Consumers In Search of Debt Relief Need to Stop Being Lazy

Consumers and laziness

Many consumers today are looking for debt relief. Without knowing it, however, they have the solutions to many of their problems right in front of them. Due to the recession, now is not the time to be lazy about change or being proactive. Here are some things that ought to get addressed, because ignoring them will cost you over time.

Optimizing savings rates

Many people are not proactive with where they put their money. It's convenient to put all your funds in one bank and leave it, though there are higher interest accounts available. Justin Prichard, bank expert at About.com, said, "The best annual percentage rate consumers will get at traditional banks is about 0.75 percent APY. Internet banks can easily offer up to 2.25 percent.”

Though it seems like a small difference, over time it adds up. For instance, a $ 100,000 account which compounds monthly for five years, the 2.25 percent interest earns about $ 8,000 more than 0.75 percent rate. Prichard added: “People are creatures of habit. If their money is somewhere, and they’re busy doing other things, they don’t necessarily try to do better. But if people have a decent chunk of change, it’s worth it.”

Having an IRA set up

Despite their perks, many people are putting off starting their IRAs. If a 40 year old person opens an IRA and can save $ 5000 annually at 6 percent, they will have $ 291,000 by age 65. Whereas if he or she had started the account at 25, at the same deposit and interest rates, the account would contain $ 821,000.

The benefits of an IRA make those who don't take advantage look like they aren't exactly the brightest bulbs in the box, as they are geared to save money. It’s tax-free money and matched by many employers. People should start taking advantage of these as early as they possibly can. Time is the key to compound interest.

Take advantage of department stores’ rebates

A great way to find extra money is to take advantage of department stores’ rebates. A lot of customers are lax when it comes to cutting off the barcode, filling out the application and sending it in. Rebates can save people 10 percent off big purchases. When those items are dishwashers, refrigerators and computers, the savings are substantial. The key to finding debt relief is looking at small ways to cut back. Rebates are a great way to find extra money.

0 percent financing deadlines

Consumers also don’t normally pay attention to when their great 0 percent financing deal ends. A lot of stores are offering 0 percent for a defined time period. These are great to take advantage of, but consumers need to remember that at the end of the allotted period, interest charges start.

For instance, P.C.Richard and Sons sell TVs for $ 3,200, at 0 percent interest for 18 months. After the 18 months are up, the interest rate becomes 22 percent. Say a consumer pays $ 3,100 prior to the 18-month period and has a remaining balance of $ 100. If he or she waits one day after the offer expires, that person will owe $ 800. The first $ 100 was the outstanding balance, but they owe interest of $ 700 for the entire $ 3,200.

Savings are available

In the end, savings are available but consumers have to be actively involved in their management. It might seem like a lot to remember rules and deadlines, but if the actions bring savings to use towards things like debt relief, it's worth it.