credit cards

Changes In The VantageScore System

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The VantageScore system is getting an overhaul. Many people wonder what kind ofa1522-credit2breport changes are being made and how will this affect the way their score is calculated.

The VantageScore, which dictates the way credit bureaus — Experian, TransUnion and Equifax — determine your credit score, is going through a shake-up this fall. The company is looking deeper into specific circumstances and what they say about your financial responsibility.

Having a favorable credit score comes into play when you need to qualify for financing on a new car, if you’re opening a new credit card, or you want to take out a loan. In each of these scenarios, your credit score is the most important deciding factor for your approval, and will also influence your terms and interest rates.

It’s important to note that the new system will not impact mortgage loans. This is because few mortgage lenders use VantageScore; most use FICO scores to verify eligibility.

The changes will affect the credit scores of many people, though, for better or for worse. It’s wise to learn all you can about these changes so you can make the necessary adjustments to your credit behavior.

Lucky for you, we’ve made it easy! We’ve broken the changes down into the three main areas they impact, and then we’ve simplified it by telling you what these changes mean for you.

Read on to learn all about it!

1.) Trended data and trajectories

What it means:

Under the modified system, VantageScore won’t just check if you’re meeting your minimum monthly payments; it will consider trended data, too. This means the company will analyze the trajectory of your debts on a month-to-month basis. They want to know the direction in which your finances are going. Are you gradually paying down debt, or are you scraping by with the minimum payments as your balance slowly grows?

What it means for you:

In the past, your score wasn’t affected by growing debt as long as you were making the minimum payments on your cards. Now, if you’re careful about making the monthly payment but your balance is increasing each month, your credit score will take a hit.

Conversely, if you’re working toward actually paying down your debt, your score will likely get a boost. If you don’t fall into this category, it’s time to get serious about doing away with your debt for good. Even small steps toward this goal will be recognized and rewarded.

2.) Large credit lines

What it means:

Having lots of available credit was once considered a mark of good credit. After all, if the companies deemed you responsible enough to merit all that credit, it’s gotta be a good thing, right? Well, not anymore.

With the new system in place, VantageScore will mark a borrower negatively for having excessively large credit card limits. The theory behind this rationale is simple: lots of open credit means the borrower can quickly rack up a huge bill.

What it means for you:

If you enjoy an excellent credit score, you likely have a large line of credit available and will be negatively impacted by this change unless you take action. This change also upends the old advice that the more credit cards you have open, the better. The rationalization behind that maxim was to build your available credit, and thus, improve your score. With the modified system, though, the opposite is true.

Let’s say Bob has $4,000 in credit card debt with a $40,000 limit across several cards. He’s only using 10% of his available credit. In the past, this would net him a higher credit score. Bill, on the other hand, has $1,500 in debt out of an $8,000 limit. In the past, this modest credit limit would lower his score.

With the new changes in place, the realities are shifting. Bob, who has a lot more available credit, will likely score lower than Bill, who only has $6,500 available to borrow.

Aside from those who enjoy prime credit scores and have several open cards, this change will also affect people who enjoy playing the credit card rewards-and-points game.

Whichever category you fall into, it’s best to use less than 30% of your available credit. Also, if you have a large credit line open across several cards, consider closing some of your cards to lower that number. Finally, if you’re thinking of opening a new card in the near future, ask for a smaller credit limit over a larger one.

3.) Medical debt, tax liens and civil judgments

What it means:

Medical debt, tax liens and civil judgments will no longer be factors at play when determining your credit score. These elements are being removed with the rationale that they often harm a credit score prematurely and are later proven erroneous. Civil judgments and tax liens are often inaccurate, and can significantly lower one’s score before the error is corrected. Similarly, medical debt can hurt credit scores before insurance can reimburse the borrower for the payments.

What it means for you:

If you’ve had any of the above dragging down your credit score, you have cause to celebrate. In fact, you might even see a jump of as much as 20 points to your score! On the flip side, if you have negative marks from things like delinquencies and debts that have gone to collection agencies, this new rule won’t help you much.

If you are looking for a way to track your credit score for free, take a look at WalletHub.*

*Please note: WalletHub gives you TransUnion and VantageScore credit scores.  Not all lenders use TransUnion, so your score when you apply for a loan may be different.

Your Turn: Do you think the new system encourages responsible use of credit? Why or why not? Share your thoughts with us in the comments!

SOURCES:
http://onemileatatime.boardingarea.com/2017/04/19/credit-score-changes-2017/  
http://www.cnbc.com/2017/04/19/major-changes-coming-to-how-your-credit-score-is-calculated.html   
https://amp-usatoday-com.cdn.ampproject.org/c/amp.usatoday.com/story/100653342/   
http://www.pressherald.com/2017/04/24/changes-coming-in-the-fall-to-how-major-credit-score-is-calculated/
https://www.thepennyhoarder.com/smart-money/changes-might-raise-your-credit-score/
https://www.nerdwallet.com/blog/finance/vantagescore-fico-score-the-difference/
https://thepointsguy.com/2017/04/changes-credit-score-calculations/ 

Help! I Overspent On Christmas!

