Selecting a Credit Card

Posted by SIU Credit Union on Oct 20th, 2009 | no comments

Having a credit card is much easier and safer than carrying large amounts of cash with you.  But are the credit cards in your wallet really offering you the best deal?

To find out, start by asking yourself how you use your credit card(s). If you pay your balance in full every month, interest rate isn’t an important consideration. Instead, look for a card with no/low fees and a 20 to 30 day grace period. However if you’re among the other 82%of college students that already have a balance, be sure to do your homework and shop credit card rates.

The good news is that often you can transfer your existing balance from a high interest rate card to your credit union low rate credit card for little or no cost and realize instant savings.

For the Freebies

Don’t forget to also consider rewards. Some cards allow you to build points with every purchase towards free gift cards, merchandise or airline miles. Check with your credit union to see what rewards programs they offer.

Plus, Build Good Credit

Remember every time you use your credit card and then pay off the balance, you’re building yourcredit. Not sure what your credit rating is? Just contact the credit reporting bureaus. They are required by federal law to provide you with one free copy of your credit report per year upon request:

Equifax

www.equifax.com

Experian

www.experian.com

TransUnion

www.transunion.com

Your Credit Score

Posted by SIU Credit Union on Oct 16th, 2009 | one comment

Do you know your credit score?

Your credit score matters whether you need a credit card, auto loan, mortgage or some other sort of credit.  In general, higher scores mean you are more likely to be approved and you will be charged a lower interest rate on any new credit.

 Most companies use a FICO credit score that is made up of five parts:

 Your payment history – 35%

Have you paid your credit accounts on time?  Late payments, no matter what amount, can hurt your score.

How much you owe – 30%

FICO scores look at the amounts you owe on all your credit accounts, the number of accounts with balances, and how much of your available credit you are using.  The more you owe compared to your credit limit, the lower your score will be.

Length of credit history – 15%

A longer credit history will increase your score.  However, you can get a high score with a short credit history if the rest of your credit report shows responsible credit management.

New credit – 10%

If you have recently applied for or opened new credit accounts, your credit score will weigh this fact against the rest of your credit history.  FICO scores distinguish between a search for a single loan and the search for many new credit lines, in part by the length of time over which inquires occur.  If you need a loan, do your rate shopping within a focused period of time, such as 30 days, to avoid lowering your FICO score.

Other factors – 10%

Several minor factors can also influence your score.  For example, having a mix of credit types on your credit report – credit cards, installment loans such as a mortgage or auto loan, and personal lines of credit – is normal for people with longer credit histories and can add slightly to their scores.

What’s a good score?

FICO scores range from 300 – 850.  The higher the score the better.  Most lenders prefer a score of 700+ as an indication of financial health. 

What’s NOT in your score?

By law, credit scores may not consider your race, color, religion, national origin, sex and marital status, and whether you receive public assistance or exercise any consumer right under the federal Equal Credit Opportunity Act or Fair Credit Reporting Act.

Should You Pay for Mortgage Points?

Posted by SIU Credit Union on Oct 9th, 2009 | no comments

You’ve just bought your dream home and now your finalizing your mortgage.  Your lender ask if you want to purchase “points” on your mortgage and now you’re confused.  Should you or shouldn’t you?   What exactly are these points that your lender is talking about?

Mortgages come with “points” – a polite synonym for fees or premiums that your lender charges for loan origination or refinancing. The math on points is simple: one point equals 1% of the amount of the loan you take out, two points equal 2%, and so forth. While the math is easy, the real value of a point is not always so simply calculated.

There really is a point. Why would you want points? Well, when you buy a point or two along with your mortgage, you get a lower interest rate and a lower monthly payment. Pay $3,000 for a point now, and you could save that much and more later on over the course of the loan.
 

What’s the Point?

But it may seem pointless. The problem is, points don’t move when you do. Who stays in one home for 30 years these days? If you have a 30-year loan and you sell your home and move five years from now, you lose the points and the benefits that go with them. The same applies when you refinance. There’s also the interest rate aspect. Let’s say you buy two points at 6% interest when you get your mortgage. What if two years later, interest rates fall to 4%? You’ll regret your purchase.

