Thursday, January 19, 2017

Don’t Bet Your Retirement On An 8% Return


If there’s one lesson in investing, it’s that time in the market matters. The longer you leave your capital alone, the more it can grow. If past growth rates continue, the time you leave your savings alone is more important than how much you save.

The problem with that, though, is that past growth rates are not likely to continue. Over the last 30 years, the stock market has averaged 7.8% growth. That growth rate is the foundation of many retirement plans, including some professionally managed funds. If you’ve invested your whole 401(k) in total market index funds hoping to chase that growth, you may be in for a surprise.

That nearly 8% growth is a historical anomaly that’s driven by a number of shifting demographic factors. Because of slowing industrial growth, decreasing population growth, and more competitive overseas markets, economists are projecting that rate to slow as much as 2% in the next year, and for possibly longer than that.

If you think that’s too little to make a difference, you’re underestimating the power of compound interest. For 25-year-olds currently saving for retirement, a two-point drop over the next decade could require them to save twice as much before they retire. That’s a frighteningly realistic scenario.

When dealing with macroeconomic trends, it’s easy to get overwhelmed. After all, the changes in the global economy are way bigger than one person. That doesn’t mean you have to be unprepared, though. You can take these four steps to prepare your portfolio for struggling gains.

1.) Max out employer match

About 31% of American workers with access to a 401(k) don’t use it at all. With that level of participation, it’s small wonder that Americans are worried about retirement. Beyond missing out on the savings, employees are also missing out on matching funds programs.

Think of matching funds programs as interest payments. Your company is willing to pay 100% interest on your 401(k) deposits. Even if you have expensive credit card debt, it’s unlikely anyone is charging you 100% interest. Increasing your 401(k) contributions at least to the maximum match level will help minimize the impact of slow growth within your portfolio.

2.) Watch the fees

If a 2% decrease in return can require doubling your savings to catch up, every point is important. That’s why one of the biggest differences between successful 401(k) investors and those who keep working long into their retirement is the fees that each pays on their investments. By law, companies must disclose the fees they charge for investment management. You can get a breakdown from your HR representative.

Once you see the fees you’re paying, it’s time to gauge if they’re reasonable. For comparison, most small companies have fees around 1.4%, medium-sized companies have fees around 0.8% and large companies have fees around 0.5%. If you’re paying more than that, it might be time to switch the funds you’re using.

3.) Revisit the Roth question

Most of the time, a Roth 401(k) makes the most sense for young people. Taxes are likely to be higher in the future, so paying them now results in a savings in the long run. With returns expected to drop and savings amounts likely to be a larger determinant of total wealth accumulation, it might be time to revisit conventional wisdom.

If taking a tax deduction now in the form of a traditional 401(k) contribution would enable you to save more, it might be worthwhile. You can find other ways to manage taxes once you’ve saved enough for retirement. In the meantime, growing your nest egg may be the most important step.

4.) Look for predictable returns

As interest rates rise, growth is likely to slow down. This is a natural result of decreased credit availability. The same force that makes the market a less attractive option also makes savings through other instruments more valuable.

An Individual Retirement Account (IRA) can hold savings certificate funds, like those available at First City Credit Union. These instruments offer a predictable rate of return that is not dependent on those macroeconomic forces. As a hedge against market slowdowns, adding certificate accounts to your portfolio can be an excellent step toward minimizing risk.

Despite the changing economic winds, the principles of smart retirement planning remain the same. Spend less than you earn. Avoid debt. Invest as much as you can, as often as you can and as cheaply as you can. With a little luck and a lot of hard work, you can enjoy a safe, prosperous retirement.

Thursday, January 12, 2017

Beware of Utility Scams


Gas, electric, water and cable are not purchases you regularly think about. At best, they get a moment’s thought as you write a check for them once a month. Maybe they even auto-pay, and you only look at the bill when you review your statement.

Either way, if someone called and said your account was overdue and your service was about to be shut off, it’d be frightening. It might be frightening enough that you’d do whatever they said, just to avoid the dire consequences. And that’s exactly what scammers are counting on.

