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The first few years after college can be a challenge for anyone—especially when it comes to financial independence. Between finding a job and a place to live, paying down student loans, and maybe even starting a family, the financial decisions you make today can impact the rest of your life.

But don’t decide to move in with your parents just yet. By establishing smart financial habits in your 20s and 30s, you’ll be well on your way to enjoying a more comfortable lifestyle both today and in the future.

1. Finding a Job

The first step toward financial independence for anyone is finding a source of income. Your salary will determine what you can afford in all other aspects of your life, including where you can live and what kind of lifestyle you can support.

  • Be a creative job seeker, and don’t limit yourself to traditional job-search methods. Expand your network, be active on LinkedIn and professional in your use of other social media, and attend industry events.
  • Recognize that you may not get your dream job right out of college. You may have to pay your dues with one or more entry-level positions before getting to the position you’ve always imagined for yourself. And that’s OK – as long as you’re building a resume that supports your chosen career path, you’re on the right track.
  • It’s important to know your worth and position yourself as a competitive job seeker in your industry. What are your peers making? What’s the average salary in your industry and region? Do your research to educate yourself so that you can intelligently campaign for fair compensation when it comes time to negotiate your salary.

Answers to career-related questions impact your financial future and your budget. Make sure your financial plans evolve to include planning for career development – because your salary and livelihood is a major driver of your financial well-being. For example:

  • As you gain experience, you’ll define your career goals to become more specific and learn about new career opportunities. Will you need certification, additional training, or education?
  • Will finding your next position require relocating to a different job market, or can you stay where you are and move up?

2. Making a Budget

Once you have a steady source of income, you can create a budget to make sure you don’t overspend. Consider using a free budget worksheet on sites such as Quicken or Mint to make the process quick and easy on your journey to financial independence.

  • Calculate how much you spend on set monthly expenses, including rent, car payments, insurance, student loan payments, and utilities.
  • Look through your recent bank statements to estimate how much you spend on other expenses such as groceries, transportation, clothing, dining out, etc.
  • Subtract your monthly expenses from your monthly net income to determine your monthly spendable income. This is how much money you have to spend on extras each month. Don’t go over this number unless you want to start dealing with the cycle of debt.
  • Are you spending more than you make? Then it’s time to rethink your expenses. Where can you cut back? Should you take on a roommate? A second job? Be realistic about your finances and do what you can to avoid relying on credit cards to pay your bills.

With time, the definition of your household may change. You may find you have added income, but you could also have additional expenses and other considerations. Every time you experience a significant change in your household, your job, your location, and your living situation is a time to re-evaluate your budget and financial goals.

3. Choosing Where to Live

Housing costs are generally among the most costly monthly expenses. Each of the decisions below will significantly impact your bottom line.

  • Are you willing to relocate for work? While some people are set on living in one particular city, others are more open-minded when it comes to their job search. And, as you work longer and decide what you want to do, the best opportunities may be elsewhere. You’ll need to decide whether to open up your search to other cities to increase your options both in terms of pay and position.
  • How much does it cost to live in the city of your choice — and can you afford it? Some cities are notoriously expensive for renters, and it may be difficult to pay the high costs of rent on an entry-level salary. Do a little research and use comparison calculators to weigh the benefits and costs of living in various places.
  • Will you live alone or with roommates? Obviously, flying solo can come at a high price, but living with roommates has its own set of challenges.
  • Do you want to rent or buy? Buying can be a wise investment, but not all young adults are qualified to purchase a home. If it’s something you’d like to do in the near future, start by building your credit and familiarizing yourself with the real estate landscape in your area.
  • As you live on your own (or with roommates or a significant other), you’ll learn more about what sort of environment leads to a better quality of life for you. As life events unfold, you may find that a significant other’s job prospects and career opportunities may begin to factor into your location of residence. Other life changes (divorce, changes to a family member’s health, etc.) can also impact who lives with you and where you decide to live – and this will impact your bottom line.

4. Managing Student Loan Debt

The average student graduates with more than $29,000 in student loan debt. While you may be able to defer your payments while in school or residency, eventually you will have to start tackling those payments. After housing, this is often one of a graduate’s most significant monthly expenses.

