Lone Star Credit Union Blog

How to Avoid Identity Theft by Hackers, Dumpster Divers and Snoops

If you’re worried about identity theft you have plenty of good reasons.

 

Tens of millions of people had their accounts compromised in some way in the past year alone after hackers breached U.S. retailers’ computer systems. The Federal Trade Commission has listed ID theft-related issues as the top consumer complaint for over a decade.

 

How can you protect yourself from identity theft and the havoc it can create? Lots of ways, it turns out. Here’s a quick checklist of practices to implement now to protect your personal information:

 

Think first

Don’t automatically provide personal information when it’s requested — think about who’s asking, why it’s needed and find out what will be done with it and how it will be protected. Never give out such details to a stranger who calls or sends an email request, no matter what is being offered as an inducement. Never disclose personal identification numbers (PINs) and don’t write them down where they may be discovered. Instead, memorize each one.

 

Lock it up

Keep vital records and documents such as your Social Security card and birth and marriage certificates locked in a safe place, and if you can’t have your purse or wallet with you at work, put it in a secure spot. At home, don’t leave things such as bills, tax returns, paycheck stubs and bank records lying around where they may be seen by roommates or workers passing through. Put a lock on your mailbox. Create a file with account numbers, expiration dates and contact information for use if anything gets lost or stolen.

 

Destroy, don’t toss

Shred or incinerate unneeded documents with sensitive information, such as credit offers, bills, old prescription containers, bank statements and medical forms. Cut up old credit cards especially where numbers are embossed or printed. 

 

Look carefully

Before using a cash machine, self-serve fuel pump or the card-swiping device at a store, give it a close examination to spot any abnormalities. If something seems out of place or unusual, don’t use it. Hackers sometimes put phony card-reading “skimmers” on automated teller machines, pumps and checkout registers to scoop up consumers’ account data. Often, these malicious mechanisms can be easy to notice if you’re on the lookout for them.

 

Check again

Go over your account information meticulously to spot any unfamiliar activity. Review your checking account transactions at least weekly, and study credit card bills closely each month. Check others, like individual retirement accounts, at least quarterly and make an annual habit of requesting your credit report from each of the three main bureaus that collect the information: Equifax, Experian and TransUnion. They’re all obliged to give you a free copy each year, when asked. Read each with an eye out for unfamiliar activity or errors.

 

Be on guard online

Install firewalls and antivirus programs on your computer and consider encrypting any files containing personal information. Exercise caution when providing personal details such as birth dates and credit or debit card numbers to websites and avoid exchanging private data over public Wi-Fi networks.

 

Identity theft affected 16.6 million Americans in 2012, leading to almost $25 billion in losses. Taking precautions including those above can help you avoid joining them. 

 

NerdWallet

Here’s How to Beat a Holiday Debt Hangover

If you overindulged during the holidays and busted your budget in the process, don’t despair. This condition can be licked, though maybe not as easily as dispatching the residual effects of over-imbibing while spreading good cheer. Nonetheless, trying to ignore that flurry of January bills won’t make the debt hangover melt away.  

For some, getting over a spending binge takes nearly all year: 7% of 2013 holiday shoppers fell into that category, Consumer Reports noted in November. It may not be easy, but it can be done. Here are a few tips to get you started:  

Stash plastic: To avoid unnecessary spending, keep your credit and debit cards out of sight and leave them home when you go out. Take your information off of merchant websites and mailing lists to limit temptations.  

Assess the debt: Make a list of all your balances, the minimum due on each per month, due dates and interest rates, so you can set priorities and weigh options.  

Consider balance transfers: Sometimes consolidating debt using lower-rate accounts can save money as the amount is paid off. An online calculator can help you figure out potential savings, but don’t neglect to include upfront fees. Keep in mind that maximum cost reduction may rely on paying off balances before any introductory discount period ends.  

Create a budget: A budget can help keep you on track to eliminate overhanging debt at minimal cost. It should include monthly necessities — such as food, shelter, fuel — as well as income. Allocate amounts for debt payments as well as savings and incidental expenses.  

Pay extra: You won’t find your way out of the mess just by paying the minimum due on balances you owe each month, so pay more. That goes double for high-rate accounts, which should be your primary targets as you reduce debt as fast as possible.  

