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If you have a history of on-time payments, your creditor may grant you a lower interest rate.

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Some experts say any loan above student loan or mortgage interest rates is high-interest debt, a range of about 2% to 6%.
Financial planners often recommend paying off “high-interest debt” before saving or focusing on other financial priorities.
Look into a balance transfer credit card or consolidation loan for lower interest rates on debt.

When you borrow money from a lender, they charge you interest, usually a percentage of your borrowed money. The amount of interest you pay, meant to offset the risk that you won’t pay your debts, is determined by the type of loan you take out and your credit score. A higher credit score, meaning you pay your bills on time, will get you a lower interest rate. 

The interest rate of your debt determines how much it will ultimately cost to borrow the money. It can also influence how quickly you pay it off and prioritize other saving and investing goals. Financial planners often recommend paying off “high-interest debt” before focusing on other financial goals, like saving, but what does that mean exactly? Which debts should be tackled aggressively, and which can be paid off over a longer term?

What is high-interest debt?

There isn’t a specific threshold where debt is suddenly considered high-interest. Interest rates are constantly changing, and everyone has a different tolerance for debt, making that figure a very personal one that’s continuously in flux.

However, Marguerita Cheng, financial planner and …read more

Source:: Businessinsider