Which Loan Is Best For Your Holiday Borrowing Needs?
Make your Christmas season a bit merrier, by putting some thought into the best holiday borrowing to fit your needs. Let’s face it, we all tend to overspend on Christmas presents, entertaining and even stocking stuffers. Making the wrong borrowing decision can deflate your holiday spirit pretty quickly when you realize the impact on your finances.
So how do you make a more informed holiday borrowing decision? Take the time to research the best holiday loan products for your particular needs. There are many options for your holiday borrowing needs, but most consumers tend to rely on credit cards and personal loans. Homeowners looking to make larger Christmas purchases may take advantage of a home equity loan or HELOC for holiday expenses. How do you know which is the right product for you? Read on to learn the pros and cons of the various holiday borrowing options.
Credit cards for holiday borrowing
Credit cards can be a good option when shopping for Christmas presents or for other holiday expenses, but only for those who can pay off balances quickly. It’s a perfect solution if you’re expecting a big holiday bonus or another payout that will enable you to pay off balances in January. Credit cards, when paid off quickly can also help you improve your credit score. If you are using a high-interest credit card and can only make minimum payments, the debt will linger, costing you a lot more than you may realize. Credit cards are designed to be used for short-term borrowing needs. If you plan on paying off your credit card balances as soon as the new year rolls around, then, by all means, take advantage of a good rewards credit card for holiday spending. Check out Spirit Financial Credit Union’s VISA credit card. As an added bonus, you will earn cash back on your purchases. Certain credit cards can provide you with some pretty good rewards for your holiday spending. Find one that’s right for you.
If this blog is catching you at the tail end of your spending and you’ve already gotten in over your head with credit card debt this holiday, you may want to consider a balance transfer credit card special. Balance transfer credit card promos will enable you to transfer the balances of higher-interest rate cards to a lower-rate, balance transfer special for a limited time. If you can pay off the card in that low balance period, it can help you from overpaying on interest. Tap here to learn more about Spirit Financial’s VISA balance transfer credit card benefits. Keep in mind that carrying very high credit card balances and not making timely payments can damage your credit score. That’s a big drawback of relying too heavily on credit cards.
Personal loans for holiday borrowing
Unsecured personal loans and Christmas loans are other popular choices for holiday shoppers looking for some extra cash. A Christmas loan is simply a personal loan with a more festive name. Personal loans enable you to borrow just what you need to get through the holiday season and spread the cost out of a certain term. The rates are typically better than a credit card interest rate, depending on your credit score. You’ll have the benefit of a fixed monthly payment and a pre-set term, so you know when your loan will be paid off. For some people, Christmas loans are a part of their holiday tradition.
A personal loan is a great way to avoid high-interest credit card bills for those who know they need time to pay off debt. The downside is that your holiday expenses will ultimately cost more because of the added interest payment. Similar to credit cards, you need to be sure you make your payments on time, as to not hurt your credit score. If you’re considering a personal loan, shop around for the best rates and terms. Look for a loan with low or no fees. Be sure to include your local credit union in your search. View Spirit Financial’s personal loan rates or apply for a personal loan online.
Home equity loans and HELOCs for holiday borrowing
When the season greets homeowners with large purchases to make this Christmas, a home equity loan or HELOC may be the best answer. Both allow you to tap into the equity in your home for a low-interest loan. Rates are typically lower than credit card and personal loan rates. A home equity loan or HELOC may also enable you to borrow a larger amount than a personal loan, depending on your home’s equity. The downside of this type of loan is that your home is used as collateral. The risk is losing your home if you don’t pay back the loan. That’s a big gamble if you’re not sure you can afford the payments, so be aware. If you have the equity, are comfortable with the monthly payments, and need to make a large purchase this holiday season, a home equity loan or HELOC may be your best bet. Shop around and compare rates and fees. You want to get the best deal. Visit Spirit Financial Credit Union for more information on home equity loans and HELOCs.
Make the right holiday borrowing choice
We realize you don’t need the added stress of being short on cash this holiday season, so we hope this gives you some options to help with expenses. Whether you decide on credit cards, personal loan or home equity loan, Spirit Financial can help with all of your borrowing needs. Be sure to start the season by creating a realistic holiday budget. If you have extra money in your account, try not to rely too heavily on credit cards and use your debit card instead. It will help you from building up too much debt. How can you avoid holiday borrowing next year? Start now and put aside savings for next year’s expenses. You’ll be glad you did.