DCU Show Me - June 2009

StreetWise Guide to Using Financial Services

To learn more about smart borrowing at DCU, stop by any branch or visit dcu.org.

Loans and credit cards can be the key to making your dreams come true: attending college, buying a car, and purchasing a home. They can also help pave the way to a solid financial future by helping you build a strong credit history. But borrowing money can also get you into trouble if you don't know how it works.

The cost of borrowing can be steep. First, there's the interest. For example, let's say you borrow $3,000 to pay for a car at a 9% interest rate. You agree to pay back the loan within 36 months, so your monthly payments are $95.40. At the end of the loan, you will have paid a total of $3,434.40 – that's $434.40 in interest!

And if you don't pay on time, the cost is even higher. Not only will you owe additional penalty fees, but your failure to pay can ruin your credit rating. A bad credit rating can make it difficult to borrow money in the future, and can even affect your insurance premiums, ability to rent an apartment, and land a job.

Take Charge
You have the power to borrow wisely and build your credit. Here are a few tips to keep in mind:

Pay your bills on time and in full. This will help you avoid late fees and extra interest as well as build a positive credit history.
Look before you leap. Before you borrow money or use a credit card, consider whether you can make timely payments. If not, don't buy it.
If you overspend, fix it. If you spend more than you can afford on a credit card, call DCU and we'll help you formulate a plan to repair the damage.

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Visit Show Me and FoolProof Solo online for more money management advice and ideas. Visit dcu.org and select "StreetWise" then "Show Me."

Digital Federal Credit Union
PO Box 9130
Marlborough, MA 01752-9130
508.263.6700 • 800.328.8797 • dcu.org • dcu@dcu.org
TTY 800.395.5146 (For hearing impaired only)