Should I Trade in my Car Now?

Q: I’ve heard that used cars can currently fetch a pretty penny from dealers because of a nationwide vehicle shortage. Should I trade in my car?

A: The auto market has been red-hot for months as manufacturers scramble to catch up on pandemic-induced supply shortages. While circumstances vary, this can be a great time to get top dollar on a used car. 

Here’s what you need to know about the current auto market for sellers.

How high did prices go?

According to online automotive resource Edmunds, the average transaction price for a used car in the second quarter of 2021 was $25,410, which is up 21% year-over-year. This was the first time the average list price for used cars in the U.S topped $25K. Also, fewer than 1% of used cars on dealership lots were priced below $15,000 during this quarter, compared to 18% offered below this mark the previous year. 

Why have prices of used cars increased so sharply? 

Several interconnecting factors have led to the increase in auto prices. 

First, the pandemic put a freeze on the production of new vehicles for nearly a full business quarter. Factory output at the time of the nationwide lock-downs was reduced by 3.3 million vehicles and sales dried up, which also reduced the volume of trade-ins. This led to a decrease in the available supply of used cars and led to a driving up of prices. 

With production on pause, chip-makers focused on the electronics industry instead of creating semiconductor chips for automakers. When production resumed, manufacturers faced a worldwide shortage of these chips, which experts predict will last well into 2022. Consequently, manufacturers have been limited in the number of new cars they can make. This, too, means there are fewer trade-ins and fewer used cars available for buyers, leading to an increase in prices.

A third factor that has influenced the fall in the supply of used cars is the months-long shutdown of business and leisure travel during the lock-downs. Car rentals were virtually unused at this time, prompting the agencies to hold onto the cars in their lots instead of selling them to used car dealerships. This, of course, led to a reduction in the number of used cars available for sale and contributed to the spike in prices.

Finally, the single factor unrelated to the pandemic that has decreased the supply of used cars is the fact that today’s used cars were manufactured during the Great Recession. During this time, automakers faced severe financial challenges and the number of cars sold during that time was far lower than average. Today’s dearth in used cars, then, is also a trickle-down effect of the Great Recession and now directly impacting the current auto market. 

Will the market settle down soon?

Auto prices are already showing signs of leveling off, with some used car prices dropping by as much as $2,000 over the month of July. Many drivers are eager to sell their cars at top dollar now, adding more used cars to the available supply. Car rental agencies are also recovering from their business freeze during the pandemic, adding their own vehicles to the available pool of used cars. While it will take some time for the market to recover completely, it does seem to be cooling off from its post-pandemic sizzle. 

Should I trade in my car now? 

If you plan on trading in your car sometime in the near future, you may want to do so sooner rather than later. With inventory still low, dealers are eager to get their hands on as many used cars as possible and will offer you more than you’d typically expect. Be sure to check what price you can get from several dealers before you sell. It’s equally important to note that those same inflated prices will work against you if you plan on buying a new car now. 

Used cars can fetch a pretty penny in today’s hot auto market, but it’s crucial to weigh all factors carefully before deciding if trading in your car now can work in your favor. 

Your Turn: Have you recently traded in your car? Tell us about it in the comments. 

What Should I Consider Before Getting an Auto Loan?

Q: I’m ready to finance the purchase of a new car. What do I need to know before finalizing my auto loan?

A: Financing a new car is a big decision that will impact your monthly budget for the entire term of the loan. That’s why it’s important to weigh all relevant factors carefully before making your decision. 

Here are five questions to ask before taking out an auto loan.

1. What is the actual cost of this car? 

In many dealerships, the sticker price on a car and the one you end up paying can be vastly different. In some lots, you can negotiate with the salesperson to get them to lower the price. Meanwhile, in other lots, you may find out at the last minute that you need to pay extra fees that will bring the price up significantly. Before you sign on an auto loan, make sure you know how much you’re actually paying for your new wheels.

2. Is this the lowest interest rate I can get from any lender without extending the term?

The interest rate on your loan determines how high your monthly payment will be and how much you’ll be paying overall for the privilege of financing your car. The range of rates you’ll be offered will depend on the lender, the market rates at the time and your credit score and credit history. Be sure to shop around and check out what different lenders can offer you before making your decision.

