Personal finance tips | blog.firstffcu.com

If you’ve ever had a financial emergency, considered consolidating debt, or needed to make a big purchase – you might have considered a personal loan as an option to quickly help you meet your financial needs. A personal loan is a type of installment loan that can be used for nearly any purpose and usually comes with a fixed rate and monthly payment. Personal loans are typically unsecured, meaning they are not backed by any collateral and approval is based on your creditworthiness. Personal loans are popular among borrowers for numerous reasons, such as having interest rates that are typically lower than credit cards, knowing the exact dollar amount owed and end date of payments, and the flexibility with which the funds can be used. Consider these do’s and don’ts if you are deciding if a personal loan is right for you.

Don’t Forget to Evaluate Your Finances

Although it’s recommended to regularly check your credit report, it is especially important when applying for loans. A key consideration for lenders when qualifying you for a personal loan is your credit score. If your credit report has any inaccuracies that could be lowering your credit score, it is best to resolve these before applying for a loan. Additionally, a higher credit score will help you receive a more favorable interest rate. By reviewing your credit report before applying for a personal loan, you can look for areas of improvement – such as paying down debt or making on-time payments.

Do Compare Lenders

Getting a second opinion applies when you’re shopping for lenders, too. Taking the extra time to compare lenders and their offerings will help you pick the personal loan that is right for you. Factors that you might want to consider when comparing lenders are loan type, requirements for approval, available terms, annual percentage rate or interest rate, and fees. A common fee is a pre-payment penalty, which is an additional fee charged if you pay your loan off early.

Don’t Borrow More Than You Can Afford

Just because a lender approves you for a certain loan amount, doesn’t necessarily mean it’s right for your budget. In the case of an unsecured personal loan, a lender will qualify you for the loan based on your credit score and income – among other factors. Your lender doesn’t know your financial obligations that don’t appear on your credit report, or how your budget currently feels without this additional monthly payment – only you do. Before you sign and make your personal loan official, consider how this new monthly payment will impact your budget.

Do Consider a Secured Loan Option

Unlike an unsecured loan, a secured loan requires you to pledge an asset as collateral. This allows the lender to seize the collateral if you default on your loan, helping to recoup a potential loss. An auto loan is a type of secured loan, since the lender can repossess the vehicle if you default. Since you are pledging a valuable asset, you will likely get a lower interest rate with a secured loan option. You may also choose to consider a Home Equity Loan as another option, instead of an unsecured personal loan. However, it is important to be aware of the risks of secured loans – if you were to default on a secured loan, you risk losing your collateral (i.e. your home or your vehicle).

Do Be Cautious of Payday Loans

Payday loans are short-term loans of small amounts (typically $500 or less), and are meant to hold borrowers over until the next payday. Although this may not seem harmful to borrowers on the surface, these loans typically have large fees and extremely high interest rates. According to the Consumer Financial Protection Bureau, fees can be upwards of $15 per $100 borrowed, or $45 on a $300 payday loan – which is equivalent to an interest rate of 400%. Payday loans are meant to have terms of two to four weeks, just enough time for the borrower to repay the loan by their next payday. This gives the borrower very little time to repay – potentially causing the loan to rollover into another payday or be assessed with additional hefty fees. Although the instant funding and lax borrowing requirements may be appealing – payday loans can get you into a cycle that is very difficult to break, so it’s best to be leery of these.

For anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties – First Financial does have a payday alternative loan option with a lower interest rate, a personalized savings plan, and no-cost financial counseling options.** You can apply online 24/7 or give us a call at 732-312-1500, Option 4 – if you have additional questions.

If you need to borrow money for a large or unexpected purchase, or are looking to consolidate high-interest rate debt – a personal loan could be exactly what you are looking for. Our personal loans are an easy an affordable option, with interest rates starting at 10.24% APR.* For more information on any First Financial loan, you may visit a local branch or our website at firstffcu.com.

*APR = Annual Percentage Rate. Actual rate will vary based on creditworthiness and loan term. Subject to credit approval. Personal Loan repayment terms range from 12 to 60 months, and APRs range from 10.24% APR to 18% APR. Minimum loan amount is $500. Loan payment example: A $2,000 Personal Loan financed at 10.24% APR for 24 months, would have a monthly payment amount of $92.51. A First Financial Federal Credit Union membership is required to obtain a Personal Loan or Line of Credit, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan.