  • Your post-graduate student loan bill shouldn’t be a surprise. Know how much you’ll owe – and have an idea of how you’ll pay for it – before you even start college.
  • Learn more about the federal loan repayment plans for which you are eligible and what your private loan payments and interest rates are at this time. Check your private loan statements or your lender’s website for this information.
  • Explore student loan refinancing. For most people, student loan repayment stays around for a while – but it doesn’t have to keep the same form. Once you’ve been out working and living in the “real world” for a while, your situation may change, and refinancing your student loans can help you take advantage of some positive changes to your situation. If you’re making the smart financial decisions we at U-fi know you can, your credit worthiness, credit score, and income have all been taking an upward turn. Consider whether refinancing your federal and private student loans can make your interest rate and monthly payments lower. With U‑fi, there are no application or origination fees and you could end up saving yourself thousands of dollars over the life of your loan – or ridding yourself of student loan debt sooner than expected.

5. Planning for the Future

While at times it may be difficult to imagine life beyond your next paycheck, it’s critical to think about your future financial independence.

  • Family planning – Do you have plans to get married, start or expand your family? It’s a good idea to start saving for those milestones early on. If you haven’t found the right person, but you know it’s a priority for you to buy a home, find a partner, or start a family, there’s no reason to wait to prepare financially. Why not make it easier on yourself later by planning now for the future you know you want?
  • Retirement savings – Speaking of planning now for the future you want: for millennials, the age of 65 may seem like it’s a long way off but it’s getting closer every day. Starting as soon as you have the option to save toward your retirement has a huge positive impact on your ability to save enough for retirement. But what do you do each time you get a raise or bonus? Do you increase your contribution toward retirement and diversify the types of accounts you invest in – or do you find new ways to spend the additional money? You can guess what we recommend.
  • Insurance – You’ve enjoyed the benefits of your parents’ insurance policy for most of your life, but being an adult means buying your own health, car, and home or renters insurance. When you first start out, you won’t own as much of value to insure, but as you continue to work, you’ll acquire a nicer car, a bigger home, better furnishings, and simply more stuff. Plus, the larger income you’re making will be harder to replace should something happen that prevents you working to pay your bills. Insurance is something that you’ll need to continue to evaluate as your assets, income, and dependents change.

Complete financial independence after college may seem intimidating at first, but it’s also exciting. Embrace the challenges, but reach out for help when you need it. As you may have noticed, financial literacy is an ever-changing learning process because life is full of constant change. It’s always good to reevaluate your goals, your situation, and your budget on a regular basis to make sure you’re on the right track.

One thing you can count on? U-fi is always here with resources to help you be a smart financial consumer. Explore smart student loan refinance options with U-fi and get started today.

Another new year brings another set of resolutions — many of which involve making new financial goals. Whether you’re currently in school or have been in the workforce for a few years, it’s smart to make these changes now in order to set yourself up for future financial success.

But it’s one thing to make financial goals, and another thing to stick with them. Here’s a few tips to save more money and budget effectively to keep yourself on track throughout the year.

Create A Budget. Then Write It Down.

This is important. Many of us budget in our heads, but don’t take the time to write it down. Dig out your notebook — or use our budgeting worksheet. Then, follow these steps to set up an effective budget that helps you make responsible decisions with your funds.

  • Determine a timeline for your budget — will you track it by week, month, semester, or year?
  • Separate your expenses into categories like housing, transportation, and entertainment
  • Revisit the document on a regular basis to update and track payments

The way you set up your budget is up to you. The important thing is to get it written down.

Wants Versus Needs

Obviously, there are things you need to pay for. Tuition, fees, housing, and food can all add up. The line between “needs” and “wants” can be blurry, so it’s important to clearly define them in your budget.

For example, if you’re paying for a school meal plan, going out with friends is a “want,” even though you need to eat. That doesn’t mean you have to give up eating out or spending money on things you want — in fact, it’s often important to do so!

By determining which expenses are “wants” and which are “needs,” you’ll be able to spend your money responsibly without going overboard.

Financial Goals Quick Tip: Consider giving yourself a set allowance to spend on your “wants.” If you’re saving up for something big, determine which “wants” you’re willing to spend less on each week.

Credit or Debit?