3. What will my monthly payment be with this loan? 

Your monthly payment will be determined by the loan amount, the annual percentage rate on the loan and the loan term. It’s best to use these details to run the numbers on a potential loan to be sure you can afford the monthly payments (there are hundreds of monthly payment calculators throughout the internet). Defaulting on an auto loan can mean risking the repossession of your vehicle and a massive dent in your future credibility. You’ll also be better prepared to incorporate this new payment into your monthly budget if you have a number to work with before finalizing the loan.

4. Are there any available incentives that can bring down the cost of this loan?

Before closing on a loan, ask the lender about any available incentives that can help you save on the cost of the car. Here are two incentives you may be able to access:

  • The cash rebate. This incentive allows borrowers to apply a dollar amount to the price of a vehicle, effectively bringing down the price. The borrower receives the discounted amount in a cash rebate when the loan is finalized. These rebates are typically offered regionally or under specific circumstances, such as to repeat buyers of a certain brand, buyers who have left a competing brand, recent graduates or members of the military. 
  • Dealer cash. This incentive is similar to the cash rebate, but it’s offered by the dealer instead of the automaker. Dealers may offer these incentives near the end of the month, quarter or model year, as they scramble to reach a quota set by the automaker. The dealer will be compensated for reaching this quota and is consequently open to bringing down the price for the buyer. However, you’ll only know about this incentive if you ask.

5. Do I really need an extended warranty?

Dealers can be overly eager to sell extended warranties to new car owners, but these may not be in the buyer’s best interest. If you’re purchasing a new car, it likely comes with a factory warranty covering the vehicle up to 100,000 miles, making an extended warranty an unnecessary expense. If you’re buying a used car, have it thoroughly inspected by a mechanic and get a detailed vehicle report on AutoCheck.com or Carfax.com to see if you need the extra protection that an extended warranty provides.  

Your Turn: Which factors do you consider before finalizing an auto loan? Tell us about it in the comments. 

6 Ways to Boost Your Credit Score

An excellent credit score is the ultimate goal of the financially responsible consumer. Those three magic digits tell a story of accountability, good financial sense, and the ability to spend mindfully. A great credit score also unlocks doors for large, affordable loans; employment opportunities, and more.

Its significance notwithstanding, achieving and maintaining an excellent credit score is easier said than done. There is no quick and easy way to dramatically boost your score over a short amount of time, but you can take steps to increase your credit score gradually. Below, we’ve listed six ways you can start amping up your credit score today.

1. Pay your bills on time

Your payment history is the single most important factor in determining your score. A missed credit card payment can significantly impact your score and it can take months to recover the loss. Set a reminder a few days before your bill is due to ensure you never miss a payment.

2. Reduce your credit utilization ratio

Another crucial factor in your score, your credit utilization ratio refers to the amount of available credit you use. It’s best to keep your utilization under 30%, or even 10% if you can swing it. This means, if you have $50,000 of available credit, try to keep your usage below $15,000 at most and, ideally, below $5,000.

It can also be a good idea to accept offers of increased credit or to request an increase on your own, which can instantly bring down your credit utilization ratio. However, only go this route if you know you are not at risk of overspending as soon as you have more credit at your disposal.

3. Use your cards

Taking a pair of scissors to credit cards can seem like the perfect way to increase your credit score, but you need to use your cards to keep your score high. A great way to make sure you use your cards on occasion but don’t overspend is to charge fixed expenses, like monthly subscriptions, to your card. Just be sure to pay the balance in full before the credit card bill is due.

4. Work to pay down outstanding debt

If any of your cards are carrying a balance from month to month, showing that you are working to get rid of this debt can do wonders for your credit score. Maximize your monthly payment by trimming an expense category in your budget and channeling that extra money toward your credit card bill. Don’t be afraid to reach out to your credit card company to ask for a lower interest rate as you work to pay off debt. Finally, consider consolidating credit card debt with a personal loan from Advantage One Credit Union, which will help you get rid of your credit card debts and leave you with one low-interest payment to make each month.

5. Look for errors on your bill and credit history

A fraudulent charge on your credit card can bring down your score without your knowledge. That’s why it’s important to check your statements each month and to look for charges you don’t remember making. If you see anything suspicious, contact the credit card issuer immediately to dispute the charge. It’s also a good idea to get your free credit report once a year from annualcreditreport.com for a more comprehensive look at your credit usage and signs of possible fraud. 

6. Become an authorized user on another cardholder’s account

If you’re new to the world of credit, and you’re looking to thicken your credit file to build your score, becoming an authorized user on another cardholder’s account can be a great way to get results quickly. Team up with someone who has excellent credit and never misses a payment. Your partner’s responsibility will reflect well on you and help build your credit history and boost your score. 

Credit scores are a crucial component of financial wellness, but achieving and maintaining a high score can be challenging. Use the tips outlined above to start boosting your score today. 

Your Turn: Have you taken steps to boost your credit score? Tell us about it in the comments. 

How do I Raise my Kids to be Financially Independent Adults?

Q: How do I raise my kids to become financially independent adults?

A: It’s commendable to try raising your kids today with an eye toward their future. Teaching your children how to be financially independent will help smooth the transition into adulthood. It will also give them the tools they need to achieve and maintain financial wellness throughout their life.

Here are some tips for raising kids to grow into financially independent adults. 

Start with basic budgeting

Successful budgeting is the foundation of every financially independent household. You can introduce your children to the concept of earning money and spending it mindfully when they’re still young, and then build upon that knowledge as they grow older. Preteens can watch you work on an actual budget, and teens can even assist you in creating a budget for a large expense, such as a family vacation. 

Another way to bring this lesson home is by showing kids how to budget their own money. Help them create columns for “income” and “expenses,” listing their allowance, occasional gift money and income from any jobs they may have in the income column, and the ways they’d like to use their money in the expense column. Show them how to divide their money across their expenses in a reasonable fashion and talk to them about setting aside money for the future. 

Finally, you can allow your older kids to make some spending decisions on their own, provided they don’t later complain about the choices they made. For example, you can give your preteen a specific amount of money to spend on a fall wardrobe, and then let them choose to spend more on a jacket and less on a pair of sneakers, or vice versa. They may make some mistakes, but you’ll be teaching them a lesson they’ll carry with them throughout life. 

Split the costs of “must-have” items

If your kids are like most, they’ll likely be asking you for all sorts of trending items they claim they absolutely need; from a pair of designer jeans all the in-kids are wearing, to the latest fad toy they insist their entire class already has. As a parent, you may be inclined to bend and give them what they want more often than you’d like. Or maybe you play hardball by refusing most of these requests. Neither approach is likely to leave both you and your child feeling happy with your choices. 

A great way to compromise on just how often to say yes to kids, and to teach them a fantastic financial lesson at the same time, is to have your child pay half the cost of expensive trending items. They’ll quickly realize that what seems like a “must-have” really isn’t when you’re the one footing half the bill. Or, they may go ahead with the purchase and either come to regret it as they learn this lesson later or enjoy the gratification that comes from paying your way toward an important goal. 

Teach them about credit cards

To a child, a credit card is a magical piece of plastic that makes everything possible. If your child observes you using a credit card or debit card often, you owe it to them to teach them what’s behind that little card. Show them your credit card bill when it arrives in the mail and talk about how you need to pay for all those expenses you swiped during the month, plus the interest you may incur. Teach them about debit cards, too, explaining how money is withdrawn from your checking account when you swipe the card. It’s also a good idea to give older kids a quick rundown on credit scores, how they work and why they’re so important. 

Open a checking account for your child 

Experience is the best teacher, and giving your child their own checking account can be an excellent way to teach them how they manage their own money. You can open a youth account, or a regular checking account under both your names, at Advantage One Credit Union to help your child learn all about money. They’ll make their own deposits (with your help), check on their balance, and may even enjoy a debit card to use as appropriate, so long as they have enough funds in their account to cover the purchases. This first account opened and managed under your watch will help them transition easily into truly handling their own money as financially independent adults. 

Talk openly about what they can expect in terms of support for the future

When your child is mature enough to talk about their college years and beyond, it’s time to have a conversation about their transition into financially independent adulthood. The more you communicate about your plans now, the less room you’ll leave for misunderstandings and upset feelings in the future. 

Be open and specific about how much financial support you plan to offer while they attend college, immediately after they graduate and further into the future. Ask about their plans as well, paying attention to when they anticipate being financially independent and whether you believe they are being realistic in their planning. 

When speaking to your young-adult child about the future, it’s a good idea to bring up the topic of career paths and earning potential as well. You can help your child determine a basic budget for the lifestyle they plan to lead, and then assist them in narrowing down their career choices to just options that can support their future desired lifestyle. Talk to your child about student loans too, and explain how crippling debt can be. 

It’s a scary world when you must step up to manage your money on your own, but it’s also a world filled with wonderful opportunities. Use the tips outlined above to help raise your child to be a financially independent adult. 

Your Turn: Do you have additional tips for raising financially independent adults? Share them with us in the comments.

All You Need to Know About Home Equity Loans

As you pay down your first mortgage or the value of your home increases, you develop equity. When you have equity built up in your home, borrowing against it with a home equity loan is a great way to tap into the money when you need it most. Many people take out a home equity loan to finance home improvements, pay for their child’s college education, cover unforeseen medical costs, and many other purposes. Here’s all you need to know about home equity loans. 

What is a home equity loan? 

A home equity loan (HEL), or second mortgage, is a secured loan that allows homeowners to borrow against the equity in their home. The loan amount is based on the difference between the home’s current market value and the homeowner’s outstanding mortgage balance. Home equity loans tend to be fixed-rate, while the typical alternative, home equity lines of credit (HELOCs), generally have variable rates and allow the borrower to withdraw funds as needed.

How is a home equity loan amount determined?  

Your primary mortgage is the amount you borrowed when you first purchased your home. Over time, as you pay down the loan and/or the value of your residence increases, so does your equity. You can take a home equity loan out against the equity you have built up in your home, essentially borrowing against your home’s value minus what you still owe on your mortgage. It’s important to note that a home equity loan is a second loan against your home. You’ll still need to pay your primary mortgage along with new payments for your home equity loan.

A lender will typically want you to have at least an 80 percent loan-to-value (LTV) ratio once your home equity loan has been approved. 

Interest rates on home equity loans 

Home equity loans typically have a fixed interest rate, making budgeting for the payments easy. The lender provides a lump sum payment to the borrower, which is then repaid over the life of the loan, along with a set interest rate. Both the monthly payment and interest rate will remain the same over the entire loan term, which can last anywhere from 5 to 30 years. If the borrower sells the home before the loan term is matured, the loan must then be repaid in full. 

A home equity loan can be a great choice for a borrower with a one-time or straightforward cash need such as a home addition, large medical expenses, debt consolidation, or a wedding. 

Are there any costs associated with home equity loans?

As with mortgage loans, there are closing costs associated with home equity loans. Closing costs refer to any fees incurred when originating, writing, closing, or recording a loan. These fees include application, appraisal, title search, attorney fees, and points. Some lenders may advertise no-fee home equity loans which require no cash at closing, but these will usually have other associated costs or a higher interest rate which can easily offset any gains. 

What are the pros and cons of a home equity loan?

There are several advantages to taking out a home equity loan to fund a home improvement project or a large expense: 

  • The amount of interest paid toward a home equity loan may be tax-deductible.
  • Interest rates on HELs are generally lower than those provided by credit cards or unsecured loans. 

Home equity loans do have some disadvantages as well: 

  • Using your home as collateral for the loan means risking foreclosure and the loss of your home if you default on the loan. 
  • If your home value declines over the term of the loan, you may end up owing more than your home is worth. 
  • You’ll need to pay closing costs and other fees when you take out a home equity loan. 
  • You may qualify to borrow more than you actually need and ultimately end up using more than planned, which of course you’ll need to repay. 

The hot real estate market has led to a boom in popularity for home equity loans. However, it’s important to weigh all factors carefully before determining if a home equity loan is best for your specific needs.  

Your Turn: Have you taken out a home equity loan? Tell us about it in the comments.

6 Steps to Crushing Debt

You and debt are so over. You’ve just about had it with those endless piles of credit card bills and those hideous numbers that never seem to get any lower. It’s time to kiss that debt goodbye!

Getting rid of high debt will take hard work, willpower and the determination to see it through until the end, but it is doable. Here, we’ve outlined six steps to help you start crushing debt today. 

Step 1: Choose your debt-crushing method

There are two approaches toward getting rid of debt: 

  • The snowball method, popularized by financial guru Dave Ramsey, involves paying off your debt with the smallest balance first and then moving to the next-smallest, until all debts have been paid off. 
  • The avalanche method involves getting rid of the debt that has the highest interest rate first and then moving on to the debt with the second-highest rate until all debts have been paid off. 

Each method has its advantages, with the snowball method placing a heavier emphasis on achieving results at a faster pace, which then motivates the debt-crusher to keep going, and the avalanche method, focusing more on actual numbers and generally saving the borrower money in overall interest paid on their debts. There’s no right approach, and you can choose whichever method appeals to you more.

