One of the main reasons people place their money in financial institutions is safety. Your cash is much safer
Your credit score is more than just a three-digit number. Lenders use your score to decide whether or not to lend you money and to determine the interest rates you’ll pay on your loans.
A compromised computer can put you at risk for money loss, phishing scams or even complete identity theft. Read on for steps you can take to keep yourself safe online.
Digging yourself out of debt requires taking a hard look at your income, your spending habits and your total debt. You can start getting your financial house in order by accessing a copy of your credit report, which will allow you to check for errors, make a list of your debts and calculate your total indebtedness.
Q: I’m thinking it’s time for new wheels. Should I spring for a new vehicle or buy a pre-owned one?
A: Choosing between new and pre-owned cars can be a complicated decision. To make your job a little easier, we’ve outlined the pros and cons of each purchase type below.
Pros of new cars
- Status symbol - The allure of owning a new vehicle is obviously its attractiveness.
- Fewer repairs - You can assume you won’t be dealing with major repairs or maintenance issues for a while.
- Easier shopping - There’s no need to drag your prospective new car to the mechanic to check it out.
- More financing options - You’ll be offered attractive incentives, like cash rebates from the carmaker and better interest rates from the lender.
- Improved technology - Recent models have incredible technology, such as programmable settings, autonomous emergency braking and adaptive cruise control.
- Automaker’s guarantee - New cars come with warranty coverage for their first three years or 36,000 miles, whichever comes first.
Cons of new cars
- Price - Of course a new car will cost more. But, what makes it more painful is the fact that you can get a comparable vehicle for much less.
- Depreciation - New cars go down in value as soon as they leave the lot, often by 20%. At the end of the first year of ownership, your new car can drop another 10%.
- Higher premiums - Insurance companies charge more for newer vehicles.
Pros of used cars
- Price tag - It’s not unusual to find a used car in decent condition with a price tag that’s 30% lower than a similar brand-new model.
- Less depreciation - With the previous owner absorbing the initial depreciation on the car, your vehicle will only experience a minimal drop in price.
- Lower insurance - With your car weighing in at a lower value, your monthly insurance premiums will be lower.
- Lower interest - If you finance a used car, you’ll likely have a higher interest rate. However, since the loan amount is lower, you’ll save in total interest payments over the life of the loan.
- Predictability - When buying a model that’s been around for a few years, you’ll have a wealth of research available on your car and can know what to expect.
Cons of used cars
- Complicated purchase - With a used vehicle, you’ll want to get a vehicle history report and bring it to a mechanic for an inspection.
- Fewer choices - When buying pre-owned, you don’t get to be picky about things like colors and features.
- Risk - Even if you do your homework well, you run the risk of walking out with a lemon when you buy a pre-owned car.
Whether you choose to go new or previously-owned, don’t forget to click, or call City CU at (214) 515-0100 to hear all about our auto loans.
Bundling products and services is a marketing technique designed to appeal to a consumer’s perception of value and convenience. To see the concept in action, look no further than your favorite fast food restaurant. If you choose to turn your sandwich order into a “meal deal” by adding a drink and fries, you’ve decided to bundle. Since you were already feeling both hungry and thirsty, bundling menu items is a no-brainer. The total cost of your meal is now less than if you had ordered the sandwich, fries and drink a la carte.
Scale bundling up to purchases such as home and auto insurance, however, and it begins to require closer examination.
If you’re like most people, your first experience with insurance was when you purchased your first car. At the time, you probably shopped around for the lowest rate. As your obligations and number of assets grew, you may have added homeowners or rental insurance, life insurance, travel insurance and perhaps insurance for a boat, motorcycle or recreational vehicle.
Should you keep these policies separate, underwritten by different insurance companies, or will bundling them with one insurer save you money?
The benefits of bundling your insurance
The primary benefit of combining your insurance policies is potential savings. Many insurance providers will discount an individual policy (or multiple policies) if you choose to bundle. The amount you can save by bundling policies varies, so compare the total cost of your current individual policies, then seek out quotes for a comprehensive policy to replace these.
Bundling your policies offers the added benefit of lightening your paperwork load. You’ll only have one bill to pay rather than several, and if a single event — for example, a storm that damages both your home and vehicle — is covered by different policies, a single insurer will handle your claim.
The potential drawbacks of bundling
You may have received a quote for a combined home and auto policy that offers a good discount over what you pay separately. But what happens when your premium ticks up at renewal time?
