Caution: Payday Lenders!

Payday loans are called so because the principal on these loans is typically required to be repaid on your next payday. Payday lenders provide fast funds to borrowers with a job and a checking account. And most payday lenders charge annual percentage rates from 300% and up. Watch this video from our Home&Family Resource Center. It is a personal account of a credit union member who got stuck in this cycle. Do you know somebody in a similar situation?

Credit is bad…myth or reality?

The reason many Americans end up in financial trouble is because they don’t understand debt and credit. To be more responsible with your finances, understand the reality behind many common myths:

Myth: You have to use credit in order to buy anything. Guess what? If you don’t use credit, you’ll never have debt. If you want something, save for it.

Myth: Credit is bad. Like anything else, if credit is used incorrectly, it will hurt you. Credit is good for many things, such as buying a home. You can use a credit card to make purchases — as long as you have the cash to pay for the monthly bill.

Myth: There’s always bankruptcy. When your debt is out of control, filing for bankruptcy should be your absolute last resort. It stays on your record for ten years, making it difficult to get certain loans, life insurance, or even jobs.

Myth: Paying the minimum monthly payment means you’re handling your debt well. In fact, you’re only extending your debt for an even longer time. Also you’re paying much more than the original price of your purchases. If you can’t pay more than the minimum payment, take it as a sign that you’re teetering on the financial edge.

Myth: It’s a good idea to consolidate your credit card debt into a home equity loan. Many people are under the mistaken impression that a home equity loan is a great way to make interest tax deductible. By doing so, you put your home at risk if you default on the loan.