Finance Credit

Tips And Ideas For Credit Interest Rate

Published at 03/17/2012 23:43:59


Financial institutions rarely give credit for free. You will be charged a credit interest rate on the amount you borrow. This may vary from one state to another and from one creditor to another. In most countries, the credit interest rate is often a part of a larger monetary policy decided by the government. 

Step 1

The credit interest rate directly affects the cost of borrowing. Very low interest rate as work to your advantage as they lower the amount of interest you pay on a loan. Very high interest rates will mean that you will have to pay more to service you loan.

Step 2

Credit interest rate is affected by various factors- the most obvious being monetary policy. It may also be affected by inflation, risk of investment and deferred consumption.

Step 3

If you are planning to look for credit, shop around for the lowest rates. As earlier stated, a lower credit interest rate will lower you cost of borrowing meaning that you will pay less interest on a loan as compared to what you would pay on a higher credit interest rate loan.

Step 4

Be extra careful when shopping, you may be offered very tempting credit interest rates which you will later find out that they are introductory rates which will be raised once your grace period is over.

Step 5

For a credit card, you could transfer your balance to another card offering a lower credit interest rate. Although this may take time, it might be worth the wait. This is a short term solution and your joy might be short lived as the provider you moved to may raise interest rates.


Monetary policy tends to put a cap on maximum and minimum credit interest rate. If your need for credit is not urgent you could wait to take advantage of lowered interest rates. Though they might rise again, monetary policy is long term and may just give you enough time to repay the loan before rates are raised again. Going for credit facilities with a fixed credit interest rate is good for you. Though they might appear to be exorbitant at first, a fixed rate credit interest rate will cushion you against any changes in interest rates.


Get the most out of your credit score. Lending institutions will keep a list of borrowers. Using various factors like repayment periods, defaulted payments and many others, they will calculate your credit score. This will determine your eligibility of getting a loan. A higher credit score will mean you can easily obtain credit and at very favorable rates while lower credit scores will dent your chances of obtaining credit and if you are lucky it will be pegged at an exorbitant rate. Fix your credit score if you can, it might be your gateway to the best credit interest rate.


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