College savings basics

Call Sterling Van Dyke Credit Union at 586.264.1212 for an appointment to discuss ways we can help you save for college.

Imagine your child coming to you with an acceptance letter from "the" college. The one he’s been dreaming of all through high school. The one that perfectly matches her career aspirations. Perhaps even your own alma mater.

Only one thing could make you prouder – knowing that you have done your homework, too. That no matter where your child is accepted or what financial aid is offered, you have the resources to afford the college of choice.

Numerous surveys and studies have been published describing how parents prepare for future college costs. You probably don’t need a survey to tell you what you already know:

• Kids grow too fast.
• College is expensive.
• The time to start saving and planning is now.

Your child’s college tuition could be one of the largest expenditures you ever make. And, if you have more than one child, the financial commitment is even greater. The financial challenge you face is shared by millions of others.

Fortunately, American families with a desire to save for future college expenses now have more options than ever before. Traditional investment options—savings accounts, taxable investment accounts, annuities, and U.S. Savings Bonds—are now joined by more recent investment vehicles including Section 529 college savings programs and Coverdell education savings accounts.

New investment programs bring new opportunities, but they may make decisions more difficult for people who want the best education possible for the children in their lives.

With these pages, we hope to help you gain a basic understanding of your options so that you can maximize the return on every dollar you set aside for a child’s future. Our focus is on the increasingly popular “529 plan,” but we also explain other commonly used savings and investment vehicles.

Remember, even if your goal seems overwhelming now, the proper planning and saving can put the cost of any college within your reach.

Excerpted from Savingforcollege.com’s Family Guide to College Savings

Youth Deposit Record Savings in April

In our strongest year yet, we saw $28,545,722.81 deposited into 146,002 youth accounts. Also, youth opened 9,058 new accounts at the 305 participating credit unions that reported results for the 8th National Youth Saving Challenge™.

Credit unions had the option to run the Challenge for any week or the entire month of April. The majority (60%) ran Challenges for the entire month. The rest opted to run Challenges in conjunction with Youth Week.

How does this year compare? Well, fewer credit unions participated, but average deposits were higher. Take a look at the eight-year results history.

Next week, I'll be sending final participation results to your state leagues, but for now you can see a list of all the credit unions that reported results. My compliments go to the Michigan and Pennsylvania leagues for their strong showings with nearly 30 credit unions from each state participating.

Why Do We Have a Youth Week?

“Youth Week is a great way to get our youth fired up about savings and to remind them that we are here for their financial needs. Our staff looks forward to helping them set goals and assisting them in their future.”
     -Annette Samaniego, Dynamic FCU

"We hold Youth Savings Week because we understand the importance of teaching the next generation the Power of Saving! Our children know very well, how to spend money, everybody and anybody's money! We have to be proactive in making sure they understand the importance of saving for the future, rainy days, and investing in themselves!"
      -LeWana Britt, Mt. Zion FCU

"Our credit union celebrates Youth Week to reach, teach, and encourage youth to learn about and save money. There has been a big gap in financial education for many years, and this is an opportunity to reach our young people. They certainly aren’t going to learn it by osmosis when they graduate from high school, but many of them will be stepping out into the Real World at that time, so we need to catch them before then and give them some guidance. Who better than credit unions?"

     -Judy Jett, Central Missouri Community CU
 

 “National Credit Union Youth Week gives credit unions the opportunity to reach out to the youth in our communities, teaching them about financial literacy in a fun and exciting way. It allows us to build a strong foundation for the financial future of our communities.” 

     -Kendra Handke, Oregon Community CU

And the Saving Challenge Winners Are...

• Emma, age 6, of Gig Harbor, Wash., from American CU
• Kylee, age 9, of Roseburg, Ore., from Cascade Community CU
• Ethan, age 6, of Hewitt, Texas, from Educators CU
• Alexander, age 18 months, of Caledonia, Mich., from Grand Valley Co-Op CU
• Olivia, age 8, of Jacksonville, Fla., from Jax FCU
• Cullen, age 8, of Lutcher, La., from Louisiana FCU
• Emily, age 9, of Silverton, Ore., from Maps CU
• Malloree, age 13, of West Enfield, Maine, from Penobscot County FCU
• Dylan, age 3, of Spokane, Wash., from PrimeSource CU
• Larkyn, age 4, of York, Pa., from York Educational FCU

Winners are also listed online.

Young Savers at 1st Community CU	$100 Winner Kylee at Cascade Community CU

Is It Time to Leave Your Bank?

If your bank raised it fees tomorrow and it seems to be happening more and more-would you ditch ‘em?  According to the National Foundation for Credit Counseling, most of us would.

In the latest survey 2,200 people were asked what they would do if their bank raised its checking account fees.  The results show the following:

• 51% would shop for another institution
• 16% would complain to their bank
• 16% admitted that they probably would never notice
• 11% that they would grin and bear it
• 6% would close their account

If you are considering leaving your bank then you should use a Credit Union instead.