The Department of Consumer Affairs has warned of a new scam targeting utility customers. A scammer calls and claims that the potential victim is overdue on a utility bill, and that someone is en route to shut the power off. The scammer will direct the victim to go to a nearby drugstore and buy a prepaid debit card. The scammer waits to receive the number on the card and then takes its whole value. Transactions with these cards are difficult to trace, which means getting the money back is next to impossible.

If you’re targeted by one of these scams, it’s important to stay calm. Stand your ground, and don’t give in to threats.

Know your rights

Utility companies just don’t operate like these scammers. No one from a utility company will tell you that your service is going to be shut off in minutes if you don’t pay right now. There are rules and regulations that govern how and under what circumstances companies are permitted to turn off service.

First, they’re required to provide you with a notification of termination. This is a letter identifying the reason, the date and what you can do to prevent this shut-off. This process is cumbersome, so most utility companies won’t send one until you’re more than two payments behind.
Second, turning service off and on is an expensive process for the utility provider. They’re likely to make several attempts to contact you before they start the process of turning off your service. They’re also likely to use multiple contact methods, including phone and mail. Ask for a record of past attempts at contact and check it against your own records. A utility company will be happy to provide this information, as they’d need to keep it for court anyway. A scammer will likely hesitate when asked for details.

Pay it right

Utility companies process hundreds or thousands of payments every day. They have established procedures for securing payments. They will never insist you make a payment through a pre-paid debit card or other means.

In fact, anyone who wants to collect money from you will make it as easy as possible for you to pay them. Always choose a secured means of payment, like your credit or debit card. These cards offer fraud protection and limit your liability if something goes wrong with the transaction.

When it comes to utility companies, First City Credit Union offers automatic bill payment. We’ve set up payment relationships with area utility providers to let you make your payments directly without the trouble of writing a check or the expense of postage stamps. You can make sure you’re current on your bills and save yourself time with automatic bill payment.

See something, say something

If you get a call like this one, hang up. Then, contact the FCC. Using the telephone to demand money is illegal, as is making unsolicited commercial phone calls. Report violations of the no-call registry at complaints.donotcall.gov. You can help make the airwaves safer for everyone!

Stay ahead

If you’ve run into payment trouble with utility companies in the past, you can keep the fear that makes these scams work at bay by working ahead on your utility payments. If coming up with the money is a challenge, there are federal and state programs designed to help you keep the lights on. One such program is the Low Income Home Energy Assistance Program (LIHEAP). This program provides utility payment credits for low-income individuals, and they can be applied to past bills as well.

You might also look into programs which average your utility payments. This can avoid the spike in bills that can occur in response to inclement weather and also make budgeting a slightly easier process. This will help ensure you can make a payment every time and avoid being a target for these scams in the first place.

Your Turn: Have you been targeted by a utility scam? How did you handle it? Share your wisdom in the comments!

Monday, December 5, 2016

Good Ideas, Bad For Credit: How Your Responsible Choices Can End Up Hurting Your Credit Score

Q&A: Can Your Responsible Choices Can End Up Hurting Your Credit Score?



Q: I've had some trouble with credit in the past, but I'm trying to turn over a new leaf. I think I'm doing everything right, but my credit score still isn't rising! What gives?

A: Credit scores can affect you more than you know. Employers look at credit scores. Landlords look at credit scores. Bill providers look at credit scores, and they might decide to charge you if yours gets too low. With all this pressure, you've no doubt started working on some good habits for improving your credit score. You pay your bills on time, are sure to not max out your credit line and work hard not to default on a loan. You might be surprised to find out that some actions you take to improve your credit score are actually hurting it.

If your credit score isn't where you want it to be, it might be due to one of these habits. Read on for four good ideas that might actually be hurting your credit score:

1.) Debt settlement


Settling your old debt can seem like an easy way to get out of a sticky situation. You make an agreement with a third party, pay a part of your debt and the owner writes off the rest of it.  However, unless it's at least 90 days since the debt was due, it's always better for your credit score to pay the debt back in full yourself. Settling a debt for less than you owe can take your credit score down as much as a hundred points. This happens because the debtor only took your settlement on the assumption they'd never see the full amount you owed. Future lenders worry that they'll end up in the same situation, and that makes them hesitant to lend.

