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In the current financial climate, debt tends to snowball far too easily, while savings accounts fail to achieve proper growth. Although this current state is generally the norm, you can take a new approach to controlling your debt and savings accounts to turn the tables and reap the rewards. Here are three smart ways to make interest work for you and regain total control of your finances once again.
When you pay off your statement balance in full on credit cards or lines of credit, you eliminate the need to pay interest on those totals. You must make the statement credit payment by the given deadline to actively decrease the amount of interest you pay each month. Once you have paid down all your debt balances, continuing in this manner allows you to collect the credit card rewards without paying a single cent of interest.
If your debt payments are completely out of range for a quick payoff, keep the totals from snowballing out of control by taking advantage of a zero-interest balance transfer deal. You can divert the balances to the account offering this deal to pay off the total without fighting against high interest changes every month. Make sure the payoff term is reasonable for your financial status or you could end up paying the full interest total anyway if you do not pay it off in time.
The average individual savings account only offers an interest rate of 1 percent of your balance monthly, which adds up to barely any earnings at the end of the year. Switching to a credit union can net you up to 5 percent interest yearly, while CDs may offer even better rates. You must compare all the available options in your region and online to find the savings account type with the highest interest rate. Make sure to avoid accounts that have a monthly or yearly fee you must pay to keep the interest you earn in your pocket.
With the above approaches, you can decrease the amount of interest you pay on your debt accounts and increase the interest you receive on your savings totals. After setting up the appropriate financial accounts, commit to reviewing your finances once a year to confirm that you are receiving the absolute best rates possible for your situation.