It’s been a tough two years living through a pandemic, and inflation isn’t making it any easier for a lot of people. According to a new Gallup poll, almost half of Americans (45%) say inflation has caused financial hardship. In times like these, it’s a relief knowing you can get a line of credit to help you in an emergency. A line of credit can be a safety net if an unexpected expense arrives, and you don’t have any money to handle it out of pocket.
Whether you’re dealing with an emergency today or want to be prepared before one arrives, this guide is here to help. It shares how to find the best possible line of credit (LoC) available and how to use it responsibly.
Going online makes rate shopping easy. You can open a new tab for every online direct lender you find. And with just a few clicks, you can compare their rates, terms, and conditions right there without even getting up off your couch.
You may even want to compare this to other emergency loans available online. You can find a simple resource on payday cash advances, installment loans, and lines of credit at MoneyKey, making it possible to evaluate all three options in one click.
Before applying for any offer, make sure you sit down with your budget. This spending plan will tell you how much expendable cash you have after taking care of important bills and savings.
Your expendable cash covers everything else in your budget—from subscription services and takeout to your eventual LoC. You have to make sure there’s enough of it to go around.
Refer to an online direct lender’s rates to understand how interest and finances charges will impact what you pay, keeping this in mind before you accept and use an LoC.
A line of credit isn’t like the plastic in your wallet. While you might safely use a credit card for everyday expenses, an LoC is designed as a backup in extenuating circumstances. It’s a safety net to catch you if your savings fall short of what you need in an emergency.
If you aren’t dealing with an unexpected emergency expense right now, keep your LoC in reserve. As long as you keep your balance at zero, you won’t have to make any payments, nor will you accrue any interest or finance charges on what you don’t use.
As a revolving financial product, most LoCs come with the option to make a minimum payment. It’s the smallest payment you have to make against your balance to keep it in good standing each month.
A minimum payment is usually a flat fee or percentage of your overall balance. If money’s tight, making the minimum is easier than your full balance.
But whenever possible, pay off as much of your balance as you can. This habit may help you pay your debt faster, reduce what you pay in interest, and free up your LoC limit for the next emergency.
After two tumultuous years, financial security may be top of mind for you in 2022. Having a line of credit at your fingertips can help you find that security, provided you follow these responsible tips.