2.) Turning down credit


It might seem like a good idea to reject a higher credit limit. If your credit card offers to boost your limit, that might seem to indicate you have more money to spend. If you've struggled with responsible credit management in the past, you might want to turn it down in an effort to keep your spending in check. Keeping your credit limit low can give you a budget and a sense of security regarding when you'll stop yourself from spending.

However, a higher credit limit does come with benefits. To be exact, it can boost your score quite a lot through a something called a credit utilization ratio. That's the ratio of your credit card balance to your credit card limit. The less you spend relative to what your limit is, the higher your score in terms of this one factor. That means, if you have a higher credit limit, you'll be using less of it, and therefore increasing your score.

3.) Avoiding credit cards


With all this rigmarole and paperwork, many people might think it's easier to just not have a credit card at all.  While it might make your life simpler at first, it can complicate your relationship with credit in the future. You might not need credit for day-to-day things like buying groceries or gas, but you will need it for a home loan, auto loans and to prove to potential landlords and employers that you can be trusted. So long as you're paying everything on time and not carrying a high balance, a credit card is much more beneficial in the long run.

4.) Closing paid accounts


Paying off a credit card can be a big struggle. Once it's over, your instinct might lead you to throw it away, burn it or otherwise have it completely out of your life once and for all. Credit reporting agencies say something different, though. Since 15% of your credit score is the length of your credit history, you want to keep your cards for as long as possible.

Additionally, your credit utilization score is worth 30% of your total score. Closing a credit card account also kills available credit, which lowers that balance-to-limit ratio. You can destroy the card itself and delete its record from online shopping sites to be certain you'll never accidentally use it, but don't cancel it. Even after all that, you should keep the account open (provided there's no annual fee attached to it), just to keep your score up.

Credit scores have never been easy. There's an endless number of twists, turns and troubles to keep in mind. It may seem like there's no one on your side in this struggle. Yes, you have to be in charge and be responsible enough to pay everything on time. First City Credit Union can help. Visit our website today to get help with budgeting, credit management or debt consolidation.

You don't have to go it alone, but you can leave bad credit cards alone by taking a look at First City's Visa Platinum.  It has a low rate—lower than most banks, no Balance Transfer fee, and no Annual fee.  Check out one of best credit cards today, here!

Tuesday, November 1, 2016

What Happened At Wells Fargo?

The financial services industry is based on trust. When a company abuses that trust, the whole industry seems off kilter. While the details about the extent of the recent fake account scandal are still coming to light, we know enough to start painting a picture of what was going on inside the bank. Here are a few common questions about the scandal and what to do if you've been impacted by it.

What was going on inside Wells Fargo?

As a commercial bank, Wells Fargo generates revenue from each customer account. It could do this in a variety of ways: fees, low balance penalties or other charges. Whatever the cause, the bank made a little bit of money on each one. In an effort to maximize its revenue, the company established a sales quota for each of its sales teams. Individual salespeople and team managers were therefore under heavy pressure to meet an unrealistic goal and open new accounts.

Somewhere along the line, someone inside the organization decided the only way to meet these goals was through fraud. Eventually, fraud became a widespread corporate practice. It became standard procedure to open fake accounts using an existing customer's information and then charge fees for services they never wanted or agreed to.

Worse yet, the company began actively silencing those who attempted to put a stop to this wrongdoing. Over the course of eight years, about 5,600 employees were fired for reporting this activity to the Wells Fargo ethics hotline or attempting to discuss it with human resources. Many of them were effectively blacklisted, preventing them from working in financial services again.

After this information became public, Wells Fargo CEO John Stumpf was forced to resign. All evidence suggests that he was aware of the situation and did nothing about it. The bank has been fined millions of dollars and is also being asked to issue refunds to many of its victims.

What can I do if I was a victim of fraud?

Most of the people who had fake accounts opened in their names have already been given a refund. While money can't make up for the inconvenience or the sense of betrayal that occurred, those refunds are being issued automatically to most of the people who were affected. Wells Fargo is conducting an internal review to uncover the extent of the damage, and it's extended its search back to 2009.