Step 2: Maximize your payments

Credit card companies are out to make money, and they do this by making it easy to pay just the minimum payment each month, thus really paying only the interest without making progress on the actual principal, thereby trapping millions of consumers in a cycle of endless debt. Beat them at their game by maximizing your monthly payments. Free up some cash each month by trimming your spending in one budget category or consider freelancing for hire and channel those freed-up or newly earned funds toward the first debt on the list you created in Step 1. Don’t forget to continue making minimum payments toward your other debts each month!

Step 3: Consider a debt consolidation loan

If you’re bogged down by several high-interest debts and you find it difficult to manage them all, you may want to consider consolidating your debts into one low-interest loan. A personal loan from Advantage One Credit Union can provide you with the funds you need to pay off your credit card bills and leave you with a single, low-interest payment to make each month. Or, you can transfer your credit card balances to a single card with a low-interest or no-interest introductory period. Be aware, though, that you will likely get hit with high interest rates when the introductory period ends. 

Step 4: Build an emergency fund

As you work toward pulling yourself out of debt, it’s important to take preventative measures to ensure it won’t happen again. One of the best ways you can do this is by building an emergency fund. Ideally, this should hold enough funds to cover your living expenses for three to six months. Start small, squirrelling away whatever you can in a special savings account each month, and adding the occasional windfall, like a work bonus or tax return, to beef up your fund. 

Step 5: Reframe your money mindset

Sometimes, like when there’s a medical emergency or another unexpected and expensive life event, a consumer can get caught under a mountain of debt through no fault of their own. More often, though, there is a wrongful money mindset at play  leading the consumer directly into the debt trap. 

As you work on paying off your debts, take some time to determine what got you into this mess in the first place. Are you consistently spending above your means? Is there a way you can boost your salary or significantly cut down on expenses? Lifestyle changes won’t be easy, but living debt-free makes it all worthwhile. 

Step 6: Put away the plastic

Credit cards are an important component of financial health and the gateway to large, low-interest loans. However, when you’re working to free yourself from debt, it’s best to keep your cards out of sight and out of mind. You can set up a fixed monthly bill to charge one or more of your cards to keep them active, but only do this if you know you will pay off the charge in full before it’s due. Learning to pay your way using only cash and debit cards will also force you to be a more mindful spender. 

Kicking a pile of debt can take months, or even years, but there’s no life like a debt-free life. Best of luck on your journey toward financial freedom!

Your Turn: Have you kicked a significant amount of debt? Tell us how you did it in the comments. 

Step-by-Step Guide for Buying a Motorcycle

If you’re ready to purchase your first motorcycle, you’re likely thrilled — and more than a little overwhelmed. There are so many factors to consider and dozens of choices you’ll need to make before you pull the clutch. It can all get confusing, fast!

No worries; Advantage One Credit Union is here to help. We’ve compiled a step-by-step guide for buying a motorcycle, complete with useful tips to help you make a purchase you’ll enjoy for years to come. 

Secure financing

A motorcycle can run you anywhere from $2,000 to $16,000, and it’s always best to have the financial details of a large purchase squared away before entering the market so you’ll avoid disappointment later. You can save up for your bike, charge it to a low-interest credit card or take out an unsecured loan from Advantage One Credit Union, where you’ll enjoy affordable interest rates and payback terms to fit your budget. 

Brush up on your motorcycle safety

Before you shop for a bike, it’s a good idea to complete a Motorcycle Safety Foundation (MSF) course. The course is similar to driver’s training and will help ensure you can ride your bike with increased safety. Depending on your state, you may need to obtain a special motorcycle license as well. 

Procure insurance

In some states, motorcycle insurance is required by law, but even if your state does not mandate it, consider purchasing coverage anyway. Insurance will protect you from liability for property damage or personal injuries caused through your vehicle, help cover medical bills in case of an accident, and cover theft and damage to your bike as well. As is the case with auto insurance, you’ll have the freedom to choose how much coverage you’d like to purchase, with more robust coverage directly increasing the cost of your policy. 

Choose between a new and used bike

You’ve got the important stuff taken care of and you’re itching to try out bikes, but before you do, decide if you’re going to purchase a new or used motorcycle. Let’s take a quick look at the pros and cons of each option. 

A used motorcycle can cost thousands less than a new bike and won’t depreciate nearly as much, but finding a used motorcycle in decent condition can be challenging. If you decide to go this route, stay away from bikes that show signs of excessive wear, have mileage exceeding 20,000 miles, and/or have difficulty starting up, running or stopping. It’s also a good idea to get a VIN (Vehicle Identification Number) to check on your potential new bike, have it professionally inspected, and take it for a spin before finalizing the deal. 

