Thrifty Spending Issue 52

FEATURE ARTICLE:  Over 4.0% APR on my Checking Account? No way!

Consumers frequently search through the newspapers and surf the web searching for a place to park their money and get that higher APR. Not wanting to tie their money up in a CD for 5 years to get 2.9%, or put it in a money market account for a whopping 2.0%, and consumers definitely have no problem finding that .5% APR at their local bank or even from some of the large national banks. But here’s a little secret, Credit Unions and High Yield Reward Checking Accounts. These accounts are usually found at local community banks or credit unions. They offer a great rate of return in exchange for maintaining a minimum balance, with a few exceptions. These exceptions include doing a certain number of online or debit transactions or using direct deposit.

As of 5/4/2010, the Royal Bank of Missouri is offering a 4.3%APR for up to $25,000 on their checking account, and First New England Credit Union is offering 4.1% up to $15,000. As of the printing of this article, there are 9 institutions offering 4.0% APR or better. Consumers can read more about the best cd and savings rates plans and the name of the institution by going to . Some institutions require you to live in their state and others open accounts nationwide, so take the time, read up and start making some money.

But is your money safe? High Reward Checking Accounts opened at your local community bank are FDIC Insured, while your funds in a Credit Union are insured by the National Credit Union Administration. Go to and read the regulations.

Most local banks and credit unions are doing well in these tough economic times, which is great news if you are looking for a High Yield Reward Checking Account.

MONEY SAVING TIP:  Do you know if you are banking smart?

Request that the bank provide you with a complete list of fees that are charged on these accounts. Also, inquire about getting free banking if you choose to do direct deposit or agreeing to ATM use only. However, keep in mind charges may still apply for using an ATM that is not associated with your financial institution. You can save more than $100 a year in fees by choosing a free checking or savings account that requires no minimum balance requirements. For example: $12 monthly maintenance fee = $144 per year!

DID YOU KNOW…that the perfect credit does exist?

Pursuit of excellence is often wise, but does “perfect” exist? Yes, says Craig Watts, the public affairs director for Fair Isaac “Several thousand consumers do, in fact, have the highest possible FICO score.”

Though most people won’t reach the credit score apex (850), you can get close by consistently following three simple guidelines:

  • Pay all bills on time.
  • Keep credit card balances low.
  • Take on new credit only when you really need it.

Don’t obsess over small credit score variations. “Lenders decide what score they will accept for

their best-interest-rate product,” assures Watts. “They genuinely don’t care if your score is 50 or 100 points higher than that.”

Clearly, A-plus credit has its advantages, but there is no reason to go overboard. Find a balance between attentiveness and fixation by understanding what those numbers can do for you and knowing how you can improve them. And remember: Credit scores gauge your borrowing history, not your value as a person.

Thrifty Spending Issue 51

FEATURE ARTICLE: Your credit report may be costing you money

Most consumers know that negative information on their credit reports affect the offers they receive when applying for credit or the type of credit granted to them. But how far can low scores affect a consumer? What aspects other than mortgage or credit card interest rates are negatively impacted by a poor credit rating?

Employment. With your acknowledgement, employers are looking at your credit reports to determine whether you are the appropriate candidate for their work place. An education helps to get the job, positive work history is also a plus but unless your credit report is good, the employer may think you are more of a risk than you are worth.

For example, let’s say you graduated from college with honors and a debt of about $20,000. Unfortunately, the debt may cancel out any positive education experience. The fear behind this decision is that the debt could cause problems at work. Will you be distracted? Will your creditors contact your employer? Will your paycheck be garnished?

Employers are consumers themselves, therefore the odds are in your favor. However, if your debt is sufficiently high, they have the option to not hire you. Larger businesses seem more likely than small ones to check your credit report. It also depends on the type of job you are applying for.