If you've done business with Wells Fargo, it might be a good idea to get a list of accounts that have been opened in your name during your time as a customer. You can do this by getting a free credit report at annualcreditreport.com.

Those hoping for a day in court will likely be disappointed. Several victims of the scam attempted to form a class action lawsuit against the bank, but the case will likely be thrown out. Wells Fargo account opening agreements specify that any disagreements must be settled through arbitration, and the court has previously held that this applies even to accounts that were opened through fraud.

Why did Wells Fargo do this?

Part of what set up Wells Fargo for failure was the profit motive at the heart of its business model. As a corporate bank, Wells Fargo has a first obligation to its shareholders. Any obligation it might have to its account holders is secondary; it only needs to maintain enough good will to keep customers coming back. That creates an inevitable conflict of interest between the desire to maximize profits with the safety and trust of customers.

Credit unions, on the other hand, are not-for-profit institutions owned by their members. Our shareholders and our account holders are exactly the same people. Our board consists of volunteers from within our community, not individuals seeking a payday. That allows us to always put the interests of our members at the forefront of what we do.

If you're tired of a bank that treats you like a cash machine, maybe it's time to give First City Credit Union a try. We offer the same services that commercial banks do, but with a model that's based on putting members first. For more information about First City Credit Union, call or stop by any of our branch locations, or click here to check out the many services we offer.

Monday, August 29, 2016

From Summer Job To Just Plain Job: How To Turn Your Internship Into A Promising Career



You’ve fetched coffee, made copies and done all the typing and filing for an entire department. Congrats! You’ve finally finished your summer internship! In many ways, just going back to school would be a wonderful relief, but you might be looking for more.

You took this internship as a stepping stone in your career. If you want to take the next step, though, you’ll need to transition it into an actual job. That can be an intimidating process.

Here’s the the good news: You’ve made it through the door. Most companies prefer to hire and promote from within. They don’t want to go through the interview process again any more than you do.

The bad news, though, is that doesn’t make it automatic. If you’re expecting the company to do the work of finding a place for you, you’re going to be disappointed. That said, it’s not impossible. It just takes the right combination of accomplishment, luck and know-how to get the position you’ve been dreaming about.

If you’re struggling with planning how to convert your internship into a full-time position, remember these five pointers!

1.) Ask for a specific position

One of the biggest mistakes job-seekers generally make is asking the broad question “Are you hiring?” The answer may be yes, but it’s unlikely – especially at large firms – that anyone knows about every possible position. For external applicants, doing the legwork to track down potential openings is tricky. That’s one of the advantages of the internship.

Keep an ear to the ground for new projects, new teams or new promotions. Those are places where there are likely to be new positions opening. Your immediate supervisor may not be in a position to make a hiring decision, but they can probably put you in touch with the person who is. A recommendation from someone within the company will go a long way toward putting you in that office.

2.) Time your ask

The last day of your internship is not the right time to have the first conversation about your future with the firm. Timing like that makes you seem like a procrastinator. You’re giving the impression that you put off thinking about your future until the last possible minute. This is not a trait companies want in their employees.

Ideally, you’ll want to ask about a new position after a big win. If you’ve just finished a major project, you’ve got the limelight, but only for a brief window. It doesn’t have to be one of those cinematic, vital to the life of the company projects, but it should be a significant success that shows your skills and determination.

When you reference this accomplishment, always do so with a humble-brag. Ask your immediate supervisor if the task was done to their satisfaction. Getting them in the headspace of singing your praises will make them much more likely to recommend you for another position.

3.) Be everywhere

Part of the benefit of an internship is the chance to see the inner workings of a company. Yes, you’re gaining experience doing a specific set of tasks, but you’re also learning about different aspects of a business in your field. You don’t do that by keeping your head down and doing the work in front of you.

Instead, take every opportunity to visit and work with other departments and people. You never know who you might impress! The more people in the company who know your name, the more likely it is you’ll get to stay.

