Need Help Establishing Credit?

Wouldn’t it be great if you could snap your fingers and you instantly had a solid credit history? The reality is that it takes time and effort to establish credit. But once you have good credit, it can open doors financially for you. Having good credit can mean the difference between getting approved or denied for a mortgage or car loan. And the stronger your credit, the greater your chances of getting favorable terms and interest rates on loans and credit cards.need-help-establishing-credit

But building credit can be a bit of a catch 22. A lot of credit card companies and lenders won’t grant you credit unless you have a proven track record of handling credit responsibly. This can make it a bit challenging for those who haven’t established a credit history yet.

Luckily, there are many ways to establish a foundation of credit to build upon. Here are some credit building tips you can use:

Take out a credit-builder loan. With this type of loan, the lender places the money being “borrowed” into a savings account on your behalf. You then pay off the loan through a series of monthly payments. Once the loan is paid in full, you gain access to the money in the savings account. Credit-builder loans are usually for relatively small amounts of money, making it easier to meet your monthly loan payments. The lender reports your payment history on the loan to the three national credit reporting agencies, so as long as you make your monthly payments on time, you’ll be building a positive track record on your credit report. These types of loans can be a bit hard to find, but a good place to look for one would be at a smaller financial institution, like a community bank or credit union.

Obtain a secured credit card. These types of credit cards are intended specifically for people with little or no credit. When you take out a secured credit card, you pay a deposit to the financial institution who then grants you a credit limit, which is usually equal to the amount of your deposit. Once the account is opened, the card works just like any other credit card. The only difference is that the financial institution has your deposit as a guarantee on the credit line. In other words, if you don’t make your payments, they will take the money out of your deposit. Like a credit-builder loan, the payments you make with a secured credit card are reported to the credit bureaus, helping you to build up a solid credit history if you make them on time. The point of a secured credit card is to build your credit to the point where you can qualify for an unsecured card — one that doesn’t require a cash deposit and has better benefits.

Look into opening a store credit card. Many popular retailers offer their own, private credit cards. While these cards can typically only be used to purchase items from the store issuing them, a plus side is that they usually have more flexible underwriting standards, meaning they are easier to get than a traditional credit card. These types of credit cards can be good “entry-level” cards, allowing you to build up a credit history before applying for a regular credit card. It’s worth noting however that they do typically have lower credit limits and higher interest rates than non-store credit cards.

Take out a student credit card. Like a store credit card, a student credit card is generally easier to get than a traditional credit card; that is, if you’re a college student. Credit card companies have been known to be pretty aggressive with targeting college students, due to their future earning potential. A college student can typically be approved for a student credit card even if they don’t have any credit, as long as they can show enough income or assets to cover the minimum monthly payments.

Become an authorized user on a credit card. If your parents or someone close to you is willing to do so, you could be made an authorized user on their credit card. An authorized user will typically receive their own card in their own name that they can use to make purchases, but financial responsibility for the account remains with the primary cardholder. So, as long as the primary cardholder makes all of the monthly payments on time, the authorized user will benefit by having the positive payment history reflected on their credit report as well. Just keep in mind that being an authorized user works both ways. In other words, if the primary cardholder is irresponsible with the card and fails to make payments on time, your credit could suffer as the authorized user. For this reason, it’s important to only be an authorized user if you completely trust the primary cardholder. You should review your credit report regularly to ensure payments on the account are being made, and if you find your credit is being damaged by the relationship, you should remove yourself as an authorized userAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!.

Co-sign on a loan. It’s generally pretty difficult to obtain a traditional loan without a solid credit history, as lenders are hesitant to extend credit to individuals who haven’t demonstrated they can pay the loan back. However, if you co-sign for the loan with someone who already has a good credit history, your chances of being approved will be much higher. A co-signer is basically someone who agrees to share financial responsibility for the loan. In other words, if you default on the loan and stop making payments, the lender will go after the co-signer for the money. Both parties are equally responsible for the debt. Because both of your credit reports are on the line, it’s extremely important to only co-sign with someone you have complete confidence in.

Be responsible with student loan payments. No one likes having to pay back student loans, but if you’re fresh out of college with no credit history, you can at least work them to your advantage. Like other types of loans, student loan payments are reported to the credit bureaus, so paying them on time can help you establish a solid credit history. Just be sure not to miss payments, because then they’ll start to damage your credit history. If you find that your student loan payments are so high that you’re having trouble making them, you might want to consider refinancing them to help reduce the monthly payment amount.

