From Emily Rienhardt, blogger for Mid American's Money Matters finance blog
Credit cards can be a convenient and safe way to purchase things and build your credit. That is…if you’re using them right. They can also become a nightmare and damage your credit score and perhaps put you into massive amounts of debt.
But that’s not how you’re using your credit cards is it?
I hope not. It’s not all about the cards we use, it’s about how we use these cards. If we aren’t careful to reexamine our behaviors around our credit card usage, we could be putting ourselves in some trouble without even knowing it.
Strategically use your credit cards. I was always a debit card fan. It helps me keep a more accurate view of my spending, and I think, keeps me from overspending on the regular. The problem with debit cards is the direct link to your bank account, if any fraudulent activity ever occurs. Massive retailers in the past have even dealt with huge security breaches in their systems, leaving tons of debit card purchases out in the open for fraudsters to access. I’ve had my own situation with fraudulent charges on a debit card and it required a lot of work on my end. Getting the cards cancelled, getting the new cards, finding just which charges were fraudulent…and all with an out of town bank. It was hard to navigate. Credit cards can offer us better protection in the case of fraud, and they can also act as the negotiator or middle party if you need to dispute a charge with a retailer or other company. Your credit card can be a safer option for making major purchases, and for online purchases especially.
Missing a payment. This mistake, might be an easier one to keep from making. It’s hard to miss my payments now that I’ve set up automatic payments. But if you’re really looking to see that credit score drop drastically, go ahead and miss a payment on your credit card. A late payment means you’ll have late fees, but a missed payment, by 30 days or more, will show your credit score that you’re not in the best place right now. Even if you didn’t mean to miss it. Even if you’re not that kind of person! Forgetting a payment won’t be fixed with an apology to your credit card company I’m afraid. You could even see your interest rate increase if your payment is missed by a lot.
Only hitting your minimum payments. There were a few months in a row for me where I could only pay off my minimum ($25…yes, you read that right) payment towards my credit card balance. It doesn’t feel like you’re making a dent at all, and really, you barely are. Even your credit card company isn’t impressed by this action. It shows that you’re so close to defaulting on your payments that you can only shell out what’s necessary. Doing this means you’ll likely pay a lot more in interest than you’ve actually even put on the card. Meaning, you’re paying for everything twice!
Maxing out your credit cards. It took one bad purchase for me to get into a bad, bad cycle of credit card bills. ONE silly bag I bought that was out of my budget. And it threw me off track for a long time, making the things I normally use the card for, near impossible since it had already been maxed out. A big part of your credit score comes from the amount of your available line of credit you’re using. Even if you’ll pay it off in full a little bit later, maxing it out shows that you need every penny of that borrowed credit limit to get by, and that can show credit scoring companies that you’re not borrowing their money wisely. Spread your charges around so that you’re only using a small percentage of the available credit on each of your cards. If you’re really working to have a better credit score, try keeping that small percentage of usage of your available credit to 10% or less.
Ignoring your credit card statement. When was the last time you looked through all of the individual charges on your credit card statement? Have you combed through it before? Never? I will be honest, it’s not something I practice each month. (And the statements aren’t even that long on my end!) Mistakes made by merchants you frequent can happen more often than you think. If you aren’t catching them in a timely manner, you might have a harder time getting reimbursed or resettled from these card companies. Promptly reporting fraudulent activity means you’ll have to catch it promptly too. Make it a habit of checking your statements, and if you’re only using 10% of your available credit, then hey, this practice won’t even take that long!
Taking advantage of rewards programs. There are lots of credit card options out there. Finding some cards with special rewards and advantages is a huge bonus! I’ve recently started a card account with my favorite airline, and the points system is really wonderful. Since I’ve been traveling more often for work, this allows me to cash in on some of those points instead of spending extra money. These rewards programs are often a little bit complicated, with all of the rules, regulations and fine print, you might rather opt in for a cash-back rewards program. Whatever you find is your ideal, smartly taking advantage of these perks is a good thing. And ignoring them seems like a mistake to me! The key is to understand yours really well, and only spend what you would normally spend, so that you don’t go into a purchasing frenzy thinking that you’ll get a ton of rewards if you do.
Have you caught yourself making some of these mistakes? Sometimes the fix is as easy as calling your credit card company to get a few questions cleared up. But sometimes the fix requires a little more work and some habit changing. Being aware of the risks involved with regular credit card usage is a big part of having credit cards.