A new bike will be blessedly free of mechanical breakdowns in the near future and will look nice and shiny. Of course, you’ll pay for these privileges, so be sure to run the numbers before setting your heart on a particular motorcycle. It’s also important to note that, while you might save on repairs and maintenance, insurance on a new bike will likely be a lot more expensive than coverage for a used one.

Choose a motorcycle type

You’re ready to choose your type of ride. Here are the most popular choices:

  • Sport bikes- equipped with a leaning design that makes them ideal for riding at high speeds, these bikes also have higher foot-pegs and handlebars that are more out of reach than most other bikes. A sport bike can be a good choice for thrill-seekers, but an uncomfortable option for riders planning to take long trips on their bikes. Insurance can also be expensive. 
  • Standard bikes-an upright riding posture and lack of accessories make these a great all-purpose motorcycle. Perfect for beginners and the budget-conscious, but not the best choice for off-road and long-distance riders. 
  • Cruisers-the Harley Davidson standard, cruisers offer a relaxed riding position, comfortable suspension and a V-twin engine. They also tend to be heavy, making them difficult for new or small riders to handle, but an excellent choice for tall riders and those seeking a stylish ride. 
  • Touring bikes-built for long rides, these motorcycles are fully loaded with extra features, including fairings that block the wind, saddlebags to accommodate luggage and large fuel tanks for long trips. A touring bike can be ideal for riders who take lots of road trips, but they can be an expensive choice for city riders. 
  • Dual sport bikes-lightweight and built with high-travel suspension and aggressive tires, these bikes are a great choice for off-road riding. Their tall seat height makes them difficult for short riders to handle.

Once you’ve chosen your ride type, research models from popular brands, including Yamaha, Harley Davidson, Suzuki, Kawasaki, Honda and Triumph. Be sure to check out ratings and reviews from current owners. Once you’ve narrowed down your choice, you’re ready to visit dealerships and private sellers.

Important features to consider

A motorcycle’s seat, handlebars and foot-pegs are not adjustable, so it’s important to choose one that fits comfortably. Take a seat on any bike you are considering. See how it feels, and make sure you can easily reach the handlebars and pedals. If possible, go for a ride around town to get a real feel for it. 

You’ll also want to consider the weight of your bike since a heavier bike can be difficult to maneuver. 

Finally, if you’re a new rider, don’t go overboard on power. It’s best to start with a bike that has a 500cc engine and then trade- in for something more powerful later on, if necessary. 

Choose your bike and finalize your purchase

You’re ready to buy your bike! Be sure to choose carefully and do lots of research so you’ll enjoy your motorcycle for many happy miles. 

Your Turn: Have you recently purchased a motorcycle? Share your tips and advice with us in the comments. 

Your Complete Guide to Secure Mobile Banking

In response to the rise of mobile banking scams, the Consumer Financial Protection Bureau (CFPB) recently published new guidance on unauthorized electronic funds transfers, or EFTs. With more people using electronic banking as a holdover from pandemic times, it’s important for consumers to be aware of its vulnerabilities and how to protect themselves from scams. Here’s what you need to know about the risks of mobile banking and how to stay safe. 

What are the risks of mobile banking? 

Banking through your mobile device is quick, convenient and efficient. There’s no longer a need to stop by the credit union on your way home from work to deposit checks, make a transfer or review your recent account history. Most banks and credit unions now allow you to do all that and more at any time, and from anywhere, using your phone and a mobile banking app. 

Unfortunately, though, like all transactions that take place over the internet, mobile banking has some inherent risks. First, hackers can break into a phone and an account to steal money and information. Also, phishing scams that target people over the phone can trick them into sharing login information with scammers who may then hack into the account. Finally, bogus emails and messages appearing to be from your credit union can lead you to unknowingly install malware on your device. 

Mobile banking scams can be difficult to spot and are frighteningly prevalent. In fact, according to a report by data science company Feedzai, the first quarter of 2021 saw a 159% increase in banking scams over the last quarter of 2020. This is likely due to the fact that the volume of banking transactions are returning to their pre-pandemic norm and many of them are happening online. 

