Holiday Loans - The Better Option for Holiday Expenses

If you’re like most, you may not have money saved this year for the holidays. Likewise, you may be tempted to rely on credit cards for this year’s holiday expenses. However, this may do more damage to your finances in the long run. Not to mention, if you already have outstanding balances on your credit cards, adding new expenses to them can result in more financial challenges. 

Our goal is to help you make the best financial decisions possible. That’s why we put together four reasons a personal loan for your holiday shopping might be a better choice than credit cards.

1. Lower, Fixed Rates

Interest rates on personal loans are typically much lower than rates on credit cards, particularly when compared to high-interest bank and store-sponsored credit cards. Plus, personal loan interest rates are usually fixed, whereas credit card rates tend to be variable. Variable rates mean the rates can suddenly increase with market fluctuations. When you have a fixed rate personal loan, the rate will never change.

2. Only Spend What You Borrow

With a personal loan, you will typically receive the full loan amount in one lump sum. This means you’ll know ahead of time the total amount of money you have available for holiday shopping. By limiting your spending only to this borrowed amount, you’re likely to reduce your overall holiday spending versus relying on credit cards.

With credit cards, your finances can quickly spin out of control. The limit on just one credit card could be much higher than the amount of a personal loan, leading to you spending more than you realize. Further, with higher interest rates on credit cards, it can take much longer for you to pay off the balance and cause you to pay significantly more in interest.

3. Set Payments

Personal loans have a set repayment period. That means you’ll know exactly when your debt will be paid in full. With credit cards, it can take years to pay off the balance, particularly if you can only make the minimum payments. By making set monthly payments, you’ll eliminate your debt quicker and help improve your credit score.

4. Removes Temptation

The joy and excitement of the holiday season can easily cause you to spend more than you anticipated. This is especially true with credit cards that allow you to borrow more money continuously. With a personal loan, you receive the borrowed amount upfront, and this is a great advantage.

When you receive your personal loan, agree to keep your holiday spending within this limit. Create your holiday budget based on your borrowed amount and restrain yourself from spending any extra money.

It’s important to remember that surprises will pop up, so keep some money aside in your budget for unexpected holiday expenses.

With the holidays comes fun family traditions, gifts …and expenses. Plan ahead this year with a personal loan from the credit union. We’ll help you avoid long-term debt, pay less interest vs. high-interest credit cards, and stick to your holiday budget. 

 

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