CFCU Member Source

Holiday Debt

2008-01-02T10:00:00.000-06:00

So, the Holiday season has come and gone, and now we are faced with the task of paying off all of that debt. Many people have been pulled into the 0% introductory rate credit card that we have discussed in a previous post, or just used a current credit card with a low fixed rate. Either way, we want to be sure to pay the balance on the cards sooner than later.

The first piece of advice would be to always pay more than the minimum due on your credit card statement. In most cases, the minimum amount due mostly covers the interest due from the previous cycle period, and very little going to pay off the principal balance. For example, if you have a payment due of $45.00, make a payment of $75.00 or $100.00. This will significantly cut the amount of time you have to pay on your existing balance.

Also, look for ways to adjust your budget to allow yourself to apply extra funds to that credit card debt. Excessive credit card debt and high balances are one of the main deterrents in loan qualification.

2007-07-30T09:24:00.001-06:00

The first Home Loan product we will discuss is the Home Equity Line of Credit (HELOC). This product serves as a variable rate loan that is tied to the equity of your home as collateral. When you have a HELOC available, you can use the funds to purchase or payoff anything, and you will receive the current HELOC rate. This product allows you to pay off those high rate credit cards or pay for that overdue home improvement with a low interest rate. When you have owned your home for a number of years, you have hopefully been making on-time monthly payments. Over time, your loan balance will begin to decline. The difference between the value of your home and the balance of any real estate loans is the equity you have in your home. For example, a member may own a home that is valued at $200,000.00 but they have a first mortgage balance of $75,000.00, allowing for $125,000.00 in equity. Most banks and credit unions, however, will only go up to 80 or 90% loan to value (LTV). In this situation, the member could get a HELOC @ 90% for $112,500.00. The best part of the HELOC is you will only pay interest on the portion you actually borrow on. For instance, if you have an $112,500.00 line, and borrow 10,000.00 to pay of that high interest credit card, you will only be paying the interest on the $10,000.00 advanced. This is a safe and economical way to save money, and pay off high interest debt. Next week, we will discuss the fixed rate option of the line of credit.

Make Your Home Work For You!

2007-06-11T14:07:00.000-06:00

The current housing market can be a very scary and intimidating world. There have been numerous news articles about home owners loosing their homes to forclosure and how interest rates are shooting through the roof! This world can be especially scary for an individual who does not know left from right in the world of real estate finance. When most of our members hear the words "balloon payment" or "variable rate" they break down into a cold sweat. This is only one of the many reasons you are a member of a credit union. Our experienced bankers will take the time to explain all the terms to you BEFORE you sign your loan papers. We are here to make sure you are making an educated decision in borrowing from us.

With this in mind, if you are a current home owner, and are looking for a feasible way to do those long over due home improvements or to take that well deserved vacation, it is time to make your home work for you. Over the next couple of weeks, we will be discussing a variety of home loan products and how they actually work. As always, we look forward to any questions or comments you may have.

What Credit Card is Right for You? Pt. 2

2007-02-19T10:28:00.000-06:00

In our last discussion, we looked at the most popular ways that credit card companies determine your finance charges. Now, let’s take a look at the fine print on some of the credit card offers you may be receiving in the mail.

The first thing that will jump out at you in most card offers is that fantastic introductory rate, most showing 0% interest on all purchases for the first “x” amount of months. Be careful and stop and take a look at the fine print. That great introductory rate that you have for the first couple of months won’t last forever. The first thing you will see, if you squint, is “Rates, Fees, and terms may change”, followed by:

We reserve the right to change the account terms (including APR) at any time for any reason, in addition to APR increases that may occur for failure to comply with the terms of your account.

This is what that paragraph states:

We reserve the right to change the account terms (including APR) at any time for any reason, in addition to APR increases that may occur for failure to comply with the terms of your account.

What does this mean to you? It means that the credit card company holds the right to alter the terms in your contract at any time. Your rate after the intro rate can often go as high as 30% +, that is if you get approved for your pre-approved offer.

When you receive a pre-approved offer in the mail, this does not mean that you are guaranteed to get the card they are advertising. Squint again at some great fine print:

This “prescreened” offer of credit is based on information in your credit report indicating that you meet certain criteria. This offer is not guaranteed if you do not meet our criteria.