**Loans of $200 to $1,000 available for terms of one to six months. An application fee of up to $20 will be charged; other fees and charges may apply. At least one month of First Financial Federal Credit Union membership is required to obtain a Payday Alternative Loan, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. Not all applicants qualify, subject to credit approval. Rates vary based on creditworthiness, but will not exceed 28%. Terms and conditions of this offer may be subject to change at any time.

Not every payment method is the same. At First Financial, we believe that understanding the tools you have at your disposal – including cash, credit, and debit – is vital to achieving financial wellness. By using the right payment method for the right situation, you can enhance your financial security, budget more effectively, and make your money work for you.

Cash: The Tangible Transaction

Even in this digital age, there are certain situations where cash remains king. These include:

Small, Everyday Purchases: For small, incidental expenses like a cup of coffee or a quick snack, cash is a handy option. It helps keep track of your spending in a tangible way that digital forms of payment often can’t match.
Budgeting Tool: Cash can be a powerful visual aid in budgeting. Physically dividing your cash into envelopes or jars for different expense categories can give a clearer picture of where your money is going. Plus, when it’s gone – it’s gone.
In Case of Emergencies: Having some cash on hand for emergencies, such as power outages where digital payment systems may not work, can be a lifesaver.

Remember, while cash offers a direct, tangible way to control spending, it doesn’t provide any kind of record of your transactions or protection against theft.

Debit: A Bridge Between Cash and Credit

A debit card offers the convenience of a credit card, but works like cash because the funds are directly withdrawn from your checking account. It’s a useful tool when:

Avoiding Debt: If you are concerned about overspending or accumulating debt, using a debit card can keep you within your means – because you can only spend what you have in your account.
Digital Convenience: Debit cards offer the same ease and convenience as credit cards for online shopping and bill payments.
ATM Withdrawals: Need cash in a hurry? Your debit card lets you access your money at ATMs.

While debit cards provide more record-keeping than cash and less risk of overspending than credit cards, they may not offer the same level of protection against fraudulent transactions as credit cards do. That’s why it’s essential to have both. At First Financial, you’ll be instantly issued a debit card when opening a checking account.* Our debit card offers great features like no annual fees and more!

Credit: The Power of Borrowing

Credit cards allow you to borrow money up to a certain limit in order to purchase items. They can be a powerful tool in your financial toolkit when used responsibly:

Building Credit: Regular and responsible use of a credit card can help you build a positive credit history, potentially leading to lower loan interest rates and better terms in the future.
Rewards and Perks: Many credit cards offer rewards such as cash back, travel points, or other perks based on your spending.
Protection: Credit cards generally offer more robust protection against fraudulent transactions compared to debit cards.

The convenience of credit cards, however, can often lead to overspending and other common mistakes to avoid. It’s crucial to pay off your balance in full each month to avoid interest charges and potential debt accumulation.

Once you learn the tips and tricks to using a credit card, you’ll get to enjoy the benefits of having one. Whether you’re looking for a card with extra perks or are working on building your credit, we offer four different credit card options that will suit your needs. With our Visa® Cash Plus Credit Card, you can earn cash back on eligible purchases.**

Navigating Your Payment Options

Every payment method comes with its own strengths and weaknesses, and the best choice often depends on the situation. At First Financial, we’re here to help you navigate these decisions and make the most of your financial resources. Whether you’re choosing between cash, debit, or credit – our team is ready to support you with expert advice tailored to your individual financial circumstances and goals. Visit a local branch or call 732.312.1500 to get started.

As always, we encourage our members to spend wisely, budget regularly, and make informed decisions about their financial health. Stay tuned for more insights and tips on personal finance from us by subscribing to our First Scoop Blog!

*Debit Card must be linked to a First Financial Checking Account. Debit Cards are available for First Financial members with Checking Accounts only. A First Financial membership is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the program. Click here to view full Rewards First program details.

**Your First Financial Visa® Cash Plus Credit Card will earn cash back based on your eligible purchase transactions. The cash back will be applied to your current credit card balance on a quarterly basis and be shown cumulatively on your billing statement. Unless you are participating in a limited time promotional offer, you will earn 1% cash back based upon eligible purchases each quarter. APR varies up to 18%, when you open your account based on your credit worthiness. This APR is for purchases and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fees. Other fees that apply: Balance Transfer and Cash Advance Fees of 3% or $10, whichever is greater; Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa® Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties.