The world of money has its own language. Here are a few key terms to know.
|Account||A fund established at your credit union in your name, with which you can withdrawal or deposit money. An account keeps a complete record of all your financial transactions.|
|Annual Percentage Rate (APR)||The total yearly cost of a loan, expressed as a percentage. APR calculates interest, fees and any other charges such as insurance.|
|Annual Percentage Yield (APY)||What you earn (total dividends, expressed as a percentage) on your deposits during one year.|
|Automated Teller Machine (ATM)||A machine at a credit union branch or other location that lets you do basic banking transactions, such as get cash, check your balance, or even make a deposit. Because the machine is automatic, it is often available even when the credit union is closed.|
|Balance||The amount of money in an account at a specific time. Also often called an “account balance.”|
|Budget||A detailed plan of how much money you should save and spend each month, based on your income, in order to meet your needs and goals.|
|Certificate Accounts||A special type of savings account (sometimes called Certificates of Deposit at other financial institutions) offering higher dividend rates, in exchange for depositing your money for a fixed amount of time.|
|Checking Account||An account that lets you write checks to make payments using the money deposited in the account.|
|Credit Card||A plastic card that lets you pay for items using a temporary loan. The card is swiped through a special machine at a store, and the amount of the purchase is added to the loan balance. At the end of each month, the user is expected to make a payment toward the balance of the loan.|
|Credit Score||A standardized measurement of your credit history, included in your credit report. Your credit score analyzes your history making loan payments on time, responsibly using credit cards, renting a home, and more, and decides if you can be trusted to pay back a loan.|
|Debit Card||A plastic card that lets you make purchases electronically using your checking account. Instead of writing a check, you swipe your debit card through a special machine, and the amount of the purchase comes out of your account right away.|
|Debt||The amount of money a person owes to other people or companies.|
|Deposit||Money you put into your credit union account.|
|Direct Deposit||A service that lets your employer deposit your paycheck directly into your credit union account--without giving you a paper check.|
|Disclosure||The “fine print” details of an account or loan, outlining complete details, risks and more.|
|Dividends||The rate (as a percentage of your balance) a credit union pays you for depositing your money. Sometimes called interest at other financial institutions.|
|Down Payment||A small part of the purchase price (usually of a car or home), paid in cash up front. A down payment lowers the amount of the loan or mortgage needed to make the purchase.|
|Individual Retirement Account (IRA)||An account used to save money for retirement. People with IRAs set aside money each year, and cannot withdraw the money until they are age 59 1/2 or older.|
|Interest||The fee (as a percentage of your balance) charged by a credit union to borrow money.|
|Loan||Money borrowed by a member from a credit union. The borrower agrees to repay the money, plus interest, over the course of a specific timeframe.|
|Mortgage||A loan used to purchase real estate (a home), with specific terms, payment periods and interest rates.|
|Online Banking||A web-based system that lets you perform certain transactions on your credit union accounts over the Internet.|
|Overdraft||A negative account balance, caused by having withdrawals greater than your deposits.|
|Savings Account||An account at a credit union that pays dividends, but cannot be accessed by writing checks.|
|Terms||The specific conditions and details required to establish a credit union account or loan.|
|Withdrawal||Money you remove from your credit union account.|
by Jean Chatzky
Part of being a smart consumer is managing your credit history and your credit score. Your efforts will be rewarded – a good credit score gets you lower interest rates, thus saving you money. It’s also particularly important now, because the recession tightened lending requirements. What used to be considered an excellent credit score may now be only good. Generally, if your score lands above 740 (on the FICO score range of 300 – 850) you’re in great shape.
So how do you keep on top of things? By getting your credit report regularly. Luckily, it’s free. Several years ago, the three major credit bureaus came together to create and host a website, annualcreditreport.com, that allows you to pull one copy of your credit report from each bureau every single year. That’s three free copies total within a one-year span, and I suggest spreading them out throughout the year. Pulling one every four months means you can stay on top of your file and spot any suspicious or inaccurate activity quickly.
Once you have your report in hand, you have to know how to read it. Start with your personal data. Are there any mistakes? You’re looking for red flags like names you’ve never gone by, addresses you’ve never occupied, or errors in your Social Security number’s digits. If all of that information is correct, move on to your accounts. Make sure that they are all ones that you’re aware of, and that the information is accurate right down to the credit limit, account status, balance, and payment history. If you have any negative information on your report, you need to check the accuracy of that too. Make sure that if you’ve declared bankruptcy, all debts included in your filing are noted on your report, and if you’ve settled debts, they should be listed as such.
Finally, you want to look at your inquiries. Every time you apply for credit, whether it’s a new credit card, an increase in your credit limit, or a loan, the lender takes a peak into your credit file. Make sure that the inquiries listed on your report are ones that you are aware of—in other words, you applied for that loan or credit card, and no one was trying to apply in your name without your knowing.
If you find an error, it’s up to you to dispute it. If it’s just a simple mistake—like an address that needs updating—you can contact the creditor and ask them to fix it. They will send an update to each credit bureau, so follow up to make sure they do. If your creditor is unable to make the correction, you need to dispute it with the credit bureaus by sending a notice to each one. All three bureaus allow you to dispute information online, but where you can, you should also send a written letter. List all mistakes with a description of why the information is inaccurate and how it should be updated. Include any back up information, such as your account records, for proof, as well as your phone number and social security number. Give the bureau 30 days to investigate. If you don’t hear back (you should receive a letter detailing what was updated on your credit report, or an email if you submitted your dispute online), follow up and keep a paper trail.