WHY?

• Credit Unions are nonprofit and community- based
• Credit unions pay higher interest on savings and charge less for loans
• Credit cards have lower interest rates and usually no fees
• Convenience-most credit unions are members of a shared branch network which means over 28,000 surcharge-FREE ATMs
• No monthly service charges or hidden fees
• Free paper or e-statements
• No per check fees
• Credit Unions are personal and friendly

For more information about joining a credit union, please call Sterling Van Dyke Credit Union at 586.264.1212

New Federal Consumer Protection Laws

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

On January 1, 2011, new federal consumer protections went into effect on issues ranging from transparency on credit reports to safeguards against identity theft.

This is known as a “risk-based pricing notice”—a piece of information that surfaces early in the loan process to allow consumers to make corrections on their credit data that could lead to better pricing. Consumers who receive these notices can obtain one free credit report to verify the accuracy of the notice.
The provisions affecting credit reporting are actually the result of a law passed seven years ago – the Fair and Accurate Credit Transactions Act of 2003. The law requires lenders to tell consumers when negative information is going to result in higher rates and fees for mortgages, credit cards and other loans.

Also on January 1, the Federal Trade Commission started enforcing rules to require businesses that handle credit to adopt written plans to identity, detect, monitor and respond to potential cases of identity theft. Called the “Red Flags” rule, it affects traditional banks or thrifts, but also credit-granting organizations like auto dealers.

But until the Consumer Financial Protection Bureau opens in July, consumers should re-acquaint themselves with rules affecting their credit reports and scores. In the meantime, there are some good rules of thumb to follow in improving one’s chance for credit, according to the Fed:

Pay your bills on time. If you’ve paid bills late, had an account referred to a collection agency or declared bankruptcy, this history will ding you.

Get your debt levels down. Most scoring models downgrade your credit score if your accounts are close to your credit limit.

Aim for a score of 700 or better. Many banks consider their most desirable customers to have credit scores of as much as 730 or more to get the best rates.

How long is your credit history? A short credit history may have a negative effect on your score, but a short history can be offset by other factors, such as timely payments and low balances.

Don’t over-apply for credit. If you have applied for too many new accounts recently, that may negatively affect your score. However, either you or outsiders checking your credit reports or scores won’t affect this because they’re not applications for credit.

Note your mix of credit. Many credit-scoring models rank customers lower when they have too many finance company accounts or credit cards. Get all your non-deductible debt to under 50 percent of your credit line in each account. Go after your balances with the highest interest rates first, and once you hit 50 percent, keep trying and get those balances down further.

Start budgeting. If you’ve never reviewed your spending and picked out areas where you can cut, you’ve never done a budget. Start tracking your spending either on paper or with financial planning software and start pinpointing what spending you can shift over to paying off debt.

Get some advice. You might be focused on pulling together a down payment, but it might not be a bad time to sit down with a tax professional or a financial adviser to talk about the way you're going to manage your debt going forward.

Keep an eye on your credit reports. Remember that you have the right to get all three of your credit reports—from Experian, TransUnion and Equifax—once a year for free. You can do so by ordering them at AnnualCreditReport.com. Don't order all three of them at the same time, though. By staggering receipt of each of your credit reports, you'll get a continuous picture of how your credit picture looks because the three bureaus feed each other the latest information. You’ll also be able to clean up errors as you find them—errors can drag down a credit score—and you’ll also keep an eye on identity theft.Oh, and by the way, keep in mind that all “free” credit report sites are not free—if they ask you for a credit card number, remember they’re doing that because they want to charge you. Just go to the site above and you’ll be fine.

Once you’ve paid it all off, don’t close the account. In the world of credit scoring, closing accounts (even those that have not had balances for years) is a lousy idea. Lenders want to see a long record of credit management, and longtime accounts that you haven't touched in years may actually help your score because it shows you have some restraint.

This article was submitted by the Financial Planning Association, the membership organization for the financial planning community. FPA members are dedicated to supporting the financial planning process in order to help people achieve their goals and dreams. Submission of this article does not imply an endorsement or recommendation of the Financial Resource Center site.

What is a Credit Union?

A Credit Union is a cooperative financial institution. This system was set up as a parallel banking system. This gives the consumer the option of having a nonprofit alternative.

How are they different from banks?

In a cooperative bank, you vote according to how much money you have in the bank. In a Credit Union, everyone who has a share has one vote. It is true democratic control.

In a bank directors are paid.  In a Credit Union directors are volunteers.  Credit Unions do not pay their directors. The single point of focus is what is best for the member, not what is the most profitable for the institution.

Credit Unions offer the same products and services as banks but at Credit Unions every member counts and they want you to know it.  Credit Unions offer lower fees and better service than big banks.

If you are thinking of switching your accounts, consider a Credit Union.  They have more to offer members and they save you money.

For more information about joining a credit union, please call Sterling Van Dyke Credit Union at 586.264.1212