Credit union or bank: What’s right for you?

(BPT) – The banking and credit union worlds are as much the same as they are different. Both are eager to earn your business and to provide you with loans, mortgages, savings and checking accounts. With that said, there are some significant differences between the two financial institutions. In today’s world, with cutthroat competition for your money, it’s worth understanding the advantages of both, and perhaps making a switch to one or the other to put yourself in a better financial position.

Credit union and banks: The differences

The primary difference between a credit union and a bank is that a credit union is a not-for-profit cooperative, meaning it’s owned by its members or customers. Profits made by credit unions are returned back to members in the form of reduced fees, higher savings rates and lower loan rates. A bank, on the other hand, is for-profit, owned by shareholders and focused on its stock value.

Joining a credit union is fairly simple, and membership is inexpensive — typically a one-time fee of between $5 and $25. Depending on where you live, many credit unions serve a geographic area, such as a state or metropolitan area, and are open to anyone who lives in that area. Some credit unions are employer-sponsored, so that anyone (including family members) who works for that organization can join.

There is no membership fee to “join” a bank. All you need to provide is some money to open a checking or savings account, a government-issued ID card, and some personal information (address, Social Security number, etc.).

Credit union advantages

Credit unions, by and large, are able to provide better rates to their members. Unlike a for-profit bank, credit unions return their “profits” to members in the form of lower rates on loans, higher interest on deposits and more personalized services. Other advantages of a credit union are that they tend to have lower fees on checks, withdrawals and electronic transactions, and many offer checking accounts with no minimum balance and without a monthly service charge. Finally, because credit unions are smaller and have a focus on member service, they may be more flexible when it comes to working with someone with financial challenges.

Bank advantages

Banks, because of their size and scale, tend to offer more financial products than credit unions. For example, a credit union may have two or three different types of checking and savings accounts, whereas a bank may have dozens to choose from. Depending on where you live, banks will most likely have more locations for convenient access and more advanced online and mobile banking capabilities. Because of their geographic reach and wider range of offerings, a large bank could be a better fit for someone who wants specialized financial products (annuities, trusts) and needs access to nationwide locations.

Credit unions catching up

Depending on where you live, you may have numerous options for selecting a credit union. Some credit unions may have only one location and offer basic financial services like auto loans, checking and savings accounts. Other credit unions may have a large footprint in a market or state and offer the breadth of services you’d find in a bank. Most offer free, nationwide ATM access, and since many credit unions belong to cooperatives, members can access accounts across the country through other credit union branches. Bellco, for example, offers a full range of financial products and services, including mortgages, auto loans and checking accounts. Today, Bellco has more than 300,000 members who benefit from the advantages of a credit union, including lower interest rates on loans, higher yields on savings and access to thousands of ATMs nationwide.

Choosing a bank or credit union

Depending on where you live — urban vs. suburban vs. rural — your banking and credit union options will vary considerably. If you are in an area that offers both, there are several features to weigh and consider:

Services: Compare the basic banking services and access to specialized financial products, including advanced online services and mobile banking.

Rates and incentives: Look at the current rates, fees, and incentives — as well as overall benefits to being a customer or a member of the bank or credit union. Are there good reasons for joining one over the other?

Location: Evaluate options to access your accounts, whether it’s branch locations or ATMs or mobile banking services, and decide whether a national footprint is a requirement for your banking.

Finally, it’s important to note that both banks and credit unions insure your money up to $250,000 per person, across a group of accounts (checking, savings, and CDs would be considered one group). The Federal Deposit Insurance Corporation (FDIC) insures banks, and credit unions are backed by the National Credit Union Administration (NCUA).

Read more

Shop for health care with these websites and apps

(BPT) – As our nation seeks solutions to help improve the health care system, there is at least one goal we can all agree on: the importance of making health care quality and cost information more accessible.

This is an important effort that has the potential to help improve health outcomes and make care more affordable — laudable goals considering the nation’s health care system ranks among the least efficient in the world, according to a recent Bloomberg analysis.

More widespread use of health quality and cost resources may be part of the solution. Providing health care prices to consumers, health care professionals and other stakeholders could reduce U.S. health care spending by more than $100 billion during the next decade, according to a 2014 report by the Gary and Mary West Health Policy Center.

That is in part because there are significant price variations for health care services and procedures at hospitals and doctors’ offices nationwide, yet a study by Families U.S.A. concluded that higher-priced care providers do not necessarily deliver higher-quality care or better health outcomes.

Fortunately, there are many new online and mobile resources that help enable people to access health care quality and cost information, helping them to comparison shop for health care as they would with other consumer products and services. And people are starting to take action: Nearly one-third of Americans have used the internet or mobile apps during the last year to comparison shop for health care, up from 14 percent in 2012, according to a recent UnitedHealthcare survey.