Unfortunately, you can’t access your FICO score for free. You can buy one of your scores for $19.95 from myFICO.com (you have two FICO scores, one based on information in your Equifax report and one based on information in your TransUnion report. Experian split from FICO a couple years ago – you can buy their score from experian.com for $14.95). Your scores between bureaus will vary slightly, but they should be relatively similar.
I can see you scratching your heads. You listen to the radio. You see those commercials on television— they say you can get your score for free. Those deals generally require you to sign up for a credit monitoring service, which will cost you in the neighborhood of $15 a month. You do that, and they’ll give you a free score. Is it worth it? Sure, if you cancel the monitoring service before you incur any charges.
You can also get a free approximation of your score from our website. But if you’re going to be applying for a major loan (car, mortgage), I’d shell over the cash for a FICO score six months or a year before you apply
by Jean Chatzky
Credit card companies recognize that it’s cheaper to keep an existing customer than to acquire a new one and may be willing to cut your interest rates to avoid losing you to a competitor. Sound too good to be true? Well, it isn’t—card holders who call their issuer to ask for a lower rate are successful over 50% of the time. They may (or may not) do it willingly—after all, they like your interest payments—so you’ll have to negotiate.
Are You a Good Customer? If you’ve had your credit card for a while, paid on time for the last 6 months, and have a good overall credit score, you may be able to negotiate a lower interest rate from your credit card issuer. Remind your issuer that you’ve been a good customer.
It makes no sense to call your credit card company and say, “Hey, I want a lower rate.” You have to know what you’re asking for before you call. So take the time to look at some of the offers available to you. What are their rates? How much lower are they than the rates you are currently paying? Have those numbers by your side before you dial.
Negotiating a lower interest rate is as simple as making a short phone call. Call your credit card company and speak with someone in customer service. This may not be the person who ultimately lowers your rate, but it’s where you start. When you connect with a customer service representative, introduce yourself and let him/her know that you are a valuable customer who is looking for a lower interest rate. Let the rep know that you have received several card offers from other issuers with lower interest rates. Then, indicate that you’d be willing to transfer your card balances to one of those new cards if you can’t get a similar, or lower, rate from your current issuer. If the individual you’re speaking with can’t, or won’t, help you, ask to speak with a supervisor.
To make this negotiation work, you need to be serious about cancelling your cards if you don’t get what you want. If you say that you will close your account if the card issuer won’t lower your rate, you have to mean it. If you’re bluffing, they win. As a good customer, you can take your business elsewhere.
by Jean Chatzky
Something interesting happened during the recession: Budgeting suddenly became cool. We were all trying to pinch our pennies, save a dollar, live within our means (after all, living outside of them is at least in part what got us into this mess). Doing this means doing two things – consistently.
Plan your spending based on your take home pay. You likely don’t see a third of the dollars you take home. They’re pulled out by your employer and funneled toward taxes, health insurance, and Social Security. So if you’re budgeting based on your annual salary – taking that number, dividing it by 12 and spending accordingly – you’re headed straight for trouble. Instead, plan on the money that lands in your bank account each month. Then…
Subtract savings off the top, before anything else.. You should aim to save 10% of your income – more if possible. In financial circles this is called, paying yourself first.
Now you have a chunk of change that is yours for the spending every month. The rest is simply a puzzle, though most people approach it the wrong way, by trying to fit their monthly expenses into their monthly income. That’s an easy way to overspend. Instead, use your income as a guide, and scale your monthly expenses to it.
Consider trying to make more money. Easier said than done, yes. But possible. If you have the time and talents to moonlight on the side – whether at the local coffee shop, by selling the products of your creative side on a website like etsy.com, or taking on a freelance gig or two in your field – you’ll have more income to spread around.
Or work the other side of the equation by cutting your expenses. You may find that by living on your post-tax, post-savings income, you can no longer afford the most cable channels, or unlimited texting, or your hefty car payment. It’s time to cut back. Start with relatively painless changes: Call your cable company. They may give you a discount if you threaten to cancel or scale back your package. Do the same with your cell phone, your internet provider, your insurance, even your electric (if you live in a state that doesn’t regulate energy prices, you can shop for the cheapest option). Then think of lifestyle changes you might be able to make, like having girls night at home instead of at a restaurant, or trading your car in for a cheaper model.
Finally, live your own life. We all have a friend who can seemingly afford everything we want – and on a similar lifestyle. I’m here to tell you two things: First, stop comparing. And second, that’s a sham. That friend may not be saving her 10%. She may have thousands of dollars in credit card debt. Or maybe she has an income source you don’t know about – a side job, an inheritance, a trust fund. Having a healthy financial life means living within your own means – not the means of your neighbors or friends.
Send payments at least 10 days in advance of due date to avoid late fees and possible interest rate increase.
Use online bill payment or set up an automatic payment to ensure payments are made on time.
Transfer balances from high interest credit cards to lower interest rate cards. Research the cash advance fees ahead of time. If you add the percentage rate of the cash advance to the percentage rate of the new card and it's still lower than your high interest credit card, transfer!
Use the equity in your car and get a low rate auto loan to pay down high rate credit cards.
If you can pay more than the minimum, focus your extra payments on the card with the lowest balance and the highest interest rate. Once that card is paid in full, roll that payment up to the next card. Go to www.powerpay.org to learn more.
Keep balances below 30% of the credit limit to help pevent a reduction in your credit score.
If you're struggling to make even the minimum payments, contact your creditors and inquire about their hardship programs that could lower your interest rate and/or your payments.
At California Coast, we're caring advocates for our members. We're looking out for you and serve in your best interest every day.
Our partners are your partners. See what they have to say.
Credit utilization impact on your credit score
Our members are our most valuable asset. That’s why everything we do — from the accounts, loans and rates we offer, to the personalized caring attention we provide — is designed to help you to achieve your goals.