Managing debt

For many, using credit is a normal part of handling their finances. For others, using credit can lead to uncontrolled spending, anxiety, and even bankruptcy. It's important to recognize your own spending and savings habits so you remain in control.

Develop an overall debt strategy

Borrowing money is necessary at times, just make sure you only borrow for things that provide long-term and lasting value. Example: borrowing for higher education costs is probably a good idea as it should result in a higher earned income later. Charging extravagant vacations and expensive gifts that you really can't afford is probably not a good idea.

Credit cards

Decide on a credit card strategy. Remember that you have to pay back every charge you make. In a nutshell - don't charge things you can't afford. Try to pay your entire balance each month to avoid finance charges and be sure to make the payments on time to avoid late payment fees.

Choose a credit card that offers the right combination of fees, rates and benefits. If you pay every credit card bill in full and don't incur any finance charges, it may be okay to have a card that has a high interest rate but offers rewards (like airline miles or money back), or has no annual fee. If you tend to carry over balances and pay finance charges, getting a card with a low interest rate becomes more important.

If credit cards are too tempting, cut them up or don't use them. Using only cash, or a prepaid credit card can be a good strategy for avoiding overspending.

Consolidate debt

If you have credit card debt, you may be able to consolidate higher rate debt with a Personal Loan. It could lower your monthly payments and you'll pay less interest. You may even be preapproved!

To learn more about Personal Loans call us at 1-800-288-3425, send us a secure message in Online Banking, or visit any Think Bank office.

Example:

 

Using A High Rate
Credit Card

Using A Think
Smart Loan

Loan Amount
$10,000
$10,000
Interest Rate
16.84% APR**
7.19% APR***
Monthly Payment
$201.73
$201.73*
Time to Pay Off
85 Months
60 Months
Total Interest Paid
$7,219.23
$1,941.65

You Save:

$5,277.67!


Mortgages

Mortgage payments are a big part of any budget. If your budget is tight, and depending on your specific situation, it might make sense to refinance a higher rate mortgage to a lower rate that could free up some income. Talk with a professional who can explain the pros and cons of refinancing and home equity loans.

Pay attention to current rates

Eliminate high cost borrowing. Determine if you can convert high interest rate debt to another type with lower rates. Example: If you are paying high interest rates on credit card balances, switch to a card or personal loan with a lower rate, but watch out for "teaser" rates! If you have equity in your home, consider a home equity loan to consolidate all your debts at a lower rate. Of course, this only works if you don't rack up even more debt.

Getting help

What if you can't pay your bills? This is when you should get help. First, stop incurring more debt - quit using or destroy your credit cards. Then, contact all your creditors to work out a payment schedule. Explain your situation and that you want to pay what you owe. They may be able to help by giving you extra time to pay, temporarily reduce your payments or offer other solutions.

Don't bounce checks. In some states, it is a worse offense to write a bad check than it is to not pay your debt. In addition, you may be charged for the bad check. It looks very bad to a creditor if your check bounces.

Get professional help if you need it. Many non-profit organizations exist that help individuals when all else fails, but be very wary of organizations that offer to fix your credit rating or want you to pay a fee to get you out of debt easily.


* Monthly payments listed are approximate and include OPTIONAL Single Credit Life Insurance. Payment examples shown are based on fixed rate Personal loans. Rates shown are current as of 07/06/2018 and subject to change.

** National average variable credit card rate. Source: Bankrate.com: 03/14/2018 and subject to change. Monthly payments listed are approximate.

*** APR = Annual Percentage Rate. Rate current as of 07/06/2018 and subject to change.

Other amounts and terms available. Standard underwriting guidelines apply.

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