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It’s so easy to go overboard on Christmas. If you have kids, you want everything to be perfect for them. You want to build priceless memories, so spending any amount seems worth it. If you’re just getting started, you want to impress your family with how together you have things. Giving extravagant gifts to your family members seems like a great idea … until you’re staring at a huge credit card bill in January.

However it happened, it’s important to approach this problem rationally. Constantly blaming yourself won’t fix the problem. The important part now is to right yourself financially. You can’t take back gifts and return them at this point. You have to deal with the situation that’s in front of you.

Fortunately, you’re not alone. Destinations Credit Union is here to help. Check out these four ways you can patch up your finances and have things right before summer.

1.) Budgeting advice

It can be very tempting to make only the minimum payments on the credit card you used to buy Christmas. Unfortunately, it’s also the best way to ensure you’re in debt for all the Christmases from here on out.

Making minimum payments on credit cards prolongs the length of time you’re in debt. It also makes the total amount you pay for your debt skyrocket. Making just the minimum payment adds an extra $175 to a $10,000 balance at 21% APR.

What you need is an aggressive debt repayment plan. The question you should be asking yourself isn’t, “What’s the least I can pay on this debt?” Instead, identify the most you can afford to pay. Destinations Credit Union can help with informative guides and worksheets on household budgeting.

Making an extreme budget is usually not a good choice, but in this case, it’s essential until you get yourself out from under that holiday-fueled debt. Make some sacrifices and get ready to tighten your belt for a little while. Yeah, coming up with an extra $35 or $50 a month is tough, but it’s the easiest way to get things moving.

2.) Refinancing major purchases

If you went overboard on one or two major purchases, like a car for a teen, it may not be credit card debt you need help overcoming. Slick dealers offer crazy-sounding incentives like zero down and zero percent financing on cars to entice people to give cars for Christmas. Unfortunately, once you’ve signed on the dotted line, you may see you’re in for more than you can handle with a car payment.

Destinations Credit Union can help. Our auto and other major purchase loans often feature rates that are better than dealerships. You may need to finance over a longer term to manage the monthly expenses, or you may just need to restructure to pay less now. Either way, you’ll find more favorable and flexible terms with us than you will at the dealer. 

3.) Debt counseling 
Does reading those credit card statements fill you with a dizzying sense of despair? Destinations Credit Union can help you make sense of them.

Make an appointment to speak with a debt counselor.  Through our partnership with Accel, Destinations Credit Union offers free unlimited debt counseling. You’ll gain a better understanding of your rights and responsibilities. You can also come up with a realistic plan to pay off your debt and avoid falling into the same trap next year.

4.) Personal loans

Instead of making dozens of minimum payments, wouldn’t it be nice to focus your debt into one manageable plan? A debt consolidation loan can do just that. Best of all, it can save you money in the long run by lowering your interest rate and monthly payment commitment. Rather than paying a credit card APR, you can get the low fixed rate on a personal loan.

Although collateral, or something to secure the loan, can help get you a lower interest rate, it isn’t necessary. All you need is some basic personal information and a willing partner, like Destinations Credit Union. Our loan specialists can help you organize and simplify your payments, working toward a debt-free life.

Your Turn: Feeling buyer’s remorse after a big holiday spending spree? Let us know about it in the comments. If you’ve got a system to stay on budget, help your fellow members and share your wisdom!
SOURCES:
https://www.nerdwallet.com/blog/credit-cards/minimum-payment-credit-card/
https://www.igrad.com/articles/what-to-do-after-you-have-overspent-on-christmas
https://www.debt.org/consolidation/