These resources are far more accurate and useful than those of past generations, and in some cases provide people with estimates based on actual contracted rates with physicians and hospitals, including likely out-of-pocket costs based on their current health plan benefits. Some resources also include quality information about specific physicians, as determined by independent standards.

There are many resources people can consider when shopping for health care. In addition to online and mobile resources, people can call their health plan to discuss quality and cost transparency information, as well as talk with their health care professional about alternative treatment settings, including urgent care and telehealth options. Public websites, such as www.uhc.com/transparency and www.guroo.com, also can help enable access to market-average prices for hundreds of medical services in cities nationwide.

These resources can help people save money and select health care professionals based on objective information. A UnitedHealthcare analysis showed that people who use online or mobile transparency resources are more likely to select health care providers rated on quality and cost-efficiency across all specialties, including for primary care (7 percent more likely) and orthopedics (9 percent more likely). In addition, the analysis found that people who use the transparency resources before receiving health care services pay 36 percent less than non-users.

As people take greater responsibility for their health care decisions and the cost of medical treatments, transparency resources are becoming important tools to help consumers access quality care and avoid surprise medical bills.

Read more

How to make sure your financial advisor is working in your best interest

(BPT) – Let’s face it: finances can be complicated. Whether opening a new investment account, saving for your child’s college fund or rolling over a 401(k), sometimes you need professional financial help.

But who to turn to? A financial advisor can be a great resource for professional guidance so that you’re not making critical investment decisions on your own, but did you know that not all financial advisors are equal? Some financial advisors may be little more than salespeople trying to sell you investment products that may or may not be in your best interest, but earn them a hefty commission.

If you’re looking for an advisor who truly has your back, you need to work with what is called a “fiduciary.” As a fiduciary, your advisor is legally required to place your interests ahead of their own.

It can be difficult to know who to trust — especially when advisors misrepresent their services with carefully crafted wording that gives the appearance of being a fiduciary, even when they are not. According to a recent survey from Financial Engines, America’s largest independent investment advisor, 53 percent of Americans mistakenly believe that financial advisors are already legally required to put their clients’ best interest first. Only 50 percent of investors who work with a financial advisor are certain that their advisor is a fiduciary, while 38 percent don’t know if their advisor is a fiduciary or not.

Most investors aren’t aware of how their advisors get paid and that advisors may not always be acting in their client’s sole best interest. For example, some advisors may recommend clients invest in funds or services that provide the advisor with a commission. Sometimes doing so is mutually beneficial for both the investor and the advisor. But other times, the investor may end up with higher or unnecessary fees and it’s the advisor who comes out on top.

So how can you tell if a potential or current advisor is a fiduciary? Here are a few key questions to ask before making a decision to work with them:

* Are you a fiduciary? A direct question deserves a direct answer. Pay attention to how the advisor responds. If your advisor has told you that he or she is acting as a fiduciary, ask them to show that to you in writing.

* Do you receive any type of compensation in addition to what I’m paying you? Some advisors receive commissions or other product-based compensation when they steer clients into particular investment products (including mutual funds, annuities and variable annuities). This is a clear conflict of interest and can indicate that the advisor is not, in fact, a fiduciary. Make sure your advisor is providing unbiased advice and not simply selling you investment products.

* Are you “dual-registered”? Some advisors are registered as both investment advisors and broker-dealers. Often, a broker-dealer is acting in the role of a salesperson. If your advisor is also a broker-dealer, make sure you understand which hat they are wearing when providing advice to you.

* Have you ever been cited by a professional or regulatory body for disciplinary reasons? To be extra sure, you can look up the advisor’s records on FINRA’s BrokerCheck to find out if they have any complaints — especially complaints related to providing financial and advisory services.

As your finances become more complex, you may consider getting help from a financial professional. Make sure your advisor is required to act in your best interest as a fiduciary before you trust them with your hard-earned money. By asking the right questions, you can confidently navigate the process and choose an advisor who is right for you.

Read more

Crunching dollars and planning weddings: How to financially plan for the big day

(BPT) – Attending most weddings, with the exception of your creepy uncle’s third marriage, is great. You eat free food, get to dance to music and leave without having to take part in the cleanup or the costs.

It gets a little different when you’re the one footing the bill. Then you’re confronted with 127 different invitation styles, a guest list that keeps growing and awkward phone calls to cousins to tell them they can’t bring their bratty 7-year old twins.

Falling in love might have been easy and making the decision to spend the rest of your life together was probably a no-brainer. However, celebrating your love and funneling all that joy into one beautiful ceremony and one memorable party is where things get a little more complicated.

As a leader in creating credit scoring models and educating consumers on credit, VantageScore Solutions shares how important it is for couples to agree on how to manage their finances.

So let’s get into it and look at some of the financial topics you and your partner should go over.