When it comes to the debate between credit cards and debit cards, there’s really no right or wrong answer. In many cases, it’s smart to use both. However, it’s especially important to use your credit card responsibly.

  • Use your credit card for one small charge each month — otherwise, keep it for emergencies only
  • If an emergency does happen, stop your monthly charges and instead use that money to pay off your credit card
  • When using your debit card, keep an eye on your checking account to make sure you aren’t spending more than you have

By handling your spending this way, you can build your credit score without relying on credit card debt to fund all of your wants. Your debit card gives you the convenience and security of not having to carry cash everywhere.

Loans and Financial Aid

Chances are you’ve had to borrow some money to pay for at least a portion of your education. If you’ve taken out a variety of different loans, it can be difficult to keep track of what you really owe.

When you’re considering taking out a loan, it’s helpful to research repayment options to find the loan that is right for you. If you find your payments are too high, you may consider refinancing all your loans into one loan with a potentially lower interest rate. Refinancing means you’ll pay less each month on your student loans – if this sounds like a fit for you, U-fi can help you start the refinancing process.

Setting up your financial goals doesn’t mean sacrificing experiences like going to the movies or eating out with friends. By budgeting and defining your wants and needs, you make smart choices that count.

Want to make another smart financial decision? See how U-fi can help you refinance your loans.

For undergraduates and graduates considering student loans to help pay for their education, finding a low interest rate loan is important. Understanding how rates are set and how they potentially change over time can help you decide which loan is best for you. Let’s take a closer look at what determines the interest rate on various types of loans.

Direct Loans

The largest student loan program in the United States is the Direct Loan Program and is offered directly through the federal government. The formulas for setting interest rates for the Direct Loan Program are determined by Congress. Currently, the interest rate is set as a fixed rate for all loans first disbursed on or after July 1 and by June 30 of the following year. So, any loan first disbursed during that one-year window will have the same interest rate for the life of that loan.

The interest rate is the index plus an add-on or margin. In the case of federal loans, the financial index used is the 10-year Treasury note auctioned at the final auction held prior to June 1. That index is then used for new loans first disbursed in that following July 1 – June 30 timeframe.

The following chart represents the interest rate calculations for federal Direct Loans first disbursed on or after July 1, 2017 and before July 1, 2018.

Borrower TypeIndex (10-Year Treasury Note)Add-On (margin)Fixed Interest Rate
Direct Subsidized LoansUndergraduate Students2.40%2.05%4.45%
Direct Unsubsidized LoansUndergraduate Students2.40%2.05%4.45%
Direct Unsubsidized LoansGraduate/Professional Students2.40%3.60%6.00%
Direct PLUSGraduate/Professional Students and Parents of Dependent Undergraduate Students2.40%4.60%7.00%

Private Loans

For private student loans, the interest rates will still be based off of a financial index (although the exact index may vary by lender) plus a margin. However, other factors will also go into determining the interest rate on private student loans. The borrower’s credit score (or cosigner’s credit score) is a determining factor in the interest rate assigned to a private student loan. A high credit score may translate to a low interest rate. Another factor that can determine the interest rate on a private student loan is the length of the repayment term. Typically, a longer repayment term means paying a higher interest rate.

Fixed Interest Rates

Private student loan lenders will usually set their fixed interest rates prior to July 1 for the upcoming school year. That fixed rate will remain constant for the life of the loan. Lenders may adjust their fixed interest rates each year for new loans or even during the year if there is a dramatic change in market conditions.

However, once you’ve received your loan, your fixed interest rate for that specific loan will remain the same until the loan is paid in full. Your monthly payment will also remain constant for the duration of your repayment term.

Variable Interest Rates

When private student loan lenders set their variable interest rates, they may use a different financial index. Some lenders will use the 1-month LIBOR (London Interbank Offered Rate) where the variable interest rate will fluctuate monthly based on changes (up or down) in the 1-month LIBOR. Other lenders may use the 3-month LIBOR and adjust their variable interest rates quarterly (every three months).

Finally, other lenders may use the Prime Rate as their index and adjust their variable rates monthly. The bottom line is that your variable interest rate will likely change each month or quarter and your monthly payment will also go up or down based on your rate increasing or decreasing.

