Have an overview of the financial situation
Is everyone well advised to have an overview of their financial situation? Respectively, knowing which interest rate to pay for the overdrawn checking account? And what return, for example, is achieved with life insurance? And how much these two amounts are.
It is important to deal with the topic
For those who are currently facing outstanding debts, now would be a good time to reschedule them, because there is currently a favorable interest rate level. This means that if someone, for example, has a current account with a negative balance of 8,000 USD and pays 10% interest, i.e. an amount of 800 USD per year, it would be worth rescheduling this amount on a cheaper loan. For example, a loan with 3% interest.
That would lead to an annual interest saving of 560 USD. Which can be invested in the reduction of the outstanding balance in order to further reduce the interest burden. It can be seen that it literally pays off to deal with your financial situation.
For outstanding accounts, it is important to know the effective interest rate
It is also important for the whole thing to know your effective interest rate. That means surveying the “true” interest rate, including costs and other fees. To make everything easier, it is advisable to use a loan replacement calculator as an aid. Especially with long terms, for example the financing of the home, even a slight deviation behind the second decimal place causes an enormous impact due to the compound interest effect. Either in a pleasing economic sense for the bank, or for its customers.
But before switching from a loan agreement with bad conditions to a new loan agreement with better ones, there should be clarity about the legal basis of the new loan agreement. All clauses and conditions should be understood. What happens if you are in arrears with the installments, or what the consequences will be if, due to an event, you have the possibility to pay back the entire outstanding amount at once. Especially in turbulent economic times like this one should be prepared for all eventualities in credit transactions.
There is considerable potential for optimization in financial services
Many bank customers do not habitually deal with their financial situation. It should be borne in mind that all customers who have a good credit rating, i.e. a regular work income that is commensurate with their financial obligations, have a good negotiating position with the banks, on the one hand due to the currently favorable interest rate level and on the other hand due to the increasing competition in the financial sector.
The opportunities to obtain information about providers and market conditions on the Internet have never been as attractive for bank customers as they are today. Of course, you can also go to your house bank after using the loan replacement calculator and try to negotiate better terms for the existing loan commitment with the printed new offer in hand.