For more articles on personal finance, visit Money Matters
From Emily Rienhardt, blogger for Mid American's Money Matters finance blog.
A lot of us feel the pressure around the holiday season. It’s an expensive time of year, and just like any other expensive life event, planning and prepping are important so that you and your budget will make it through with little to no financial stress. The less time you give yourself for holiday spending, the more money you’re likely to spend. You’ll be in such a hurry to make it happen fast that you’ll spend whatever it takes just to get it finished. It’s never too early to start planning and getting prepared, so here are some things you can do right this minute to start preparing you and your family for the expenses that come with each holiday season.
Start forming your budget right now. You need to solidify what financial commitments you’re giving yourself this year. There are a lot of holidays that fall in this second half of the year, so be sure you’re accounting for each holiday that you’re celebrating. Will you need to pay for travel? Will you be in charge of cooking meals for multiple people? Will you be purchasing gifts for people? This is just your first rough draft, so don’t focus too hard on the exact amount you’ll have to spend for each item. Just outline all of the events and plans you have and build those things into your budget over the next few months. Once you have a rough list of your financial obligations for the holiday season, you can fine tune it over the next several weeks. Set up a spending maximum for yourself, and try to build everything into this.
Set your mind on not using credit cards this holiday season. If you’re planning things out in advance, you’ll be able to consciously sock away any extra cash you come across. Set up a sub savings account for all of your pre-holiday savings. Try skipping lunches out for a few weeks and set aside that money into your holiday savings instead. Or skip your morning coffee run and transfer that money to savings instead. If you start right now, these seemingly small steps will really add up. You don’t want to create extra debt for yourself for the sake of the holidays. You’ll feel the brunt of paying that off for months and months afterwards.
Spend strategically and not impulsively. If you are relying on your credit cards, do make sure that your credit limit can handle the extra charges. Be diligent about paying down your balances now, so that you don’t max everything out when you add purchases for the holidays. Time your purchases out by making a few of them at a time and starting now. You’ll take advantage of any seasonal deals and you won’t have to spend long days having a marathon mall shopping session. By spacing everything out week by week, you’ll spread your spending out instead of being hit all at once. That means when it comes time to pay down your balances, you won’t be breaking your monthly budget and you won’t miss any payments. Do your research on finding the right credit card for your holiday spending too. By strategically using a credit card that offers travel points, or cash back, you could set yourself up for better bonuses if you know you’ll have to be using credit cards a little bit here and there this season.
Thoughtful gift giving doesn’t have to cost a lot. You can make time for people, you have have an experience together, you can make them a special gift…you don’t always have to spend money on someone to let them know that they are cared for and loved this holiday season. Discuss some alternative gift giving with your family and loved ones. They might be on the exact same page as you this year if your top priority is saving some money this year.
Don’t forget about the little extras. They add up fast! Things like wrapping paper, bows, a Christmas tree, grocery lists for extra batches of baked goods, holiday party host gifts, holiday party contributions, charity donations — the list goes on! These things may not be on your radar as boldly as the list of gifts and travel you have to do this year, but they’re important to think about if they’re things you’ll need to add to your spending this season.
Make and book your travel plans as early as you can. If you wait until the last minute to book flights or plan your travel, you could be paying way more than you would if you plan ahead. If you can, plan your travel outside of the busiest travel times during the holidays. If you’re willing to be flexible on your travel times and plans, it could save you lots and lots of money.
Keep track of all your receipts and all the spending you’ve done for the holidays. If you plan things out really well, you could educate yourself on how to make next year even more frugal. You can save and track what you’ve spent this year, and calculate how to make it better next year. Where did you overspend? What did you forget to calculate? How much travel did you really do? Try to track everything you’re spending on this season, and learn a little more about your holiday shopping patterns.
Try starting your 2017 holiday prep the week after this year’s holiday. That sounds too early right? But maybe you could snag the deeply discounted items that follow a holiday that just passed. Imagine you got all of your wrapping paper and your decorations and even some of the gifts you need for next year right away. You’d be pretty proud of yourself! Future you would thank you!
For more articles on personal finance, visit Money Matters
Our in-house call center, staffed with eight employees, handles service calls from members during normal business hours. Their goal is to provide world class service with first-call resolution. They strive to exceed member expectations on every call.
How do they do this? They treat members in a respectful manner using courteous responses and maintaining a congenial tone on the phone. Mid American’s call center team gives individualized service on every call, an example of the pride they take in their role when serving members.
Q: How do you strive to exceed expectations with on-call members each day?
