Five Ways to Reduce Stress with Low Interest Rates

Americans are stressed. More than 15 million have turned to yoga to help manage the tension from a sluggish economy, high unemployment, political turmoil, and financial woes. According to Dr. David Shukri of Providence Hospital in Southfeld, Michigan, “Americans work harder than any industrialized nation in the world.” And there’s very little relief from the stress. A study by Westin Hotels discovered that more than half of American workers fail to take all their vacation days, and 64 percent of their respondents have canceled vacations due to financial worries. Compare that with workers in Europe and Australia, who enjoy four-to-six weeks of vacation each year.

But if it’s true that every cloud has a silver lining, the one shining through these challenging times is the availability of historically low interest rates. If you want relief from financial stress, here are three ways to take advantage of them to take some of the pressure off your monthly bills.

Three paths to stress relief

     1. Refinance to a lower mortgage rate. The rule of thumb is that it's worth considering a mortgage refinance if you can get a mortgage rate that’s 1 percent or more lower than the one that you’re currently paying. With mortgage rates at all-time lows, that’s a good possibility for many people to shave off a few hundred dollars from their monthly mortgage payment. A low rate, however, isn’t the only thing to take into consideration. You’ll need to know your breakeven point, which is the length of time it will take for you to recoup your costs before you experience any benefits. To find this number, add up all your closing costs. Then figure out how much money you’ll be saving each month. Divide the former by the latter, and you’ll know the number of months you’ll need to stay in your home before you’ll break even.

     2. Get a new auto loan. Your mortgage isn’t the only thing that you can refinance. If that car loan is weighing heavily on your monthly budget, shop around to locate a good deal to refinance. You could shave a few hundred dollars off that monthly payment, especially if you’re refinancing a new car that was bought with a loan from the dealer. Start by shopping online, to find the best available rates. Then, take that information to your dealership to see if they’ll match it or at least come close.

    3. Lower your credit card rates. These days, credit card companies are happy to have customers who pay their bills on time. Call the 800-number on the back of your plastic, and request a lower rate from the customer service department. You’ll be pleased and surprised with their willingness to comply.

Did you know that the Consumer Reports Stress Index is currently at its highest level since April 2010? (Did you even know that there is a stress index?) If you’re a statistic, do what you can to reduce stress.  One way is to take advantage of lower interest rates. By doing so, you can move away from being a statistic, and into a more relaxed state.