No matter which approach you choose, once you have credit in your name the key is to be responsible with it. By making all of your monthly payments on time, every month, you can be well on your way to building a strong credit history for your future.

Deciding on a CD Term Length

If you’ve made up your mind that you’re going to invest some money this year, you might be considering a CD, or certificate of deposit. CDs are commonly viewed as a safer alternative to potentially higher-yielding investment vehicles such as stocks or mutual funds, because fixed-rate CDs have a set, guaranteed interest rate, and they’re protected by FDIC insurance. Bank5 Connect CD accounts are actually covered by both FDIC and DIF insurance. The DIF coverage at Bank5 Connect ensures that all deposits are 100% insured, even past traditional FDIC coverage limits.cd-term-length

Not surprisingly, the safety of CDs, coupled with the fact that they generally offer higher interest rates than traditional savings accounts, makes them popular choices for saving money. If you’ve chosen a CD as one of your investment tools, it’s just a matter of deciding how long you want to tie up your funds. With CDs, you have several fixed term lengths to choose from. They can range from as little as 3 months to up to 10 years. The term you select will depend on your unique financial circumstances and needs.

When considering CDs, it’s important to note that they’re intended to be held until maturity. When they mature, you have the option to withdraw the money, along with any accrued interest, but if you withdraw any money before the entire term length is up, you’ll usually be hit with an early withdrawal penalty fee. The policies regarding early withdrawals vary, so it’s always wise to check with your financial institution prior to opening an account to see what kinds of penalties you could incur.

To avoid early withdrawal penalties, it’s a good idea to choose a CD term based on how long you think you can go without needing access to the money. If you anticipate needing to tap into the funds within a few months, then a 3- or 6-month CD will probably be the way to go. Keep in mind however, that typically the shorter the term length, the lower the interest rate.

Generally, multiple year terms offer the highest CD rates. If you know you won’t need to tap into the funds for several years, a multi-year term could be a good fit, but it’s a good idea to consider current interest rate trends and predictions first. Think about it. How angry would you be if you locked in a 2.00% rate on a 5-year CD only to find that the rate on that exact CD increased to 2.50% a few weeks later? Once you’ve opened a fixed-rate CD, your rate won’t change, even if the bank starts to offer the same CD at a higher rate. To help avoid this kind of scenario, it’s a good idea to stay on top of interest rate news, so you have some kind of idea of when rates could fluctuateAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!.

Another consideration with CDs is how often you’ll be looking to stash away more money. Generally, once you open a CD you can’t add money to it until it matures. Therefore, if you think you’ll want to add money every few months, a shorter term length might be best. Another option is to choose an add-on CD. Add-on CDs are special fixed-term CDs that allow you to deposit additional funds throughout the entire term length. These types of CDs can be hard to find, but Bank5 Connect does offer one. Bank5 Connect’s 24-Month Investment CD allows for additional deposits at any time, in any amount. Plus, there is only a $500 minimum deposit required to open an account, and no monthly maintenance fees.

If you have enough money to open several CDs, another way to allow for ongoing deposits is to invest in multiple CDs with various term lengths. This approach is known as CD laddering. With CD laddering, you end up with a collection of CDs that will mature at regular intervals. With a CD regularly reaching maturity, you’ll regularly have an opportunity to make additional deposits, or withdraw your funds.

No matter what CD term length best suits your needs, just remember to read all of the fine print associated with the account before opening one. This will help you to understand exactly what you’re getting into, and help you to avoid costly early withdrawal penalty fees. And, keep in mind that it’s always a good idea to consult with a tax advisor or financial professional before making any major investment decisions!

Establish an Emergency Fund for Life’s Unplanned Expenses

What happens if your car breaks down in the middle of the road? Or the boss tells you that the company is downsizing and you’ll be losing your job? What if your heating system decides to die in the middle of winter? Or you need to be hospitalized immediately? If any of these emergencies were to happen today, are you financially prepared for them? emergency-fund-for-lifes-unplanned-expenses

If your answer is “no,” then it’s a good time to think about setting up an emergency fund. Having enough money to cover unplanned expenses makes it easier to recover from life’s bumps and bruises, and can help alleviate stress in emergency situations and provide peace of mind.