“I strive to provide world class service for each member by being friendly, respectful and courteous. I take pride in making the experience professional for the member and ensuring their request is handled in a professional and efficient manner,” Kathy said.
“I strive to exceed members’ expectations on a daily basis by listening and being empathetic,” Gaby said.
“By listening to their needs and helping them promptly with a positive attitude in order to provide the best service possible,” Cassie said.
Q: Describe a time you provided First-Call Resolution to a member. How did you feel after the call ended?
“The best first-call resolution that I get are usually the ones when a member has lost a card and needs to cancel it. We can get the card blocked, have a new one mailed if necessary, and go over the transaction history to make sure there have not been any fraudulent charges. These calls are rewarding because we can put members’ minds at ease right away,” Mathew said.
“A member called in asking to transfer money. After making the transfer, I suggested that she download the mobile app so she could transfer money anytime, she was happy that she would be able to transfer the money without having to call in or get on the computer. It makes me feel good when the member is happier at the end of the call," Craig said.
Q: What should members know about our call center and why?
“We are a hard working group that is willing to do anything and everything to help serve the members any way we can. We make sure that Mid American Credit Union is their financial home,” Dakota said.
“I feel like they should know what a great team we have here and that we truly have their best interests in mind,” Tyffany said.
“We are here and ready to take their calls. We are here to perform our utmost best and our job is centered on helping them and making sure they’re taken care of,” Ruth said.
If you have questions regarding your Mid American Credit Union account, call 316-722-3921 for assistance.
From Emily Rienhardt, blogger for Mid American's Money Matters finance blog.
Living happily with less. Do you think you can do it?
Our society has really encouraged this “have it all, and get it fast” mentality, I think it’s easy for us to feel like we don’t know how to minimize and live with less and still feel happy. We’re told we will feel happy with MORE and RIGHT NOW that it’s easy to get carried away with keeping up. It makes us forget about the things that should take priority in our financial lives.
This idea of drastically cutting back is particularly important if you’re currently living paycheck to paycheck and you’re having trouble making ends meet. Or if you’ve lost your job. Or maybe you’re trying to cut spending to meet a certain short term goal – like paying down your debt, or a down payment on a house, or a baby on the way. OR maybe you’re working towards your dreams, like opening a small business or early retirement. Whatever your situation, making a few big cuts can help.
Massive cutbacks in several areas of your life can feel overwhelming, but it can lead to new discoveries about yourself and your life that you may not have found otherwise. Here are some areas to focus on and some ideas of how you can really cut back and live with less.
Cut the convenient, unnecessary spending. This means spending money on clothes, shoes, jewelry, makeup, home decor, convenient taxi rides, music downloads, video streaming services, vacations, electronics, getting your hair cut…the list goes on…it’s a lot!
Learn how to get comfortable without the middle-class comforts you’re used to. If you’ve been laid off, or suddenly finding it crucial that you make some changes, don’t give yourself a grace period to “ease into” a new normal. Start it right this moment. It’s easy to resist abrupt cutbacks when you’re suddenly faced with a big life adjustment. You need to make the necessary changes as soon as you can so that you won’t get yourself into a more serious situation. Even if you’re getting ready to go to an interview, try your best to resist the urge to overspend on a new look, or even a new outfit. Hit up some consignment stores, or borrow a nice outfit from a friend. Try to think about what you already have, and what you can get away with never buying.
If food has been a big part of your budget, cut it down. Maybe your job allowed you to go out for meals on a regular basis before you were laid off. That will need to change. And it should change if you’re trying to save up for something or cut down your debt too. There are a lot of benefits to retraining yourself to cook at home and eat a little bit less. Your older clothes from your “skinnier days” will start to fit you. You can set a daily, automatic withdrawal from your checking account right into your savings account with the the amount you would normally be spending on lunches out with coworkers, or dinners out on the town. It’s easy to feel like your social life changes drastically too when you have to cut back on some of these fun outings. That doesn’t have to happen! Get your friends on board (they could stand to save a little money too, couldn’t they?) and find ways to get together without compromising on fun and friendship. Grab a group of close buddies and coordinate a weekly night where you could all get together and cook a good meal, one where everyone is contributing something so that no one feels the brunt of all that cooking. Even people who aren’t really forced to cut back on their spending will appreciate saving a little bit here and there. You could still allow yourself 1 or 2 nights a month (if you can swing it) where you go out with some friends. Something I try to do is only eat half of my meal when out with friends. And with my leftovers at home, I add my own rice or quinoa to make the leftovers stretch even further, sometimes into two more meals if I’m really strategic.
