How Do Credit Card Companies Get Their Rates?

The Federal Reserve is raising interest rates again, this time by a half percent. The unemployment rate is still very high and many people have lost their jobs. Many Americans are very frustrated with the recession and very few see an opportunity for improvement. In this article I will explain why, how and where you can lower your monthly payments and save money.

We all know that interest rates are controlled by the government. Interest rates are indirectly controlled by the banking lobby. They like to keep them high so they make more money and profit from your loan and credit card balances. They also like to control your savings as well because it is their money that is backing your credit cards. There are hundreds of programs available to help Americans with low-interest debt consolidation loans and credit card management plans.

One in ten American households carry credit cards. These credit cards are used by many Americans every day. Many of these users carry numerous balances and are paying on these loans for many years. When interest rates are increased, many households are negatively affected.

The Federal Reserve lowers interest rates to cool the economy and make it easier to borrow money. Lowering the interest rates makes money available to be spent by consumers. This allows businesses to get the capital needed to invest in new products and services. Without the necessary funds, companies cannot grow or expand and many jobs are lost.

If your debt is causing you a lot of stress and you need to eliminate your debt then consider enrolling in a debt consolidation program. Debt consolidation will allow you to have one monthly payment that will cover all of your debt. The process is simple. You will talk to a debt counselor who will help you map your way through the process. In most cases, the counselor will consolidate your unsecured debts into one monthly payment. Then, you will make one small monthly payment to the agency, which holds the debt for you.

If your current interest rates are too high then you may not be able to qualify. Your credit counselor can assist you with this information. Your goal is to find a company that can offer you the lowest possible interest rates. Most debt counselors have access to a variety of lenders so you should not have any problems with finding a lender to work with.

Once you have found a lender to work with, you will fill out the online application. The next step is to enter information about your creditors. The more information you have regarding your debt, the easier it will be for your debt consolidation consultant to find a plan that will work for you. You will be given options on the type of debt consolidation loan, you will take out. Most of the time your interest rates will remain the same, but the terms will vary.

One thing to consider when trying to find a good interest rate is that the fees that you pay will affect this in a big way. Debt consolidation loans and lenders do charge fees. Some of them are non-refundable, which means they cannot be refunded if you fail to make your payments. These fees can make the today&s rates on debt consolidation loans a little bit higher than the rates you would find elsewhere.

Lenders charge these fees because they profit from the services you provide. They also want to know how much of a risk you present to their business. If you have poor credit and you are seeking help to consolidate your debts, lenders are wary. If you have bad credit, you may not be able to get approved at all. Therefore, the fees that are assessed are designed to offset the risk that the lender faces by approving a borrower without proper credit history and background.

However, some lenders do not use these criteria. Lenders who do approve borrowers still do set their rates based on several factors. For example, if you have poor credit, you are probably going to have higher rates than someone with good credit. If you fail to make your payments, you are also going to be charged a high interest rate. It is all about risk assessment.

The best way to find the best possible rate for debt consolidation today is to shop around. There are many companies that offer debt consolidation loans. You should definitely shop around and compare what each company has to offer. Make sure that you are aware of the charges for these loans before you sign on the dotted line. Then, you can get started on paying off your bills and repairing your credit score.