You might just take the path of least resistance and pay the higher premium, rationalizing that price increases are to be expected. If you discover a better rate for your auto or home insurance somewhere else, canceling that part of your plan will unbundle your policy, and you will lose the discount that brought you to that insurer in the first place. On the other hand, if you do decide to maintain separate policies, you’ll still have the flexibility to respond to price increases by shopping around.
The best way to shop for a comprehensive policy
If you’re interested in bundling your insurance, start by shopping for your most complicated policy. For most people, homeowners insurance is the most costly and the most complex insurance policy they’ll purchase. Get several quotes and narrow your list down to two or three prospects, then ask about bundling other insurance products. Be sure to compare apples to apples by looking at policies that have the same coverage and deductibles.
Don’t overlook service when shopping for insurance. You’ll want to work with an insurance agent who will evaluate your specific needs and take the time to ensure you understand the provisions of your policy. While you hope you never need to use your insurance, having a knowledgeable and professional representative when it’s time to file a claim goes a long way toward relieving the stress of an accident or other mishap.
Whether you purchase your insurance from one company or several, it’s important to review your policies annually. Underwriting standards may have changed, which will affect rates. Moreover, changes in your own life circumstances — marriage, the birth of a child, your credit score, etc. — will affect your insurance needs.
City Credit Union offers a range of insurance products with competitive rates and reliable coverage. Contact a City CU insurance representative to discuss your insurance needs and available discounts. City CU serves eight counties in North Texas — and probably the one where you live or work.
If you’re a homeowner, you may have considered taking out a home equity loan to help pay for a big expense, from a home renovation to your child’s college education. But what exactly are home equity loans, and what do you need to know before borrowing with one?
What is a home equity loan?
Home equity loans allow you to make use of some of the value you have invested in your home. Every month that you make a mortgage payment, the equity you hold in your home grows. While you may feel poorer when the mortgage payment check clears the bank, you aren’t. You’ve simply converted one asset-cash-into another-increased equity in your home. The only expense you incur is the interest portion of your mortgage payment. Therefore, as you reduce the balance owed on your mortgage, your personal wealth grows.
Unlike liquid assets, such as money kept in a checking or savings account, you can’t just make a withdrawal from your home when you need extra funds. However, a lender can make the funds you have tied up in your home accessible to you by issuing a home equity loan.
Because they pose a lower risk for the lending institution, home equity loans typically carry lower interest rates than unsecured personal loans. The current national average annual percentage rate (APR) for a home equity loan is approximately 5 percent. However, a home equity loan is essentially a second mortgage in which your home serves as collateral. If you default on the loan, you run the risk of foreclosure and potentially losing your home.
What are the best uses for a home equity loan?
With terms ranging between five and 20 years, home equity loans can be a great option for paying college tuition, consolidating higher-interest debt, adding a pool or remodeling your home. An added benefit of using a home equity loan to improve your home’s value is that the interest payments may, in some cases, be tax-deductible.
How much can you borrow?
Most banks will lend up to 80 percent of your equity. When you apply for a home equity loan, the lender will send an appraiser to determine your home’s value. (This amount is not the same as the market value, which is determined by the housing market at an any given moment.) The appraiser will consider the home’s features, age, size and the neighborhood in which it’s located to determine a value.
From that appraised value, the lender will deduct the amount you still owe on your home to determine your equity. For example, if the appraised value of your home is $200,000 and the principal balance on your mortgage is $120,000, your equity is $80,000. To calculate the maximum amount you may borrow against your home, multiply this your equity by 80 percent-which, in this example, is $64,000.
How much should you borrow?
You do not have to borrow all the way up to your maximum limit. And it is never advisable to take on more debt than you can comfortably handle. If you are unsure of what you can afford, draw up a realistic budget. A rule of thumb is to keep your debt-to-income ratio -your monthly debt payments divided by your gross monthly income-at or lower than 50 percent.
A reputable financial institution will not lend you more money than you will be able to pay back. If a lender approves you for an amount greater than your budget says you can afford, it’s a good idea to approach that lender with caution.
How to shop for the best home equity loan
Finding a low annual percentage rate will naturally be a top priority when comparing home equity lenders, but you need to examine each institution’s terms to determine which home equity loan will work best for you.
When shopping for a home equity loan, ask these questions:
- Is the interest rate fixed or adjustable?
- If it’s adjustable, is there a cap?
- What fees, if any, will I be charged?
- Will a late payment cause my interest rate to go up?
- Is there a prepayment penalty?
Does the loan proposal include credit insurance?
If you don’t want credit insurance, ask that it be removed from the proposal.