Paying for your wedding

No doubt how to pay for your dream wedding will be one of the first conversations you’ll have with your loved one. Some people have months, sometimes even more than a year to plan and save up for the big day. Other times you may need to make a deposit or pay for something upfront and you might not have the cash to do it.

This is when you reach for your credit card.

Even if you don’t plan to use a credit card, it’s more than likely you’ll have to put some things on credit. This might include just about anything you purchase online, from the cute decorations you find on Etsy or novelty gifts you find on Amazon. In addition, many venues require you to have a credit card on file.

The point is, it’s likely that at some point you’ll use credit to pay for your wedding. When you do this, both you and your partner need to be aware of the potential perils of racking up debt. Provided you can responsibly manage the debt and have a plan to do so, your credit score won’t decline, which can lead to more purchasing opportunities in the future.

But first, you need to talk about credit with your partner.

The talk

Talking about credit might not exactly be a champagne and strawberries moment, but it is probably one of the most important discussions you can have.

Because it might be hard to get started on this topic, many couples find it’s easier to start by taking The Credit Score Quiz. This 12-question quiz is easy to take and can do a lot to reveal the knowledge gaps you and your partner may need to fill.

While the quiz is a great way to get started, resources like The Score, a monthly newsletter from VantageScore Solutions that covers all things credit, can help you continue on your conversation and guide you on your journey.

So while you’re debating what shade of off-white is right for your invitations, take the time to talk and use these credit-related resources. After the big day has come and gone, you’ll be glad that together, both of you were smart about your finances.

Read more

How savvy Wi-Fi use saves data and dollars

(BPT) – Access to cellular data has become the lifeblood of communications in the 21st century. We stay connected to keep up with news, weather and sports, listen to music, check email, watch movies and videos or grab new apps that let us do even more. With today’s technology, a few clicks on your smartphone screen can bring the whole world into the palm of your hand.

This is great news for cellular providers, who ply us with increasingly large (and increasingly expensive) data packages to feed our modern need to surf and stream wherever we go. However, it may not be such great news when your cellphone bill arrives each month and you find yourself ponying up big bucks for cellular data.

So what’s the easiest way to stay connected without breaking the bank? Fortunately, the answer is now all around us.

Find the hotspots

Wi-Fi networks (“Wi-Fi” is short for wireless fidelity) are available just about anywhere you go these days, from hospitals to coffee shops to hotels to department stores. By connecting to Wi-Fi, it’s possible to stay connected all day long without using any of your cellular data. With rare exceptions, it’s completely free.

Wi-Fi technology allows you to connect smartphones, laptops or tablets to the internet through a communal access point, or “hotspot.” The resulting data usage is not occurring on your mobile network, meaning it does not count against the data on your cellphone plan.

It’s easy to connect to Wi-Fi by turning it on in your smartphone’s settings. By leaving it on, your phone will always be searching for a strong Wi-Fi signal, and will either connect automatically or alert you to sign-in if an available network is password protected.

More speed, more power

There are other advantages. In many cases, the speed of a strong, dedicated Wi-Fi connection will actually be faster than your cellular network. The difference might not be that obvious if you are only reading email or checking out a web page, but it is very noticeable if you need to transfer larger files.

In addition, using Wi-Fi can make a difference in extending your device’s battery life. The further you are from a cellular tower, the more energy you need for that data signal to be of any use. Wi-Fi access points are typically much closer, and therefore use less power to communicate and transfer data.

An essential “Plan B”

While hotspots are now quite common, you’ll still find yourself in locations where Wi-Fi simply isn’t accessible, especially when you’re traveling. That’s why having an adequate cellular data plan is still a necessity, even if you’re using it very little.

How much data do you really need? After you’ve started using Wi-Fi on a regular basis, take a look at your monthly cellphone bill. Compare the amount of data your plan offers to the amount you actually use. The average consumer uses about 1.8 gigabytes (GB) of data each month, which is far less than what’s included in most standard cellphone plans.

Don’t pay for more than you need

Today, many carriers tout the advantages of having “unlimited” data. The reality is that most people will never need it. See if your carrier offers a plan that’s better aligned with your actual usage, and if so, find out if it’s easy to switch.

If not, look to carriers like Consumer Cellular, who specialize in providing smaller, more affordable data plan options along with the flexibility to switch plans from month-to-month with no additional fees. This gives you the freedom to adjust your data plan to fit your specific needs, rather than paying for more than you’re likely to use.

Regularly connecting to Wi-Fi lets you preserve your cellular data for those situations when you really need it. Perhaps more importantly, it can help you save significantly on your monthly cellphone bill. It is a great way to enjoy the best of both worlds.

