If you need to borrow money, it makes sense to lessen the cost of credit as much as possible, this way you could either borrow more, pay back the loan faster or use the extra cash to pay down other debts.
So here are a few tips on lessoning your borrowing costs –
Loans
In general, the smaller the loan, the higher the rate of interest offered by lenders, so having your borrowing scattered across various loans, credit cards and shop cards will generally cost you more than having one loan of the combined debt.
In this instance it would make sense to look at loan consolidation to bring down your costs.
Credit cards
Having the right credit cards can drastically cut the cost of your borrowing. Search for cards that offer an interest free introductory period for balance transfers, and transfer all other credit card debt onto it.
Use the interest free period to pay down your debt, before the interest rate reverts to the norm.
Bank overdraft
If you are just looking for a small amount to tide you over until your next paycheck, speak with your bank. Most banks will offer a small overdraft facility on your account with no penalty.
Make sure you are authorised though, as the penalty for an unauthorised overdraft can be extremely high.
Your credit score
Probably the best way to cut the cost of your borrowing is to improve your credit score. Lenders will take into account your credit score, when deciding what rate of interest to offer you.
Some of the ways of improving your credit score is by paying your bills on time, and not applying for too much credit at the same time.
