10 Rules For Managing Credit Cards

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Depending on your spending habits and money management skills, credit cards can be a useful financial tool or a ticket to financial ruin. If you want to be the master of your debt load, Everybody's Money magazine recommends following these key rules:

Take Inventory. How many credit cards do you have? What's the balance and minimum monthly payment on each? What's the total balance? Excluding your mortgage, or monthly housing payment, your debt payments should not exceed 10% to 15% of your monthly take-home pay. If you find that your total balance is more than you thought or can afford, it's time to initiate immediate reductions.

Check out the cost of your credit cards. What's the interest rate on each card? What's the annual fee? Does your card offer a grace period? The grace period is the length of time you have from the statement date until the due date to pay your bill in full before you're charged interest on new purchases. Typically you will have 20 to 30 days. If the card doesn't have a grace period and you carry over a balance or take a cash advance, you're usually charged interest right away.

Get one low-fee or lower-interest card and use it wisely. Too many cards can equal too many shopping sprees and result in excess in debt. Generally, if you never carry a balance, you should look for one card with a low annual fee. If you do carry a balance, search for a card with a lower annual percentage rate (APR). A good source for low-interest rate cards is your credit union. Credit unions historically have lower rates and fees than other financial institutions. When searching for a new card, see if you can transfer balances to your new lower-interest card. This will help you keep closer track of your total credit card debt.

Make the largest monthly payment you can afford. While it's ideal to pay your balance in full each month, it's not always possible. But paying the monthly minimum may do little more than cover accrued interest. If you're paying down a high-interest or high-balance credit card, make the highest payment you can afford, and stick to it. Instead of reducing your monthly payments as your balance declines, keep your payments level and save.

Don't exceed your credit limit. Card issuers may levy a stiff fee if you charge more than your limit. Your credit limit not only includes the dollar amount you charge, but also factors in accruing interest. Use your checkbook register credit tally to keep yourself safely under your credit limit.

Keep track of your purchases. Don't just charge it and forget it. Be aware of what you're spending. One easy way to track your credit card debt is to write down all credit purchases in a checkbook register; simply keep your purchases listed as you would your individual checks. Keep a running total as the month progresses and stop when you've reached your personal limit.

Monitor your credit limit increases. If you're a good customer, credit card companies may reward you by increasing your credit limit. While this may make you feel special, be careful. Increased limits can turn around and bite you when you try to apply for other loans. You may be denied credit if you have too much available credit through your credit cards. Increased limits may also tempt you to spend more; that's the real reason they are provided.

Watch out for teaser rates. Your mailbox may be brimming with unsolicited credit card offers that promise attractive low interest rates. But if you take the time to read the fine print, you'll see that after six months or so the issuer may double the low introductory rate. If you're like some not-so-watchful consumers, you might run up many charges (or transfer balances from other cards) on this new card. When the rates go up, you could find yourself owing a lot of money at a high interest rate.

Be wary of "reward" cards. The irresistible lure of a free round-trip ticket to paradise, or cash back for every dollar you spend may end up costing you more than you think. Before you sign up for a "reward" card, decide what you're hoping to "buy" with the accumulated points and then figure out how much it might cost to pay for it yourself. Now, figure out how much you'll have to charge to earn that "free" item, factor in the interest charges and any annual fee you may be paying for the card. You may find that it's cheaper to stick with the lower-interest rate card and purchase the "rewards" all by yourself.

If you get in over your head, don't bury it in the sand. There are some hardships you just can't avoid that can do some major damage to your debt load. If you quit making your payments your credit report will suffer. Generally, negative information stays on your credit report for seven years—and bankruptcy stays for 10 years—and can affect not only your ability to get credit, but may also limit your ability to get a job or rent an apartment. If you are having trouble making payments contact your creditors before they contact you; alternative payment arrangements may be negotiated.

From gaarc.org

How Credit Unions Protect Your Money

Call Sterling Van Dyke Credit Union at 586.264.1212 for an appointment to discuss ways we can help you plan your financial future.

