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Save Smarter

Four Reasons to Buddy Up with a Credit Card

Combined with responsible spending, these tips could help improve your financial wellness.
Presented by Member One Federal Credit Union

High-interest rates, nasty fees, or the inability to pay back debt—all can leave you feeling glum when it comes to credit cards. Cheer up! Credit cards don’t have to be your worst financial enemy. If you educate yourself, you’ll discover how befriending your credit card, while spending responsibly, could actually benefit your overall financial health. 

Build and/or improve your credit. Are you planning to get a loan for a car or a home? That loan will depend on your credit score. By using a credit card and making monthly payments (or better yet, paying off the entire balance each month), you’re helping to establish good credit. You’ll also want to consider your credit utilization ratio—the amount you owe compared to your credit limit. Keeping this ratio low, usually below 10 percent, will make you more appealing to lenders.

Maximize the value of your dollar. If you use your credit card wisely, rewards can be a good way to maximize the value of every dollar you spend by earning cash back, points, or miles that you can later redeem. Why not benefit from purchases you’re already making? Just be cautious—don’t charge more to your credit card just to earn a certain reward, such as an airfare ticket or hotel stay. This could lead to significant debt if it gets out of control. One way to keep track of spending is to use your credit card for specific things like groceries and gas.

Keep your budget in check. Credit cards can be a great way to consolidate your debt. You can save yourself some money over time by rolling all of your debt onto a single credit card; however, make sure the card you’re putting debt onto has a lower interest rate than your other cards. This could make your life simpler by paying one bill each month instead of several, and the lower interest rate could help you save money.

Protect your money. With credit and debit card fraud on the rise, using a credit card as opposed to a debit card could help protect you and your funds. Debit cards are linked to your checking account, so fraudsters could drain your account quickly if your card is compromised. With credit cards, you have the advantage of fraud protection. Review your credit card provider’s fraud protection policy to learn more. Another great feature of credit cards is purchase alerts that notify you when your card is used. 

Credit cards don’t have to be a foe. With a little willpower and a bit of know-how, they can help you achieve financial ease and security. 

Join Member One here each month for more money-saving tips and financial advice! Be sure to visit their website, www.memberonefcu.com, for more info on their products and services. Member One Federal Credit Union is federally insured by the National Credit Union Administration.

Avoiding a Financial Doomsday

A major car repair, job loss, or medical emergency—all are scary realities and could lead to financial ruin unless you’re prepared. While these misfortunes are often unpredictable, there are things you can do to prevent financial catastrophes. With a new year on the horizon, now is the perfect time to get your emergency fund in place.

Build up your emergency fund. According to financial experts, you should have three to six months worth of living expenses saved in an emergency fund. This should protect you in case of a job loss or another unexpected financial hardship. While that amount might seem daunting, you can start small. Make a goal of saving one month’s worth of living expenses in six months or a year. This will help boost confidence in your saving abilities while getting you to your goal.

Determine where to store your money. Your emergency fund needs to be readily available, so don’t tie it up in things like investment accounts. A high-yield savings account or a money market account is a good place to start. If it has checks or a debit card, it’s a safe bet. Set up an account that’s separate from your regular savings. Some even recommend getting an account at a different financial institution altogether. Consider setting up automatic deductions into that account so you don’t even need to think about it.

Find extra money. If you find it difficult to build up your emergency fund, look for other ways to contribute like putting your tax return toward your fund or selling items you no longer need or use. Closely examine your household budget and discover ways to save. Maybe it’s time to cancel subscriptions you don’t need (cable, magazines, or the gym), or cut down on eating out. And if you haven’t done this yet, make a household budget so you know exactly where every dollar you earn and spend is going.

Maintain your fund. It’s recommended that you visit the dentist every six months for a cleaning and to spot any problems before they become major issues. The same attention should be paid to your finances. Commit to regular check-ins to make sure you’re on track with building up your emergency fund. If you do and a financial disaster occurs, the impact will be much less devastating.

 

Presented by Member One Federal Credit Union

Member One: Credit Score Quick Guide

It’s one of the most important numbers linked to your identity: your credit score. But are you fully aware of why it’s so significant, and what constitutes a good credit score? Read on for a brief explanation of what it is and tips for improving it.

What is it? Your credit score is a number that ranges from 300 to 850 and, along with repayment history, is an indication of your creditworthiness. Anything above 700 is generally viewed as good credit and signals to potential lenders that you’re more likely to pay back your debts on time.

Why should I care? A credit score helps determine whether you’re approved or denied for a credit card or loan and your interest rate. On-time payments have a big impact on your score, and just one or two late payments can significantly lower it. If you’ve ever had a bill go to collections, declared bankruptcy, or had a foreclosure, your score will go down. The number of loans in your name matter and the more accounts you have (in good standing), the better, because it shows that multiple lenders have approved you.

How do I find out my score? The three major credit-reporting agencies—Equifax, Experian, and TransUnion—are required by law to provide you with a free credit report every 12 months. Keep in mind that this is just the report and not the actual score. In order to receive your score, you typically have to purchase it. Visit MyFICO.com to buy your official FICO score. Also, check your monthly credit card statement as some lenders now include your credit score as an added service.

What are some quick ways to improve it? One of the best ways is to consistently pay your bills on time. Other ways include paying down a credit card balance to improve your utilization rate, and keeping lines of credit open with zero balances. Both of these strategies show lenders that you’re able to manage debt and aren’t biting off more than you can chew.

As a general rule of thumb, you should review your credit report along with your score at least once a year. Not only is it beneficial to keep yourself informed and aware, it could help protect against fraud or identity theft.

Presented by Member One Federal Credit Union