Make The Nice List With Your Credit Card Use

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It’s that time of year again. He’s making a list, and he’s checking it twice. Of course, we’re talking about the major credit bureaus! With holiday spending season upon us, it’s time to broach an uncomfortable subject: how to pay for all that joy and goodwill.
The holidays can be an expensive time of year, and it’s tempting to turn to plastic to finance the whole thing. Consumers are planning to spend more this year than last year, with only 24% of Americans planning to reduce their holiday spending. Regardless, the average American plans to spend $812 on the holidays this year, and that’s more than most people have just sitting around or in their savings.
In the spirit of the holidays, let’s look at some “naughty” and “nice” ways to use your credit cards. Be sure to stay on the right list, or there may be coal in your stocking – and smudges on your credit report!
Naughty: Financing gift-giving with credit
If you don’t have the money sitting around to finance your gift-giving, it can be tempting to pull out a credit card at every store and shop ’til you drop. That’s exactly what most people do when spending with credit. A recent study of consumer behavior found that people spend nearly 20% more when shopping with a credit card. The dissociation between plastic and money can erode our ordinarily thrifty impulses, causing us to overspend.
There’s also interest to contend with. That $812 could easily turn into $1,000 or more thanks to the power of compound interest. Even deferring payment for a month can cost you quite a bit! Less than a third of Americans pay off their holiday credit card bills immediately. Most will end up carrying a balance that can make it hard to start the new year right. In fact, consumer counseling agencies see a 25% increase in requests for help in January and February. Holiday spending can be the last straw for people barely getting by while making minimum payments.
Oh, and by the way, you might end up ruining the surprise on Christmas morning! If you put something special for your someone special on a joint credit card, they might see it on the credit card statement. Nothing ruins a perfect gift like a spoiled surprise.
Nice: Paying for holiday travel
If you’re traveling for the holidays, it can make sense to use credit cards. Most major credit cards offer insurance for rental cars and extra cancellation policies for flights in case things change at the last minute. Using a credit card to make reservations at hotels, rental agencies and other book-ahead services can also prevent the company from placing a hold on your account as a deposit.
Remember to make a clear budget for your travel plans and stick to it! Resist the impulse to take frivolous upgrades. Holiday travel is a chance to bond with family, and fancier hotel sheets won’t help with that! Keeping a clear budget will make sure you can pay off that credit card bill next month and avoid costly financing charges.
Naughty: Guilt spending
The holidays are full of messages that connect spending to caring. These messages would have us believe that, if you love someone, you’ll get them jewelry or another extravagant item. Advertisers encourage consumers to make emotional decisions about spending, rather than looking at what they can afford. Credit cards make this even easier by letting you postpone paying for the gift.
Instead of telling someone you care with borrowed money, show them you care with a thoughtful message and a reasonable gift that’s based on what they want. Don’t buy into the myth that dollars are a meaningful quantification of your feelings. Give sensible gifts with money you have.
Nice: Spending rewards on holiday purchases
If you use a rewards card throughout the year, now’s a good time to cash those points in. Most companies offer discounts on two commodities everyone needs this time of year: travel and gift cards. You can use your rewards money to help absorb some of the impact of gift-giving. Picking up gift cards this way can make last-minute gift-giving easier.
It might also be worth investigating the possibility of giving travel points or miles directly to others. This can make a difference for relatives who travel frequently, or make a trip home feasible for people who live far away. Look into using your rewards generously this year!
Your Turn: How do you manage your holiday spending? Are there secret tricks to keep those costs down, or are there techniques you use to keep you within budget? Let us know in the comments!
SOURCES:
http://abcnews.go.com/Business/story?id=88539&page=1
http://moneyqanda.com/spend-wisely-with-credit-cards-this-christmas/
http://www.moneymanifesto.com/use-credit-card-rewards-to-pay-for-christmas-2376/
https://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/
http://www.daveramsey.com/blog/credit-free-christmas


Get These Things Out Of Your Purse Or Wallet Now!

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Your wallet can become a lot like a junk drawer you carry around. It’s cluttered with loyalty cards, coupons, cash, checks, store credit cards, credit cards for gas, credit cards for everyday purchases and a host of identification cards. That much bulk can make your wallet or purse a serious hassle to carry. Even worse, though, you may be setting yourself up for identity theft.

Even though it’s all packed into one place, if it is stolen, each item has to be accounted for individually. Forget even one and you set up a thief to take your credit for a ride. That’s why it’s a good idea to give your purse or wallet a good once over. Look for things you don’t regularly need and store them in another location for use when you do need them.

There are also things you should never carry in a purse or wallet. If you see these items as you’re trimming down your daily carry, take them out immediately.

1.) Your Social Security card

There are only a few times when you absolutely need your Social Security card. If you’re starting a new job, opening a new account or applying for some kinds of government benefits, bring the original card. It’s easy enough to stuff the card into your wallet or purse for one of these occasions and then forget about it.

That could be a big mistake. Thieves can use your original Social Security card to apply for all kinds of unsecured debt in your name. Canceling your Social Security number and getting a new one is a complicated, time-consuming process, and you may be liable for the fraud that’s committed before you complete it. Having your Social Security card stolen is one of the worst things that can happen as far as your personal information is concerned. Keep yourself safe, and get the card out of your wallet! Put it in a secure location in your home, like a lockable desk drawer, file cabinet or safety lock box.

2.) Receipts

This is by far the easiest way to accumulate paper in your wallet. Every single purchase generates a tiny slip of paper. Because you never know which might be needed later, you stick them all into your wallet or purse. Before you know it, you’ve got a novel-sized stack of transactions.

This could be serious trouble if your purse or wallet is ever stolen or lost. While regulations prevent retailers from printing more than the last four digits of your credit card number on a receipt, that could be enough for someone to start building a profile of your purchases, especially when used with the rest of your wallet, like your driver’s license. Thieves can use the last four digits of your card number to fish for more information with a merchant who has the card on file, like a cable company or an online retailer. While they may be caught once you report the card stolen, they’ll have all of the time in between to rack up charges.

If you’re in the habit of using receipts to track your purchases, think about going paperless. Use one of the dozens of mobile scanning apps to turn your phone into a digital filebox. This information can be encrypted to keep it out of the hands of malicious people, but still accessible to you if you need to check a purchase or balance your account.

3.) Tons of credit cards

Every store offers its own card and usually offers incentives to use it, too. Whether it’s a purchase discount or cash back, retailers really prefer to keep their credit card processing in-house. If you shop at a few of these stores, those cards can really add up. Tack on an extra couple of cards for gas purchases, everyday expenses, and work-related stuff, and you could easily end up with a wallet or purse chock full of plastic.

If your wallet or purse is stolen, though, each one of those cards has to be canceled individually. Forgetting even one can put you on the hook for hundreds or thousands of dollars of purchases. It’s best to thin your collection down to the one or two you use regularly. Look for those that can be widely used, provide the lowest fees and best acceptance rates. Put the rest of them into a safe place at home, using them only when you need them.

