New Interest Rates

By: EconomyWatch Content   Date: 3 November 2009

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An interest rate is essentially the cost of borrowing money. This borrowing, or loan, can be acquired in different forms, such as credit card loan, personal loan or home mortgage. The interest rates charged on these sources are established at the time of applying for the loan and remain constant for the entire life of the loan, unless in case of flexible interest rates. However, under extraordinary circumstances, an individual can approach their lender to set up new interest rates, which are lower than the pre-determined rates. Setting up new rates helps to fulfill the debt obligation faster.

New Interest Rates: An Easy Debt Management Alternative

Requesting for new interest rates is an excellent option for individuals struggling with credit management. Doing so, helps to reduce the burden of debt and re-establish credit ratings. Moreover, unlike other debt reduction options like debt consolidation and debt settlement, these rates are not reflected negatively on the credit report. In addition, most lenders are willing to help repeated defaulters to get back on track by providing new interest rates, thus ensuring continued and prompt repayment.  

Qualifying for New Interest Rates: Requisites

An individual need not be a defaulter, or on the brink of bankruptcy to request for new interest rates. In fact, any individual can easily qualify for new rates, provided they:

  • Have a good credit score and credit report without any late payment notations

  • Have a balanced debt-to-income ratio

  • Have a reasonable balance on their credit cards

  • Make more than the minimum monthly payment on cards

  • Does not have a credit card that is classified as ’sub-prime,’ which implies that the card is not secured or backed by an asset, since these are mostly marketed to individuals with bad credit

It is advisable to ask for lower rates every six months; especially in case of credit cards, as new interest rates can help to significantly lower the APRs.Although, anyone can apply for new rates; in reality, not everyone is provided one. A survey conducted by Synergistics Research Corp. in November, 2006, found that of the people who requested for new interest rates, only 78% were granted one. 


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