Increase income: Adding income will help. If you can’t negotiate a raise or win a bonus, maybe you can do some moonlighting to boost what you bring in. Even selling unwanted items can give you more money to pare down what you owe faster.  

Don’t get discouraged — persistence pays off. As your debts disappear, check out a savings account at a financial institution like Lone Star Credit Union. You can use one to prepare for the 2015 holidays and put yourself in good financial shape before the season’s shopping even begins.

NerdWallet

Don’t Let Thieves Pry Funds Out of Your Debit Card

Lots of people enjoy the convenience of using debit cards — 59% of Americans use them every day, according to Accenture research — and many of us get paid or receive government benefits through them. In short, they’ve become indispensible. So it’s important to protect your debit card information from hackers, thieves and fraudsters. These no-goods can pose a serious threat, and safeguards may be less robust than you think. What’s at Stake  Unlike credit cards, losses to fraud or identity theft can be unlimited — it all depends on how quickly you report a card lost, account information stolen or unauthorized transactions. No charges can be made against your account once you’ve reported it compromised. But you can lose your entire balance if the activity goes unreported long enough.    Under the federal Electronic Fund Transfer Act, your losses are capped at $50 only if you notify the issuer within two business days of noticing that your card or account information has been lost or stolen. After two business days, your exposure can rise to $500. If you wait more than 60 days to notify the issuer about a fraudulent transaction on an account statement, you could be liable for all losses after 60 days and before you notified the issuer.    Visa’s Zero Liability policy may protect you from any loss but only if the card company processes the transaction involved. Other limitations may apply as well.    Minimize Your Risk  Considering the potential stakes, it’s a good idea to take some steps to prevent crooks from getting their hands on your debit card information. Here are a few: Register your Visa card with Verified by Visa and create a password for the account to add a layer of extra security in online transactions. Keep records of account and security numbers, passcodes and expiration dates. Never give card information to strangers or unfamiliar organizations. Look closely at card-reading “swipe” devices — if something looks out of place, don’t use it. Thieves sometimes install “skimmers” on top of legitimate card readers to capture account data and use concealed cameras to learn associated passcodes. Don’t keep your personal identification number (PIN) for your debit card in your purse or wallet. Memorize it and keep it a secret. Check your account activity regularly — daily or at least weekly. Immediately reportany unrecognized activity to issuers like Lone Star Credit Union. Let the card issuer know in advance if you’re traveling to distant places or you plan to make an unusually large purchase, so that such transactions don’t trip red flags for account monitors. Don’t let the convenience of a debit card become a nightmare. Take steps like those outlined above to protect your money. NerdWallet

Credit unions are just like banks. Or, are they?

In answering the question "What is a credit union?", most people have the same answer "It's just like a bank, but...".  Well, in the case of products and services, that's usually a pretty good descriptor. Saying credit unions are just like banks is an easy way to let whomever is asking the question, know that credit unions have checking accounts, loans, debit cards, savings accounts, credit cards, and other traditional banking products.

But how does that answer end?  "It's just like a bank, but..."  

Often times those of us that know banks and credit unions are different aren't exactly sure how. Or maybe we just aren't sure how to explain it.  Well, there is very major difference between these types of financial institutions, and here it is, in a nutshell:

Banks are for-profit businesses that answer to investors.  Credit unions are not-for-profit and member-owned.

Basically, think of the money in your bank accounts as money you are lending to the bank that they will invest to make a profit.  And much like any other business, the bank will make these investments based on which will turn the greater profit.  And, at the end of the day, all of the decisions made for the bank as a company, that will in turn affect bank policies and customer fees, will be made based on investor happiness and what can garner the most revenue for the bank.

Credit unions, on the hand, operate under a not-for-profit business model.  Not-for-profit is not the same as nonprofit, which is a term you may be familiar with in regards to charity organizations. Nonprofit means that an organization is dependent on donations to survive.  Not-for-profit simply means that any profits that a credit union makes are returned to its members in the form of lower loan rates and higher savings rates.  And, if it so happens that there is any revenue left after making all of these adjustments, credit union members can receive dividends.  

