It sounds like one of those technical financial terms that only bankers can understand: Interest Rate Arbitration. But it’s actually a pretty simple process that can help you consolidate your bills, which should allow you to pay them off faster, incurring less interest on each debt.

With interest rate arbitration, you consolidate your bills into one loan that carries a lower interest rate than all the high-interest rate credit cards.
There are several methods of accomplishing this bill consolidation. Turning to a professional in bill consolidation services, like those you find at, is a great way to start the process towards finding the method that works best for your budget.

Secured vs. Unsecured Loans

One method of interest rate arbitration is to take out a secured loan at a low interest rate to pay off your existing unsecured debts. A secured loan is one that is backed by collateral, usually property of some kind, such as a house or vehicle. An unsecured loan is given on just the applicant’s signature, which is why those loans — usually credit cards — carry a higher interest rate.

A home equity loan is often used for interest rate arbitration. A borrower with many high-interest credit cards can borrow on the equity in their home — the difference between the value of the home and how much is owed on the home. Once that loan is approved, the homeowner can pay off all their high interest credit card bills, in effect consolidating all their debt into one loan.

An added bonus to this bill consolidation method is that instead of worry about making payments on several different accounts, you just have to make one payment each month.

Balance Transfers

Another method of interest rate arbitration is opening a new credit card with a lower interest rate and transferring your existing balances to the new card.
This can really pay off if you can find a card that offers 0% interest on balance transfers for an introductory period, usually between six to 12 months.

There are some caveats with these 0% offers, however. There is usually a 3% fee to transfer the balances to the new card, so if you are transferring $1,000, the credit card company is going to add a $30 fee to the balance. It doesn’t sound like much, but if you are transferring several cards to the new card, the transfer fees can add up.

Another thing to be aware of: If you are late on even one payment, the interest rate will automatically jump to the card’s usual rate. This can be anywhere from 15% to 29%, so be sure to read the fine print to find out what that interest rate hike will be.

Also, this method of bill consolidation works best if you can pay off the balance before the introductory rate ends. If you don’t, you’ll find yourself once again paying a double-digit interest rate on what you owe.

Consolidating your bills with interest rate arbitration can really pay off by lowering your interest rate. Almost as important, bill consolidation can decrease your stress level as you have just one bill to pay each month rather than a handful.

Know the process started today at