So, is any particular type of index better than another when evaluating interest rates from different lenders? You really need to know what the index rate is as well as the margin being added. For example, if you see an offer for an interest rate of “Prime + 1.5%” that might sound pretty good compared to an interest rate of “1-month LIBOR + 4.50%.”

Visually, it just looks like the first rate would be lower. However, if the Prime Rate is 4% and the 1-month LIBOR rate is 1%, both rates would equal 5.50%. It’s always a good idea to look for a lender’s Application and Solicitation Disclosure to see the true interest rate calculations.

For more information on student loan options and other helpful resources, please visit U-fi.com.

You’ve finished off the leftover turkey and dressing and have shifted gears into holiday shopping mode. As another year comes to a close, it’s a good time to look back on how your budget planning went this past year.

After an assessment, you can begin to find ways to improve your financial well-being in the upcoming year. In order to be prepared for a bright financial future in the New Year, it’s important to set your budget, contribute to your savings, and pay down any high interest debt.

Now is the Time for Budget Planning

Do you know how much you spent this year on utilities, groceries, housing, or entertainment? Once you have an idea of how much you’re spending on certain categories, you can estimate your projected expenses each month and use budget planning to find places to cut expenses.

There are a number of apps that can assist you with tracking and categorizing your spending, but you can also do it on your own by entering your expenses into a spreadsheet. If you use your debit card for most purchases, you can use your online bank statement to help you identify your expenses. Don’t forget to account for the cash you spend if you want a true picture of all your expenses.

When setting your budget, you’ll likely have fixed and recurring expenses for housing, transportation, student loans, utilities, and other similar areas. Then, you’ll need to set an amount for variable expenses like groceries, clothing, and entertainment.

Knowing your income each month will help you set goals. If you have a steady job, you probably have a consistent weekly or monthly income and can use that to start your budget. Your monthly expenses should be less than your available income each month.

If this is not the case, you can review your expenses to identify areas to trim back and reduce your spending each month. Once you’ve created a budget, try to stick to it as best you can each month. That way, you’ll stay on track and not get into a position of having to use credit cards or possibly getting behind on some of your bills.

Save, Save, Save—The Sooner You Start the Better

Even if you’re in your 20’s, it’s never too early to include retirement in your budget planning. If you start with small contributions, you can make it a habit and priority. If your employer offers a 401(k) plan and matches your contributions, take full advantage of the opportunity for free money.

It’s also important to set aside funds for unexpected expenses or emergencies. A good rule of thumb is to have three to six months of income in a savings account that you can access for those unplanned events. Not only will this give you peace of mind knowing that you have your own safety net, but it will help you avoid putting large charges on a credit card that will likely incur high interest fees.

Pay Down High Interest Rate Debt

Whether you’re paying off a student loan, a car, or a credit card balance, it’s always an accomplishment to know you have extra income to go toward something else (like saving).

If you can allocate some extra resources to pay down your debt, it’s generally best to start by tackling the account with the highest interest rate. That might be a credit card balance that seems like it never gets smaller because of the interest that keeps adding up each month.

Another goal you might have is to simply pay something off with a smaller balance just to get that sense of accomplishment and then move that money toward paying down other debt. It might make sense to look at debt consolidation or refinancing where you may benefit from paying off higher rate loans or debt with a lower interest rate personal loan. This is especially helpful with high rate credit cards. See our article on using personal loans to cure those post-holiday credit card blues. You can find other helpful articles and resources at U-fi.com. All of us at U-fi wish you a successful and prosperous new year!

Have you ever applied for a loan from a bank and wondered why you received a certain interest rate? I remember when I applied for a loan to buy my first house. I’d taken out a few student loans that I paid off, but I was still making payments on my auto loan, and had a couple of open credit cards. Since I’d never had a late payment, I assumed I would qualify for the lowest advertised interest rate. I had no idea what my credit score was.

After submitting my loan application, to my surprise, I wasn’t offered the lowest rate. “But why?” I asked the mortgage loan officer. I had never missed a payment on any of my loans or credit cards. Isn’t that what they should be concerned about? They told me my credit score wasn’t high enough to warrant their lowest rate.

After some research, I discovered the quality of the applicant’s credit score is one of the most important factors lenders consider when deciding to whether to extend credit. It’s also taken into account when deciding what terms and rates are offered. And, that a person’s credit report determines the person’s credit score.

