You're probably wondering how your credit score and save money relate. Well, it is to save money will help you pay for unexpected expenses, such as new tires for your car that might otherwise put you in debt, which could hurt your credit score. Have enough savings for large purchases can also help you pay less interest when you get a future mortgage or car because you will have more money to put down early on. credit cards to savings accounts, here are three ways to help you save money and eliminate your debt.
1. Get a high interest savings account
The average APY rate on savings accounts is nationally a meager 0.06%. Fortunately, there are a number of online savings accounts offering APY rate of at least 0.75%. High yield savings account is a great way to earn above average interest on your money while having available when you need them. Better yet, some accounts do not require a minimum for them or maintain a minimum balance in order to keep open open. Although you should not rely on a high-interest savings account to save for retirement, it is important to maintain an emergency fund that can support you for three to six months if you lose your income.
You might ask, I can not get a rate of about 0.75 percent if I put my money in a certificate of deposit (CD)? Although you can get a rate comparable to that of a CD, you will not be able to access the money until the term is up. This means you will not be able to tap into this money for months or even years. Your money should be available to you immediately, and a high yield savings account allows you to withdraw money when you need it, while continuing to earn much higher interest rate that an account of standard savings.
2. Pay off debt
It may seem obvious that the repayment of debt is important, but there are ways to reduce unpleasant interest charges, even if it takes you a little time to pay off your debt.
The first and best way to repay the debt is to make regular payments. When you make these payments, it is important that you always pay more than the minimum payment because the extra money will help pay the balance in a short time. This rule can be applied to all debt, including any loan you might have, and not just about credit cards. For loans, it is important to also decide if you want the money to be applied to the principal, the borrowed amount, or interest. In most cases, you want to apply the additional amount to capital because it could help you pay less interest in the long term, this decision also depends on whether the loan is fixed or variable interest.
If you are someone who regularly carries a balance on your credit card, you can also consider asking a balance transfer credit card that offers a 0% intro APR on balance transfers so you can move your debt from a peak in April to an account that you pay no interest over an extended period of time. Cards with a 0% APR on balance transfers also generally offer a 0% intro APR on purchases, which means you will not have to pay interest on purchases made over a long period of time in if you need to use the card. Note that you'll want to make sure that the card also no balance transfer fee so you will not have to pay a small fee to complete the transfer.
3. Know your credit score
Knowledge is power. This might not save you money directly, but it can help you in the long run, when you apply for a car loan or home. The better your credit score is, the higher the interest rate you get when applying for a loan or credit card. The lower interest rate can save you hundreds or even thousands of dollars over the length of an expensive loan.
In addition, knowing your credit score can help you apply for credit cards you're likely to get approved for and help mitigate the risk of being declined. Your credit score takes a little bit every time you apply for a new loan or a credit card, regardless of whether you are approved or not, so it's best to know where your credit score thus falls the odds are in your favor when you apply.
Although you can get a free annual credit report from AnnualCreditReport.com, you will have to pay to see your credit score. Fortunately, there are services that you provide your reports and your credit scores immediately after registration. And the best part is that most of these credit report monitoring services also monitor and alert you of any activity on your credit reports so that you can ensure that no fraudulent activity will harm your credit score . It should be noted that although these services do not provide you with your FICO score, they are designed for educational purposes and can provide a close approximation of where your credit score falls.
This post originally appeared on The Huffington Post.