Cut the costs of housing. An obvious solution to cut back on what you spend on rent or your mortgage is to live with other people. If you can, look for a roommate or someone to split housing with. Whether living with friends or a new acquaintance, work up a rental agreement that you are both comfortable signing. Living with other people can be tough, and getting wrapped up in the wrong living situation can make a financially stressful period of your life even more stressful. Becoming a house sitter for friends, family and acquaintances could lead to a nice trade of services. Whether short term or long term, put it out into your circle in the universe that you’re looking for this type of work and perhaps a longer opportunity could present itself. My friend once housesat for a couple who were traveling overseas for almost a year. They worked out a great deal that allowed my friend to live rent free for nearly 10 months! This is another situation where a written contract could help smooth over any potential hiccups down the road. Perhaps you have doting parents that would just love it if you moved back in with them for 6 months or a year. It’s not the life you dreamed of, but it could really open up your finances for substantial savings, even if just for a shorter period of time.
Find your biggest motivator for a financially comfortable life. Keeping your eyes on the prize is a healthy mentality for accomplishing something big. Maybe you’re already living with 4 roommates and your biggest motivator is getting your own place. Or maybe that business you’ve always dreamed of is getting closer than you imagined. You might be closer to buying that house or killing your debt than you think! Keep the momentum going, stay on track, and don’t allow yourself to get pessimistic about your current situation. This doesn’t have to last forever.
If you felt the need to make a massive cut tomorrow, where would you start?
For more articles on personal finance, visit Money Matters
By Debbie Stang, Home Loan Officer
Fall officially started last month, so don’t waste any more time in completing chores both inside and outside your home to get ready for the winter. It’s worth it – from avoiding costly repairs later to helping with heating bills – to make an investment of time for these fall chores.
• Clean and store outside patio furniture and kids’ summer toys.
• Drain and store garden hoses to prevent damage to water pipes. Have your sprinkler systems blown free of water to prevent damage to the system, as well.
• Inspect windows, entry doors and garage doors. Check and make necessary repairs to caulking and weather stripping to ensure windows and doors close tightly to avoid drafts.
• Inspect and clean, if necessary, chimneys and flues for safety and efficiency.
• Check gutters and downspouts to make sure melting snowfall and ice can drain properly. Ice in a clogged cutter will expand, causing damage.
• Wash windows.
• Get ready for ice and snow by stocking up on ice melt for sidewalks and getting a new snow shovel, if needed. If you have a snowblower, make sure it’s in good working order.
• Do final winterizing treatments for your lawn.
• Give your house a good cleaning now so you’re ready for any holiday entertaining. Vacuum, clean or launder drapes and window treatments. Clean window sills and baseboards. Either schedule or do your own carpet cleaning. Give furniture a deep vacuum or have it professionally cleaned. Clean and organize kitchen cabinets so you’re ready for holiday cooking.
• Since you’ve washed the outside surface of windows, do the same with the inside surface.
• Take care of furnace and humidifier needs. Schedule a furnace inspection, stock up on furnace filters and ensure your humidifier works (which is important for preserving hardwood floors).
• Inspect and clean appliances – from vacuuming refrigerator coils to checking washer hoses to cleaning out dryer exhaust tubes.
If you find you need any major repairs or renovations, remember that Mid American offers great rates on home equity loans and lines of credit. Go to www.midamerican.coop and find out more about home equity loans and our mortgage services.
By Jim Holt, President and CEO
Whenever talk of tax reform looms, lawmakers and special interest groups aligned with for-profit banks will bring up the fact that credit unions have a tax "subsidy" that banks do not.
First it is important to note that credit unions generally and Mid American specifically, pay every single tax levied, with the only exception being income tax. The basis for our income tax exemption results from our democratic, not-for-profit cooperative status. The 1934 legislation that created credit unions justified the exemption because credit unions are "mutual or cooperative organizations operated entirely by and for their members." We do not impose fees and charge for services to help a small, select group of stockholders make a profit. We are here because we operate on cooperative principles to serve and benefit all members equally. We return profits to our members by way of higher dividends, lower fees, better saving rates and – as indicated in several surveys – better member service than found at banks. Without credit unions charging lower fees and offering better dividend and loan rates, banks could charge even higher fees and rates to allow their select stockholders to pocket even more profits. In fact studies have shown that in communities where there is a credit union alternative, consumers at all financial institutions benefit.
