Living in the net » credit

Should I Switch to a Credit Union?

admin — Tue, 22 Jun 2010 00:18:26 +0000

A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at reasonable rates, and providing other financial services to its members. Many credit unions exist to further community development or sustainable international development on a local level. Worldwide, credit union systems vary significantly in terms of total system assets and average institution asset size, ranging from volunteer operations with a handful of members to institutions with several billion dollars in assets and hundreds of thousands of members. Yet credit unions are typically smaller than banks; for example, the average U.S. credit union has $93 million in assets, while the average U.S. bank has $1.53 billion, as of 2007.

The World Council of Credit Unions (WOCCU) defines credit unions as “not-for-profit cooperative institutions”. In practice however, legal arrangements vary by jurisdiction. For example in Canada credit unions are regulated as for-profit institutions, and view their mandate as earning a reasonable profit to enhance services to members and ensure stable growth. This difference in viewpoints reflects credit unions’ unusual organizational structure, which attempts to solve the principal-agent problem by ensuring that the owners and the users of the institution are the same people. In any case, credit unions generally cannot accept donations and must be able to prosper in a competitive market economy.

As consumers, we are doing all we can to make ends meet and start saving more cash. Interestingly, the one place people fail to notice they are losing cash is the exact same place they store their cash. Banks have been raising their fees and lowering their interest rates, leaving customers unsure of what to do. There is no chain binding you to your banking institution and may want to consider your other options.
Exploring Your Options

A credit union is one such option. Banks and credit unions do differ and you should take a look at what your local credit union have to offer you. There are over 90 million people who belong to credit unions across the country and nearly anyone can belong to a credit union because of their employer and other associations where the consumer belongs.

Exploring the Differences

Credit unions are owned by its members. When you open an account at a credit union, you essentially are part owner in the business. You are more likely to get better customer service that at your traditional bank. Credit unions are not designed to make a profit, therefore their fees are smaller and occur less frequently than at a bank. The profits that are made will then be divided up amongst account holding members. Banks keep adding fees in order to boost profits. Unlike bank, credit union ATM cards can be used at a large network of ATM’s for no fee. Some will even reimburse you for fees incurred from other ATM’s used.

Many consumers have joined credit unions only to get a good deal on a loan but then come to discover the other benefits, such as lower fees, better interest rates, and good mortgage rates. Many will find a credit union from information given out by their employer. Otherwise you can find a credit union for you here.

Deposits at a credit union are insured for at least $250,000 on each account. That coverage is provided by the Federal Deposit Insurance Corporation and backed by the federal government. If you haven’t taken a serious look at your bank policies lately, now is a great time to do just that. You may be surprised to see exactly how much your bank is costing you each month. You can always comparison shop with other local banks and see what kind of deal you can get, or even negotiate with your current bank to get a better deal but if you find that banks are no longer meeting your financial needs, check out your local credit union for more options.

tips on using credit wisely

admin — Fri, 23 Jan 2009 14:06:49 +0000

You’ve got a credit card and you’ve learned how to manage it. Now we’ll show you some ways to protect your good credit.

The topics covered in this chapter may seem wide-ranging, but they all have a common theme: wise and safe use of your credit card. Tempted to buy online? Here’s why you want to use a card to make your purchases. Find a mistake on your bill? We’ll show you how to dispute it. Want a free trip to Hawaii? Maybe a credit card with travel perks is the way to go. Can’t get credit? A secured card might get you going. Too many bills due the first of the month? You can change your due date.

To use credit intelligently, start by examining the terms of the card(s) you are currently using. Keeping track of your cards, their rates, and your current balances will help you to be aware of how you use credit cards. Increased competition in recent years has led some credit card companies to offer enticing features to attract new cardholders, including no annual fees and low interest rates for an introductory period. (And credit card companies sometimes will give their introductory rates to existing cardholders so that they won’t transfer their balances to another credit card company.)

Helpful Hints for Credit Card Use:
Try to restrict your credit card use to only one or two cards.
Use credit wisely. Ask yourself the following questions before purchasing with credit: Is this something I need? Do I need it now? Do I have the ability to repay? How long will it take me to repay? How much will it ultimately cost me?
Make sure that monthly debt payments do not exceed 20 percent of your monthly net income.
Shop around for credit cards with low interest rates, low annual fees and reasonable grace periods before finance charges begin.
Pay the entire balance when it’s due and review your spending habits to cut unnecessary purchases.
Pay your bill as soon as you get it, and if you can’t pay the entire balance, pay more than the minimum amount due when possible.
When you use credit to pay for an item, write down the amount and subtract it from your funds to ensure you can pay the amount at the end of the month.
Never lend credit cards to friends or leave cards or receipts lying around where people can find them.
Think ahead. Be proactive, not reactive, about your finances. Plan for different obligations now and after graduation.
Keep a list of your credit card account numbers and phone numbers in a safe place in case a card is lost or stolen. If a card is lost or stolen, report it as soon as you notice it is missing.

