Of course I am talking about interest rates, what else? In this golden era of historically low rates, we are all getting a bit used to things and my clients don’t settle for anything but a rate with a ‘4’ in front of it these days! But does rate size really matter so much? Not really when you understand that the day to day operation of your loan and linked accounts is far more important. What the banks ideally want for you to do is to get your loan, and pay the minimum repayment each month, once a month for 30 years. No thanks.
Interest is calculated DAILY, which means that every cent of your spare cash that is either in the loan itself as redraw or in an offset account (or both) is ever so slowly shaving a thin layer of interest off the big iceberg. Got a package with a credit card? Good! Use it! Don’t be afraid of that little card, (unless of course you are a danger to your financial health through impulse buying!) and all ESSENTIAL purchases/bills paid for with it. As long as you pay the monthly balance each month (and not a cent less) you will be free of interest, and as an added bonus all your salary is tucked away in or against your loan working away for you. So if your rate is 4.5% or even 6.5%, but you are not maximising your income and functionality available to you, they are both quite expensive. To summarise, rate helps a little, but it’s not ‘all that.’
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