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

Amp Up Your Allowance

Call Sterling Van Dyke Credit Union at 586.264.1212 for an appointment to discuss ways we can help with your family finances.

Some families do allowances and some don't. If you're lucky enough to get one, it can be a great head start on your financial future--if you manage it wisely. If you don't get an allowance, or if you think it's time for a "raise," we've got some tips for you, too.

Why allowance?
An allowance is really part of the family budget. Different families manage allowances differently. There are really two basic philosophies when it comes to allowances: either the allowance is provided in exchange for something, such as good grades or doing chores, or it's given simply as a way to help you learn to manage their money.

Believe it or not, many experts believe that the latter is the way to go. If you always get a set amount, it helps you learn how to plan your expenses. If it's about what you do, the point about learning to manage money can get lost in the negotations over which chores you do and when.

What do you think? Do you have to do something to get an allowance or do you get one no matter what? What are some of the advantages and disadvantages of getting an allowance versus just asking your parents for money when you want something?

What can you do with an allowance?
Balancing saving, spending, and sharing is what every budget should be about, and there's no better place to start than with an allowance.

Saving means paying yourself first--putting some money away in a savings account or other investment--which is the only sure-fire way to build wealth.

Spending means buying stuff--sometimes tied to saving, if what you want to buy costs more than you're paid at one time.

Sharing means donating some of your money to a worthy cause. Giving to charity is an investment of a different kind--one that makes the world a better place.

Here are a couple of tools to help you get a handle on how to manage your allowance income. The sites are written toward parents, but don't let that stop you!

Moonjar: A cool money box with separate compartments for saving, spending, and sharing.

Money Savvy Generation: The Money Savvy Pig has compartments for saving, spending, and donating. Their version also adds investing into the mix--a great thing for Biz Kid$ like you.

Talk about it
Not sure why you get an allowance? Not sure what to do with it? Talk about it. It used to be that parents didn't talk about money with their children. And it can be a stressful topic, especially in tough economic times. But parents who talk to their kids about money help create financially responsible adults. And kids who show that they are interested in managing their money wisely may find that they suddenly have more of it.

Speaking of more, if you're trying to get your parents to increase the amount of allowance you get, make a plan. Ask yourself the same questions they might ask you: Why do you want a larger allowance? What are you going to do with it? Are there ways you could use what you already get more carefully to accomplish the same things?

From bizkids.com

How to Save for Something Big

Call Sterling Van Dyke Credit Union at 586.264.1212 for an appointment to discuss ways we can help with your family finances.

Whether you want to save up for a cool video game or your college education, you're going to need a financial game plan. Check out some of these ideas that'll get you started!

Get a Savings Account
If you're serious about saving your cash, keeping it in a shoe box isn't going to cut it. It's time to start a savings account. This account should be separate from your checking or "spending money" account. Look for a credit union that offers a higher interest rate (that's the money the credit union pays you to keep your cash with them) and also make sure they don't charge you a lot of service fees. In fact, a lot of credit unions don't charge kids any service fees at all.

Start Saving Your Money Now
The next step is to start putting money in your account. Start with whatever you have, whether it's five bucks or a thousand, it all helps. The best thing to do is to make a saving plan. Decide how much you're willing to put aside every month and then do it. If you already have a checking account, most credit unions will be able to set up an automatic transfer every month - so the cash will come out of your checking account and go into your savings automatically. This is helpful because it's way easier to save money if you never have a chance to spend it in the first place.

Advanced Options: Investing Your Money
If you have a serious goal (paying for college, backpacking through Europe after graduation, etc.) the best idea is to start making your money work for you. The way to do this is to invest your money somewhere where it's going to make more interest than in your savings account.

Here are some options:

Bonds: When you buy a bond it means you are lending money to someone (for example, your government or a company). With a bond you get a higher rate of interest than with a savings account, but you have to wait longer to get your money back (sometimes 10-15 years).

Stocks: When you buy stocks you are actually buying a tiny piece of a big company (for example, you can buy stocks in Disney, McDonald's or Nike). You can often make a lot of interest in the stock market but you also run the risk of losing money too. If the stock goes down, the money you get back from your investment goes down too.

Mutual Funds: Mutual Funds are like investing on your own, but instead you pool your money with other people and invest in a bunch of things (stocks, bonds etc.) with the help of a financial manager. This is a good option because you have a professional doing all the hard work, and it is less risky since you don't have all your investments in one place.

Other Investment Options
There are tons of other investment options out there and a financial advisor, or a money-savvy parent might have some cool ideas for your specific situation. If you're trying to save up for school, you might find that your government offers some saving help. Some countries and states will chip in to your college fund, while others will give you (or your parents) tax breaks. Check out your government's web site or ask your school counselor.

From: http://www.kidzworld.com/article/3966-how-to-save-for-something-big

10 Rules For Managing Credit Cards

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

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