Get Smart about Debt
Using loans and credit cards can help you pay for things you need now but haven’t yet been able to save for, like a car for getting to and from work. It’s important to remember, though, that debt comes at a cost in the form of interest and loan fees. Those costs will need to be accounted for in your budget.
Credit cards can blur the line between useful financial tool and dangerous budget buster. If you’re able to pay your entire credit card balance off every month, you can reap benefits such as rewards and consumer protections like extended warranties and fraud protection. Credit cards can also be useful for short-term borrowing. But, if you carry a balance each month, you can be hit with big interest charges and typically have much higher rates than other types of loans.
Plus, if you only pay the minimum balance each month, you’ll end up paying that balance for a lot longer. As a result, you’ll pay more interest than you should.
Depending on your needs, some strategies will work better for you than others.
Here are a few ideas:
- Pay more than the monthly minimum
- Make a half payment every two weeks
- Identify one debt above all others, and pay it off first (e. the debt with the highest interest rate)
- Use some of your savings to pay off your credit card debt
- Take advantage of balance transfer offers. If you can consolidate your debt to a lower interest-rate loan, you may be able to pay your total debt down faster and even free up money in your monthly budget.
To avoid interest charged on debt, you may want to delay saving for non-critical goals such taking out a lease on a car you don’t need or purchasing a vacation that is outside of your monthly budget.
By managing your monthly expenses, you can reduce the anxiety that comes with borrowing and maintain your financial health.
NEED more help? Get BALANCE, A Free Service for Financial Fitness
For a lot of people, becoming financially fit is tough – and even more difficult to maintain. At some point in life, everyone faces financial challenges. Helping you become savvy financial consumers is an important part of why Seattle Credit Union exists. Whether it’s paying off debt, getting back on track after a financial crisis, or even learning to build a budget to save for important goals like a college education or new home, BALANCE is an ally on the path to financial stability.
BALANCE is a free service for all Seattle Credit Union members that provides:
- Financial education (articles, webinars, podcasts, newsletters, etc.)
- Resources (income, debt, and loan calculators, toolkits, etc.)
- Access to attorneys
- Coaching from professional, third-party counselors on:
- Debt and budget
- Credit report reviews
- Student loans
- Services are offered in Spanish both online and over-the-phone.
Check out this free service online or toll free at 888.456.2227. If you are having difficulty paying off a Seattle Credit Union loan, please talk with our Member Solutions team at 206.398.5757. Our team is happy to answer any questions you may have about BALANCE and how it can benefit you become financially fit.