Save and Spend Wisely this Year with These Tactics

According to the Congressional Research Service’s COVID-19: Household Debt During the Pandemic report, the United States unemployment rate peaked in April 2020 at 14.7 percent. In March 2021, it was at six percent. These are higher than the unemployment rate in the Great Recession of 2007 to 2009 and are the highest rates since the Great Depression. From March 2020, about 50 percent of American households have experienced some loss in employment income.

Data from the Household Debt and Credit 2021: Q1 report of the Federal Reserve Bank of New York shows that in the first quarter of 2021, total household debt reached $14.64 trillion representing a six percent increase or $85 billion more than the fourth quarter of 2020. This comes from increases of $117 billion in mortgage loans, $29 billion in student loans, and $8 billion in vehicle loans. Credit card debt, however, decreased by $49 billion. This is the second-largest quarterly drop since 1999.

Credit Card Management

The drop in credit card debt is welcome news in the face of economic hardship. Many people cut down on spending or limit their credit card spending to an amount they can fully pay when it falls due. Make it a habit to thoroughly check your credit card statement and cancel auto-payments for things you can do without. Promptly report and contest any questionable charges.

Experts recommend keeping the credit utilization ratio or the percentage of available credit used to 30 percent or below. This will improve your credit score. Zero usage of the credit card will, however, not contribute to good credit history. Minimal use with complete payments on time is best.

It is crucial to check the interest rate of credit cards and choose the lowest rate. If you have several credit cards, consider consolidating your debt by transferring all balances to the card with the lowest interest rate. This will lower your monthly payments. It would be even better if you find a new credit card company that offers zero interest and will allow you to transfer your balances. With this, all your payments are deducted from your principal debt.

Keep the other credit cards active by using them for small purchases you need and can pay in full. The activity on these cards will add to your good credit history and length of credit use, boosting your credit score.

A high credit score is essential because it determines your qualification for loans you may need, such as housing and auto loans. A high credit score will also qualify you for lower loan interest rates.

Joining a Credit Union

Instead of using a regular bank, you will get more benefits from joining a credit union. According to, a credit union is a nonprofit cooperative that returns profits to members through higher savings interest rates, lower banking fees, and lower loan interest rates. The National Credit Union Administration (NCUA) manages credit unions. They provide insured deposits up to $250,000 per account through the National Credit Union Share Insurance Fund (NCUSIF) program fully backed by the U.S. government.

Credit unions offer savings and checking accounts, debit and credit cards, certificates of deposit, money orders, safe deposit boxes, online bill payments, and various loans. They require a lower account balance and are more lenient in screening borrowers, even those with low credit scores or previous bankruptcy. Credit unions can also provide debt consolidation with a debt management program that customizes monthly payments to what you can afford.

For home loans, credit unions offer a hundred percent financing with no down payments and no mortgage insurance requirement, plus a 20 percent refund on real estate commissions. Those with a current mortgage will benefit from refinancing it with a credit union at a lower interest rate.

There are various types of credit unions such as college credit unions serving specific academic communities; group credit unions serving specific organizations; employer credit unions serving specific companies, professions, or industries; military credit unions that serve military service members and veterans; local credit unions that serve communities; and federal credit unions that are nationwide and have few membership restrictions. You may qualify for several credit unions, but you must compare the benefits you will get from each one because they have varying interest rates and varying levels of services offered. For instance, a smaller community credit union may have lower interest rates. It will serve you better if you need a loan, but if you need accessible online and mobile banking, a larger national credit union will probably offer it.

Money Management

As money is tight nowadays, it is necessary to closely monitor spending and take every opportunity to save even a dollar. Dollars and cents accumulate fast in debt and savings, so it is a no-brainer to decide where you want it. If you put every dollar you do not spend into paying any existing debt, you will soon balance your finances.