Once you’re down to your top cards, make a list of their numbers and the steps you’d need to take to cancel them if necessary. Put it next to your Social Security card in a safe place. That way, you know exactly what cards to cancel!

YOUR TURN: It’s time to think about what’s tucked into your purse or wallet. What items make your “essential carry” list and what can you safely leave behind?
SOURCES:

https://blog.mint.com/how-to/whats-in-your-wallet-and-how-can-you-clean-it-out-0214/

http://www.creditcards.com/credit-card-news/9-things-to-know-about-credit_card-receipts-1273.php

https://www.gobankingrates.com/personal-finance/things-never-keep-wallet/ 

Good Ideas, Bad For Credit: How Your Responsible Choices Can End Up Hurting Your Credit Score

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I’ve had some trouble with credit in the past, but I’m trying to turn over a new leaf. I think I’m doing everything right, but my credit score still isn’t rising! What gives? 

Credit scores can affect you more than you know. Employers look at credit scores. Landlords look at credit scores. Bill providers look at credit scores, and they might decide to charge you if yours gets too low. With all this pressure, you’ve no doubt started working on some good habits for improving your credit score. You pay your bills on time, are sure to not max out your credit line and work hard not to default on a loan. You might be surprised to find out that some actions you take to improve your credit score are actually hurting it. 

If your credit score isn’t where you want it to be, it might be due to one of these habits. Read on for four good ideas that might actually be hurting your credit score:

1.) Debt settlement

Settling your old debt can seem like an easy way to get out of a sticky situation. You make an agreement with a third party, pay a part of your debt and the owner writes off the rest of it.

However, unless it’s at least 90 days since the debt was due, it’s always better for your credit score to pay the debt back in full yourself. Settling a debt for less than you owe can take your credit score down as much as a hundred points. This happens because the debtor only took your settlement on the assumption they’d never see the full amount you owed. Future lenders worry that they’ll end up in the same situation, and that makes them hesitant to lend.

2.) Turning down credit

It might seem like a good idea to reject a higher credit limit. If your credit card offers to boost your limit, that might seem to indicate you have more money to spend. If you’ve struggled with responsible credit management in the past, you might want to turn it down in an effort to keep your spending in check. Keeping your credit limit low can give you a budget and a sense of security regarding when you’ll stop yourself from spending.

However, a higher credit limit does come with benefits. To be exact, it can boost your score quite a lot through a something called a credit utilization ratio. That’s the ratio of your credit card balance to your credit card limit. The less you spend relative to what your limit is, the higher your score in terms of this one factor. That means, if you have a higher credit limit, you’ll be using less of it, and therefore increasing your score.

3.) Avoiding credit cards

With all this rigmarole and paperwork, many people might think it’s easier to just not have a credit card at all. While it might make your life simpler at first, it can complicate your relationship with credit in the future. You might not need credit for day-to-day things like buying groceries or gas, but you will need it for a home loan, auto loans and to prove to potential landlords and employers that you can be trusted. So long as you’re paying everything on time and not carrying a high balance, a credit card is much more beneficial in the long run.

4.) Closing paid accounts

Paying off a credit card can be a big struggle. Once it’s over, your instinct might lead you to throw it away, burn it or otherwise have it completely out of your life once and for all. Credit reporting agencies say something different, though. Since 15% of your credit score is the length of your credit history, you want to keep your cards for as long as possible.

Additionally, your credit utilization score is worth 30% of your total score. Closing a credit card account also kills available credit, which lowers that balance-to-limit ratio. You can destroy the card itself and delete its record from online shopping sites to be certain you’ll never accidentally use it, but don’t cancel it. Even after all that, you should keep the account open (provided there’s no annual fee attached to it), just to keep your score up.

Credit scores have never been easy. There’s an endless number of twists, turns and troubles to keep in mind. It may seem like there’s no one on your side in this struggle. Yes, you have to be in charge and be responsible enough to pay everything on time. Destinations Credit Union can help. Call, click, or stop by today to get help with budgeting, credit management or debt consolidation.

You don’t have to go it alone.

Your Turn: Any tips or tricks you use for managing debt and/or improving your credit score? What has seemed to work or not worked?

How To Get By In An Emergency: Personal Loan Or Credit Card?

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Unexpected expenses, by nature, can come out of nowhere. Your check engine light comes on, and your car demands you put another thousand dollars into keeping it on the road. That cough that just won’t go away turns out to be more serious than you thought. Your air conditioner gives up during the longest heatwave you can remember. No matter what causes these personal catastrophes, they all have one thing in common: They’re expensive. 

The best financial advice suggests a rainy day fund for situations like these. However, for many people, that’s just not practical. Just getting to the end of the month can sometimes feel like an emergency. An emergency fund is one of those things it’d be nice to have, but there’s just no room for it after the bills have been paid.
 

