Take Control of Your Reliance on Debt

Debt has gotten a bad reputation. What is debt really? It's an exchange of money borrowed from one party to another with terms. As scary as it seems, sometimes loans are absolutely necessary to plan for your future, offer your family security, or supplement funds needed in an emergency. Once you better understand your relationship with debt, you can start to control and even use it to your advantage. (Hello rewards credit card benefits!) Harnessing your borrowing power and financial reputation can put you in a position to have a better credit history, which can have a positive impact on your access to more affordable services. Let's break down debt, how it works, and why it's needed...

Loans can come in a few different forms but all fall under one of two types; secured, meaning the loan is attached to a piece of collateral, or unsecured, which is a loan that is backed only by the borrower's signature. Unsecured loans usually carry a higher interest rate as they are riskier. If you fully own something of value you could use as collateral if needed in an emergency. Yes, that includes your snowmobile, boat, camper, and the list goes on.

TIP: If you need a personal loan and have poor credit, ask your financial institution if you can use the money in your savings account as collateral for a secured loan(hyperlink to loans rate page). This can boost your credit and prevent you from dipping into your savings account for impulse purchases!