But you may be wondering – doesn’t a credit card serve as a good backup for funds in case of emergencies? Of course it does, but you need to keep a few things in mind. For starters, credit cards provide borrowed money, which means you have to pay it back. And if you don’t pay it all back at once when your monthly statement comes due, you’ll be hit with interest. Interest charges can snowball pretty quickly, and for a lot of people they can lead to massive credit card debt.

Financial experts will tell you that an emergency fund should be part of every household budget. It should be as high of a priority as putting money aside for a down payment on a new house or car, or financing your child’s college education.

But how do you know what’s an adequate amount to have in an emergency fund? A good goal for your emergency savings account could be anywhere from three months’ worth of your salary to a year’s worth of your salary, depending on how much you make each year, and how prepared you’d like to be. When deciding the right amount of savings to aim for, think of what it would be like to unexpectedly lose your job. How much would be enough to pay for routine monthly household bills such as rent/mortgage payments, utility bills, and groceries? And how many months do you think it would take you to find a new job?

It may seem overwhelming to think about amassing that much money, but it’s okay to start small. By earmarking a certain amount of money to stash away in your emergency fund each month, you’ll be on your way to achieving your goal emergency balance. And one of the best ways to ensure you stick to your savings plan, is set up your paycheck to direct deposit a certain amount from each paycheck directly into your emergency savings account. If you don’t see the money, you likely won’t miss it! If your job offers direct deposit, your employer can likely help you set it up so your paycheck is split between your desired accounts.

Another way to reach your savings goals as quickly as possible is to stash your money in a high-interest savings account. Many online-only banks offer higher interest rates than traditional brick-and-mortar banks, because they have fewer overhead costs. Online banks save on costs associated with running physical locations, and they pass those cost-savings along to customers in the form of higher interest rates. The higher the interest rate, the more your money grows.

The key is to stick to your emergency savings plan, and make sure that you contribute to it on a regular basis until you reach your balance goal. You’ll be happy you did when an emergency arises and you have the money to pay for it without racking up debt.

Shield Yourself from Debit Card Fraud

Chances are, you know someone who’s been a victim of fraud. Maybe you’ve even fallen victim yourself. With daily stories about credit card fraud and identity theft hitting the news, consumers need to be proactive about protecting themselves from fraudulent activity.shield-yourself-from-debit-card-fraud

One type of fraud to stay extra cautious about is debit card fraud. With debit cards, the stakes are higher than with a credit card. If a thief gets his hands on your card information as well as your PIN, your entire bank account could be drained in minutes. And Federal law doesn’t protect debit cards to the same degree as credit cards. If you notify the bank within two days of discovering a lost or stolen card, the most you will be liable for in terms of fraud is $50. After two days however, your liability can jump to as much as $500, and after 60 days you could be liable for all of the fraudulent activity, depending on your financial institution.

So what is a debit card user to do? Luckily there are steps you can take to protect yourself, and your bank account from fraudsters looking to steal your financial information.

Beware of card skimmers. You’ve probably heard about card skimmersAs a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon! in the news, and unfortunately they’re becoming more and more prevalent. These are devices that criminals install over the legitimate card readers at ATMs and point-of-sale terminals like gas pumps and self-service store checkout lanes. When you insert your card into the reader, the skimmer captures the card information so the crook can access it. Many skimmers look so much like the real thing that they’re difficult to spot, but there are some key things to look out for. A good habit to get into is to look around at the terminals next to you to see what their readers look like. If they look different than the card reader at your terminal, it’s very possible yours is affixed with a skimmer. You should also always check for any signs of tampering, or any aspect of the card reader or keypad that isn’t aligned correctly. And if the color of the reader is different from the color scheme used on the rest of the terminal, it could also be a sign that a skimmer has been installed.

Look who’s watching. It’s not uncommon for crooks to install miniature cameras near ATMs and payment terminals, so that they can watch people enter their PIN numbers. A more low-tech, but equally painful scam involves “shoulder surfing”, where a crook will literally look over your shoulder to obtain your card number and watch as you type in your PIN. One way to protect against this type of intrusion is to shield the front of your card, and cover the keypad with your other hand to block the view of a camera, or anyone nearby, from seeing what you’re typing in.

Don’t put yourself in a vulnerable position. Perhaps one of the easiest, and scariest, ways for a criminal to steal your debit card information is to ambush you at the ATM and demand your card and PIN number. To safeguard against this type of attack, try to conduct ATM transactions during daylight hours. If you do need to use an ATM at night, make sure you pick one that’s in a well-lit area. And if you see someone who looks suspicious lurking near an ATM, don’t use it.