What is a credit score?

A credit score is a numerical representation of your credit risk. That essentially means how likely you are to pay back the loan. Credit scores range from 300 to 850, and are used by lenders to easily and objectively evaluate your credit risk. Higher scores usually mean less credit risk. Most lenders require a minimum credit score before they offer you a loan. They also create credit score tiers used to determine what interest rate they offer. That’s why you should have as high a credit score as possible before applying for any loan, regardless of type.

What can you do to raise your credit score?

The first thing to know is it takes time to improve your credit score. While you can ruin your credit score very quickly, it can take several years of good behavior to increase it. This is especially true if you have had a credit mishap like a missed payment. Below are six suggestions to help you improve (or maintain) your credit score.

  1. Review your credit report annually. At least once per year, check your credit report for accuracy, and that nothing is on it that shouldn’t be. Reviewing your credit report can also help you protect yourself from identify theft, which could ruin your good credit. If you have any questions about your credit report, or wish to dispute an error, immediately contact the credit reporting agency that issued the report. Tip: You can get one free credit report per year from each of the three major credit reporting agencies simply by visiting www.AnnualCreditReport.com and requesting your free credit report. Unfortunately, you won’t find your credit score on your credit report. Some credit card providers have partnerships with one of the three large credit bureaus to provide free credit scores to their customers. Check to see if your credit card provider has such an arrangement.
  2. Pay your bills on time. This may seem like a no-brainer, but it’s important to make your payments on time, as any late or missed payments are likely reported to the credit bureaus. If you’ve missed a payment, get your account current and stay current. The longer you go without missing a payment, the more your credit score should increase.
  3. Pay down your credit card balances. When your credit cards have high balances, it gives you a high debt-to-credit ratio (also known as utilization rate) and can signal credit providers and lenders that you are facing financial difficulty.Tip: Don’t move your balance from one credit card to another as this won’t help.
  4. Only apply for a new loan or credit card when you truly need one. When you apply for a new credit card, you add a “hard inquiry” to your credit report, which causes your credit score to drop slightly in the short term. You may also be adding more new debt than you can afford to repay, both of which could negatively impact your credit.
  5. Enroll in automatic payments. Enroll in automatic payments through your credit card and loan providers to have payments automatically debited from your bank account. Most student loan providers offer an interest rate discount for automatic payments, so there is that added benefit as well. Tip: When setting up automatic payments on credit cards, if you choose to make only the minimum required payment, you could be rolling over large balances each month and get hit with high interest charges.

How Does It All Help?

Having a clean credit report and a high credit score can help you in many ways, including lowering the cost of borrowing, obtaining insurance, setting up housing utilities, getting a job offer, and more. If you are having trouble making your payments, be sure to speak with your credit card provider or lender before you miss a payment. It’s in their best interest to work with you to find a mutually agreeable solution, so you may be able to work out an arrangement that meets your needs.

If you’re reading this, you probably have at least one credit card already. Credit cards can be a helpful tool when used appropriately, including helping you establish credit and build your credit score. However, you can also damage your credit score if you develop bad habits with your credit cards. Here are some tips to help you avoid going down the wrong path so you can better manage your finances. You can also check out our Credit Card Tips sheet for additional information.

Looking for a New Credit Card?

If you’re in the market for a credit card, there are some important factors to keep in mind. First, do you already have a credit card? If so, why do you need an additional card? Typically, one is all you really need. If you open several new accounts within a short period of time, your credit score could be damaged. You could be perceived as a higher credit risk because you increased your capacity to take on more debt. This might ultimately be hard to repay.

If you’re looking for your first credit card, be sure to compare different offers and find the card that will work best for you. Here are some things to look for in a credit card:

  • Find a card with the lowest interest rate
  • Avoid outrageous fees (make sure you read all the fine print to understand what fees can be charged)
  • Be cautious of low introductory interest rates that can increase greatly after their initial low interest period

Managing Your Existing Credit Cards

Once you have a credit card, it’s best to have a solid game plan in advance. Sticking to your strategy ensures you won’t get in trouble financially and find yourself with an impossibly high balance.

