Win the
Money War by
Shopping for the Best Deals
by Robert K. Heady
Bank Rate Monitor
This
is war. I'm not talking about the possible one in Afghanistan.
I'm referring to the new battles you must now wage to protect
your pocketbook because of job layoffs, the clobbered stock market
and sickly bank CDs whose yields are headed even lower.
For now, the time is
gone when you could expect investments to keep gaining in value,
or merely shrug off murderous fees or other hijacking tricks
buried in the contract with your bank. You're going to have to
do a little brave homework, my friend just to keep from falling
more deeply behind.
Foolishly, millions
of Americans are still carrying 19.8 percent credit cards, overpayings
on their mortgages, and earnings piddling yields on their bank
savings accounts. With one phone call, they could get up to one-third
more on their CDs and shave tens of thousands of dollars off
their home loan costs. Yes, there are better deals out there,
on the Internet and in weekly rate tables in your newspaper.
Some examples:
Mortgages: Let's
assume you took out a $150,000, 30-year fixed-rate mortgage four
years ago at 8.25 percent. Your monthly payment has been $1,126
and you've paid $11,997 in interest to date. By refinancing now
at an average rate of 6.73 percent, your monthly payments drops
to $936, and your total interest cost on the loan will be slashed
by $51,364.
Check Web sites such
as www.interest.com and www.bankrate.com, and you'll see current
30-year mortgage rates as low as 6.06 percent at Smart Mortgage
Finance in Boca Raton, FL., (561-347-1760). The sites' calculators
even show you how much of a mortgage loan you can afford to borrow,
and how much interest you'll be able to deduct from your taxes.
Credit cards:
You're already losing the war if you're paying 19 percent or
more on your plastic not to mention getting hammered by $29 or
$35 fees for making a late payment or exceeding your credit limit.
The average fixed- or variable-rate card today charges less than
14.5 percent. Cardholders with good credit, who finance their
balance monthly, can apply for standard fixed-rate cards as low
as 6.5 percent at Pulaski Bank & Trust, Little Rock, AK.,
(800-980-2265). The annual fee is $35. Those who pay their balance
off each month and want a standard no-fee card will find an 8.15
percent variable rate at Chase Manhattan (800-413-5661).
Want better deals
on money accounts than the measly 1 or 2 percent that your bank
offers? No problem, and again, you can usually phone the
institution on their nickel. While the typical annual percentage
yield on MMAs is 2.95 percent nationwide, according to Bankrate.com,
Marketplace Bank in Maitland, FL., (877-658-2265) pays 4.4 percent
on a $10,000 deposit. By contrast, you only need a $100 deposit
to earn 4.31 percent at Bank of Internet USA in San Diego, CA.,
(877-541-2634).
There also are better deals on other types of bank accounts, as well, starting with the Web sites I mentioned. For example, on a $10,000 home equity loan, Sun Trust Bank in Kingsport, TN., (877-578-2265) charges 6.28 vs. the 7.56 percent national average. And on a four-year new car loan, the rate at Bank Independent in Florence, AL., (256-386-5010) is 6.47 percent compared with Bankrate's 7.83 percent nationally.
In today's tough times with the Dow plunging by hundreds of points in one scary week and the country on its huge military mission simply make sure you earn more where you save, and save more where you borrow. All it takes to win the money war is smarter shopping, getting rid of those high-rate, rip-off credit cards, and better discipline with your monthly payments and checkbook.
Editor's Note: Robert K. Heady (jrnl8888@aol.com) is the founding publisher of Bank Rate Monitor and is author of the book, "The Complete Idiot's Guide to Managing Your Money." Mr. Heady's columns appear regularly in the print version of the Bull & Bear Financial Report.