Be wary of helpful strangers. In one type of unsophisticated debit card scam, the perpetrator will insert something into the card reader prior to the victim using it which will cause the card to get stuck in the machine. The crook will commonly offer help by telling the victim that entering their PIN again should get the card out, and they’ll watch closely while the PIN is re-entered. Of course, the card won’t come back out, and when the victim leaves, the criminal uses tools to get the card out of the machine, and walks away with the victim’s card and PIN number. Anytime your card gets stuck in an ATM, forego any offered help from a stranger, and instead immediately notify your financial institution and the owner of the ATM.

Keep close tabs on your account. Use online and mobile banking to check your account balance and card activity at least weekly, and sign up for account alerts if they’re available from your financial institution. These notifications will help keep you up-to-speed on any irregular activity in your account, so you can report it immediately to your financial institution.

Staying alert and being on the lookout for anything amiss is the best line of defense in protecting yourself from debit card fraud. Debit cards can be a convenient tool for helping you to manage and access your money, but it’s also important to know the risks associated with debit card use, and how to minimize them.

Credit Cards vs. Debit Cards – What’s the Difference?

There’s a popular TV commercial that ends with the line, “What’s in your wallet?” Of course, the ad is referring to the credit card it’s promoting.difference-between-credit-cards-vs-debit-cards

But for many consumers, what’s in their wallets is usually a mix of credit cards and debit cards. So, how do they pick which one to use? Is there really any difference between a credit card and a debit card? You bet there is.

To get a better understanding of how the cards differ, here’s a glimpse at some of the benefits associated with using credit cards:

And using a debit card has its advantages as well:

  • Debit cards can help keep you out of debt. That’s because the cards are linked directly to your bank account, unlike a credit card where you’re essentially borrowing the money. So, as long as you keep a close eye on how much money you have in your bank account to avoid accidental overdrafts, you’ll only spend the money you have and avoid costly fees. With a credit card, it’s easy to rack up interest fees on the money you’re borrowing, unless you pay back the full card balance each month. Paying with a debit card can also help you avoid other common credit card charges like late payment fees and annual fees.
  • With a debit card, you don’t have to worry about paying yet another monthly bill. But be sure to always keep an eye on your account activity and statements. Doing so will help you to spot any suspicious charges early on, and can also prevent you from overdrawing your account. Reviewing your bank account activity is easier than ever now that most banks offer online banking and mobile banking to their customers.
  • While debit card rewards programs can be hard to find, they are out there. Luckily, Bank5 Connect has a debit card rewards program called UChoose Rewards®. Bank5 Connect debit card holders earn 1 point for every $2 spent on signature-based, online, or PIN-less transactions made with their cards.

Ultimately, which card you choose will depend on your personal financial picture, as well as the kind of purchase you’re making. Knowing how your credit and debit cards differ is the first step in selecting the one that’s right for you!

Making the Switch to a Mobile Wallet

There you are, impressed with yourself for getting the rest of your holiday shopping done in just a couple of hours. You make your way to the checkout aisle and hand over your items.AdobeStock_112895088

While the salesperson is ringing everything up, you dig into your purse or pocket for your wallet…but wait, where is it? Now you’re frantically rummaging while customers wait impatiently behind you. It’s then that you realize you pulled it out at the drive-thru to pay for a coffee and left it behind in your car. So much for being done with your holiday shopping.

In the event of a missing wallet, wouldn’t it be great if you could whip out your smartphone, or flash your smartwatch and somehow use it to pay for your goods? Well guess what – you can! Meet the “mobile wallet”.

A mobile wallet is a virtual wallet that stores credit and debit card information on a mobile device. And, it encrypts that information so it can’t be easily accessed if your device falls into the wrong hands.

The most widely used mobile wallets right now are Apple Pay, Android Pay, and Samsung Pay. Some mobile devices come pre-loaded with a mobile wallet, and if your device doesn’t have one you can download a mobile wallet from your phone’s app store. First though, you’ll need to see whether your debit and credit cards are compatible with the mobile wallet. Bank5 Connect debit cards support Apple Pay, and a full list of Apple Pay-friendly banks can be found at https://support.apple.com/en-us/HT204916As a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!. If you’re looking to see which banks support Samsung Pay, visit https://www.samsung.com/us/samsung-pay/compatible-cards/As a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!. A list of Android Pay participating banks can be found at https://www.android.com/pay/participating-banks/As a courtesy, you will be leaving Blog.Bank5Connect.com and going to another website. We have approved this site as a reliable partner, but you will no longer be under the security policy of Bank5Connect.com. Come back soon!.

