Author Archives: Chief Marketing Officer Jessica

Financial Quick Fixes Can Come at a High Cost

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Prohibited in 18 states, payday loan companies still manage to offer more than 20,000 locations across the United States, making them more common than McDonald’s restaurants. Banking on consumer desperation, these programs market their services to financially vulnerable customers. When potential borrowers encounter an unexpected money crunch, the appeal of getting instant cash with minimal qualifications seems too good to pass up. If the borrower is employed and receiving regular paychecks, that’s usually all it takes to get a loan. However, these loans traditionally charge rates of 300% annual interest (APR) or higher, saddling the already-struggling borrower with an even heavier financial burden.

Even though a payday loan is designed to be paid off when the customer receives their next paycheck, the outrageous interest charges often make it incredibly difficult to pay off the full amount. Since the average payday loan payment consumes 25-50% of a borrower’s income, the threat of default is extremely high. To avoid defaulting on the loan, many customers elect to pay only the interest charges and roll over the loan for another pay period. According to recent CFPB research, almost 4 out of 5 payday loan customers re-borrow within a month. What started as a temporary fix becomes an ongoing cycle of debt.

High-interest consumer loans: overspending over time

While payday lending companies are traditionally limited to loans of $1,000 or less, there is no shortage of consumer lending companies willing to offer similarly unfavorable terms on higher loan amounts. Like payday lenders, these lenders commonly target individuals with less-than-perfect credit or little to no collateral. But rather than charging outrageous interest rates for short periods, they make their money by charging slightly-less-outrageous rates (59% instead of 300%) over longer periods of time, often 2-3 years.

Consider this example: borrowing $2,100 at an interest rate of 59.39% for 36 months would result in a total payment of $4,644, more than double the original amount borrowed. You don’t need a financial advisor to explain why that’s a bad deal. Fortunately, these lenders aren’t the only game in town.

Credit unions offer a convenient, cost-effective alternative

Because they’re structured as not-for-profit, member-owned financial collectives, credit unions (like First Financial!) are able to reinvest their earnings into programs that benefit their members—instead of paying dividends to shareholders like traditional banks. This distinction allows credit unions to approve personal loans with lower interest rates and higher flexibility than programs offered by payday lenders or banks.

For more details about First Financial’s Fast Cash Payday Alternative Loans*, and how we can help you find smart solutions for your financial needs, stop by one of our local branches or call us at 732-312-1500, Option 4.

*Loans of $200 to $1,000 available for terms of one to six months. An application fee of up to $20 will be charged; other fees and charges may apply. At least one month of First Financial Federal Credit Union membership is required to obtain a Payday Alternative Loan, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. Not all applicants qualify, subject to credit approval. Rates vary based on creditworthiness, but will not exceed 28%. Terms and conditions of this offer may be subject to change at any time.

Should You Pay for Credit Repair Services?

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Should You Pay for Credit Repair Services? Probably not.

Call it a coincidence. Call it savvy marketing. Whatever you call it, there always seems to be a spike in credit repair advertisements around the time the first holiday shopping bills arrive. Maybe you’re staring wide-eyed at a balance that’s higher than you expected, wondering how you’re even going to keep up with the minimum payments. This kind of uncertainty can the stage for bad decisions. So, before you scramble and sign up for credit repair services, take a deep breath and realize you have more control than you think.

Risk vs. Reward: Is credit repair worth the cost?

It’s important to remember that some credit repair services are legitimate businesses, able to follow through on their claims. Unfortunately, the reputable companies reside in a corporate landscape littered with scam artists and opportunists. If you’re willing to devote enough time and research, it’s possible to separate the upstanding services from the scams, but as NerdWallet columnist Liz Weston points out, “If you’re able to do that kind of research, then you can certainly figure out credit repair and do it yourself.”

While the trustworthy credit repair companies aren’t necessarily too good to be true, there’s a good chance they’re too costly to be worth it. When you consider that many of these services charge monthly fees ranging from $30-$100, the boost in your credit rating may not justify the ongoing expense.