So what kind of financial institution is best for you?  Of course each individual's financial and personal needs are different.  But here are a few items you should consider when choosing your financial institution:

• Turning a profit has its benefits.  The big banks have tons of locations, nice and new branches, and many conveniences and technical advances that many smaller financial institutions cannot afford to offer; think robust mobile apps, remote check deposit, etc.
   
• You're the boss.  A savings account is not just a savings account at a credit union. CUs call these "share accounts" for a reason; because it is your share in the ownership of the credit union.  And while banks are answering to investors, credit unions answer to their members. CU members even vote for the board of directors for their credit union and voice their opinions at annual meetings.
   
• Investments aren't the only way to turn a profit.  A couple of years ago, consumer frustration with big bank nickel and diming practices culminated in Bank Transfer Day. November 5, 2011 was deemed Bank Transfer Day in a movement of consumers that were fed up with being charged fee after fee by big banks.  Not only were these banks raising existing fees, but they were also adding new fees, like Bank of America's now infamous proposal to charge its customers $5 monthly just for having a debit card.
   
• If turning a profit has its benefits, then no profits must have some disadvantages. Most credit unions are smaller and more local in nature.  And sometimes that means that the conveniences that larger banks can offer, like the technological advances and multitude of branches we mentioned earlier, are not as easy to come by.  But, you should also know that credit unions are much more cooperative in nature and don't have the competitive spirit found between big banks.  So how does that help solve some of the CU inconveniences?  
  
  1.  Shared Branching.  Shared branching is a partnership of credit unions that
       allows credit union members to perform financial transactions (deposits,
       withdrawals, transfers, loan payments, etc.) at partner credit unions just as the
       member would at their own credit union.  
  
       So even if your credit union doesn't have a branch near your home or office, or
       you're across the country on a trip, chances are that one of the over 5,100
       shared branching participating credit unions is close by if you need them.
  
  2.  CO-OP ATMs.  So you don't necessarily need a credit union branch, you just
       need some quick cash from the ATM.  BUT, you don't want to pay a huge fee,
       right?  Most credit unions participate in the CO-OP ATM Network of almost
       30,000 ATMs across the country that members can use just as they would their
       own credit union's ATMs.  Fash cash with no fees.  And many of them even take
       deposits. 
   
• Service with a smile.  This is last, but certainly not least.  Another advantage of the smaller, community nature of credit unions is the impeccable and friendly service.  The hustle and bustle of long lines just don't lend themselves to remembering customer names or customer relationships with banks.  But, credit unions provide something much different.  So, don't be surprised if you're are greeted with "Good morning Mr. Smith" when you walk into your credit union, as opposed to someone asking for your account number or debit card.

We are obviously biased, but the advantages to joining a credit union seem to far outnumber the disadvantages.  And contrary to semi-popular belief, you don't have to work for an employer with credit union ties to join one.  Many credit unions do have restrictions on who can be a member, but many of those restrictions are as simple as living in certain counties or cities; which isn't much of a restriction at all. 

 

Are you unbanked or underbanked? Bank accounts can save you money!

The terms "unbanked" and "underbanked" are being used quite a bit lately; mostly by financial institutions and local and federal government officials advocating safer financial practices for their communities.  But, how many of us know what these terms mean? And what's so great about being "banked" anyway?

Let's run through the definitions first.  The FDIC defines someone without a bank account, credit union account, or another financial institution account as "unbanked". "Underbanked" typically means that, while someone may have a bank or credit union account, they also routinely subsidize that account with other non-traditional financial products like payday loans, check cashing, or pawn services. 

Currently, there are about 60 million adults that are underbanked or unbanked entirely. So why is this a problem?

Well, if you are someone who is banked, you probably don't worry about cashing your paycheck, social security check, or even just a personal check from a friend or family member.  You simply deposit the check into your account, right?  If you don't have a bank account, however, you would probably resort to a check cashing store to redeem a check.  National studies have shown that the average check cashing fee is between 2-6%.  Imagine paying $20 - $60 for every $1000 payroll check! That's money you have earned that you could be spending on food, gas, or clothing; and now you no longer have that option.  To make matters worse, some of these stores charge up to 20% of the value of the check they are cashing.