Credit Card Goals

Here are four goals that will help you stay in control of your credit cards:

  1. Try to pay your balance in full each month. Think of your credit card as an extension of your bank account. That way, you won’t be tempted to charge more than you can afford. Just remember not to charge more than you could pay if you had used your debit card.
  2. If you can’t pay your balance in full, try not to carry much of a balance from month to month. Make a goal to pay more than the minimum monthly payment due. This will help you pay down your balance as quickly as possible. Keep in mind the balance you are carrying is also charged interest, which can make that original purchase more expensive.
  3. Don’t be late with any of your payments. Make sure you know your monthly payment due date. Even if you plan to pay the balance in full, it’s important to make that payment on time. You may want to set a reminder for yourself so you won’t miss that date. If you’re late by even one day, your credit card company may charge a higher interest rate and late fees. Additionally, being late on a payment may lower your credit score.
  4. Avoid impulse purchases and cash advances. Just because you have a credit card doesn’t mean you’re obligated to use it. Although it may be tempting to buy something expensive on credit, it’s better to take your time and save for that purchase. Remember that using your credit card to buy something expensive this month means paying for it over several months. And, you’ll end up paying a lot more than that original purchase price with the added interest charges. Finally, don’t use your credit card for cash advances at the ATM. You could be charged a fee, and may also pay a higher rate of interest on that transaction.

Use Credit Responsibly

Remember, credit cards can be a helpful financial tool when used responsibly. Do you currently have a balance with a high interest rate? Are you looking for a smart way to pay off that debt? A personal loan is a solution worth exploring to pay off your high rate credit card balances. You can find more information about personal loan solutions, as well as additional tools and resources at U-fi.com.

Congratulations! You’re graduating soon and will be searching for your first job out of college. It’s an exciting time in your life. However, if you’re like the majority of college students, you’re also graduating with student loan debt. Now is a good time to make sure you’ve got a plan to manage your student loans after you graduate.

Here are some easy steps you can take to set yourself up to successfully manage your student loans.

First, Identify All of Your Student Loans

The best place to start is at the National Student Loan Data System (NSLDS). You can find information here about all of your federal loans. This will give you all the details you need to understand how much you’ve borrowed on your federal loans. You can also find out who to contact for questions about your federal student loans.

If you used private loans from a bank or other financial entity, check with your lender to make sure you have the correct loan information.

Next, Get an Idea of What Your Monthly Payments Will Look Like

At StudentLoans.gov you can access a repayment estimator for your federal loans that will give you an idea of what your monthly payment would look like under the different repayment plans available. Depending on your individual circumstances, it’s likely there is a plan that will work for you. If you have relatively low debt and a good salary, you may want to pay off your loans ASAP. The standard 10-year repayment term allows you the quickest and lowest cost method to pay off your loans.

If you have a higher debt load or lower income, there are options that base your student loan payment on your income. Income-driven repayment plans are often helpful since they give you a more affordable monthly payment based on your income. You can learn more about these options as well as how to apply them to your student loans at StudentLoans.gov.

For private loans, visit your lender’s website to access repayment calculators. Or, simply contact your private loan provider for additional information on what monthly repayment amount you can expect.

Know When Your First Payment is Due

With federal loans, you have the ability to postpone payments while you’re enrolled in school at least a half-time. This is also true of some private loans. That means you’ve probably not made any payments on your loans, or perhaps you’ve made some small payments to offset accruing interest. You are also given a grace period on your loans. The grace period is typically six months from your last day of school. The last day is usually considered when you graduate or have dropped below half-time enrollment. At the end of that grace period is when your first payment will be due. Make sure you know when that due date is. That will give you plenty of time to prepare and budget for that new payment.

Know Your Options if you Have Difficulty Making Payments and Need Assistance

There are a number of options for borrowers who encounter situations that make it difficult to manage their student loans. Your student loan servicer will work with you to find a solution, but you have to contact your servicer to get assistance. For example, if your income has changed dramatically you might want to change to an income driven repayment plan or adjust the plan you’re on based on your change in income. Additionally, if you return to school, to pursue a graduate degree for example, you can postpone (or defer) your student loans while you’re back in school. Don’t make the mistake of simply ignoring your student loan payments and damaging your credit score.