If you feel the pressure of not knowing where your emergency spending could come from, you’re not alone. A Federal Reserve survey found that 47% of Americans would not be able to come up with $400 in an emergency. The way they’d cope with that emergency? They’d borrow.
As a credit union member, you have options when it comes to borrowing. Two of the most popular choices for emergency funding are a personal loanand a credit card.
There are pros and cons to both, so let’s take a look at a few.
1.) Limits
Credit cards are generally designed to cover day-to-day purchases. They have credit limits in the thousands, which is enough to handle most small appliance purchases and some car troubles. Most of the value of credit cards is in the convenience, though. Because it’s a credit line you have to use as needed, there’s no need to apply for a new loan each time you incur an expense.
However, many people may not have a high enough credit limit to cover a major medical expense, a significant home repair, or a big appliance. This is where many choose to utilize a personal loan.
Your personal loan approval amount depends on several factors, such as your income, credit score, and other assets. For borrowers who have a good credit history and a strong ability to repay, these loans could be $10,000 or more. That’s enough to cover most serious expenses that come up out of nowhere.
2.) Repayment options
Credit card repayment is typically handled on a monthly basis. You’ll have a minimum payment, which, if you’ve got a high balance, might take a long while to pay off. There’s no fixed term to repayment; so if you continue to charge while making only minimum payments due, paying off your loan can take forever.
A personal loan, on the other hand, will include a fixed monthly payment that will let you repay the loan in a set amount of time. You’ll sign paperwork at the beginning of the term, which spells out exactly when you’ll be done repaying the loan. The loan is amortized, or set up so you’re making equal payments to cover both interest and principal over the life of the loan. There’s no penalty for early repayment, either. So, if you find yourself ahead of schedule, you can pay off the balance and save some money!
3.) Usability
Credit cards only work at a merchant terminal. While they’re accepted in many places, they are not universal. If you’re trying to pay family or friends, a credit card may not be the easiest way to get it done.
A personal loan is deposited directly to your draft account. Although you’ll usually be sending it directly to the entity where the money is owed, the money is yours. You can withdraw it as cash, write checks, or use auto draft features.
If you’re trying to work out a reduced price for a major expense, many businesses are willing to offer a cash discount. Businesses pay for processing credit card fees, which can be quite a bit of money, so a cash payment can work to the advantage of everyone. If you’re working with a hospital on a medical expense or a dental office, they may be willing to negotiate a lower fee in return for cash payment as well.
4.) Interest rates
Credit card interest rates can be high. Exactly how high depends upon your credit score and the kind of card you have, but 15% is the global average. Some credit cards may offer introductory rates that are considerably lower, but at the end of that introductory period the whole balance is converted to the higher interest rate – meaning you’ll also be charged more interest on what has not been paid off.
Some credit cards also have fluctuating interest rates that can go up or down based on the prime interest rate (Destinations Credit Union’s MasterCard has a fixed rate that does not fluctuate). Credit card companies are allowed to change your interest rate if your credit score changes dramatically. Fluctuations in your interest rate can make it difficult to plan for your financial future.
A personal loan has a fixed interest rate at the time you get the loan. Provided you don’t miss a payment, your interest rate will never increase. You can make a budget for the future that involves paying a fixed amount over roughly a 5-year period.
Interest rates on personal loans also tend to be much lower than on credit cards. For people with average credit, interest rates can be as much as 5% lower than those on credit cards. For people with better credit and higher incomes, that interest rate is even lower.
As a member of Destinations Credit Union, you have access to the competitive rates for personal loans and loans in general. If you’re between a rock and a hard place, Destinations Credit Union can help you out. Call, click or stop by today!
Your turn: What’s your emergency financial plan? Where would you go if you needed $400 for an unexpected expense? If you’ve been through a financial emergency like that, any advice for those who might be in a similar situation?
SOURCES:

https://www.nerdwallet.com/blog/loans/cheap-personal-loans/
http://www.valuepenguin.com/average-credit-card-interest-rates

https://www.nerdwallet.com/blog/credit-cards/credit-card-issuer-raising-interest-rate-5-times/

http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/


New Year’s Resolutions

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By the end of January, many of us will have forgotten all about our New Year’s resolutions. It can be difficult to change our lives, even when it’s for the better. Knowing this, we want you to know that, in your financial life, there are changes you can make today that will last the entire year. Here are three resolutions you can set today and some follow-up goals for the rest of the year. 

Today:  Save money automatically.  If you want to improve your net worth, build financial security or make a big purchase at this time next year, the easiest way to do so is simply to automate your savings. You can set up an automatic transfer to savings so you won’t be tempted to spend it. With many of our savings products, you can even access the money if an emergency arises. 

Later:  Set up an emergency fund.  How much do you have set aside for a rainy day or to cover the unexpected?  If an emergency came up, would you have to sell investments, cash in your retirement or borrow from family?  Make this the year for setting up your emergency fund.  You’ll eventually want to have at least six months of income put aside where you can get to it. for now, start with $1,000, a month’s income, or whatever feels realistic.  It might be difficult to get in the habit of saving money, but this is the resolution you’ll be really happy you kept if something unexpected happens. 

Today:  Pay down your debt.  If you’re struggling with debt, there are three basic solutions for paying it down, getting your payments under control and getting ahead of debt.  You can make more frequent payments, pay more each month or lower your interest rates. 