Advice on Managing Your Credit and Debt

admin — Fri, 23 Jan 2009 12:06:43 +0000

Information and advice on managing your debt, debt counseling, credit cards, FICO credit scores, mortgages, personal credit, credit bureaus, refinancing and other credit and debt topics.

Credit was once defined as “Man’s Confidence in Man.” But in fact, the definition of credit today is more like “Man’s Confidence in Himself.” Using credit today means you have confidence in your future ability to pay that debt. Forty years ago, your parents may have paid cash for their homes and their cars, a largely unheard-of event today. If they borrowed money at all, chances are it was from a relative or friend, and not a financial institution.

Today debt and instant credit are part of our everyday lives. The convenience of instant credit, however, has taken its toll. Many individuals use credit cards to spend more than they earn, and a few of these people actually build themselves a debt prison from which some never emerge. On the other hand, those who never use credit can be denied a loan or credit when they have a justifiable need or use for it. Using credit establishes a history of financial responsibility: Until you establish a credit history, your chances of qualifying for an important loan, such as a mortgage, are greatly reduced.

What is the balance between using credit wisely and staying out of overwhelming debt? Let’s look at the facts and some pros and cons.

Credit Debt Management – How You Can Benefit

These programs can come in many forms and from many different places, but the common thing between them all is the benefits they provide to those who take advantage of them. Unsure of what a debt management service can do for you? Take a look at the following benefits and find out if it is right for you and what you are really getting when you sign up for one of these programs.

Organizational Benefits

These programs can help you organize your personal finances, by taking the following actions:

Determining how much debt you owe and how much interest will be added onto that debt while you are in the program. They will also try to work with your creditors in order to lower the interest rates on your credit cards and other debts.

Taking your monthly bring home income and subtracting your needed expenses, in order to determine how much you have available to pay toward your bills each month.

Putting you on a 3, 4, or 5 year debt repayment plan. This will be determined according to how much debt you have and how much extra income your have each month to put toward your outstanding debts.

Distributing your monthly payments between your creditors, based on the amount of debt owed. Companies who you owe the most money to will likely get a larger percentage of your payment, in order to ensure that everyone gets paid off within 3 to 5 years.

Educational Benefits

A debt management plan can also help you discover the life rules for staying out of debt, so that you don’t have to deal with this situation ever again. They can also show you what living within your means really is, how to come up with and manage a budget, and what current expenses you should be cutting back on to stay within your monthly budget. The most important thing you need to take away from this experience, however, is responsible spending habits. Otherwise, the entire experience will have been pointless. A budget does not work if you do not stick to it.

Structural Benefits

Just as we need structure as children, so do we as adults; otherwise, things can seem out of control. You may have thought of your debt as being out of control before, but it is very easy to get things under control once you implement a plan. Having someone else help you manage your various bills will keep you from losing or forgetting about the payment, which often results in late fees. This will also make it simpler for you, because you know what amount you are to pay each and every month. You will also know what you need to cut back on in order to have the money for that payment. No more going over your various bills time and time again with a calculator trying to decide what you’re going to pay first and where you’re going to get the money for the rest.

For those who need a way to streamline their personal finances, maintain stability, and want to eliminate debt, a debt management program is a perfect solution that will make their lives better. The only choice you have to make now is which kind of debt management program is best for you and what company you want to sign up with.

How to Improve Credit Scores By Managing Debt
Step1Common sense tells us that the most important first step is to always pay your monthly credit card statements on time. It is more important to pay the minimum payment on time for all of your cards than to try and pay one credit card off totally and let the others become overdue.
Step2Keep the balances on each card under 50% of the total limit for each card. If a particular card of yours has a $10,000 limit, you must keep the balance on this card under $5,000. Take a look at your balances and move some of the debt between cards, even if it means putting some of your big balance card debt onto cards with a higher interest rate.
Step3Watch your statements like a hawk. Checking the statement once a month when you get it in the mail is not enough. Make sure you have online access to your statement(s) and check them often, at least once a week. Identity theft is extremely prevelent and you have to be on the lookout at all times. Checking the statement online offers you the chance to make sure your payment posted to your account and the bank(s) did not misplace it. You can also make sure any credits for returns are on your statement.
Step4Don’t open too many revolving charges or credit cards all at the same time. Opening too many accounts at once has an adverse effect on your credit scores and will make it more difficult to obtain financing for a new house or a car.