National Credit Education Month Offers Opportunity to Evaluate Financing Options
In March, credit professionals, financial experts, and lending institutions are recognizing National Credit Education Month. Purchasing Power, a voluntary benefit company offering the leading employee purchase program, is encouraging all consumers to use the month as an opportunity to brush up on their credit awareness skills and their knowledge of all financing options.
“It’s a fact of life that unexpected and new expenses are going to happen such as household appliances wearing out or tires that suddenly need to be replaced,” said Assad Lazarus, Chief Client & Development Officer, for Purchasing Power. “And when that occurs, many consumers turn to credit cards or other more well-known payment options to cover new or unexpected expenses.”
“When those expenses come up, consumers need to be both credit savvy and knowledgeable about all of their financing options,” he added. “What may look like a quick financing lifeline at the time may have longer-term financial implications.”
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The Bureau of Labor Statistics recently reported that inflation in the U.S. climbed to its highest level in 40 years in January, with prices rising by 7.5% from a year ago. During the last three months of 2021, credit card balances increased by $52 billion – the largest quarterly increase in the 22-year history of the data. To make matters worse, the January rise in the consumer price index (CPI) was the largest since February 1982, reflecting significant price increases for food, electricity, and shelter.
Wage and salary increases aren’t helping because higher inflation and the rising cost of living means that employees will have less spending power this year.
Conventional credit options such as credit cards; buy now, pay later; and rent to own may be an appropriate solution for new and unexpected expenses. However, another option for consumers may be an employee purchase program.
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With an employee purchase program, employees can purchase consumer products and services via automatic paycheck deductions over a 6- or 12-month period. There’s no credit check, zero interest, and no hidden fees, and the automatic deduction helps ensure employees don’t face the consequences of missed payments. Price points may be higher; however, without accruing monthly interest, making even payments over a set time offers more value in the long run, plus easier monthly budgeting.
“Consumers should be aware of the terms of their financing options before making a purchase using any financing method,” said Lazarus. “In some situations, there may be voluntary, financial well-being benefits available through the consumer’s employer. An employee purchase program, for example, may be a better option for an unexpected and unplanned expense.”
Still recovering from pandemic financial woes and now facing rising interest rates and record inflation, consumers are searching for ways to meet short-term purchasing needs. Being credit-educated and considering alternative credit options like voluntary benefits will mean consumers are making smart credit choices even for short-term purchases and avoiding compromising long-term financing options.
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