Are There Tax Benefits?

Sometimes. Usually, points are amortized over the duration of your mortgage – that is, paid off in installment payments over the life of the loan. But you might be able to deduct the cost of these points at tax time.

If you took out your mortgage to buy or refinance your primary residence, you could qualify for a deduction in the tax year you took out the loan, if your loan meets certain conditions. The IRS has a 9-point test, and the key points are:

1. the points must be a percentage of a principal amount clearly defined on the settlement statement
2. the points can’t be paid in place of separately stated amounts elsewhere on the settlement statement
3. funds supplied by the buyer + points paid by the seller must be equal to or greater than points charged
4. points charged must not be excessive, and
5. the charging of points must be “an established business practice” for such a mortgage. If you buy a home and the seller pays any points, you can deduct those points.

If you’re refinancing, there is no quick tax break. Points have to be amortized, unless you are using part of the loan for home improvement. Then a partial deduction is allowable.

If you’d like more information on mortgages and the financial questions linked to them, speak with a qualified mortgage professional today.

This was prepared by Peter Montoya, Inc., not the named Representative or Broker/Dealer, and should not be construed as investment advice. Neither the named Representative or Broker/Dealer give tax or legal advice.

Jeff Rose is an Illinois Certified Financial Planner and co-founder of Alliance Investment Planning Group. He is also the author of Good Financial Cents, a financial planning and investment blog. You can also learn more about Jeff at his website Jeff Rose Financial.

Get Back in the Game After a Job Loss

Posted by SIU Credit Union on Oct 8th, 2009 | no comments

A major challenge when losing a job is to move ahead and find new work, while trying to process what happened.

These steps can help jumpstart your job search:

* Get the word out. In addition to getting moving as soon as possible, the most important thing to do is communicate. Let everyone know you’re looking for a job.
* Network. The more people who know you’re looking for work, the better, and don’t forget former co-workers. Experts agree that the best way to find a new job is through personal and professional contacts. Job seekers have a much easier time job hunting if they keep current a copy of their contact database and personal files.
* Establish a daily routine. The job hunt is your new job.
* Be flexible. Finding new work will be easier if you are. For example, consider alternatives to one traditional job, such as a couple of part-time jobs.
* Consider temp work, especially if you need work now. Some income is better than none at all, especially if you need it to keep you or your family financially stable. Don’t make the mistake of holding out for your dream job or for a job with a salary that’s unrealistic in the current economic environment. Besides bringing in some much-needed money, you can try to work on weeknights and weekends, leaving time for job hunting during the day. It also can be a good way to position yourself for a full-time job.
* Consider retraining or going back to school, especially if the hiring outlook in the field you came from is bleak. If you’re deficient in a basic skill, many state employment services offer computer classes, for example.

Remember that perseverance and fortitude may be tough to measure, but they’re indispensable if you’re going to be successful in finding new work, especially if nothing breaks right away. Don’t forget to take some time for yourself too. Find some balance, and keep your mind engaged by continuing to read publications related to your field of expertise as well as recreational sources.

Contact SIU Credit Union. Our professionals are here to help. Don’t wait until you’re in even deeper trouble financially. We can help you through this difficult time.

Member Survey

Posted by SIU Credit Union on Sep 16th, 2009 | no comments

 Loading ...

If you answered no to the question, click here to learn how credit unions are different.

Your Deposits are Insured

Posted by SIU Credit Union on Sep 15th, 2009 | one comment

Credit Union leader Daniel Mica, of CUNA, outlines how credit unions are strong, safe and sound with virtually all insured by an agency of the federal government — just as banks are federally insured.

Mica, a former U.S. congressman, is president and CEO of the Credit Union National Association (CUNA), the leading trade association representing the nation’s 8,500 credit unions and credit union leagues in all 50 states and the District of Columbia. Credit unions are not-for-profit, member-owned financial cooperatives. With 90 million members – nearly one in three Americans – credit unions constitute perhaps the nation’s largest membership group.

At SIU Credit Union your savings are federally insured to at least $250,000 and backed by the full faith of the U.S. Government. National Credit Union Administration, a U.S. Government Agency.