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Payoff

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.

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.

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 From Nelnet’s partner. It just may be what the doctor ordered.

If you graduated from college this year, you may realize just how much student loan debt you have. With the average student loan debt at around $29,000 per student, it can be overwhelming to see that number and you may wonder how you are going to pay it back. Well, take a deep breath: you have several options when it comes to repayment. Don’t hesitate to give your student loan servicer a call because they will help you work through your options. Or, you can also follow these 4 steps to get ready for student loan repayment. It’s important to investigate your options and be prepared. It’s equally important to know a few things you should avoid.

Deferment & Forbearance

Deferment and forbearance allow you to temporarily postpone making payments or can reduce your payment for a period of time. Sounds great, right? So, what’s the problem? Your student loans continue to accrue interest. That interest could cost you thousands of dollars a year, depending on your student loan debt. Don’t delay the inevitable. You will have to pay back your student loans whether you pay them now or pay them later. Deferment and forbearance are great options if you have no financial means when you enter repayment. However, you shouldn’t use them as a way to delay paying your student loans. If you do need to go this route, try to at least make interest payments on your loans. If you don’t, the interest will capitalize leading to higher student loan debt and higher monthly payments once your deferment or forbearance expires.

Don’t Miss Payments

Make your payments every month and on time. If a loan payment is not made by the due date, the loan becomes delinquent until payment is received. Depending on your servicer or lender, this delinquency can affect your credit report as a negative mark, therefore negatively affecting your credit score. In addition, when you miss monthly payments, your payment will double, then triple, and continue to snowball which may put you in a situation that’s difficult to catch up on.

Avoid Scams

We’ve all heard the saying, “if it sounds too good to be true, it probably is.” It may seem enticing to pay a company to handle the stress of your student loans and promise you low payments or loan forgiveness, which are why these companies exist, but you’ll be wasting your money. Student loan servicers and lenders will not charge fees for finding a repayment plan that fits your needs. The U.S. Department of Education offers several student loan repayment plans and loan forgiveness, cancellation, or discharge for certain circumstances, but all of their services are free of charge.

Being prepared for repayment and understanding what you should avoid are two big steps to successfully paying off your student loans. Just remember, your student loan servicer is there to help you. If you need to adjust your repayment plan or just have questions about your student loans, give them a call (844.307.3451).

Considering paying off your student loan debt with your tax return or just a lump sum of money? There can be more to larger payments than meets the eye. Follow these steps to learn how to make the most of your lump sum payment.

1. Make a List

Knowing which loans you want to pay off first will help you get the most bang for your buck. Make a list of all of your federal and private student loans, the balances, and the interest rates. Then, based on your goals, weigh your options. You could put your lump sum payment toward your highest interest rate loans, or pay off your low-balance loans first. Paying off your highest interest rate loans reduces the amount of interest you pay. It also saves you money over the life of the loan. Paying off your lowest balance loans first could save you money on your monthly payment. Paying off your lower-balance loans allows you to put money saved from a lower payment toward your other student loans. This can help you to pay them off faster.

2. Talk to Your Loan Servicer

Check to make sure your loan servicer knows how you want your payments applied to your student loans. If you pay above the minimum payment and don’t specify how you want payments applied, your loan servicer decides for you.

Below is a sample letter put together by the Consumer Financial Protection Bureau (CFPB) that you can send to your loan servicer to ensure payments above your minimum monthly payment amount are being applied to the correct loan(s). For some loan servicers, this can be done online.

I am writing to provide you instructions on how to apply excess payments greater than the minimum amount due. Please apply payments as follows:

  1. After applying the minimum amount due for each loan, apply any additional amount to the loan accruing the highest interest rate.
  2. If there are multiple loans with the same interest rate, please apply the additional amount to the loan with the lowest outstanding principal balance.
  3. If any additional amount above the minimum amount due ends up paying off an individual loan, please then apply any remaining part of my payment to the loan with the next highest interest rate.

It is possible that I may find an option to refinance my loans to a lower rate with another lender. If this lender or any third party makes payments to my account on my behalf, use the instructions outlined above.

Retain these instructions. Please apply these instructions to all future overpayments. Please confirm these payments will be processed as specified. Otherwise, please provide an explanation as to why you are unable to follow these instructions.

3. Things to Keep In Mind

There are a few other things to be mindful of once you’ve decided where to apply your lump sum payment.

  1. Follow up with your loan servicer. Call or check your accounts online to make sure your payment was applied as specified.
  2. Making a payment larger than your minimum payment amount can sometimes advance your due date. This means another payment on your student loans won’t be due until your minimum payments catch up to your lump sum payment. While it can be nice to skip a few months of student loan payments, your loans still accrue interest and won’t save you any money. Even if your due date advances, continue to make your monthly payments to save yourself money in the long run.
  3. You can also save money on your student loans by refinancing. Refinancing allows you to combine both your federal and private student loans into a new loan with a new repayment term and interest rate, which can often save money over the life of the loan, or help lower your monthly payment.

Paying off your student loans is a great accomplishment. As you begin to make decisions around your personal finances, make sure to keep these tips in mind so that you can make the best choices for your financial future.