As you look forward to graduation and starting a new chapter in your life, just remember to do a little planning and research how to best manage your student loans and find the best repayment plan for your situation. And remember, your student loan servicer is there to help you if you have any questions.

Does your January credit card statement have you feeling blue? Find out how personal loans could provide credit relief.

It Happens to the Best of Us

The holidays have come and gone. You may be feeling a bit relieved that all the seasonal hustle and bustle is over. Sure, it may be a bit cold outside. Sure, work is back in full swing. But, things are looking good with your New Year’s resolutions. You’re feeling optimistic and energized.

Then, you receive your January credit card bill. Whoa, the new balance is much higher than you expected. As you go down the list of purchases on your statement you ask yourself, “Did I really spend that much?” You also notice the available credit on your credit card is pretty low. There are some big purchases coming up in your future. You were planning on using your credit card to pay for them. Now, you no longer have enough available credit to pay for everything as planned.

With average credit card APRs over 16%, and many exceeding 20%, you know if you don’t pay your balance in full you’ll be hit with a hefty finance charge, which will be added to your outstanding credit card balance. And even worse, if you’re late making the minimum payment that’s due, you could be hit with a penalty APR, which can be as high as 29.99%.

Personal Loans Could Provide Credit Relief

This is where personal loans could provide credit relief. Unlike a credit card, which is a revolving line of credit, a personal loan is an unsecured loan that doesn’t require any collateral, such as a car or house. Personal loans come with a specific repayment period, usually between 1 and 7 years. Fixed interest rates are more common than variable interest rates, and some lenders will offer you a choice.

The main reason people take out personal loans is to pay off existing debt, such as high interest rate credit cards or loans. Other common reasons include making major purchases, for home improvement projects, for special occasions like weddings, to take a vacation, and to pay off medical bills.

Personal loans can range from as little as $1,000 to as high as $100,000. APRs vary widely among lenders and are based on the borrower’s (or co-signer’s) credit history, annual income, repayment term selected, and type of interest rate chosen. Some personal loans even come with money saving automatic payment discounts and loyalty discounts.

Tip: Some lenders charge upfront fees, which add to the total cost of the loan, so be sure to take that into account before choosing a lender.

A really nice feature for personal loans is how quick and easy the process can be. If you submit a completed loan application, you can receive a decision in a matter of minutes, and if approved, receive funds in your bank account as soon as the next business day, provided your application has no typos or errors.

Now that the holidays are over, you may be suffering from the post-holiday credit card blues. If so, check out a personal loan for credit relief from U-fi’s partner. It just may be what the doctor ordered.

If you have student loan debt, you have most likely heard the terms “student loan consolidation” and “student loan refinancing”. Although they sound similar and are often used interchangeably, they are actually two different programs. Therefore, understanding these programs and their key differences can help you make better student loan repayment decisions.

Student Loan Consolidation

Student loan consolidation lets you combine one or more eligible federal student loans into one new Direct Consolidation Loan. As a result, the U.S. Department of Education becomes the new lender. As the administrator of the program, they use companies such as Nelnet to originate and service the loans.

Student Loan Refinancing

Student loan refinancing is offered by private (non-federal) lenders to allow student loan borrowers to refinance one or more federal and/or private student loans into a new private student loan. Consequently, the lender of the new private student loan will be a bank, credit union, or other financial institution. Either the lender themselves or entities like Firstmark Services, a division of Nelnet, handles origination and servicing.

Which is Better?

Both programs offer many benefits. These benefits include simplifying your monthly student loan payments, locking in a fixed interest rate, and lowering your monthly payments. However, there may be some drawbacks as well. For example, if you extend your repayment term, you could increase the total cost of your loans. Therefore, you may forfeit current and potential future federal student loan benefits. Also, any incentives attached to your current loans, such as interest rate reductions for automatic payments, are lost.

Comparing Options

The table below provides a side-by-side comparison of several important features of student loan consolidation and student loan refinancing.