Retailers around the world are plugging into the mobile wallet culture. Millions of business now accept mobile wallet payments at their brick-and-mortar locations, and many of those retailers allow you to use your mobile wallet for online purchases as well.

Just don’t confuse the term “mobile wallet” with “digital wallet”. While they are both very similar, they do have some key differences. Think of a mobile wallet as a credit or debit card that lives on your mobile device. If you’re purchasing something in a store, you physically take out your phone and hold it near the terminal at the checkout counter. If you’re shopping online, you can activate your mobile wallet on participating websites and use it to make your purchase.

A digital wallet on the other hand, is typically only used for online shopping. Examples of digital wallets include PayPal and Visa Checkout. When you sign up for a digital wallet service, you link your account to a debit or credit card. Like a mobile wallet, your card information is encrypted for security purposes. A digital wallet can also house your shipping information, so you can make online purchases quickly and easily, without having to enter all of your personal details on the website.

If getting through the checkout aisle a little faster sounds good to you, consider a mobile wallet. Just don’t forget to keep your device charged. A dead battery at the checkout counter is no more helpful than leaving your wallet in the car!

How to Talk About Finances with Your Spouse

In a marriage, being on the same page with your spouse regarding your finances is extremely important. Not talking about money can lead to fights, overdrawn bank accounts, underfunded retirement savings, home foreclosure, bankruptcy, and even divorce. But many couples steer clear of financial conversations because they’re afraid of sparking disagreements and arguments. In fact, marital experts say finances are one of the top sources of anxiety in married relationships.how-to-talk-about-finances-with-your-spouse

So what’s a married couple to do? Sit down and talk, that’s what. Here are some tips to help you and your spouse get on the same page about your finances.

First and foremost, schedule a time to meet. Talking about money is serious, and you should treat it that way. Try to have your discussion in a place that’s free of distractions, whether that means heading to a local coffee shop, or waiting until the kids are in bed.

If you and your spouse don’t each have a good sense of where your finances stand, that’s where you should start. Go through your all of your bank accounts, investment accounts and retirement accounts, noting the balances of each. Then, discuss all of your debt such as credit card balances, the money you owe on your mortgage and any vehicles you have, plus any other payment obligations you’re facing such as student loans, alimony, or child support.

If while digging through the numbers you find that your current financial situation isn’t as rosy as you’d like, it’s important to stay calm. Don’t point fingers at one another and start playing the blame game. Doing so will only derail the conversation and make you both weary of future financial discussions. Look over the numbers together, but don’t judge.

Once you’re both on the same page regarding where your finances stand, you should start talking about your financial goals. Listening is key here. Each spouse should have a chance to voice their own goals – without interruption or judgement – and then you can hash out which goals are the highest priority to you both. Once you’ve each laid out your personal goals, you should evaluate together which ones could have the biggest positive impact on your lives, and consider which ones will be easy or difficult to achieve. Rank the goals based on these factors, and pick one that you’re both comfortable with – whether it be paying off your credit cards, saving for a family vacation, starting a college fund for your kids, or buying a second home.

After you’ve agreed on a goal, it’s time to create a budget that will allow you to work toward it. Together, you should determine exactly how much money is coming into the household each month, and how much money is going out. In other words, how much income are you bringing in, and how many bills are you paying every month, and how much money are you putting into savings? Make tweaks to your budget that align with the goals you’ve laid out. For example, if you’re trying to pay off your credit card debt, you need to determine where that money will come from. It may mean canceling cable and going with a lower-priced video streaming service, or it might mean shopping around for less-expensive car insurance.

Once your goals have been established and you’ve mapped out a budget for achieving them, it’s important to remember that that the conversation is far from over. Keep each other informed about any expenses that fall outside of the budget – ideally before they happen. For example, if your child is going to need braces, or you’re thinking about buying a membership to a golf club, sit down and talk with your spouse first about how it will impact your finances and goals. No one likes to be blindsided with a major purchase they had no say in. Without ongoing communication about financial affairs, confusion and mistrust can surface and wreak havoc on your marriage.