Friday, March 28, 2008

$500 Phone call

Earlier today I was catching up with other blogs and came across this post at Paid Twice. She's thinking about starting an automated savings account and asked readers about their experience with auto savings/debits. A commenter mentioned a rate reduction on student loans and I started thinking about my student loans. I did ask if there was any way to reduce my rate a few months ago. They said no, not even with auto debit.

Instead of thinking well that didn't work with my loan I decided to give it another try. I called my loan folks and asked if auto debiting would reduce my interest rate. She though for a moment, did some typing, and found me a great nice answer.* Auto-debiting my monthly minimums will drop my rate .25%. Now a quarter of a percent on $1000 wouldn't get me that excited. But the student loan, despite my efforts so far this year, weighs in at just over $26K. I immediately pulled up a debt calculator do see what what the difference would be.

Interest Rate Months Interest Repayment Total Repayment
Original 6.8 111 9,113.85 35,118.79

New Rate 6.55 109 8,614.19 34,619.13

The difference? $499.66, which we'll round up for the sake of a nice title.

Now the plan isn't to take that long to pay the account. This year I've paid more than $1,900 and my first due date** is a week away. I've been thinking about different ways to attack my debt but plan on this loan biting the dust in 2012.

Not bad for 5 minutes of work.

*After a little thought it would need to be at least 1% for me to give it great. 2% would be amazing and I don't even know what adjectives I'd come up with for anything more than 2%.

**Well it was. My student loans pay down the balance and forwards the due date. My next due dates are in June and September.

1 comment:

Shuchong said...

Not bad at all! Fewer dollars of debt is always a good thing. Congrats:)