How to bank safely online

Instances of online fraud may be mounting, but that doesn’t mean you need to give up the convenience of mobile banking. Follow these protocols for online safety and bank with high confidence: 

  • Use a VPN to hide your IP address. A VPN (virtual private network) will give you a private network, even when you’re using public Wi-Fi, thus preventing scammers from tracking and hacking your mobile device. It’s important to note that some VPNs can work so well that your own credit union won’t recognize you, so be sure to choose one that provides each user with a designated proxy IP. This enables select accounts to recognize the user while providing protection from hackers. 
  • Always choose multi-factor authentication. Most money apps will require this, but if your chosen app allows you to make this choice, be sure to say yes to multi-factor authentication. 
  • Never share your password or save it to your device. All of your passwords should be confidential, but the password you choose for an online banking app must be top secret. Don’t share your password with anyone. Follow suggested guidelines for choosing a strong password, including alternating between uppercase letters, lowercase letters, numbers and symbols; and choosing a unique password you don’t use elsewhere. Also, choose a security question that cannot be answered by searching through the personal information you post on your social media platforms. 
  • Brush up on your knowledge of scams. It’s important to keep yourself updated on the latest banking scams and to know how to recognize a scam if you’re targeted. Never answer a text or email that asks for your account details, even if it appears to be from your credit union. Finally, always be wary of unsolicited phone calls and banking alerts. 
  • Protect your phone. With the wealth of sensitive information it holds, a smartphone should be protected just like a desktop and laptop computer. Consider installing an antivirus app on your phone as well as a location-tracking app so you can find your phone if it gets lost. Be sure to lock your phone after using it, log out of the mobile banking app when you are done and always keep your phone in a safe place. 

Mobile banking scams are on the rise, but by simply following the tips shared above, you can use your phone to bank with confidence, knowing your money and your information are safe.

Your Turn: How do you bank safely online? Share your tips with us in the comments. 

Why You Need to Be Financially Fit

Individual Americans spend hundreds of dollars a year and at least as many hours on keeping themselves physically fit but too many people neglect their financial health. Just like physical health, being financially fit is crucial to your well-being, your future and your quality of life. 

Here’s why being financially fit is so important and how you can overcome common barriers to achieving financial wellness. 

Financial wellness: a ripple effect 

Being financially fit is about more than just having enough money in your account to cover your expenses and put away something for tomorrow. Managing money responsibly will affect many aspects of your life:

  • Marriage. According to a recent study by AARP, financial problems are the second leading cause for divorce in the country. Money brings resentment and arguments into a marriage. In a study reviewing over 740 instances of marital conflict between 100 couples, money was found to be the most common topic couples argued about.  
  • Mental health. Money stress can severely affect your mental health, causing depression, restlessness, anxiety and more.  
  • Physical health. Stressing over finances can also directly impact your physical health, leading to recurring symptoms like headaches, fatigue, upset stomach, insomnia, high blood pressure and an increased risk of heart disease and stroke.
  • Work life. Being bogged down by money worries can make it difficult to focus while at work, which can bring down productivity levels and hamper career growth. In addition, prospective employers tend to review the financial wellness of new hires as part of their background checks; high rates of debt and a poor credit score can cost an employee a new job. 
  • Parenting. Managing money irresponsibly can mean not having sufficient funds to pay for a child’s education, private lessons, medical needs and more. 

What are the leading causes of money stress? 

According to a survey by Credit Wise®, 73% of Americans rank money issues as the number one stressor in their lives. Here are the top causes for financial stress: 

  • High-interest debt
  • Insufficient savings
  • Medical bills
  • Living paycheck to paycheck
  • Lack of retirement planning

Stressing over money is never fun. Stressing over money, when any of the above applies to you, takes on its own form of angst by adding a level of long-term anxiety. It takes time, sometimes years, to undo the damage of any of these stressors but it can be done!

Barriers to financial wellness and how to overcome them

We’re convinced: being financially fit is super-important. But what happens now? Why are 80% of Americans in debt?  Why do only 39% of Americans have enough saved up to get them through a $1,000 emergency? 

Unfortunately, while many people may understand that financial fitness is crucial to their wellbeing, there are several barriers that make it difficult to follow through on their convictions. 

First, many lack the basic financial knowledge necessary to responsibly manage their money. Second, many people mistakenly believe that budgeting, saving and being more mindful of how they manage their money are too time-consuming and tedious. Finally, some people may have fallen so deeply into debt, they’ve begun believing they will never be capable of ever pulling themselves out. 

