Lend me your ear...

Today I am going to talk to you about something that makes me a little nervous, lending. I need to be honest with you and tell you I have had one credit card and have taken out one shared secured loan. Other than that I have no personal lending record. However, thanks to Michigan First I have learned so much about loans and credit cards, how they can help and how they can hurt.

Why would you want a loan?  Common uses for loans are to purchase a car, a home, pay for school, a large repair or even go on a family vacation. When you consider taking out a loan it is extremely important you look at the payment dates and the interest rates. If you can’t handle the monthly payments and interest- avoid the loan as much as possible. Why? If you are late on a payment or your payment is way more than you can handle, you can end up hurting your credit score and getting into a lot of debt. Both of which are no fun at all.

It might not seem like it, but Credit cards are loans too! Credit cards can also be referred to as an unsecured line of credit; unsecured means that the bank or credit union doesn’t have collateral in return if you are no longer able to make your payments.  Because credit cards are a type of loan, that means they also have monthly payments and interest rates if you hold a balance. Did you know that to keep or build a higher credit score you should only use 30% of your credit card limit and you should not exceed 50% of your limit? (I need to pay down my card ASAP!) If you spend more than 50% of your limit your credit score will be effected. Just because you have a $1,000 doesn’t mean you can really spend $1,000. In that case your balance should be kept under $500.

Michigan First Credit Union wants to help you reach your financial goals, and sometimes  getting a loan or a credit card is an important step in reaching a goal, like getting a car or building a credit score. However, remember to ask questions before you sign anything; you are the only manager of your finances so you get to make the decisions! To help get you started, here are some key questions to ask:

-       Is there an annual fee?

-       What is the interest rate?

-       What’s my credit limit?

-       What would my monthly payments be?

-       Can I earn rewards/points? How?

If you’re looking for your first credit card, check out Michigan First Credit Union Reward Visa there is no annual fee, a competitive interest rate, plus you earn rewards while you spend! Our Financial Services Representatives would be more than willing to assist you with any questions you may have if you’re just starting out. Stop in to meet with one of our FSRs today!

Keeping it Fresh, Young & Free,

Ebeth