It’s a recurring theme for financial success: know what you’re getting yourself into. Whether you’re opening a checking or savings account or applying for a loan, reading the fine print is one of the best ways to ensure you fully understand the financial product. Below, learn how to save money by paying close attention to the terms and conditions.
Know your loan terms
While applying for a loan is common practice, it’s not a decision you should make lightly. Whether you’re financing a car, opening a credit card, or purchasing a house, don’t just automatically sign on the dotted line. Take some time to dig into the terms. Read loan documentation carefully, so you understand the repayment plan, the interest rate, when your payments are due, and if there are fees. These are all important things to know because they can have a direct impact on your money.
Interest rate: The interest rate is one of the most important aspects of a loan to understand. This plus the length of the loan is what determines the total cost of financing, so you’ll want to pay careful attention here. And don’t forget to dig a little deeper. If you’re trying to save money by comparing rates for a credit card, for instance, don’t just look at the advertised interest rate. Low introductory rates can skyrocket after a certain period of time or if you don’t meet certain requirements. Read the fine print and you’ll truly be able to find the best deal and ultimately save money.
Fees: Be sure you understand any fees you could incur. For example, did you know that some loans have a prepayment penalty? Take note of whether you’ll be penalized for paying off early. Other fees could include:
- Fees for missed payments
- Overage fees
- Balance transfer fees
- Annual fees
Understanding the rates and fees associated with your financial product will help you keep a handle on your finances, find the most attractive options, and ultimately save.
Much of the wisdom above applies to deposit products, as well. Just because an account is earning you money doesn’t mean you shouldn’t examine, question, and shop around. For instance, do you know what fees accompany your retirement account? How about your checking account?
On the other hand, the dividends you earn might be attractive, but read the fine print to find out what you have to do to qualify for those best rates. Does the rate change at different balance levels? Know the details to make the most of your cash.
When in doubt, ask questions
The fine print can sometimes seem difficult to navigate. If you don’t fully understand what you’re signing, stop and get more details.
The moral of the story is to never sign anything you don’t understand, especially when it comes to financial agreements. Being smart about your money doesn’t just mean getting your hands on more of it – you also want to figure out how to make the most of the money you have. Choosing the very best financial products is a big step in the right direction.
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