The unbanked and underbanked are also missing other services as well.  Because the underbanked don't have strong enough relationships with financial institutions, and the unbanked have no relationships at all, they often turn to payday lenders for high interest rate loans or cash advances when they are in a financial bind or need to supplement their income. And considering that payday lenders often have service fees ($15 - $20 per loan term) plus outrageous interest rates that can range from 300% - 750% (APR), this is a very pricey and risky alternative.  Many people end up paying back $300 - $400 or more to payday lenders for a $100 loan.  

Another type of short term loan that has grown in popularity is the car title loan.  Many car owners that are struggling financially are offering their car titles for cash by lenders who are known to charge triple-digit annual percentage rates (think 250%!).  The loan terms are typically pretty short, around 30 days.  The problem is that if the consumer didn't have a few hundred dollars initially, they are very unlikely to have twice as much money in 30 days to repay the loan.  So, many of these car owners are rolling over their loans for months until the repayment amount is nearly impossible to obtain, and eventually getting their cars repossessed.  The car title lenders are then selling the consumer's car and keeping 100% of the profit.  And the consumer is left with nothing; no cash and no car. While car title loans are generally considered a "predatory lending" practice, they are not illegal.  

So how could being "banked" help in these situations?  Many financial institutions offer short term loans or regular credit cards that would allow someone who is struggling financially to make it through the month, or several months, for much lower interest rates. Even the short term loans and most any kind of loan from a credit union, are offered at rates that are a fraction of those given by payday or car title lenders.  

The problem that some people run into is with credit checks/scores.  But part of a long-term solution for this would be to do something like a "credit builder" type loan that many financial institutions offer.  They allow you, if you don't qualify for a traditional loan, to secure a loan with your own money deposited into an account.  When you make payments to this secured loan, the payment history, etc. will still work to improve your credit score.  

And a credit card could also alleviate some frustration and give you more flexibility in months that you are short on cash.  Even if you don't have the most desirable credit rating, a 19% interest rate is still much better than a 300% interest rate.

There are other reasons that being banked is much better than being unbanked or underbanked.  Here's one more:  Safety.  If your credit card or check book is stolen, those items can be reported stolen and cancelled.  Even your debit card can be frozen by your financial institution.  But, if your entire paycheck is in your pocket or wallet and is stolen, you will never see that money again.  Not to mention, people that steal wallets, aren't always nice in their means to get your wallet.  

Other reasons to be banked include: having your money protected by the NCUA or FDIC, the helpful budgeting element of online banking that most financial institutions offer, interest bearing accounts, and much more.  If you aren't yet with an financial institution, the time to get banked is now!

To rent or to buy? How a mortgage loan could save you money.

Home ownership seems like a very grown-up proposition, doesn't it?  There's just something about mowing a lawn and making repairs that reminds us of our parents.  

 

But, a home doesn't just mean a house in the suburbs.  It can mean a condo or a townhome, too.  Given that, home ownership can really make sense for a variety of different people.  

So what does "make sense" mean exactly?  Well, there are many benefits to a mortgage loan that you may not be aware of, like:  payment stability, tax advantages, equity, as well as many other intangibles.  

Let's start with payment stability.  If you are renting then you probably have come to the understanding that your landlord/complex can raise your monthly rent payment due to inflation everytime your lease expires.  To make matters worse for the renter, rent hikes aren't always just due to inflation.  The rental market is just like every other business and varies greatly depending on demand.  According to the Dallas Morning News, North Texas rents have gone up 15% in just the last 5 years.  And that makes perfect sense when you think of that time period in relation to the extreme economic downturn from which our nation is still recovering.  If tons of people were foreclosed on or laid off about 7 years ago, then there was bound to be a huge demand for apartments in the years to follow, right?   

On the flip side of this coin is the fixed-interest rate mortgage loan.  If you were to buy a home and financed with a fixed-interest rate mortgage, then you would pay the same monthly principal and interest for the entire term of your loan; whether that is 30 years, 15 years, or somewhere in between.  Not so coincidentally, now is a great time to embark on a mortgage loan with low loan rates being so prevalent.

Did we mention there are tax advantages to owning a home?  We are not tax experts, but we can at the very least tell you that mortgage interest and property taxes are tax deductable.  The deduction you can take due to your mortgage interest will be your biggest tax break.  However that benefit is limited if your loan is for a million dollar home (or more).  There are also deductions regarding energy efficiency and "points" (regarding the fees or charges you may have paid to obtain your mortgage loan), but, we would advise you to see a tax specialist to delve into those.