Paying more frequently makes sense if you get paid every two weeks: You might already know about the advantage of bi-weekly payments, which let you make the equivalent of an extra monthly payment every year.  If you’re already doing that or you don’t get paid on a weekly schedule, you can also increase the amount you pay every month. Even an extra $25 per month is $300 per year, and you can set up those payments automatically. Make sure you increase your payments the most on the bills with the highest interest rates first, even if they don’t have the largest balances. 

Finally, you can get ahead of your debt by lowering your interest rates. You can call the creditors who are charging you the highest interest rates and pay the bill, transfer the balanceto a credit card or loan with a lower interest rate, or see if they’ll offer you a lower rate due to improved credit. One way to make this work is to arrange a home equity loan at a lower fixed rate, then move your balances with the highest interest rates to the loan. 

Later:  Get control of your spending. It’s time to make a budget and stick to it. Build rewards into the budget so you’ll actually be happy to follow it. Take a look at what you use your credit cards to buy, then budget at least some money for those items or activities. You’ll never keep a resolution like “stop eating out,” but you have a good chance of keeping a resolution like “don’t go over the eating out budget.” This also gives you 12 chances to succeed: Every month you can do better than the month before. 

Today:  Make a drawer.  Many of us who have had the misfortune to act as the executor on a loved one’s estate have had the terrible task of finding all the savings, debts, insurance policies and other financial parts of their lives.  Don’t do this to whomever is taking over your life. Empty a drawer in your kitchen or study and put as many relevant documents in it as you can find.  Make a list of everything in the drawer and everything that’s missing. Put a copy in the drawer and another with your will so it’s as easy as possible for the grieving individual in charge. As with any sensitive, personal data, keep this information in a safe place that only you and the likely executor(s) of your estate will have knowledge. 

Later:  Fill the drawer. What’s missing from the drawer? Do you have a will? How much life insurance do you have?  Do you have enough savings to take care of your children? What about a plan for how they will receive that money? 
Talk to a financial planner and insurance specialist to make sure you’re set. With any luck, 2016 won’t be the year you need it, but if it is, it’ll be better for everyone involved if there’s a plan.
And that’s it … three things to do today and three projects to complete during the year.  None of them are out of reach, so you’re setting yourself up for success by making resolutions you can keep.

Prep Your Finances for Success in 2016

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Brought to you by our partner Accel Financial Services
With 2016 just around the corner, many people will make resolutions to manage their personal finances better.  Whether that means saving more, or setting up a personal budget, the suggestions can get overwhelming.
Here are four easy personal finance goals for you to consider, to start the New Year on the right path:
1. Set up a money management system that works for you

Different systems work well for different folks, but here are a few ideas:

  • Write down your income and all of your monthly expenses. Look for opportunities to trim expenses, wherever you can.
  • Identify the areas where you might overspend, and then decide to use cash for these transactions. Then, limit the amount of cash you put in your wallet each week to the amount you’ve decided to spend. Seeing the amount of money available as a fixed, finite thing can help you control your spending. 
  • Set up automated budget alerts with a service such as our MoneyDesktop financial management program within online banking.

2. Review your credit report 
Visit www.annualcreditreport.com to receive one free credit report annually from each credit bureau. 

If you’re having trouble understanding how to improve your credit, a free credit report review through the Accel program can help.
3. Begin to save 
Once you’ve got a workable budget, automate the process of saving. Setting up direct-deposit into savings makes it much more likely that you’ll save. Plus, paying yourself first helps the money to be “out of sight and out of mind,” so that you’ll be able to stick more closely to the spending plan you’ve set for yourself.
It’s important to reach a point where you have a balance between short-term savings and long-term (retirement) savings. It should be a priority to try to adjust your budget, so that you can take advantage of any employer-sponsored retirement plan that your job might offer, especially if the employer offers a contribution match.
4. Get serious about reducing debt 
One of the first steps in decreasing your debt load is to stop adding to it in the first place. Begin to get out of the habit of using credit cards for purchases.
If you have consumer debts, look for ways to try to reduce your overall interest costs and fees. Through our credit union’s partnership with Accel, you have access to a Debt Management Plan, which may reduce interest rates, lower monthly payments and waive late fees, for free!  To learn more, call 877-332-2235 or visit www.accelservices.org.

