Reddit's February challenge---improve your interest rates---can help you pay your debt off faster or pay a lot less over time. Here's my experience.

Last month, I participated in the first of Reddit’s 30-day financial challenges—get on top of your credit. That was an easy challenge from me since I already subscribe to credit monitoring services.

This month, things get a little more complicated. February’s challenge actually consists of two parts.

I stuck with the first part of the challenge—improve you interest rates. (I’ll talk about the second part of the challenge a little bit below as well).

Here are the steps I took to improve my interest rates.

Compile info on each debt

The gist of this step is to compile information on each of your debts so you know where you stand. Include the type of debt, the amount owed, and the interest rate.

Luckily, the only debt I have is my student loan. I signed into my account and checked the details of my balance. There I found my interest rates. My student loan is consolidated into one payment, but technically it’s four separate loans (one for each year I attended college) with four separate rates, as you’ll see below.

In the grand scheme of things, I don’t have the highest student loan debt (although it doesn’t feel like that sometimes) and I have a loan through a single borrower. Plus, I have relatively low interest rates.

For those of you that have much higher debt and rates that are subject to change, you may want to take an additional step and consider refinancing.

When you refinance, you consolidate all your loans through one company and get a much lower interest rate. Check out these banks that offer the best refinancing deals.

On the other hand, you can also try one of two different methods of paying off your debt: The snowball and avalanche methods.

The snowball method involves paying off your lowest debt off first regardless of interest rate while the avalanche method involves paying down your debt with the highest interest.

Call and request a lower interest rate

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This step specifically focuses on credit card debt. If you need to carry a balance from month-to-month, call up your credit card company and request that they lower your interest rate.

The credit card I use for most purchases is the Capital One Platinum Credit Card. It has a fairly high APR of 26.99% (Variable), which is why I pay it off in full each month.

However, I decided to upgrade my card instead—something I’ve been meaning to do. Since first applying for the Capital One Platinum Credit Card, my credit score has grown a lot. I qualified for way better cards which I was quite pleased with!

Build a second tier to your emergency fund

If you don’t have an emergency fund, or you have one that is lacking, this step encourages you to start building a second tier to your emergency fund by opening a high interest savings account that pays at least one percent interest.

I have a savings account through my local credit union, which offers me a measly few cents in rewards, so I decided to look around at online accounts.

I started with the Capital One 360 account since I’m already a Capital One customer. It’s a simple account that offers a decent, but not the best APY. For accounts over $10,000 you’ll get a 1.5 percent APY, but anything under earns 0.85 percent—still better than traditional banks.

I took a look at the Discover® Online Saving Account next. I was a little more impressed since they offer a 1.5 percent APY for all accounts, no large balance required.

Other than the APYs, most of the features are similar, as are other online savings accounts. Ultimately, I decided to go to with the Capital One 360 account since I really appreciate the app and the different accounts you can set up, making saving for goals especially easy.

Part two of this month’s challenge

The second part of the challenge is to audit your investment expenses.

I didn’t participate in this challenge because, as of now, I don’t have much of an investment portfolio.

For those of you interested, here are the requirements of the challenge:

  • Request a fee schedule/statement from your financial advisor (if you have one).
  • Request a fee schedule/statement from the administrator of your 401(k) or other employer-sponsored retirement plan (or find out your fees by logging into your plan account).
  • Look through recent statements to see if there are any charges you don’t recognize.
  • Calculate your blended expense ratio.


This month’s challenge involves a little more than last month’s, but it’s well worth it. By looking closely at the interest rates for your debt you could end up saving a lot over the course of paying them off.

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About the author

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Christopher Murray is the Senior Editor at Money Under 30. Chris received a BA in English Literature and Gender Studies from Smith College. He now lives in Maine with his husband where he spends his free time watching reruns of The X-Files and dreaming of traveling in a refurbished VW Bus while writing the next Great American Novel.

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