Utilities. Do you ever wonder why the power company or the cable provider wants your social security number? It is not just so that they can report a delinquent account but also to check and see what kind of consumer you are. Do you pay your electric bill on time? Are you late paying the telephone or cable company?

You may not be turned down for services but you will be asked for a hefty deposit if your credit score does not measure up.

Housing. It is no surprise that your credit reports are checked thoroughly for a home loan, however, if you plan on renting also plan on having a good score. Negative information on your credit report as well as high debts can prevent you from renting. Not many property owners or associations like to have tenants who have had or currently have financial issues. Chances are, if the consumer has had problems paying their previous bills or are facing a large debt, the risk of them making rent on time may be high and therefore not favorable.

Auto loans. If you are planning to purchase a car and you have low credit scores, understand that this may mean extremely high interest rates and consequently high monthly payments.

Consumers with low credit scores can expect to acquire an interest rate ranging anywhere from 19 to 26 percent. Where as, individuals with better or good credit ratings are going to receive an interest rate of about 6 to 7 percent.

Auto Insurance. With a good credit score, you are most likely going to be eligible for a low premium (other factors are considered, such as diving record, type of vehicle, etc.). However, if you have a low score and poor credit history, your credit record will get noted on your insurance application making you a consumer who pays between 20 to 50 percent more in premiums.

What’s the logic behind all this profiling?

Lenders and business that grant services depend on your credit history and/or score to determine how likely you are to pay them back. Does your history show a responsible, credit worthy consumer or have you fallen into a financial gap and therefore seem more of a risk?

If you have not ordered your credit reports within the past year, go to and receive all three, for free. Evaluate what creditors are saying about you. Make sure the information is correct. If you find errors, fix them. All of the credit reports have contact information for the credit bureaus and the creditors. Do not delay in making corrections as this could be costing you money.

Many consumers struggle with the negative effects of poor credit reports. Although it does not have to be that way forever. Improving your credit history and score is a matter of organizing your finances. Take the time to sit with your expenses and develop a budget that you can stick to. A budget is key to improving your financial health. Continue to practice your new financial obligations and goals until they become a habit. Within six to twelve months, you could have a much improved credit score and change those high interest rates and premiums to amounts that you can handle.

MONEY SAVING TIP:  Wants vs. Needs

Instead of focusing on saving for a specific product with this ezine, we would like to challenge what you think your wants vs. your needs are. If you want to save money, do not make the mistake of confusing a want for a need. Needs are simple to identify: shelter, food, clothing, transportation. Wants are items that enhance or improve our life. Clothes for instance are a need, but wanting to shop at a particular store for a particular brand is a want. A vehicle might be a need, depending on where you live. However, a sports utility vehicle is a want. Do not neglect yourself from the things you want, but if you are finding it hard to stick to a budget or cutting expenses, practice only spending money on needs for just a month….you will be surprised how much you save.

DID YOU KNOW… that there are things you can do to help boost your credit score?

While there is nothing that can be done about the accurate negative information on your credit report, there are things you can from this point forward to improve low numbers.

Order a copy of your credit reports. You may get a free one from each of your credit bureaus every twelve months be visiting

  • Fair Issac Corporation states that 35% of your score comes from credit payment history; therefore, paying bills on time is the key to making your scores go up. Regardless of how many bills feature on your credit reports, making sure that they are paid on time will help your score.
  • Avoid acquiring more credit. This is especially important if you haven’t had credit for very long.
  • If you have questionable credit history, open a new credit account, use it responsibly and pay it off on time.
  • Do not open credit accounts you do not intend to use.
  • Keep your balance low in relation to your available credit.  Keeping your balance below 25% of your limit, will improve your debt to income ratio.
  • Pay off credit card debt rather than moving it around to lower rate cards.

Please note these tips will not clear your credit report right away. It took some time for your credit to appear the way it does and it will take some time to clear things up and improve your score.  Never-the-less, be consistent with your efforts and the rewards will undoubtedly happen.