Here are some simple steps you can take today to help you achieve and maintain financial wellness:

  • Get educated. There is no shortage of financial literacy available to the interested consumer, from financial literacy blogs to personal finance books, podcasts, online classes and so much more. Learning how money works, the power of a long-term investment and how much you’re really paying each time you swipe that high-interest credit card can help you make better choices. 
  • Have the money talk with your partner. Whether you’ve only been sharing expenses for half a year or you’ve been married more than a decade, it’s important to be on the same financial page as your partner. Talk openly and honestly, being careful not to be judgmental in any way, and discuss your individual and shared long-term and short-term money goals. Then come up with a plan for how you intend to reach them together. 
  • Pay all bills on time. If you can’t take aggressive steps toward paying down debt just yet, be sure to make the minimum payment on each credit card bill each month. 
  • Create a budget. Giving every dollar a destination makes it easier to spend mindfully and cut down on extraneous expenses. 
  • Start saving. There’s no such thing as a sum of money that’s too small to put into savings. Every dollar counts, and once you get the ball rolling, you’ll be motivated to pack on the savings until they really grow. 

You give your abs a great workout each day now it’s time to get those money muscles into shape! Follow the tips outlined above to stay financially fit at all times

Your Turn: What are your best tips for maintaining financial wellness? Tell us about it in the comments. 

What to Buy and What to Skip in August

Q: I’d love to pick up some great bargains as the summer winds down, but I’m not sure what I should be buying this season. Which products typically go on sale in August and which should be pushed off for another time?

A: As host to the second-biggest shopping season of the year, the tail end of summer brings some fantastic finds, but some overpriced products as well. Here’s what to buy and what to skip in August. 

Buy: Outdoor toys 

Outdoor toys, like sandboxes, bikes, inflatable pools and more, typically get big discounts in August. Check out sites like Overstock, Wayfair and look for markdowns on playground sets at retailers like Lowe’s and Home Depot. 

Skip: Major household appliances and mattresses

If you’re in the market for a new oven, mattress or another major household purchase, you’re best off waiting until September. Retailers tend to slash the prices on these items by 30% or more during Labor Day weekend sale events. Plan ahead by checking out upcoming sales in the weeks leading up to Labor Day. Doing so will help you land the best prices on your purchases.

Buy: Swimwear

Stores and online retailers need to clear out their summer stock to make room for the autumn and winter line, which gives you the perfect opportunity to snag a super swimsuit deal! You can walk away with great finds at ridiculously low prices you won’t find next spring. Stash your treasures for next year’s beach season, or keep them for a winter getaway to warmer climates with sunny shorelines. 

Skip: iPhones

If you’re looking to update your iPhone, you’re best off waiting it out a month or two. The new iPhone 13 is expected to be released in mid-September. Older models typically see a price cut when new models hit the market. So, whether you want to score the best price on an older phone or you’re willing to pay anything for the latest and greatest in iPhones, put the brakes on that purchase until September. 

Buy: School supplies and kids’ clothing

With back-to-school shopping seemingly starting almost as soon as school is out for the summer, August is already late in the season. It’s also when school supplies and kids’ clothing tend to see generous markdowns. Stock up on supplies to last all year long and get your kids outfitted for the coming season at rock-bottom prices in August.

Skip: TVs

Don’t run out and buy a new TV just yet. If you need a new flatscreen, you’re best off waiting for Black Friday to get the best deal.

Buy: Office supplies and furniture

Back-to-school sales means you can also cash in on office supplies and furniture. If you’re one of the many Americans working from home, you may need to restock your home office with basic supplies or to upgrade your office chair or desk. Why not save on these purchases by paying for them in August?

Skip: Fall clothing

Fall apparel will just be hitting the stores in August, so you likely won’t be seeing any steep discounts on fall wear until October at the earliest. It’s best to buy just a few autumn basics during the Labor Day sales and fill out the rest of your wardrobe later on in the season. 

Buy: Patio furniture 

Those wicker table-and-umbrella sets can get pricey! Pick up a sweet deal on patio furniture by buying your sets and single pieces at the end of the season. While you’re giving your patio a facelift, you’ll also find grills, outdoor decor and more on sale in August.

The final dog days of summer bring a flurry of marked-down products and end-of-season sales, but there are some items that are best purchased during another time of year. Stay ahead of the retail game by using this guide to learn what to buy and what to skip in August.

Your Turn: Have you picked up any great deals in August? Tell us about them in the comments.