Helpful habits for responsible borrowing

MANILA, Philippines — Responsible borrowing is an important component of financial literacy, along with budgeting, saving and investing money. Credit is not necessarily a negative as long as you are borrowing for a reasonable cause and you are able to manage your loan wisely. Sharpening your financial skills can help set you off toward financial stability and ultimately, freedom.  

With the onset of digital transformation, innovative financial services are increasingly available through fintechs like Cashalo. Cashalo is committed to giving Filipinos access to a suite of meaningful digital credit products that are secure, convenient, and fast. They provide alternative funding that can be used for emergencies, lifestyle needs, personal goals and entrepreneurial pursuits.

Alongside these products, Cashalo is also promoting responsible borrowing through education.  The company believes that not knowing how money works or failing to understand the concepts of interest and repayment schemes leads one to poor financial choices and an endless cycle of debt.

To be a more responsible borrower, Cashalo shares important concepts to learn and helpful habits to acquire.

• Understand interest rates

Keep in mind that with interest rates, the sooner you repay, the better. Before committing to availing a credit product, come up with your own computation and carefully compare it with the lender’s repayment scheme. Make sure there are no hidden charges.

• Create a monthly debt payment calendar

Make a list of the people or entities you owe and how much you owe them. Put them in a calendar so you can mark the due dates and create a better perspective of your amount due. This is a convenient way to remind you of your due financial responsibilities.

• Pay your bills on time

Know the consequences of skipping payments or missing due dates. Bad behavior will hurt your credit score (a number which indicates your creditworthiness, based on your credit history)  and prevent you from accessing other financial services. Hence, avoid missing your due dates at all costs because it will only make it harder to repay your debt.

• Make the minimum payment

When a full repayment is not possible, pay at least the minimum amount of your monthly amount due. This may not show significant changes when paying off the amount which is due, but it sure keeps the amount from growing. It’s better to pay the minimum than to skip payment to avoid interest and late charges.

• Manage your expenses with a budget plan

Create your own budget plan. This will help you to identify and study your fixed and variable expenses, factor in savings and investments, and set a clear picture of how much you need to spend daily or even monthly.