4.) Become indispensable

Lack of experience is typically seen as a liability by employers, but you can turn it into an asset through your internship work. That you don’t have any experience provides you with tremendous flexibility in how you tackle tasks. Find some piece of technology, new practice or set of procedures you can master. This means taking every training opportunity and looking over the shoulder of as many folks as possible. Your objective is to become an expert at the company in something.

The truth is, it doesn’t matter what. If you’re the only one in the department who knows how to run the copier, that’s a strong argument for keeping you on. Running the copier may not be your dream job, but it can get you in the door.

5.) Be professional

The best attribute you can display in your internship is follow-through. That means showing up on time every day, dressed like you’re there to work, and taking on every task — no matter how menial — with enthusiasm and dedication. Demonstrate to your employer that you’re the kind of person they want to hire.

The summer internship can be a great start to a great career, but — like every opportunity — you get out of it what you put into it. With a lot of work and a little luck, it can be the first in a series of career successes.

Wednesday, July 27, 2016

What are my options for digital banking?



Plenty. We live in the digital age, where you don't even need to leave your couch to do anything; from buying groceries to meeting the love of your life. First City Credit Union is one of the many financial institutions allowing you to bank from a mobile device and through mobile apps.

In fact, The digital age is ushering in a new era of green banking, and the planet is healthier for it already. Mobile banking saves gas that you would spend on making a special trip to a branch. It saves paper that would be used on statements or receipts. Sites like Paypal or GoFundMe allow you to pay or be paid instantly, which cuts out the need for paper in checks or, again, receipts and paper money. The same goes for the ability to pay bills automatically online, through our online/mobile banking page.

Are there any risks to digital banking?

While the benefits are fantastic, digital banking does come with a few small risks. Some people find keeping a budget to be more difficult when they can just look at their phone and rationalize a purchase they don't need simply because their balance seems okay. This is best solved with separate accounts for savings and spending, so you never think you have more money than you do. Also, although you can do quite a lot of your banking online, you can't do everything. There are still some important tasks that you need to do in person or by mail, such as signing loan documents and making deposits over a certain threshold.

Of course, the biggest concern with banking in the digital age is the ever-looming threat of hackers. Robbery no longer looks like a tall man in a ski mask with a revolver. Instead, most robbery happens through identity theft, perpetrated by a much scarier, faceless criminal who could be anywhere. Protecting security is at the forefront of everyone's minds, and First City Credit Union uses industry-leading security protection technology. You can help by choosing strong passwords and avoiding online banking from public computers. Fortunately, identity theft is still quite rare. About 4% of the U.S. population was victimized by identity theft in 2013 (Sources: World Bank, CNN Money, Javelin Strategy and Research). In fact, online banking has helped reduce much of the danger that comes from having paper with personal information on it sitting in the garbage can for anyone to find. The benefits that online banking provides continue to outweigh the risks.

Are there any banking initiatives that directly support environmental sustainability?

For starters, an ethical financial institution is one whose primary goal is to support sustainability and the long-term health of its community. Credit unions nationally have led the charge by identifying and supporting local businesses. The less distance goods have to travel, the less CO2 gets pumped into the atmosphere. You can help these efforts when you purchase a car or a home. Buying an energy-efficient car or building green features into your home can help build a sustainable future.

How can this help me?

In addition to the long-term benefits of going greener, sustainable banking offers many advantages. Online banking can be done at any time and any place - no waiting for the branch to open, no wasting extra gas money driving to the ATM. Having receipts and monthly statements emailed to you keeps them all in one place, which allows for easy organization and budgeting.

The ability to be paid instantly allows you to, well, be paid instantly. No more waiting for a check to cash or losing it at the bottom of your purse. With automatic bill payments, you can put the bills right out of mind and never have to worry about forgetting them again. This does great things for your stress level and your credit score. Greener auto loans or mortgages allow you to save money on things that might have previously been more expensive, making them worth the hassle. In the end, saving the earth can also save you time, money and energy.

How can I go greener in my banking?

In the year 2016, greener banking is easier than ever. If you're ready to be a part of the future, take these four easy steps:



  • Set up direct deposit to split your paycheck between your savings and your checking and/or to make loan payments.




