Why are interest rates so low? We are living in interesting times, and these historically low interest rates are the result of the Federal Reserve attempting to boost growth during the present conditions. If you are in the market to borrow money, or perhaps refinance your mortgage, you likely wonder how these rates will affect you. Is now the time to take advantage of the moment, or should caution prevail? The answer depends on the ways in which you could benefit personally, based on your credit score.
Low Interest Rate Benefits
As long as interest rates remain low, businesses should have access to the credit markets. The economy needs ample access to credit to grow. If you have a small business, you know the importance of available credit. If you were thinking about taking out a personal or business loan, low interest rates will save you a considerable amount of money over the loan’s term.
Even if your current mortgage rate is relatively low, these historically low rates are the opportunity of a lifetime when it comes to refinancing. Not only will you pay less each month in interest on your mortgage payment, but the money saved comes at a good time. If you are concerned about having a financial cushion right now, mortgage refinancing is a prime way to build it.
Of course, mortgage refinancing has its own costs, usually a small percentage of the loan, so you must do the math to determine whether making such a move in this low interest rate environment is right for you. Make sure to keep track of all fees.
Student Loan Refinancing
While you cannot refinance federal student loans, you can move these loans to a private lender. Keep in mind that doing so will make you ineligible for student loan forgiveness or similar programs. If that is not a consideration, you can obtain a lower rate on your refinanced student loans in the private market.
Credit Card Debt
If you have significant credit card debt, a low interest rate environment provides the circumstances under which to pay it down. If you have a variable rate card, you should notice a dip in the interest rate, but this is likely only for the short-term. Consider transferring a high-interest credit card balance to one with a much lower rate. Another option is paying off that high-interest balance with a personal loan at a lower rate.
Paying down credit card debt helps you in two ways. Not only are you working on eliminating your debt load, but you are also improving your credit score. That means you can take better advantage of these low rates if you want to buy a home or refinance your mortgage.
If you want to achieve your best credit score to take greater advantage of these historically low interest rates, contact ScoreMaster today. In just 20 days, using ScoreMaster’s gamified system, you can achieve your best possible credit score. The enrollment process takes just one minute, and you are on the way to taking actionable steps to achieve your best score while securing the lowest loan rate possible.
*Legal Disclaimer – ScoreMaster is a patent-pending educational feature simulating credit utilization’s effect on credit scores via payments or spending. Your results may vary and are not guaranteed.