Line of Credit and Savings
When line of credit rates and credit card rates are low, it is tempting to use these to make a purchase, where you normally would have saved or put off that purchase. The temptation to use these low rates is great, where saving the money to make the purchase outright, does take time.
Saving Vs Low Interest Rates
If you opt to use the low interest rate on a line of credit from your bank or credit union or your credit card, before you know it, the balance on these will be higher that expected and it could take you a lot longer than expected to pay off these debts. It is surprising how fast the balance on these can increase so quickly.
These credit options can lead you to a situation where you have more bills than income coming in. Also, emergency situations can happen, and if you don’t have enough saved up for this, it can put you further into the hole.
Don’t wait too long to deal with your current debt level. Always keep on track of how much your line of credit and/or credit card limits are, and make sure you are making payments on these.
If you want to make a purchase for a house, or a family vacation, plan in advance and save up. Having a savings account you can rely on for an emergency, or a special purchase can make things a lot easier for you now and in the long run. Even at low interest rates, it is still costing you money per month.
Teach your kids good spending habits. Imagine if kids had credit cards and purchased what they want, when they wanted. It would get out of hand. Teaching them good spending habits early on, will help them to become more financially responsible when they are older.