Holiday Spending Is Getting Smarter, But You Can Be Smarter Still

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The average American will spend nearly $900 on holiday presents this year. If you have two adults in your household, that’s almost $1,800. The odds are good that you’ve already spent a good chunk of that on Black Friday, Small Business Saturday, and Cyber Monday specials.  In looking at the sales numbers from the weekend, Americans are getting smarter about how they spend that money.  Brick and mortar stores suffered about a billion-dollar decrease in sales from 2014, largely avoiding many of the big-ticket items that lure customers into waiting overnight in cold parking lot lines.  Instead, consumers pushed online purchases to a record high of $4.45 billion, roughly 20 percent more than last year. At the time of this writing, Cyber Monday sales had not yet been released, so we can’t compare those. 
In addition to this, sales numbers indicate earlier spending, more diversified spending and shopping carts that were more full at fewer locations.  All of this points to people purchasing items they had selected before the big weekend sales, then spending less time browsing and far less time in the harsh winter conditions and occasional inhuman violence that only cheap electronics and toys can provoke.
Even with the transition to warmer, quicker and more pajama-clad shopping, the money being spent is astounding.  The odds are also good that you don’t remember everything you bought for the holidays last year, and even if you do remember what you were given, it probably doesn’t add up to hundreds of dollars worth of things you still use.  If you don’t remember or use what you were given, the people who received gifts from you probably don’t either.  So why do we insist on spending so much of our hard-earned money on cheap plastic junk? Is there a better way to spend that money?
Yes, we’re getting smarter about how we spend on the holidays. But let’s set up a plan today to be in an even better position at this time next year. 
Step One:  How much did you spend or will you spend this year? 
Consider how much you’re going to spend this year.  If you’ve finished your shopping, then you can use your receipts.  Otherwise, you can estimate what else you plan to buy or just use the $900 per person national average.
Next, add to that how much you’ll spend in interest on credit cards while you pay off the balances.  If you’d like to avoid the math, you can estimate that the total cost is $1,000, because that’s a nice round number for this exercise. 
Step Two:  Putting away that money for next year. 
To use this money as intelligently as possible, it’s a good idea to save as much as possible ahead of time.  That way, compound interest is in your favor instead of working against you.  Start with one of our savings plans. A great option is our Holiday Club, which offers easy automatic deposits and doesn’t let you withdraw prior to the due date without a penalty. If you are more disciplined and not worried about using the money prior to the holidays, another option is our High Yield Account, which will pay a higher dividend if you’re ready to put the money into savings today.  
Step Three:  Paying off this Christmas. 
It’s time to get those credit card payments down so we can move into the new year with a clean ledger.  If you’ve got the extra income, pay them down with that, but we also know times are a little tighter for many of us.  Luckily, your credit union has a variety of solutions for paying down credit card debt: 
  • Home equity loans are great for high balances, because they turn high interest credit card debt into low interest home equity debt.  Also, if the Federal Reserve raises the prime interest rate early next year, you’ll be protected by a fixed-rate loan.  If you don’t want all the math, a home equity loan reduces the interest you pay, so you can pay off your loan more quickly.
  • If you don’t want a home equity loan, your credit card debt isn’t that high, or you don’t own a home, you could also consider transferring your higher rate balances to a Destinations MasterCard Credit Card.  We offer incredibly low rates, so you can transfer your higher interest balances onto a lower interest card, which will let you pay off the debt more quickly. Plus, there is no fee for balance transfers and no annual fee for the card.

Step Four:  Cutting costs. 

Make a list of everyone for whom you’ve bought gifts and how much you spent or will spend.  Then, go through and imagine what would happen if you got them nothing.  Would life be worse?  Would it be embarrassing?  Do you really need to give everyone something?  For those you feel an obligation to gift, keep them on the list for next year. For those you don’t, send them a card.  For anyone about whom you’re unsure, how about a gift of home baked cookies? Simply cutting out a few people can save you several hundred dollars every year.  Ask yourself:  would I rather avoid a potentially awkward situation or have a new … well, you probably know what you’d rather buy with several hundred dollars.
If you’re worried about last minute awkwardness in case someone gets you something, there’s a really simple solution:  Buy a few cards, write a general inscription inside, sign them, and add a gift card to a big store you’d shop at anyway.  Would anyone be upset at an Amazon gift card?  Then, if you need it, you can write the name of the person in question on the envelope and hand it to them.  If you happen to have any of these standby gifts left at the end of the holiday, the gift cards are yours to keep:  call it profit. 
Step Five:  What will you do with your money? 
At this point, you’ve paid off holiday 2015, and by the time holiday 2016 rolls around, you’ll have saved more money than you need since you saved enough for this year but cut costs for next year. Interest has worked in your favor, and suddenly your next December is one in which your pockets will be full.  That gives you 12 months to decide what to do with your money.  Reinvest it in a savings plan? Buy supplies to open that web store you’ve always wanted? Take a class or learn a language? Maybe your dog needs a little brother or sister.
Whatever you do, it’s probably going to be better than that necktie you got for Bob in accounting this year, and it’s all for you. 
Sources: 
http://www.zacks.com/stock/news/199560/why-did-black-friday-sales-fall-by-1-billion?cid=CS-GOOGLE-FT-199560&google_editors_picks=true   
http://www.statista.com/statistics/319562/us-consumer-spending-by-seasonal-event/ 
http://fortune.com/2015/02/12/nrf-retail-forecast-2015/  

Keep Yourself Safe During The Holiday Season

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Every year, we hear about the same holiday safety tips – don’t drive tired, don’t drive drunk, assume every other driver is drunk and/or tired, etc. Those are all good ideas to keep in mind year-round. Occasionally, we’ll hear one that’s specific to the season, like how frying turkey in the driveway is as dangerous as it is delicious, and it’s also not something to try while drinking or overly tired. Unfortunately, this time of year is also one of financial dangers, many of which you won’t hear about on the morning news or read about in the paper.  Take some time, read our tips, and hopefully you won’t be a holiday victim. 

Keep an eye on your surroundings – Crowded malls and shopping centers are a savory opportunity for pickpockets.  You’re expecting to get bumped and won’t notice one more jostle in a day full of them.  If you do recognize you’ve been robbed, the thief can probably get away into the crowd, disappearing like a needle in a haystack.  Purses should be worn across the body, wallets kept in the front pocket or inside a closed jacket.  Consider leaving the house with the bare minimum, such as your driver’s license or ID, health insurance card and our debit card – which offers fraud protection and security features not available with cash. 