Before signing a loan agreement, carefully read the document to ensure you understand the loan terms. The decision to put a lien against your home should be deliberated with care. Do not feel compelled to sign anything immediately. You may wish to take the agreement with you and go over it with a financial advisor before signing.
If you’re shopping around for a home equity loan, start with us. Our low, fixed rates*, convenient online payment options and team of real estate experts will help you get the most out of your home.
*Equal Housing Lender. Certain restrictions apply. All loans are subject to credit approval. See credit union for details. City Credit Union is federally insured by NCUA.
The year was 1934 – the very height of the Great Depression. Think: The Dust Bowl, breadlines, a stock market still not recovered from its 1929 crash and belt-tightening on an unprecedented scale. But 1934 was also the year that President Franklin D. Roosevelt signed the Federal Credit Union Act into law.
In the years since, credit unions have survived bear and bull markets alike, consistently delivering benefits to their members. But how? One of the easiest ways to answer this question is to examine how credit unions differ from banks.
A bit of history
To understand the role that credit unions play in a 21st Century economy, it important to review the circumstances that led to their becoming a significant feature of the nation’s economic landscape.
The idea of a credit cooperative originated in the 19th Century with a group of English textile workers. It became a force in early 20th Century America when Massachusetts passed the Massachusetts Credit Union Act in 1909. Other states soon followed suit.
However, it wasn’t until the Roaring Twenties that the U.S. experienced the kind of rapid economic growth that could give rise to an alternative to traditional banking institutions. The 1920s were a time of peace and prosperity. Modernity’s spirit of technological innovation also brought automobiles, labor-saving household appliances and other goods to the marketplace, driving a new consumer economy.
With this boom came a need for affordable consumer credit. However, banks of the time focused on commercial interests rather than the financial needs of working-class families. Credit unions stepped in to close this important gap.
Member versus customer
Just like our Jazz Age predecessors, when you choose to do business with a credit union, you choose to become more than a customer. You choose to become a member – someone with an ownership interest in the institution. The money you deposit represents your share, and stake, in the cooperative. The credit union pools member funds to provide loans to other members and pay its operating costs. Earnings generated by loan activity are then apportioned to members as dividends, similar to interest paid on a bank account.
Credit unions are not-for-profit entities
Banks operate under an obligation to turn a profit for their shareholders. If a bank is not profitable, it can and will go out of business. That’s why bank customers can typically expect lower returns on deposits, higher interest rates on loans and higher fees for services. Credit unions are concerned with solvency, not with turning a profit. Therefore, a credit union can offer the same services as a bank – mobile deposits, bill pay applications, auto and home loans, debit and credit cards, etc., at a lower cost to its members.
Credit unions are local
Credit union members are also members of a community. They are your neighbors and co-workers. Because they are community-based, credit unions also often spearhead and participate in local philanthropic efforts. Major banks oversee branches across the globe, and those branches seldom tailor their services. By contrast, credit unions are in constant conversation with their members about their specific needs. And, while bank dividends are distributed to distant shareholders, credit unions distribute their earnings to members and create incentives for those funds to circulate throughout the community.
Credit unions are democratic and autonomous
When you join a credit union – and regardless of the size of your account – you get to have a say in how the institution conducts its business. The credit union’s board members, officers and directors are elected by the membership at large. These leaders generally serve on a voluntary basis. Their top priorities are to act in the membership’s best interests and to encourage local economic development.
As independent agencies, credit unions are not beholden to any outside organization. Nevertheless, oversight is provided by state regulators – in Texas, the Credit Union Department – as well as the National Credit Union Administration. These agencies ensure that credit unions remain both stable and accountable.
Credit union funds are federally insured
Like the Federal Deposit Insurance Corporation (FDIC) that insures bank deposits, the National Credit Union Share Insurance Fund (NCUSIF) protects credit union deposits up to $250,000 per individual depositor. The U.S. government backs this insurance, and their coverage applies to regular share accounts, share draft accounts, education accounts, trusts and retirement accounts. According to the NCUA, “no member of a federally insured credit union has ever lost one penny of insured savings,” a reassuring note in times of economic uncertainty.
How to join a credit union
In keeping with their community roots, some credit unions have traditionally restricted membership to residents of a certain geographical area or to employees in certain industries. However, at the vast majority of credit unions in operation today, membership eligibility has been extended to the general public. For example, City Credit Union may be headquartered in East Dallas, but the institution serves Members across North Texas, from Cooke to Kaufman County. For 75 years and counting, City Credit Union has been making a difference, one Member at a time. If you’re ready to start enjoying the many benefits that come with joining the City Credit Union community, you can check your eligibility and begin the application process online here.