5 rules for saving money on interest

Canadians fork over billions of dollars in interest every year. Why? Because they either won’t negotiate with their lenders, or because they can’t.

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Why can’t they? Well, if you’ve been a naughty borrower, it’ll show on your credit report, and it’ll tell lenders that you’re less credit worthy. Want to save on interest? Follow these 5 rules:

Pay your bills on time.
Being a day late and a dollar short is just as bad as missing by a mile. Set up automatic payments for most of your bills. For the ones you need to check each month, make sure you pay ‘em at least three working days before the due date.

Review your monthly bills.
Hey, mistakes are made all the time. If you aren’t checking over your bank statement and credit card statements you’re a dope.

Know how much you’re paying in fees and interest.
People assume nothing changes. So they stop looking how much interest they are paying and any additional fees that may be tacked on. But changes happen all the time. If you hear in the news that the prime lending rate has gone up, watch your statements.

Don’t go over your credit limit.
Your credit score will take an immediate hit and drive your interest rates up. Ditto dipping into your overdraft protection too often.

Lose the retail credit cards.
Why would you carry a wallet-full of cards that charge exorbitant interest and can muck about with your credit bureau report willy-nilly?  You may not realize it, but the credit bureaus take the word of the credit granters when they report on your credit behavior.

When I lost a department store credit card from what used to be a Canadian department store, they allowed auto charges to go through on the card even though I’d reported it lost. Since I had moved and never received the goods, I refused to pay. They dinged my credit history. (Yeah, I fought it, but all they had to do was stick to their story that I was a dead-beat and the credit bureau threw up its arms!) Since I’m not a credit user, it was no biggie for me. If I’d been up to my eyeballs in hock, I would have been paying more in interest immediately!

28 comments on “5 rules for saving money on interest

  1. We just went through a review and restructuring of all of our bank accounts and credit cards. We will now save about $700 per year. Add what we're now saving on our cell, home phone and utilities and that number goes up to over a $1,000! Some might say this doesnt sound like much but if you were offered a that money in a cheque at year end it would seem like a good deal. We're not frugal but decided if we review our business operating costs each why not our personal? But there have already been a few really great articles covering this idea.

    Go find some money!

    Reply

  2. The most important point about this article is that debt is expensive. Reviewing your accounts and your statements is a critical first step in getting a handle on your debt. Create a personal budget, use a budget calculator, do whatever you need to create some cost cutting opportunities to free up some cash to work at the debt is the second step. Get your bills paid on time, always pay over the minimum and before you know it, with a solid plan in place, you'll be debt free and finally get to keep some of that hard earned cash in your pocket. http://www.solvingdebt.ca/blog/alberta-bankruptcy

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  26. Great advice and something I will have to amend my ways when it comes to this kind of things. I often just pay my bills without even taking a look at them. I think personal finance is boring but I understand that if I want to save money I have to focus on this and try to implement what is advised here.

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