Another huge advantage to home ownership is the equity you build!  What is equity, you ask?  Equity is what builds when your home increases in value and you have started to pay off your mortgage loan.  Bascially, it is the value of your home beyond what you still owe in mortgage payments.  Once you've built equity, you can borrow against it in the form of a home equity loan to pay for a variety of things, think:  home improvements, college tuition, or retirement planning.  You can even use it as an opportunity to consolidate some bills or go on a vacation.  There are many, many possibilities here.

Some other more intangible benefits include community stability.  Buying a permanent place to live will help you and your family bond with neighbors, allow your children to have a consistent school environment and classmates, and can even make decorating a little easier; no more puttying old nail holes in the wall when you move!

Of course, with all of that being said, there are still plenty of times when home ownership may still not be right for you.  Not sure you've found your perfect city?  Think your job may relocate you?  Do you want to wait until you have a spouse and children?  All of these are legitimate reasons to wait.  

But now that you know all of the benefits that come with owning a home, hopefully you will feel more confident in your decision when you are ready.
 

 

Budget Well and Pad Your Savings Account

Get a Low Auto Loan Rate and Find the Perfect Car for Your Budget

Generally, most people know that a good credit score means more opportunity for you in terms of how low your interest rates can be and how much credit lenders are willing to give you.  But do you have a number in your head that represents "good"?

The FICO scale ranges from 300-850, and of course the higher your score, the "safer" you are considered and more likely to receive low auto loan rates, mortgage rates, etc. But where between 300 and 850 does "good" fall?  Here is a good general reference:

Very Poor:  Below 579

Poor:  580-619

Average: 620-659

Good:  660-699

Great:  700-759

Excellent:  760 and above
 

But, don't be fooled by that spectrum.  Those are general ranges provided by FICO. Individual lenders set their own guidelines for who can receive the lowest auto loan rates, mortgage rates, credit card rates, etc.  For example, before our country's recent financial crisis, many lenders considered a score of 720 enough to make one eligible for their lowest tier of rates.  However, since the crisis, a score of 740 and higher is now considered the new threshold by many.  

So how can you begin to know if you are eligible for a low auto loan rate?  Or an auto loan. Period.  Well, first things first:  find out your current credit score.  Maybe you will be pleasantly surprised or maybe you will be better off waiting a few months for your loan.  

You can get one free credit report from each of the three major credit bureaus (TransUnion, Equifax, and Experian)once every twelve months by going to AnnualCreditReport.com.  Your credit report will contain everything from your credit accounts (think bankcard, mortgage, auto loan, etc.) with your corresponding account open dates, limits, balances, and payment history to your credit inquiries (voluntary and involuntary), as well as any delinquent items that you may have in collections.  

It is important to read through everything listed in your report.  Make sure that everything listed is in fact yours; erroneous information has been known to appear by no fault of the individual.  Once you know what is there, you will know what you can take note of any "dings" on your credit, such as late payments, collection items, etc.

One very important note is that your credit report is not the same thing as your credit score.  In fact, when you receive your free credit report your numeric credit score will be nowhere to be found on the report.  The score itself is a separate measuring tool that will need to be purchased, although rather inexpensively. 

And, there's just one more caveat.  Each of the three major credit bureaus has their own score for you, which can all be different from each other.  So, your TransUnion score could be 700, your Equifax score could be 710, and your Experian score could be 687.  Some lenders obtain all three scores when making lending decisions, others have one preferred bureau.  

While your report and your score are two separate items, you will need to obtain both to be prepared to make improvements if need be.

And now that you know how to start on the path to getting the lowest rate auto loan, do you know what to do when you get to the dealership?

First and foremost, figure out what you can afford.  It’s difficult to hear the total cost of a car and know if it fits into your budget comfortably, barring extreme examples, like luxury vehicles that cost in the hundreds of thousands of dollars. 

For example, saying, “Can I afford a $24,000 car?” may not be easy to answer.  But, thinking in terms of your monthly budget makes it easier.  “Can I afford $400 per month?” is much simpler to figure out. 

