Lending is one of the ways a financial institution makes money. So, it might seem odd that a credit union which makes money by lending would talk to you about debt reduction. After all, the less money LGFCU loans out, the less business the Credit Union has.
The fact of the matter is we like loaning money to members. But all loans are not created equal. Some loans are good for you. Conversely, some debts are harmful. It’s important to know the difference between the two.
Good debt improves your life. Good credit can help you get the home of your dreams, buy the right vehicle for your family and purchase the necessities of life. The purpose of good debt should be to help you get ahead in life.
Good debt can be easily recognized. A good loan is affordable and has fair terms. A borrower should be able to make the payments without too much sacrifice. The price for good debt should be reasonable and not too costly. The price of debt includes interest, fees and other requirements.
On the flip side, there are telltale signs to spot bad debts. One sign of bad debt is burdensome payment amounts. If you are struggling to make the payments, you may be in over your head with bad debt. Bad debt can create friction in your family and stress in your life. Bad debt makes your life worse.
If you have bad debts, there are ways to make matters better. If high interest rates are the problem, shop for lower rates. If the payment amounts are too much for your budget, consider refinancing several bad debts into one good loan. The lower, consolidated payment could give you the breathing room your family needs.
If you have bad debts, do something about it. Contact your Credit Union for a loan that will do you some good.