably do better. Lowering your rate can be as simple as asking the issuer to give you a better deal; but you may save more by snapping up a 0% rate (usually for an introductory period of up to 21 months) for a balance transfer. You’ll likely pay a transfer fee of 3% to 4%. If you can’t pay off the debt during the introductory period, see whether shifting to a card with no transfer fee and a lower rate will benefit you more. The Simmons First Visa Platinum card, available to those with excellent credit, imposes no transfer fee or annual fee, and it has a 7.25% variable rate.

Or look into an unsecured personal loan to refinance credit card debt. The average rate for a 24-month personal loan was recently about 11%, according to the Federal Reserve. If your credit score is in the mid 700s or higher, you might get a rate in the single digits.

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Auto loans. Refinancing an auto loan could save you big bucks, and it’s less complex than a mortgage refi. Use the tool at www.bankrate.com/funnel/auto to see competitive local rates. Recently, Pentagon Federal Credit Union was offering rates as low as 1.99% to those who applied online to refinance. Plus, check out www.rategenius.com, which matches applicants with lending institutions. One caveat: If your current loan levies a prepayment penalty, it could cancel out the savings you’d get by refinancing.

Another option for credit card debt or a car loan: a home-equity loan (recent average, 6.9%) or line of credit (5.2%). Americans overindulged in home-equity borrowing during the housing bubble, and lenders are wary of extending too much credit. Still, they’re making loans again to homeowners with plenty of equity, and interest on home-equity debt is tax-deductible up to certain limits.

Or, if you are planning to refinance your mortgage, consider a cash-out refi, says Adrian Nazari, chief executive of CreditSesame.com, and use the extra funds to pay off debt. Average rates on 30-year fixed mortgages are about 4%, and the interest is tax-deductible.