Debt Consolidation is Key

Now that the holidays are well behind us, tax season is in full swing. The big question that always comes up in our household is what to do with that tax return.  We are bombarded with all the furniture stores, electronic stores, and new car ads luring us in with their special deals so we’ll spend that tax return money. My son just got a 60 inch plasma TV with surround sound with his money (yeah he fell for it), but maybe instead of bulking up on the latest gadgets, maybe now is a better time to look at what debt we already are carrying and see how best to consolidate it to help pay it down quicker.

Did you know that if you have a credit card and you use more than 1/3 of your limit it actually can hurt your credit score? You can pay perfectly on all your debt, paying down more than minimums, but if you’ve got cards that are maxed out, or close to being maxed out you still are damaging your credit.  This is known as your "level of debt," which is measured by how much of your limit that you are using. Having a high credit balance, relative to your credit limit, increases your credit utilization and decreases your credit score.   Stick to the 30% rule – never put more than 30% of your limit on each of your cards. If you find that you’re having a hard time with that, you can transfer some of your balances to other cards to bring the balance down to 30% or lower, or even ask the provider to increase the limit so that your balance is lower.

Did you also know you can look at things like your car or home to refinance and pull equity from to help pay those higher interest rate cards down to a point where you can help your credit?  Add to that the money you get back from your tax return and you can get yourself closer to your goal of getting out of debt.   

One of the things I LOVE about credit unions is they care about their members to the point of looking at your whole financial picture and helping you find solutions that work for YOU – not them.  It’s pretty simple:  banks need to satisfy shareholders so they must make money to keep that group happy. At a credit union, they exist as not-for-profit cooperatives; which is a fancy way of saying they don’t have pressures to satisfy shareholders, they work for you…period.

So if you are anxiously waiting for that big deposit from Uncle Sam, or if you’ve recently received it, instead of measuring for a new TV set, make an appointment with a Financial Service Specialist at TropicalFinancial Credit Union to help you get complete control of your finances from a place that truly cares about you.  Give us a call today at 888-261-8328.

^Amy