This is what the above eye test specified:

This “prescreened” offer of credit is based on information in your credit report indicating that you meet certain criteria. This offer is not guaranteed if you do not meet our criteria.

The final fine print issue we would like to take a peek at is the extra fees and charges that may be possible on your credit card account. After reviewing a student credit card offer, I noticed the “other fees” section. These are thing that you want to be sure you look at, and be sure you are getting the best card that will fit your lifestyle. Here are some examples I found:

Foreign transaction fee: 3% of the amount of your transaction in U.S. dollars
Cash Advance: 4%, $10.00 minimum
Balance Transfer Fee: 3%, $5.00 minimum
Convenience Check Fee: 3% 5.00 minimum
Overdraft Protection Fee: $10.00 per occurrence
Cash Equivalence Fee: 4%, $20.00 minimum
Late Payment Fee: $15.00/$29.00/$39.00 (Late fee dependant upon balance)
Overlimit Fee: $35.00

All of the above charges can really sneak up on you, and that is exactly why we need to read the fine print. Always be sure to ask as many questions that you want when shopping for a credit card and be sure you find the one that will fit your lifestyle best. Join us for our next blog entry when we look at the credit card picture as a whole.

Don’t forget CFCU will always be here for our members and will be happy to answer any questions you may have on credit card fine print. Simply leave a comment or contact one of our convenient locations.

What Credit Card is the Right Fit for you?

2007-01-23T10:48:00.000-06:00

Over the past couple of months, you have most likely been receiving a number of credit card offers in the mail. Some are offering you 0% interest for the first 6 months, no finance charges on balance transfers, or an introductory rate “as low as” 6%. You have even probably thought to yourself, “Wow, this is a really great deal!” Let’s put the mail down for a second and take a look at these offers and also a look at what offer is going to be the best for you.

When you are choosing a credit card, there are a number of factors to take into consideration, the most important, is this card right for me. We all have different goals or ideas in terms of what we want our card to do for us. Will you be paying the card off monthly, carry a balance, use it for cash advances, or transfer a balance form an existing card?

After we decide what our purpose of the card is, we can start looking at some of the finer details that may make or break our decision. What sort of charges come with balance transfers? What sort of annual fees are tied to the card if I do not use it? What is the interest rate going to be after the grace period, if one applies, and will this rate be fixed or variable?

Let us begin our credit card series by taking a look at how companies actually figure your finance charges. There are four main equations that companies will use in figuring out what your monthly payments will be on a monthly basis; Average Daily Balance, Daily Balance, Two Cycle Balance, and Previous Balance. Let us take a look at each of these individually:

Average Daily Balance: In this formula, the creditor will average your daily balance. For instance, if you charge $200.00 on the first day of January and $300.00 on the 16th, your average daily balance would be $250.00. That number times roughly 1/12th of your annual percentage rate (APR), equals your monthly finance charge. Interest may be calculated on a daily or monthly basis.

Daily Balance: This formula is the most commonly used formula by creditors. In this, the company calculates the actual balance you carried each day of your billing cycle, subtracting payments or refunds. They then multiply this figure by roughly 1/365th of you APR and add it together for each day.

Two Cycle Balance: This is very similar to the Daily Balance formula except that the daily average is based on your last two billing months, not just one. You need to be careful with this method, because if you don’t pay your card off in full each month, you’ll be hit with retroactive interest on your next bill.

Previous Balance: The billing cycle will show beginning balance and ending balance for your account. The finance charge is based on the outstanding balance at the start of the billing cycle.

Now that we have looked at some of the calculation methods, join us next week as we look at some of the fine print on some of these offers you may have received.

Welcome CFCU Members

2006-12-12T14:36:00.000-06:00

Creighton Federal knows that it is important to maintain a good relationship with all of our members, and to be there when needed. Over the next few months, we will be discussing a number of topics in the world of finance and banking. After each post by one of our CFCU executives, we encourage members to post a reply or ask a question regarding the latest topic. We hope this increase in communication will enable us to better serve our members and continue to give you the quality banking experience that you deserve. So please, over the next few months, take some time to view our post and give us some insight that will enable us to better serve you.