April 17, 2020
CNBC Make It is posting a new financial task to tackle each day for a month. These are all meant to be simple, time-sensitive activities to take your mind off of the news for a moment and, hopefully, put you on sturdier financial footing. This is day 10 of 30.
Only about 25% of homeowners know their mortgage rate, according to a recent survey from Bankrate, while more than half of people with credit card debt don’t know the interest rate they’re paying on their balances, a 2018 CreditCards.com survey found.
If you don’t know your interest rates, you don’t know how much you’re really paying for something. And you could be missing out on a better deal. Today, look up the interest rates on your financial products, including any credit cards, savings accounts, loans and your mortgage, if you have one.
The current interest rate for your credit card, which changes periodically, is listed on your monthly statements and, typically, on your online banking portal. You can also call and ask your credit card company. If you consistently make your payments on time, ask your card issuer for a better deal — chances are they will lower it. Keep in mind that the average rate is 16.14%, according to CreditCards.com.
Mortgage rates are currently at some of the lowest levels since the Mortgage Bankers Association began tracking in 1990, though they have been shifting dramatically from week to week due to coronavirus uncertainty. Still, if you own your home, keep an eye on rates. If you are in good standing with your lender, it might make sense to refinance when rates sink.
If you’re paying off student loans, knowing your interest rates can help you devise a repayment plan. To save the most on interest, after making minimum payments on all of your loans, direct any extra money toward the loan with the highest rate first. Another strategy is to concentrate on repaying the loan with the lowest balance first, regardless of interest rate, to build up momentum.
Once you know the interest rates on your loans, which you can find on your student loan payment portal, you can decide which repayment strategy makes more sense for you. If you have private loans, you may also be able to refinance for a lower rate.
When it comes to your savings account, look for higher interest rates. While rates have been dropping compared to a year ago, you can still find online high-yield accounts offering over well over 1% APY. Again, this is variable, but it’s much higher than the national average savings account rate of 0.07%.