5 Tips to keep you in the Black

As we roll into December, we’ve listed a few tips to keep you in the black this Holiday season:

1. Pay more than the minimum.  Paying the minimum on your credit card payments covers your monthly interest and barely touches your principal amount.  If you want to avoid paying mostly interest fees and get your debt paid off sooner, pay more than the minimum payment each month.  This will also show the creditor how serious you are in paying off your debt; and your room for negotiation in the future will be made.
2. Don’t use the same bank for everything.  Do not obtain a credit card or line of credit from the same bank that you have a savings or cheque account with.  Why?  If you fail to make a payment on a bank-issued credit card or line of credit, that same bank can take the funds from your bank account without your permission.  It is always a safer bet to separate your pools of funds to maintain control.
3. Watch those ATM fees!  ATM fees can take a big toll your balance if you use machines that do not belong to your bank.  You will pay at least $1.50 for each transaction; and if you visit the ATM machine to withdraw $20 3 times a week that’s $4.50 in fees.  Multiply this by the remaining 3 weeks in a month and you’ll find you would pay $13.50 in fees!  That’s worth a lunch at a fine restaurant.  You work too hard to part with your money from this.  Instead, try to use your bank’s ATM machine and avoid those unnecessary fees.
4. Don’t overspend to get a deal.  Holiday shoppers are buzzing the malls these days, all trying to find that perfect gift for their loved ones.  To allure shoppers into their stores and reward them for purchases, retailers are giving gift cards, discounts or flash sales.  These are ways to surprise and delight shoppers!  As enticing as these discounts may be, there are conditions to them.  For some retailers shoppers would need to spend a certain amount $$$ to qualify, or an offered discount would require shoppers to return within a few days to purchase more to receive a discount.  Most people would not return to the same store on the weekend to purchase again, if they just purchased on the Thursday of the same week.  No matter what the retailers “deal” is, it may require shoppers to purchase “more” to receive it.  Moral of the story, make sure you do not purchase more than you are prepared to spend in order to receive a discount you may not use.
5. Here are a few things to consider when using a Home Equity Line of Credit (HELOC) to help pay off debt.  Did you know the financial institution lending the money puts a second mortgage (or modifies the original mortgage to capture all the equity in the home) on the borrower’s home?  Did you know a HELOC could negatively affect a credit rating or future loan applications?  Did you know when you take out a line of credit, your home becomes the bank’s security for any credit card debt, or other loans you may have with the bank; or any other loans you have co-signed?   That means when you sell the property, the bank may demand that other loans or credit cards be paid off, even if you carried a balance on the card for years without a problem.  Here’s the better option – call OCCA and we will negotiate your debt with your creditors to pay off debt in repayment plans you can afford, without jeopardizing your home.

We hope our tips will help you budget within your limits to avoid overspending and debt!  Happy shopping!  For more helpful tips on how to save money and manage your debt, check out the OCCA Blog.

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