Managing Debt

Seven Tips to Manage Debt Responsibly

Consolidate Debt

Barbara Morrison-Ritenour |
Posted on Oct 25, 2020

By the time young people today reach midlife, they are more likely to be buried under student loans and saddled with credit card debit---and, perhaps, a large mortgage---than they are to have an established emergency fund and plans for retirement. In an effort to reverse this trend, below are seven important questions to help individuals at any age manage debt responsibly for a lifetime of financial security. 

  1. Are you aware of all your monthly payments, and do you include them in your budget? This may seem obvious, but many people have no idea what their total debt burden is each month. In addition to housing, food, utilities, transportation, clothing, entertainment and gifts, be sure to include credit card payments, auto loans, personal lines of credit and any other debt obligations when budgeting your income. 
  2. Do you pay your bills on time? In addition to protecting your credit history, paying your bills on time avoids costly fees and late charges. For example, if you are often late paying your credit card bills, you may see your interest rate increase. 
  3. Do you record all your debit card transactions? In addition to keeping your account in order, by recording all of your debit transactions---purchases and cash withdrawals---you avoid costly fees you may incur by overdrawing your account or bouncing checks. 
  4. Have you reduced your interest rate whenever possible? Research credit card interest rates. You may learn there is a lower-interest card for which you qualify. Consider getting a loan with a lower interest rate to pay off a more expensive loan; investigate what is required and whether you qualify. Call your bank, explain your situation and ask for a lower rate. Remember that when you lower your monthly payments, you extend the length of the loan, and therefore the time you are in debt as well as pay more in interest. 
  5. Have you applied for a secured major credit card? To build or rebuild your credit, you may need to consider applying for a credit card secured by a deposit account. After a few months of responsible use of a store or gasoline credit card, a deposit of $500 to $1,000 may be all you need to get your first major credit card. 
  6. Have you accumulated more debt than you can comfortably pay each month? Determine what percentage of your income can be spared to pay off debt, commit to this amount and do not exceed it by charging more. 
  7. Do you protect your credit information? Don’t become a victim of fraud! Keep records of all your accounts and the numbers to call if a card is lost or stolen in a safe and secure place. Never give out your personal financial information over the telephone, online or otherwise to businesses or others who contact you. This includes your checking account number, credit card number, passwords, or other account information. Only provide this information when you have initiated the call or transaction.

In the fall of each year, financial institutions throughout the United States support Get Smart About Credit, a national campaign---established by the American Bankers Association Foundation---that organizes banker volunteers and provides resources to educate teens and young adults about the importance of using credit wisely, paying for college, managing your money, and protecting your identity. This campaign recognizes the need to raise awareness about the importance of personal financial skills for a secure financial future.

Barb Morrison

Barbara Morrison-Ritenour
Community Banking Manager