Tough Times Series: When Times Are Tough We Can Help
You've seen the headlines about the struggling economy: job losses, foreclosures, negative savings rate, recession.
In tough times, it's more important than ever to develop and maintain good financial habits. "Having a household budget and shedding high-rate credit card debt are two obvious things that could benefit most consumers," says Mike Schenk, vice president of the Credit Union National Association's (CUNA) economics and statistics department, in Madison, Wis.
"But figuring out where to start can be a daunting task—especially if you feel like you're already in trouble. The thing to remember is that it's never too late to ask for help—a trip to your credit union should be 'Job No. 1.' "
Manage your mortgageIf you have an adjustable rate mortgage (ARM) and are facing a rate adjustment, refinancing your home loan with your credit union might be the break you need. If you qualify, you could:
Even if you have a fixed-rate home loan, refinancing may free up some money you could use to:
Tap your home's equityA home equity line of credit can be a useful cushion if you're not already overloaded with debt.
Cut credit card costsNot all credit cards are created equal. Switch to a credit union credit card—they average more than two percentage points lower than bank credit card interest rates, and often have lower fees as well.
The people at your credit union can provide balanced, practical personal finance information.
Pass up payday loansPayday lenders promise to help when you're short on cash. You'll get the money you need, but with interest rates from 300% to 1,000%.
Use direct depositNACHA, the electronic payments association, Herndon, Va., surveyed 1,505 consumers. The survey revealed that those using direct deposit save $390 a month, $90 more than those saving manually—due to consistent rather than random savings. Direct deposit gives you:
Steer clear of scamsSome scammers use negative economic news to scare investors into high-risk investments. They use investor fears to promote sketchy schemes with promises of high return and no risk that leave investors with nothing but empty wallets.
Don't wait until you're in deep trouble to ask for a financial checkup.
"As member-owned not-for-profit institutions, operating with a people-helping-people philosophy, credit unions really look out for their members' best interests. Most credit unions are happy to provide personal financial advice, and consumers who use credit unions know that their consumer-friendly pricing can result in savings of hundreds of dollars annually," says CUNA's Schenk.
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