First City is here to help make your life a little greener, digitally.

Monday, July 11, 2016

Catastrophy Or Opportunity? What The Brexit Vote Means For Homebuyers And Homeowners Part 2 of 2

The recent decision by the United Kingdom to leave the European Union has led to serious turmoil in stock markets around the world. Many investors are panicking and selling off stocks in a hurry. Smart investors, though, can be prepared to ride out the storm by making a few savvy moves.

In times of trouble, people tend to look for the safest possible investment. These generally fall into three groups: stock in big companies, bonds of financially stable governments and real property. That last category should be of interest to homeowners and house hunters alike, as the recent Brexit vote is likely to be a boon to real estate markets everywhere outside the United Kingdom.

It’s not that people are flocking out of the UK and looking for houses to buy. Rather, many people are looking to invest in real estate, but the British pound sterling is experiencing a loss of value. On the other hand, for people looking for real estate either as living space or as an investment, the time has never been better.

Let’s take a look at how this could affect each group individually.

Real Estate Investors

Owning rental property is a big wealth-building strategy component for many people. Whether you serve as landlord yourself or turn the property over to a management company to handle the day-to-day operations, rental income is as close to passive as it gets. You get the rent minus expenses, plus the appreciation of the property.

One of the biggest costs associated with buying rental property is the mortgage. Very few landlords own rental property outright. More often, they mortgage the property and use the rent to cover the mortgage payment.

Interest rates have been historically low as a means of economic stimulus for quite some time, so costs have already been modest. With the uncertainty created by the Brexit vote, most experts expect the Fed to avoid raising those rates. Mortgages will stay cheap into the foreseeable future.

Moreover, investors seeking to invest in a more diverse real estate portfolio are buying mortgages at an accelerated rate. They’re doing so because they’re seeking a safe investment, and prime mortgages (loans made to people with good to very good credit) represent a pretty safe place to park money. Since there are more dollars available to lend, the cost of those dollars (the interest rate) will drop further.

If you’ve been on the fence about buying an investment property, the time could be right. Low rates and rising property values could make it a valuable part of your retirement strategy.

Homebuyers

Most of the reasons why home ownership makes sense for investors also make sense for people looking to buy a home for themselves. There’s one more factor, though, that could tip the scales in favor of buying a home.

One of the other effects of increased mortgage availability is an easing of mortgage requirements. The door is open for borrowers with less-than-optimal credit scores. Many of these people have been scared away from the mortgage market because they fear they won’t be approved. The increased availability of credit, though, may make mortgages easier to get. Working through a community lender like First City can offer borrowers the personal guidance they seek along with access to loan options that are not always widely available on the open market.

Homebuyers with good or very good credit may be able to up their price range a bit. If you’ve been on the market for a while and had little success, it may be time to take another look at payment projections and re-evaluate how much house you can afford. With interest rates approaching 3-year lows, you may be able to find an affordable house payment on a more expensive house.

Homeowners

If you’re a current homeowner, these rates should be attractive to you, as well. If you’re thinking about selling your home, now’s a great time. Cheap loans and rising rents will continue to push more people into the housing market, and more demand means prices are sure to continue to increase. Now might be a good time to get an estimate or test the waters to see how much you might get for your home.

If you’re happy with your home but want to make some upgrades, getting a home equity line of credit to do those remodels is another way to take advantage of low rates. Remodeling a bathroom or kitchen using a home equity loan could help you take advantage of the surging real estate market, and it could make your house a happier home in the meanwhile.

If remodels aren’t in the cards right now, it may be a wise opportunity to refinance. If you got a loan when you had less than perfect credit but have been making payments consistently, you could qualify for a significant savings in your monthly payments. The same is true if your mortgage is more than 10 years old. Refinancing now could lock in some serious savings and take some pressure off the budget each month.

Don’t buy into the hype. The Brexit vote is not a time for panic. It’s not a time to stuff your money in a mattress. It’s a time to make smart moves to protect your investments, when disciplined investors can significantly improve their position. You can do it, and First City can help!