RFID, RFID, RFID – Today’s pickpockets don’t need to take your wallet to cause you problems, because many modern debit and credit cards emit RFID signals with personally identifying information.  If any of your cards have a chip, then you need to account for them. Check our RFID wallet guide for some tips. In a pinch, you can wrap chipped cards in two layers of aluminum foil, which will offer you protection from high-tech pickpockets, but you may get some bewildered stares or questions from folks at the register.

 

Don’t leave checks in the mailbox – At some point, we all learned not to use those colorful envelopes that tell thieves which cards might have checks in them, but we never learned the next step: Don’t put checks in the mailbox at all.  It’s not hard for thieves to grab stuff out of the outgoing mail, whether it has the power company’s name on it or is shaped like a holiday card.  Drop all checks into a big blue mailbox, bring them into your post office branch, or hand them to your postal carrier in person.  By the way, this tip should be followed year-round, and you might want to consider setting up our online bill pay feature to minimize the number of checks you write, as well. 

Understand the dangers of every form of payment – Every form of payment has its dangers.  Cash is portable and untraceable, so it’s a target for thieves.  Cards without EMV chips are in danger from skimmers built into the card reader at registers (like what happened at Target).  EMV cards can be skimmed by people with specialized equipment who bump up next to you.  All cards, cash and mobile phones are in danger of being stolen.  Some experts are even saying that check fraud will be the most dangerous type of identity theft over the next five years.  Even if you attempt to return to agrarian-era bartering, an enterprising thief could run off with the cow you were going to trade for an Old Navy gift card.

Take a breath, recognize the dangers and take reasonable precautions. Do you know what kind of fraud protection you have on each of your credit cards?  Any card about which you’re unsure needs to stay home until you find out.  Unsure about a small boutique’s cyber security? Bring cash. 
Bring your own bag – Shopping bags are a great way for stores to advertise, but they also advertise to thieves.  “This overburdened, overtired, potentially unwary individual is carrying goods from all of these stores,” the bags say “some may even have receipts in them and might have been paid for with cash.” Don’t make it easier for thieves. Instead, bring a tote bag that zips up if you have one, or your canvas grocery bags if you don’t. 
Take a trip to the car – Carrying too much is asking for trouble.  It makes you less mobile, you’re less likely to feel someone remove an item from your bags, and even if no one hassles you, it’s a good way to end up with back pain.  If you’re enduring a marathon trip to the mall, take time every few stores to take your purchases out to the car. Keep receipts in your wallet and take pictures of the bags you put in your trunk (where thieves can’t see), so even in the worst possible scenario, your car insurance can cover the loss of your shopping from a car thief.
Plus, you’ll have less to carry, you’ll get some exercise, and the cold air can help you clear your head to decide if you need to purchase anything else.  Not a bad way to keep from overspending! 
Buy yourself a holiday drink from the coffee shop – You’re probably safer if you’re alert, but that’s just an excuse.  Holiday coffee drinks are delicious, you want one, and we just gave you an awesome excuse to justify the everyday luxury of a peppermint mocha to yourself.  You’re welcome. 
January is coming, be ready – If you’re going to binge on holiday shopping in December, you’ll need to purge in January.  Keep all of your receipts and do an extra-careful reconciliation of your accounts in January.  Be ready to spend a few afternoons making phone calls to make sure every charge is correct and accounted for.  Make sure to check your credit report in January as well.  While you’re checking your credit and your accounts, take the opportunity to start the new year off right:  you have your financial info gathered already, you have your credit report in front of you and your W-2s are starting to show up, so it’s time to do three things:
  1. File your taxes.  Don’t get mad at us, it’s not our fault.  We’re only reminding you to do it early because you’ll already have most of what you’ll need, so getting your homework done on Friday will give you the rest of the weekend off. And don’t forget to have any refund directly deposited to your Destinations account.
  2. Rework your debt.  You have every one of your credit card and other account statements in front of you, so it’s time to make some calls.  For your higher interest cards, it’s time to pay them down, transfer the balances to a MasterCard at Destinations Credit Union or negotiate a lower rate.  This is easier if you’ve got some cash in hand, possibly from the tax refund you now know you’re getting.  You can also take this time to explore using your home equity to eliminate some of the high-interest cards. 
  3. Set up a Holiday Club for 2016.  Alright, you just saw how much money you spent this holiday season.  Next year, resolve to do it all without taking on unnecessary debt.  You’ll save a ton of money and a ton of stress.  The best way to do that is with one of our Holiday Club accounts.  Use this year’s budget as a guide. Next year will be a breeze.

And that’s it.  It sounds like a lot, but it’s really taking the same level of vigilance you would use for normal shopping and increasing it to correspond with the increased spending of the season.  For a good rule of thumb, maybe we should just establish the “3-Mariah” rule:  Once you hear Mariah Carey’s “All I Want for Christmas is You” for the third time on any day, you have to go home – you’ve either spent too long at the mall, or your brain has been turned into holiday slurry and you can no longer be trusted to remain vigilant.  Three Mariahs and you’re out.