Of course, the amount of your monthly payment depends on many factors aside from just the total price of the vehicle.  Using a financial calculator, like the one you can find on LSCU’s website, can help you factor in other considerations like your down payment, trade-in value (if you have one), the term of the loan you would like to consider (60 months is pretty standard), as well as sales tax and some other miscellaneous fees. 

Within the calculator you can adjust all of these factors and work to find what works best for your budget.  You can even select “Monthly Payment” or “Purchase Price” depending on what number you are looking for:  select “Monthly Payment” if you have a price for a specific car that you’re interested in, input the other factors (down payment, trade-in, etc.) and figure out a good estimate for what your monthly payments will be if you purchase that car, and if those payments fit into your budget.  Or, select “Purchase Price” and input the ideal amount for your monthly payment, input the other factors, and see what purchase price is in your budget, then you can shop for vehicles in that price range.

Lastly, the one factor for which you may not be sure what to input into the calculator is the interest rate.  Remember, not all interest rates are created equal.  A not-so-competitive rate can end up costing you thousands of dollars by the time your car is paid off.  The dealership is only one option of many for financing; don’t forget to check credit unions.  Quite often, they offer rates much lower than their competitors. 

If you’re anxious to get started, just take the lowest rate your local dealership or credit union is offering currently and add a couple of points to give yourself a ballpark figure.  So, if the lowest rate you found was 3%, put 5% in the calculator.  But, don’t forget that your rate could be higher or lower than that.  Then…happy car shopping!

Understanding Credit Cards

With so many credit cards choices available today, it's no wonder that consumers don't have the time to decipher the differences in their options.  There are even, often times, over five options from one company.  So, let's take a minute to talk about some of the things you should consider.
 

First things first, do you want to pay an annual fee?  There is one huge benefit of no annual fee credit cards and that is the ability to maintain credit at no cost.  Sounds like a no brainer, right?  Well, it's not as simple as "free is better than paying".  

Most of us are well aware that a negative credit report or a low credit score can ruin our chances for many of the milestones we want to reach in life; a new car, a college education, a new home, and sometimes even employment.

Creditors look at many things to determine whether or not consumers qualify for credit cards and loans, as well as what interest rate that credit card or loan will be assigned. The criteria includes, of course, how well you manage your credit as well as your debt-to-credit ratio.  Both of these criteria require that you have a credit history that the creditor can evaluate.  And, often times, no credit is almost as detrimental as poor credit.

So, the biggest benefit of no annual fee credit cards is the ability to maintain credit at no cost.  Otherwise, you would be paying, for example, $30 annually just to maintain your card.  Another good point to add is that often times, if we pay this annual fee and don't use our credit card often enough, we may feel compelled to close the account to avoid the fee.  In actuality, it's recommended that you keep your account open even if you aren't using it.  The account being open means you have that credit available to you, thereby improving your debt-to-credit ratio.
 
_____________________________________________________________________ 

If you’d like to find an estimate of your debt-to-credit ratio, divide your debt used by
your available credit.  


Use this as an example:

John has $1250 of debt charged on Credit Card X.

Credit Card X has a $2500 limit.

$1250/$2500=a debt to credit ratio of 50%.
 

To put it simply, you want, at the very least to have a debt-to-credit ratio of less
than 50%.  And some creditors even look for a ratio of 35%!
_____________________________________________________________________ 

With all of that being said, we were always taught to "never say never", right?  So, when is it appropriate to pay an annual fee?  

If you plan on using your card on a regular basis, paying a lower interest rate is always preferred.  Choosing a card with an annual fee and a lower interest rate is preferred if the only alternative is a no-annual fee card with a higher interest rate.  Another situation in which you may want to pay an annual fee is when the card with the fee has greater rewards that you would actually use, than a card with lesser rewards or rewards that don't benefit you.  For example, if you're a frequent flyer and a card with a fee rewards you with three miles for every dollar spent, but a no-fee card only rewards you with one mile per dollar spent, then obviously paying a small fee is to your benefit.  

All-in-all, there are quite a few factors to consider when selecting which credit card is best for you.  But, if you evaluate fees, interest rates, rewards, and penalties, you should have of the information you need to pick the card that best fits your lifestyle. 

With the right credit card and good usage habits, you can enjoy increased spending power, add another emergency financial resource, reap rewards, and boost your credit score all at the same time!