Consumers and laziness
Many consumers today are looking for debt relief. Without knowing it, they do have tools to solve a lot of their problems right at hand. We’re in a recession, and now isn’t the time to be lax about being proactive or change. Here are some things that need to be addressed because if they aren’t, the will cost dearly in the long run.
Optimizing savings rates
Many people are not proactive with where they put their money. It’s convenient to put all your funds in one bank and leave it, though there are higher interest accounts available. Justin Prichard, bank expert at About.com, said, “The best annual percentage rate consumers will get at traditional banks is about 0.75 percent APY. Internet banks can easily offer up to 2.25 percent.”
Though it seems like a small difference, over time it adds up. For example, on a $ 100,000 account, compounded monthly for five years, the 2.25 percent interest earns about $ 8,000 more than 0.75 percent rate. Prichard also said: “People are creatures of habit. If their money is somewhere, and they’re busy doing other things, they don’t necessarily try to do better. But if people have a decent chunk of change, it’s worth it.”
Having an IRA set up
Despite their perks, many people are putting off starting their IRAs. If a 40 year old person opens an IRA and can save $ 5000 annually at 6 percent, they will have $ 291,000 by age 65. Whereas, if a person had started an account at age 25, with the same deposit and interest rates, the account would have $ 821,000.
The benefits of an IRA make those who don’t take advantage look like they aren’t exactly the brightest bulbs in the box, as they are geared to save money. It’s tax-free money and matched by many employers. People should start taking advantage of these as early as they possibly can. Time is the key to compound interest.
Take advantage of department stores’ rebates
A great way to find extra money is to take advantage of department stores’ rebates. A lot of customers are lax when it comes to cutting off the barcode, filling out the application and sending it in. Rebates can save people 10 percent off big purchases. When the items in question are things like dishwashers, refrigerators or computers, the savings are substantial. The key to finding debt relief is looking at small ways to cut back. Rebates are a great way to find extra money.
0 percent financing deadlines
Consumers also don’t normally pay attention to when their great 0 percent financing deal ends. A lot of stores are offering 0 percent for a defined time period. Consumers want to take advantage, but they need to bear in mind that they need to pay it off before interest charges start.
For instance, P.C.Richard & Sons sells $ 3,200 televisions with a 0 percent financing rate for 18 months. After the 18-month period, the interest rate is 22 percent. If someone pays $ 3100 before the 18 month period is up, and has a balance outstanding of $ 100. If he or she waits one day after the offer expires, that person will owe $ 800. The first $ 100 was the remaining balance, but $ 700 is the interest owed on the entire $ 3,200.
Savings are available
In the end, savings are available but consumers have to be actively involved in their management. It may seem like a lot to remember deadlines and rules, but if one action brings savings to apply toward debt relief, then it’s worth it.