We also are here to make a difference in the community, from serving as financial literacy advocates and investing in seminars to participating in outreach efforts to help educate individuals understand money matters. A person who is more financially literate and stable will be a better contributor to society by understanding economics, learning to live within their means (to avoid bankruptcy and other financial crises), saving for retirement and more. Credit unions were created to serve consumers of modest means, allowing them to keep more of their money because they are not paying high fees or interest rates to use their money or borrow money.
If we lose our income tax-exempt status, you (our members) will bear that burden. Mid American will need to find increased revenue streams which translates to higher interest rates on loans for cars, education and houses, plus the dividends you earn on your savings would be lower. We would have to dip into limited reserves – a cushion we use to protect our members and the credit union during economic shifts – and that would impact the longstanding tradition of credit unions being safe and secure institutions for your money.
By Debbie Stang, Home Loan Officer
Buying a home is likely the single, largest purchase you will make in your lifetime. To make that step, be prepared to save money for a cash down payment and related home-buying expenses. Plus, make sure your credit is in good shape.
Most financial institutions require some sort of down payment, generally ranging from at least 3 percent to 20 percent of the purchase price of the home, to ensure you have an incentive and investment upfront in your home. (Only about a handful of mortgages, such as the VA and other government-related entities, will allow no down payment.) With a 20 percent down payment, you avoid having to purchase private mortgage insurance.
Saving for a down payment will mean being more focused on where your money goes. Start with a budget – if you don’t have one, develop one. Whether you use an online tool or old-fashioned pencil and paper, start tracking your income, your expenses and whatever else you spend your money on. In a short amount of time, you should be able to see where you might be able to scale back or make cuts. Put those dollars saved into a separate savings account to build up your down payment.
Be ruthless about cost-saving measures, like giving up a gym membership and using walking trails or parks instead, or brown-bagging lunches and giving up expensive coffees or smoothies to make your own. Do you have credit cards or auto loans? Check the rates and see if you can negotiate lower rates for savings. Take a second, temporary job to reach your goal faster. Another step is to check into homeownership assistance programs at the federal government’s HUD.
With a budget set, check on your credit score. The score is used by lenders to determine your ability to repay the loan and set your mortgage rate. Check your credit report – which can be done for free once annually from each credit reporting agency at annualcreditreport.com – to ensure it’s accurate. (Generally, you will need to pay a fee to receive your score.) Fixing errors can move up your score.
Our website offers several tips for first-time home buyers; check the section “Buying a Home.” You can calculate what you can afford and learn how to get preapproved, plus get information on our low mortgage rates for 15-, 20- and 30-year mortgages.
By Jim Holt, President and CEO
We all understand the need for rules. Often, however, rules are made to solve a situation that has already occurred. Their sweep can be so broad that they penalize individuals and businesses that already had in place a set of policies designed to help and not take advantage of those they serve.
That is what has happened to credit unions, whose members – you and me – are paying out of our pockets for expensive regulatory oversights that were put in place because of banks.
The financial crisis of 2008 resulted from money center banks needing to be bailed out. Since that time, the federal government has added a huge number of regulations intended to rein in these banks. Unfortunately, these new regulations are hurting credit unions and their members even though we did not cause or contribute to the crisis in the first place. Regulations cost time and money – more complexity, more paperwork, more fees – that we would rather spend on providing services to benefit you.
Since 2010, regulatory costs for credit unions nationwide have increased by 39 percent, driving up overall costs to a staggering $7.2 billion annually. Credit unions have lost $1.1 billion nationally in revenue due to regulatory costs. In Kansas, the impact of these regulations has been more than $44 million – more than $39 million spent in compliance and $5 million in lost revenue.
Every penny we spend trying to fix a problem we don’t have is money we cannot return to you. Less money spent on excessive, expensive regulations would mean higher interest rates on deposits, more services and products and lower loan rates – all of which would more directly benefit you.
We need your help to turn this situation around, and as a member-owner, you can make your concern heard. Mid American Credit Union is joining with our national organization, the Credit Union National Association (CUNA), to educate and help activate America’s 105 million credit union members about this situation.
To assist you, CUNA has helped establish a website, www.easetheburden.com, with more information and a way to act on this issue. Through the site, all it takes is one email – using a prewritten message or one with your own words – to contact all of your Congressional representatives to ask them to “Ease the Burden.” No personal information about you will be gathered or retained if you visit this site.
Please consider taking action today.