Uncertain economic times are making us cut back on spending, drive less, eat out less, use more coupons.
Credit is tight across the country. It may be harder to get a loan, especially if your credit score isn't sparkling. And if you do get it, you could pay higher interest rates.
If you already have credit card balances and other loans, I hope you're clamping down to pay off the balances.
But what would happen to your finances if the interest rate on that credit card or loan increased by a few percentage points?
Although the current credit crisis generally doesn't seem to be affecting military banks and credit unions as much as other financial institutions, some adjustments are being made.
For example, one reader asked why Navy Federal Credit Union has upped the annual percentage rate on its checking line of credit — which is attached to a checking account and helps prevent bounced checks — from 12.5 percent to 14.9 percent.
"Why in the world is the interest rate going up on my share check line of credit at a time when all other interest rates are falling?" asked Terry Craft of Odenton, Md.
It was a business decision, said Susan Brooks, assistant vice president of consumer lending for Navy Federal. The decision factors in the rates of competing financial institutions and the risk that the credit union takes in making this type of loan.
"Most people use [the checking line of credit] if they are running short between paydays," she said. "It's really an alternative to a payday loan."
She also notes that the line of credit is a fixed rate. "We haven't raised [the interest rate] in over 10 years," she said. "It's still a very competitive rate."
Navy Federal notified its members Sept. 18 that the rate would change Oct. 6.
Pentagon Federal Credit Union, another large credit union serving the military community, has an overdraft protection line of credit feature with an annual percentage rate of 14.65 percent.
Pentagon Federal also offers a "personal line of credit," with an interest rate currently set at the prime rate plus 3 percent. As of Nov. 1, the rate goes up to prime plus 6 percent.
The perspective of the Association of Military Banks of America is that "there is no indication of any negative impact on folks banking with our banks," said Andrew Egeland, president and chief executive officer of AMBA.
Some banks are making tweaks; for example, Armed Forces Bank has changed its loan limits on home equity lines of credit, Egeland said. The ratio of the amount of loan to the value of the home has changed from 90 percent to 80 percent, reducing the amount of equity a homeowner can borrow against.
Brooks said Navy Federal is still making loans to first-time borrowers, as well as to its other members. The credit union has always been conservative in its practices and has never made subprime loans, she said.
Navy Federal has noticed a trend in car buying — more people are buying used cars, and the car loans are for smaller amounts than the previous year, Brooks said.
Although some people are using credit cards more, others are being more conservative, she said — about a 50-50 mix. But people generally are being more careful about what they're buying on credit, with fewer luxury items, she said.
"You should be judicious in the use of credit at any time, not just now," she said. She advises making more than the minimum payment on credit cards and other loans, and shopping around for the best deal before buying.
And as always, ask yourself: Do I need this? Learn the difference between want and need. After all, every dollar saved is a step toward financial security.