141 votes

What should I do with $4,000 cash and High Interest Debt?

Every $1,000 you use to pay off a 26% interest rate card saves you $260 / year. Every $1,000 you use to pay off a 23% interest rate card saves you $230 / year. Every $1,000 you put in a savings ...
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122 votes
Accepted

Should I pay for a computer up-front or on finance?

This is pretty simple, and doesn’t require too much math. First, talk of liquidity is not necessary. You are currently paying $3000 extra on your mortgage every month. (Nice!) You certainly would ...
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121 votes

I have 9,000 cash. What debt should I pay first?

Generally, there's no particular "win" to paying off the larger debt first, all things being equal. Pay largest interest rate first. (Now, some advisors say there's a certain logic to paying off ...
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80 votes

What stops you from using fixed income in developing countries?

assuming the currency value with respect to USD stays stable in that year. This is where your analysis breaks down. The fact that the foreign bond pays a higher interest rate indicates that the ...
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  • 116k
79 votes
Accepted

Can I lend a small amount of my own money to a bank at the federal funds rate?

You can lend at any rate you like. Finding a borrower is a different matter, as is ensuring that the borrower pays it back. Few banks will borrow from you at the Fed rate. Currently, rates on savings ...
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  • 3,599
65 votes

What should I do with $4,000 cash and High Interest Debt?

If it were me, I would pay off the 23%er. That is as long as you don't borrow anymore. Please consider "your hair on fire" and get that 26%er paid off as soon as possible. From my calculations ...
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  • 75k
54 votes
Accepted

Is it possible to lock in a high interest rate in savings, when general interest rates are high?

Flexible savings accounts are almost all variable interest, meaning the rates go up and down with market rates. The reason for this is that if they did not, people could pay into the fixed interest ...
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  • 30.7k
51 votes

Pay everything now or gradually?

To put this into perspective, you are paying ~$1500 interest annually (gradually decreasing), or $132 monthly. All the while, you have money sitting in your bank account doing seemingly nothing. ...
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  • 3,074
50 votes
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Preapproved for mortgage loan but won't tell me interest rates

If you are truly preapproved (not just prequalified) then they are required to supply you with a Good Faith Estimate within 3 days. The interest rate will appear on that document. It's subject to ...
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  • 4,633
45 votes

How to rescue my money from negative interest?

I'd prefer having it (more or less) fluent at any time, if possible... And the Swiss National Bank (SNB) will do their darndest to make this a costly option. That's exactly the point of negative ...
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  • 1,179
37 votes
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Is my back-of-the-envelope calculation about taking out a loan to invest into the markets flawed?

Any scheme of borrowing money to "invest" is in fact a gamble and should be avoided. Stick to your own money for investments. Nobody can predict the market and neither can you. 4% interest ...
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  • 6,708
34 votes

What should I do with $4,000 cash and High Interest Debt?

The difference in interest is not a huge factor in your decision. It's about $2 per month. Personally I would go ahead and knock one out since it's one less to worry about. Then I would cancel ...
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  • 116k
33 votes

Does "monthly interest of 1.5% AER" mean that I will get a 1.5% interest every month?

"AER" means "Annual Equivalent Rate". This means that if you put in £100 on January 1st, it will pay you some amount of interest each month (roughly 1/12th of 1.5%, but actually more like 1/12th of 1....
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32 votes
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What does a mortgage percentage rate really mean?

The interest rate is the annualized interest rate you'll pay on the remaining principal balance each month. Since it's annualized, you'll divide the rate by 12, and pay 2.95%/12 = 0.24583% of the ...
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  • 116k
32 votes

What stops you from using fixed income in developing countries?

Because currency risk is not the only risk in this scenario. The risk of the developing country (the state) not servicing their obligations are the bigger risk, hence the very high interest rates. ...
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  • 1,476
31 votes

At 3% inflation rate, is $100 today worth $40 20 years ago?

$100 20 years ago is still worth $100 today. What changes is what that $100 can buy. Inflation is a measure of how purchasing power changes, and compounds over time. So a better explanation would be: ...
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  • 116k
30 votes

Can I lend a small amount of my own money to a bank at the federal funds rate?

Buying Treasury Bills is loaning to the U.S. government. The 4 week Treasury Bill with an issue date of 8/27 got a 2.098% investment rate. The 13 week Treasury Bill with an issue date of 8/29 got a ...
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  • 3,439
29 votes
Accepted

Did Greece really issue bonds to investors yielding 42% interest?

Your understanding is indeed wrong. Bond yield is the effective interest rate relative to the current market price of the bond, and it is anything but fixed. There was never anyone actually paying or ...
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29 votes

How to rescue my money from negative interest?

Withdraw your savings as cash and stuff them into your mattress? Less flippantly, would the fees for a safe deposit box at a bank big enough to hold CHF 250'000 be less than the negative interest ...
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28 votes

What should I do with $4,000 cash and High Interest Debt?

With all due respect to The David, the $1000 is best put against 20%+ debt, no sitting in checking as part of some emergency fund. I'd agree with the decision to pay off the lower rate card. Why? ...
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27 votes

How can bonds reach 0 and negative interest rates? why would someone buy them?

And how can bonds reach 0 and negative interest rates? 0% interest is simple. You just skip the coupon payments and get your money back when the bond matures. Negative interest rate bonds are issued ...
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  • 6,708
25 votes
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Paying off a loan with a loan to get a better interest rate

I don't know what rates are available to you now, but yes, if you can refinance your car at a better rate with no hidden fees, you might save some money in interest. However, there are a couple of ...
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24 votes

Is my back-of-the-envelope calculation about taking out a loan to invest into the markets flawed?

Personal rule for borrowing money in order to 'invest' in any kind of generally available thing: Assume your investment will lose all of its value and you lose your job and need to live off your ...
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  • 2,472
23 votes

Pay everything now or gradually?

Reasons to not close your debt: You can make more than 6.8% return somewhere else You fear an unexpected expense in which you need temporary cash Reasons to close your debt: Even if you believe you ...
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23 votes
Accepted

Are lower interest rates bad for the lending perspective of banks?

Many factors go into the methods banks use to determine what interest rates they charge on loans. Many other factors go into determining how profitable those loans are, or how readily consumers use ...
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  • 16.8k
21 votes

Preapproved for mortgage loan but won't tell me interest rates

This is definitely strange. I've had a number of occasions where I've contacted a bank and asked what their interest rates were on one type of loan or another, and they've always been very willing to ...
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  • 20.8k
20 votes

What is today's price of €15.000 given 15 years ago?

What you are positioning as a loan was not a loan at all. Your father bought something to be delivered in the future. Your aunt does not want to deliver it, so she should buy it back at whatever the ...
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19 votes
Accepted

Are banks really making less profit when interest rates are low?

profit has nothing to do with the level of interest rates. Is this correct? In theory, yes. The difference that you're getting at is called net interest margin. As long as this stays constant, so ...
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  • 6,849
19 votes
Accepted

Yield on municipal bonds versus treasury

In a lot of situations municipal bond returns are "triple tax free." No federal or state income tax and no AMT (Alternative Minimum Tax -- which is largely irrelevant at this point) liability. This ...
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  • 48.6k
19 votes

What stops you from using fixed income in developing countries?

The other answers are correct, but I would like to explain the problem from a different perspective: When some scheme seems to offer you free money for nothing, then you should always ask yourself ...
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  • 21.6k

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