Facing credit challenges? Your credit union can help.

Good credit isn’t the result of tricks and trade secrets. It’s established by applying solid financial habits over time. The same holds true for credit repair. While there may be some additional steps required to clean up your credit report, rebuilding good credit requires a consistent commitment to responsible money management.

Credit unions exist to ensure the financial success of their members. Educating people on proper credit management is part of that mission. If you’re drowning in debt and struggling to regain your financial footing, your credit union could be the lifeline you’re looking for. Discussing your current challenges with one of the credit union’s representatives can be the first step toward putting those struggles behind you.

Repairing damaged credit is no walk in the park. But with a little hard work and dedication and the guidance of your credit union’s financial professionals, you can be on the way to reclaiming the good credit you deserve.

Need a little help understanding your credit score or want to sit down with a First Financial representative to help with debt management strategies? Stop into your nearest branch location, email marketingbd@firstffcu.com, or call 732-312-1500 to schedule an appointment. We’ll help you get back on track!

Check out our guide for understanding your credit score.

 

Phishing Scam Alert: Fake Invoices

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Scammers have been relentless lately – here they are, back at it with a new twist on an old phishing scam.

Recently, scammers have been posing as well known tech companies and emailing phony invoices which show that you purchased music or apps from them. Check out our recent blog on these types of scams here. The scam emails tell you to click on a link if you did not authorize the purchase. If you get one of these emails, do NOT click on the link! This is a phishing attempt scheme.

What is phishing? When a scammer uses fraudulent emails, copycat websites, or texts to get you to share valuable information. The fraudsters then use this information to commit identity theft or other fraud in your name.

Scammers are also using phishing emails to get access to your computer or network – then they install programs like ransomware that can lock you out of important files on your computer.

Here are some tips to help keep your information secure:

  • Be suspicious if a business, government agency, or organization asks you to click on a link that then asks for your username or password or other personal data. Instead, type in the web address for the organization or call them. The link in the email may look right, but if you click on it you may go to a copycat website run by a scammer.
  • Be cautious about opening attachments. A scammer could even pretend to be a friend or family member, sending messages with malware from a spoofed account.
  • Set your security software to update automatically, and back up your files to an external hard drive or cloud storage. Back up your files regularly and use security software you trust to protect your data.

Lastly, report phishing emails and texts to the FTC by visiting https://reportfraud.ftc.gov/.

If you feel that any of your First Financial accounts may have been compromised as a result of a scam, please contact Member Services at 732-312-1500, Option 9 Monday through Thursday 8:30am-5pm EST, Friday 8:30am-6pm EST, or Saturday 9am-12:30pm EST.

Article Source: Ari Lazarus for FTC.gov

Important Member Alert: Tax Scams

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We are in the midst of tax season, and you guessed it – the fraudsters are at it again! Please be on the lookout for the following tax scams, where the scammers have been posing as the IRS via phone or email. The most important thing to remember here is that the IRS will never contact you via phone or email.

Click here to watch a short video from NBC Nightly News, which explains some of the recent tax scams.

In the first tax scam scenario, fraudsters will have already obtained an individual’s non-public personal information (name, SSN, date of birth) and bank account information. They may have obtained this information in many different ways (dumpster diving, computer hacking, stolen wallet, pretext calling). They will then file a false tax return using the individual’s name and information. Once they receive confirmation that the tax return has been deposited into the individual’s bank account, they will contact the individual via telephone posing as an employee of the IRS. They will state the funds were deposited to their account in error and order them to pay the funds back or suffer penalties.

In the second tax scam scenario, a fraudster will contact an individual via phone or email, again posing as a representative from the IRS. They will state that they owe back taxes and demand payment from the individual. They will attempt to obtain the individual’s checking account/bank routing number or credit card information to directly debit their account, or they may instruct them to mail a check.

Once again, the IRS will never contact anyone via phone or email – they will only use regular US postal mail. If you receive a phone call or email from the “IRS” – it is not the IRS.

Have you received a tax refund you didn’t file for yet?