Student Loan ConsolidationStudent Loan Refinancing*
LenderU.S. Department of EducationBanks, Credit Unions, and Financial Institutions
Credit Check RequiredNoYes
Upfront FeesNoneMost lenders do not charge any upfront fees
Interest Rate TypeFixedFixed and variable rate options are offered by most lenders
Interest RateWeighted average interest rate of the loans being consolidated, rounded up to nearest one-eighth of 1%Varies. Factors may include the borrower’s and/or cosigner’s credit history; repayment term; interest rate type; highest level of education; and current market conditions
Repayment PlansStandard, Graduated, Extended, and various Income-Driven Repayment plansStandard Repayment
Repayment Term10 to 30 years depending on the amount being consolidated5 to 20 years
Allowable LoansMost federal student loans are eligible. Private loans are not eligibleFederal and private student loans are allowed by most lenders
Interest Rate ReductionRate reduction for automatic paymentsRate reduction for automatic payments. Some lenders offer an additional rate reduction to existing customers with a qualifying account
Ability to consolidate or refinance multiple timesGenerally no, unless additional federal loans are includedYes
Loss of Federal BenefitsSome benefits may be lostYes, including potentially qualifying for Public Service Loan Forgiveness on federal loans
When can you consolidate or refinanceAfter graduation, leaving school, or dropping below half-time enrollmentAfter graduation, leaving school, or dropping below half-time enrollment. Some lenders allow refinancing while in school

* Features represent those of the largest and/or most common private student loan refinancing programs. A specific lender’s features may differ, so be sure to read the program details carefully.

Choose the Right Option for You

While there are similarities between student loan consolidation and student loan refinancing, they are different programs with unique features. Firstly, if you are interested in consolidating or refinancing your current student loans,determine what you want to accomplish. Your goal may be to lower your monthly payments, lock in a low fixed interest rate, and/or lower your overall cost of repaying your loans. Next, compare the federal government’s Direct Consolidation Loan program to U-fi and other private lender programs once your goal has been set. Then, decide if consolidation or refinancing is right for you based on your financial goals and circumstances.

Want to reduce your monthly payments? Learn how to make it happen with U-fi.

Winter break is often a favorite time of year for college students. It’s a chance to go home, visit family and friends, enjoy home-cooked meals, and maybe do a little holiday shopping. Unfortunately, working off that extra helping of pumpkin pie may be easier than off your holiday spending.

5 Holiday Spending Tips

As you prepare to enjoy the holidays, these tips can help you avoid spending traps. Here’s how you can ring in the New Year without a mountain of debt and  holiday spending regret.

  1. Don’t use student loans to pay for a holiday trip or gifts.

    Using a student loan to finance a trip over the holiday break or a shopping spree might be tempting. But remember, your student loan is intended for educational expenses. Plus, you really don’t want to take on student loan debt for a short term benefit that you’ll be paying back for 10-plus years with interest.

  2. Avoid paying for everything with a credit card.

    Much like using a student loan, you’re better off to simply pay with cash and avoid using a credit card for holiday expenses. Credit cards will typically have high interest rates, especially if you carry a balance. If you can’t pay cash for your holiday purchases, it’s probably not worth the cost.

  3. Don’t feel obligated to buy gifts for all your friends and family.

    If you’re a student, your friends and family understand that you’re on a tight budget and may not have the resources to buy gifts for everyone. Simply spending some time with friends and family will likely be more meaningful than any gift you could purchase at the mall. Find ways to do small but meaningful things that will be appreciated.

  4. Don’t forget to set a budget or spending limit.

    It’s important to know in advance what you can reasonably afford to spend. It’s a good idea to set a budget for yourself and cap your spending at a certain dollar amount. That will help keep you on track and also let you plan better for the people on your gift list, and possibly help you cut back on the number of people on your list. Some families draw names for gifts or find other creative ways to help family members keep their expenses down and enjoy their time together.

  5. Avoid paying for gift wrapping or expensive gift bags and cards.

    It’s convenient to drop your gifts off and have someone else wrap them. However, there’s a cost for convenience and it simply might not be worth paying for. Buying wrapping paper after the holidays is a great way to save money and plan ahead for the next year. Plus, if you plan and don’t make all your gift purchases at once, you won’t be bogged down wrapping a lot of gifts at the last minute. Often, a card and a gift bag may actually cost more than the gift you’re giving.

With a little discipline and planning, you can set yourself up for a fun-filled holiday season without incurring the stress of spending too much or putting yourself into debt. Remember to enjoy the holidays and the time spent with friends and family. Many times, the best gifts are the ones that don’t cost anything at all.