Connect with us

Tips and support

How Selective Borrowing Can Save You Money

jean pierre fumey



Borrowing Save Money

U.S. consumers had a total debt of $14.64 trillion as of the first quarter of 2021, according to the quarterly Household Debt and Credit report of the Federal Bank of New York.

Home mortgages made up a large part of the total, at $10.16 trillion. Student debts were at $1.58 trillion. Auto loans were at $1.38 trillion. Credit card debts were at $770 billion. Home Equity Line of Credit (HELOC) debts were at 340 billion.

Home mortgages, student debts, and auto loans all increased from the fourth quarter of 2020. The good news is that credit card debts decreased by $49 billion, the second-largest quarterly drop since 1999. HELOC debts also decreased by $14 billion.

Necessary Credit

Credit is a way of life in the U.S., and it is often difficult, if not impossible, to own a home, go through college, or buy a car without it. Many people aim to pay off all of their debt as soon as possible. This is a sound plan. Not everyone can afford to do so quickly, though.

The wise way to manage credit is to use it judiciously, only for things that are necessary. It is also essential to borrow within what you can afford to pay monthly. Otherwise, credit balances will pile up and you will end up paying interest on the interest.

Credit Card Usage

For those who have several credit cards, it is prudent to use only the card with the lowest interest rate more frequently. If possible, get a card that charges zero interest and transfer all balances to it so that monthly payments all go toward reducing the actual borrowed amount. If you do not qualify for a zero-interest card, look for one that has a low interest rate and gives cash backs on purchases or discounts on your necessities.

Do not cut up the other credit cards, though. Everyone needs to establish a long credit history, which means the period in which you use credit. Keeping your other credit cards will establish that. Use each one for a minimal amount every month on something you need and can pay in full.

Pay off each card immediately to avoid interest and late payment charges. This will build a good credit history of paying fully on time. If you do not have the money to pay the full amount due on your main credit card, pay the highest amount you can.

Building a High Credit Score

It is essential to build a high credit score in preparation for a time when you need to get a loan. FICO Scores are the most widely used and are available for free online. A score of 670 to 739 is rated good. Anything above that is better. Anything below it needs improvement.

FICO scores put a 35 percent weight on payment history, 30 percent on outstanding debt vis-à-vis available credit, 15 percent on length of credit use, 10 percent on credit mix, and 10 percent on the number of new credit applications. Applying for many new credit cards within a short period will lower the score.

For instance, you need to purchase a computer. Then you find the best custom PC builder online, and the company offers zero-interest financing for 12 months. You’d better have a good credit score to get approval. These are the types of credit that save you money.

Home Mortgages

When taking on any type of loan, it is vital to compare interest rates. On large loans, such as home mortgages, this is even more important. A tiny difference in interest rates will be equivalent to large amounts of money. While average interest rates are usually posted online, individual lenders vary in their offerings. Also, the interest rate offered to you is influenced by your credit score. A higher score can earn you lower interest rates.

It is more prudent to choose mortgage loans with fixed interest rates. This means you have a set amount to pay monthly through the years. You can then adjust your budget accordingly. If mortgage interest rates drop drastically, as they have recently, and fall below your mortgage rate, you can still avail of the lower rate by refinancing your mortgage. This means applying for a new mortgage at a lower interest rate to replace the old mortgage. Rate-and-term refinancing allows you to either pay the balance of your loan for the remaining period with lower monthly payments or pay the same amount monthly for a shorter period.

Good Credit

Credit that is within your means can help you stretch your cash flow and manage your finances. This is good credit. Choosing your creditors well and borrowing selectively will ensure that you do not overstep your boundaries. Credit used properly can make life easier, but when misused it can ruin your future.

Meta title: Prudent Use of Credit meta desc: Not all debts are bad, and you can even manage your finances better by choosing the right creditors and being a judicious and responsible borrower.


Jean-Pierre is a polyglot communication specialist, freelance journalist, and writer for with over two decades of experience in media and public relations. He creates engaging content, manages communication campaigns, and attends conferences to stay up-to-date with the latest trends. He brings his wealth of experience and expertise to provide insightful analysis and engaging content for's audience.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Top of the month

Copyright © 2023 STARTUP INFO - Privacy Policy - Terms and Conditions - Sitemap - Advisor


We are a global Innovative startup's magazine & competitions host. 12,000+ startups from 58 countries already took part in our competitions. STARTUP.INFO is the first collaborative magazine (write for us or submit a guest post) dedicated to the promotion of startups with more than 400 000+ unique visitors per month. Our objective : Make startup companies known to the global business ecosystem, journalists, investors and early adopters. Thousands of startups already were funded after pitching on

Get in touch : Email : contact(a) - Phone: +33 7 69 49 25 08 - Address : 2 rue de la bourse 75002 Paris, France