  • Contact your financial institution immediately.
  • Have your financial institution return anything direct deposited into your account to the IRS, and then call the IRS at 1-800-829-1040
  • For an actual check received in the mail, write VOID across the front of the check and mail it to the IRS location closest to you by entering your zip code at IRS.gov
  • If you cashed the check, you will need to reimburse the IRS with a personal check.
  • For further instructions, visit the tax fraud section of the IRS’ website here.

If you feel that any of your First Financial accounts may have been compromised as a result of a tax scam, please contact Member Services at 732-312-1500, Option 9 Monday through Thursday 8:30am-5pm EST, Friday 8:30am-6pm EST, or Saturday 9am-12:30pm EST.

The 50/20/30 Budgeting Rule and Downloadable Worksheet

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There are dozens of choices when it comes to budget plans. If you’re still looking, or are completely new to the concept of budgeting, let’s introduce you to an age-old budgeting guideline: the 50/20/30 rule. Even though it’s a classic, it bears a fresh look, especially through the lens of the modern American’s financial viewpoint.

Three Categories and What They Contain

The 50/20/30 rule splits up take-home pay into three large spending categories — fixed costs, financial goals, and flexible spending. Here’s a list of what each contains.

  • Fixed Costs (50%) – These are the expenses most vital to your survival, which don’t vary from month to month: mortgage or rent, vehicle payments, and utilities.
  • Financial Goals (20%) – This category includes any monthly payments and contributions toward improved financial health: 401K and other retirement accounts (from post-taxed income), extra payments on credit card debt or student loans, building an emergency fund, and savings goals such as a down payment for a home or funding an education.
  • Flexible Spending (30%) – This category includes expenses that vary from month to month: groceries, gas, eating out, shopping, hobbies, and entertainment.

One of the best traits of the 50/20/30 guideline is its simplicity. There aren’t dozens of categories to micromanage, but it will still get the job done. This is a great starting point for everyone, especially if you’ve never stopped to look at the bigger picture of your spending balance.

Reduce Your Fixed Costs.

Financial experts recommend your fixed living costs not exceed 50% of your income, but — thanks to huge mortgages, multiple vehicles, and skyrocketing rent — many Americans will find themselves over this amount. Know what percentage of your income is consumed by fixed expenses, then identify ways to reduce them: refinance your home, negotiate lower interest rates, or choose not to buy new vehicles every few years.

Look for Ways to Spend More on Your Financial Goals.

Reducing your fixed costs will allow you to designate more income toward your savings and other financial goals. Maybe you’re barely saving 5% right now, but even small changes can make a difference. In our debt-burdened society, it can also be difficult to choose between paying off debt and saving for retirement, especially when you’re young and retirement is still far away. Remember that the more you contribute to retirement accounts when you’re young (both pre and post-tax), the more it will compound (that also goes for high-yield savings accounts). Even if your current focus is debt, continue to contribute as much as you can to retirement and savings. When you eliminate bad debt, use former payment funds to increase your retirement and savings contributions.

Be More Controlling with Flexible Spending.

You may never be able to completely predict all the categories under flex spending, but the more you can control, the closer you’ll get to flip-flopping that 30% with 20% and save more for future goals by spending less on immediate wants. Try limiting how much you eat out or go to the movies, and take advantage of rewards cards, fuel points, coupons, and rebates to reduce your grocery and gas bill on a regular basis.

It may be basic, but if you follow these tips, the 50/20/30 rule might just be the tool that helps you get out of debt and improve your financial outlook for good!

If you need a good starting point for setting your budget, check out our budgeting guide and fillable PDF worksheet.

Article Source: Jessica Sommerfield for Moneyning.com

Is Your Credit Score Affecting Your Quality of Life?

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The American dream is usually characterized as working hard from the bottom up, making a good salary, buying a house, and having time to create and enjoy your family life. But the vision doesn’t always come together so neatly – despite strong buyer demand, the inventory of affordable, available starter homes is relatively low, and to secure a mortgage, you need a strong credit score (something that not all Americans have or understand).

