Search this blog

Home About Contact

Search The Web

Custom Search

Monday, April 13, 2009

Stretching your $$$ during bad times

Last month, the government seemed to have reduced the interest rates. This was done in an effort to promote spending and therefore to revive the economy.

I noticed that Fixed Deposit (FD) rates that was at almost 4% is now at 2% per annum only.Since FD is the most simplest & safest method of making your money grow, most people would stash away unused cash in a FD account. But looking at the current situation, it is not as attractive to lock your cash in a FD account somewhere and let it lie there almost doing nothing. So what are the options that you have now? Either take some cash and spend it (main intention of the government) or start investing or pay off some your debts that carries higher interest rates. I opted for the 3rd choice after doing some homework.

The home loan I was servicing had interest rate of 5.99% per annum. After the Base Lending Rate (BLR) was reduced by the central bank, most banks cut theirs. The bank now has offered me an interest rate of 4.6% per annum. With this new rate, if I religiously continue to pay the monthly amount I'm currently paying, the loan would be settled within 12 years, instead of 24 years. What a difference it makes!

But no bank will call you an make their offers. They certainly would not want to reduce their profits that they make from you, would they? You will have to make the call and ask for a reduction. Most often, you will find that they are more than willing to accommodate your request. If you are no more within the lock-in period, then you have a better bargaining power on your side, as you can always do a refinancing with other banks.

Opportunities like this doesn't come very often. So, make good use of this bad economic times to your advantage. I believe I've made mine.

1 comment:

Anonymous said...

This is justine, a webmaster. Congratulations for maintaining such a good blog on Finance & money!!
I own some quality sites & blogs on-Debt, Real estate and Mortgage having good PR, internet presence and traffic. Yesterday when one of our forum moderators informed me about your blog, I visited it. Man, your finance focused & nicely presented posts really make me admit that the content of your blog posts are standard and relevant. Keeping in mind the quality information of your blog, we are planning to build up a nice link exchange relationship with you. We would love to have you as our link partner.
Please advise whether we should go ahead. Feel free to contact me at my email: justine(dot)anderson08(at)gmail(dot)com when you get online.
I am always online at Google talk, so we can discuss online also regarding link issue.

Awaiting your earliest reply. Have a nice day. :)