How Credit Unions Protect Your Money

Credit unions know that you need more than a variety of products and services. You need to know that your money is safe—and at a credit union it is.

Money is Insured

The National Credit Union Administration (NCUA) is the independent federal agency that regulates charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of nearly 90 million account holders in all federal credit unions and the majority of state-chartered credit unions. As an alternative, many credit unions choose to insure your funds through private insurance companies.

The NCUSIF provides all members of federally insured credit unions with $250,000 in coverage for their individual accounts. These accounts include regular shares, share drafts (similar to checking), money market accounts, and share certificates. Individuals with account balances totaling $250,000 or less at the same insured credit union have full NCUSIF coverage.

Members have full NCUSIF coverage at each federally insured credit union where they are qualified members. While NCUSIF coverage protects members at all federally insured credit unions from losses on a broad spectrum of savings account and share draft products, it does not cover losses on money invested in mutual funds, stocks, bonds, life insurance policies, and annuities.

Responsibly Managed

Credit unions generally offer higher interest rates for savings accounts and lower rates for loans, when compared to most banks. And credit unions typically do not engage in predatory lending practices, such as offering subprime loans or payday lending programs with exorbitant rates and fees.

Credit unions also follow conservative investment practices and live within their financial means. That means you can trust your credit union to put the needs of you and its other members first.

Financial Guidance

Across the country, credit union staff members participate in programs that help consumers learn the basic financial skills that will serve as a strong foundation for their financial futures.

Also, many credit unions and their state associations work with other non-profit entities to help educate consumers about the risks associated with predatory lending.

Whether it’s working with schools to open in-school branches, hosting a financial planning seminar, or offering ID-theft prevention tips at a branch, credit union staff members share their knowledge with the community. Because the more knowledge credit union members have, the wiser the decisions they can make with their money.

Article from lovemycreditunion.org

Dreaming About a Tax Refund?

Call Sterling Van Dyke Credit Union at 586.264.1212 for an appointment to discuss ways we can help you plan your financial future.
Instead of rushing out and spending your refund, though, consider treating yourself to a bit of financial happiness and reduced stress. How can you do that? Follow a few money-saving tips.

Are you expecting a tax refund this year? If so—and if you’re like millions of other Americans—you’ve probably already begun to plan how it will be spent.

Pay off credit card balances. Use your refund to pay off any outstanding credit card balances. You've worked so hard for your money, so don't just give it away to the credit card companies. Each year consumers lose millions of dollars paying interest on credit card balances.

Save for college. Do you have a college education bill looming in the future? With the rapidly rising costs for a college education, a mutual fund may be just the place for your refund (especially if your kids are more than four years from graduation). If your kids are in high school already, a certificate of deposit (CD) or money market account with check writing privileges may be a better alternative.Either way, $1,000 earning interest over a couple of years is smarter financial choice than a big screen TV today and a student loan tomorrow.

Add money to (or create) your emergency fund. Individuals are advised to have an emergency fund amounting to six months' worth of living expenses. Using your tax refund here is a good place to start.

Save for holiday shopping. Do you remember how expensive holiday shopping was this past holiday season? Even if you've already paid this year's balances off, there is nothing wrong with planning for next year. By purchasing gifts throughout the year, you can shop at your own pace and find items on sale. This tip also reduces stress, allowing you to avoid crowded malls during the already busy holiday season.

Consider increasing your exemptions. If you're receiving a substantial return each year you may want to think about increasing your exemptions on the W-4 form you file at work. The extra money you see in your paycheck could be automatically transferred into a savings account. When the government holds your money until the end of the year, you earn no interest.

Spend some and save some. For some people, the temptation of all that money is just too much and the need to buy something persists. This is understandable, but there can be a happy medium. Spend part of your return and save the rest. You will feel good enjoying your new purchase and seeing your monthly savings account statements growing throughout the year.

Article from lovemycreditunion.org