Even in the face of this unfamiliarity, most people realize that your credit score is the main determining factor in whether you qualify for a loan, and what rate you’ll pay on that loan. However, your credit score has the power to affect your life in far more than just one area — it can make or break your vision of the American dream on all sides.

JOBS

Though not all employers will check your credit score before hiring you, and most employers won’t rule out a candidate just because they have a bad credit score, your credit score could have an impact on how you’re seen by prospective employers. If they run a report and see that you’ve had a checkered financial history, and realize you’ll be handling financial responsibilities in the office, they may believe you’re underqualified, and move onto other candidates.

The good news is employers aren’t always allowed to view your credit report. According to Credit Karma, “The short answer is no, credit bureaus do not share your credit score with employers. Subject to restrictions in state law, employers may, however, ask to see your credit report. When your information is requested, credit bureaus will send over a variation of your credit report meant specifically for employers.”

APARTMENT RENTALS

Similarly, your credit score affects housing in more ways than solely influencing your mortgage rates and availability. Landlords will frequently check prospective tenants’ credit scores before choosing whether to rent the apartment to them. Obviously, if a tenant has a history of missing payments, or being late with payments, they’re going to be secondary options to tenants with strong financial backgrounds.

BILLS AND PAYMENTS

Your credit score could even affect how you’re expected to pay for utilities — especially when moving to a new location. When turning on utilities for the first time, a utility company may require you to leave an upfront deposit. If you have a high credit score, they may waive that deposit, but they may charge you more if your credit score is especially low. According to the FTC, “Like other creditors, utility companies ask for information like your Social Security Number so they can check your credit history — particularly your utility payment history. A good credit history makes it easier for you to get services. A poor credit history can make it more difficult.”

RELATIONSHIPS

Your credit score can even affect the quality of your relationships. It’s no surprise that money and financial issues are the biggest causes of couples’ fights (and breakups). If your partner is fiscally responsible, but you’ve had a more questionable history, it could lead to bigger arguments. For example, will you be willing to buy a house together? Will your credit score negatively impact your joint mortgage rate? Will you be paying off your debt together? Even a little money-related stress can quickly escalate into a bigger problem.

HOW TO IMPROVE YOUR CREDIT SCORE

If you’re reading all of this and feeling nervous about your own credit score, take a deep breath. Even if your credit score isn’t as strong as you’d like it to be, there’s always time to revise and improve it. Your first step is to know what your credit score is – and thankfully, you can check it for free. Once you know your credit score, you can take the following steps to improve it (and along with it, the quality of your life):

  • Understand your weak points. First, understand why your credit score is where it is. Is it because you’ve accumulated a lot of credit card debt? Is it because you missed several payments? There are many reasons here, but almost all of them can be corrected with better habits in the future.
  • Avoid new credit or debt. Don’t apply for any new loans or credit cards, this could tank your score even harder. Instead, focus on the lines of credit you already have.
  • Pay all your bills on time. This is the most important factor to focus on – from here on out, make sure you pay all your bills in full and on time. If you need to create a strict budget to do it, then do it. Without a steady history of on-time payments, you won’t be able to lower your score.
  • Start paying off your debt. Finally, work to start paying off your debt. Consider moving to a lower-cost area, taking on a second job, and cutting any unnecessary expenses. You can even call your credit card companies to negotiate for a lower rate. Once your debt totals start decreasing, you’ll feel happier and more optimistic as well.

Unfortunately, there’s no quick fix for a bad credit score. It takes years to build an initial score, and months to years to make a significant change. You’ll have to be consistent and patient if you want to succeed, but as long as you stay committed to your financial future, it can be done.

Need a little help understanding your credit score or want to sit down with a First Financial representative to help with debt management strategies? Stop into your nearest branch location, email marketingbd@firstffcu.com, or call 732-312-1500 to schedule an appointment.

Learn to manage your credit and reduce debt with our easy guide.

Article Source: Anna Johansson for NBCnews.com