Read more

How the state you live in affects your college savings strategy

(BPT) – The cost of a four-year college degree now hovers around the $100,000 mark, according to data from the National Center for Education Statistics. While high college costs seem universal these days, college savings strategies are far from a one-size-fits-all. Many factors influence how you’ll save for college, including your children’s ages when you start saving, what schools they might want to attend, and how old you’ll be when they enter college.

The factor most people don’t know about, however, is that the state you live in actually can dramatically affect how you save for education.

“Because states offer different incentives for college savings, the state you live in can play a large role in how you prioritize different savings opportunities,” says Nick Holeman, a certified financial planner with independent online financial adviser Betterment. “Tools like 529 savings plans, state tax credits and matching savings programs vary by state, creating a checkerboard of different savings opportunities.”

Why states affect college savings: 529 plans

The central reason why states have such an impact on college savings strategy is because of a special college savings account, created by the Internal Revenue Code, called a 529 plan.

States administer the plans, and so, different states can choose to offer different incentives for improving their residents’ college savings. In general, there are two types of 529 plans: pre-paid tuition plans and savings programs.

Pre-paid tuition plans allow you to pay for your child’s tuition, in advance, years before he or she will go to college. This allows you to pay current tuition prices, rather than the going rate when your child attends school in the future — when costs could be even higher. Compare that to savings plans that allow you to put money away for college, invest it so your money can grow, and forgo paying federal income tax on the earnings from your investment when you withdraw money to pay for college.

In general, 529 accounts are a great option for college savings because of their tax advantages. However, those tax savings also come with restrictions. Depending on where you live and your personal preferences, you may find these restrictions don’t outweigh the benefit of your state’s 529 plan.

Important questions to ask when building a college savings strategy

Because 529 plan incentives play such a big role in developing a college savings strategy, Holeman points to five key questions that savers should answer about their state before opening any accounts.

1. Does the state offer a match program?

According to SavingforCollege.com, 10 states currently have programs that provide matching dollars for contributions made to 529 savings plans held by low- and middle-income families. These programs may match contributions dollar-for-dollar up to a certain amount (as in Kansas) or have a tiered structure that increases the match for families with lower incomes (as in Arkansas). Other states allow employers to offer 529 matching dollars as a benefit to their employees. However, 529 match programs are only available for in-state account-holders, so if you have a 529 from Arkansas, but live in Ohio, you won’t be eligible for Arkansas’ program. If you’re eligible for a 529 match, you should consider contributing at least enough to max out that match.

2. What types of 529s does the state offer?

In addition to pre-paid tuition and savings accounts, a third type of 529, called 529 ABLE, helps people with disabilities save for college and other expenses without affecting other government benefits they might receive. Further, each of those three types of 529s can have structural differences from state to state. Some states may offer all types of plans, while others may offer only one or two. If your state doesn’t offer the type of 529 you’re looking for, you can opt for another state’s 529. Be aware though that you will likely miss out on any state tax benefits if you go with an out-of-state 529 plan.

3. What is the maximum account balance permitted?

While 529s can be a great way to save money for college, they do have limits. Every state sets a maximum account balance, and if your 529 reaches that limit, whether through contributions, investment growth or both, you won’t be allowed to make any more contributions to it. Limits vary from state to state. For example, Pennsylvania’s 529 max is $511,758, while Mississippi’s is less than half that. If you’re planning on saving for a private college or graduate school, these limits can become a factor.

4. Does the state offer a tax deduction for its 529s?

Some states offer full or partial tax deductions for 529 contributions, while others don’t. Most states only offer the tax deduction if you choose your state’s 529 plan. If you do get a tax deduction, it likely makes sense to stick with your state’s 529. If not, the tax benefits are much less.

5. What is the quality and quantity of schools in the state?

While most 529 funds can be used anywhere, there can be additional benefits to using 529 funds in the account’s home state. Before you commit to a 529 savings plan from any state, explore the availability of higher education in that state. For example, Texas has great public schools, so their pre-paid tuition program might make sense. For other states, the savings plan can make more sense though.

The key takeaway is that the state you live in can affect how beneficial a 529 plan is for you. Some people may even decide a 529 is not worth the added restrictions and instead opt to save for college in a standard taxable account.

To learn more about 529s and how they can help you save for college, visit www.savingforcollege.com. The most effective college savings strategies are part of a personalized financial plan. Learn more about setting goals to help maximize your savings at Betterment.com/financial-planning.

Read more

Seeking a small business loan? What you should know

(BPT) – Small businesses still struggle to obtain credit; nearly half of those who applied for credit in 2016 didn’t get all the funding they sought, and 17 percent of those who didn’t apply for financing skipped it because they didn’t think they could get what they needed, according to the Federal Reserve Banks’ Small Business Credit Survey. However, a growing number of small businesses are turning to alternative sources of financing.

“The process for accessing and receiving funding can be slow and cumbersome and alternative forms of lending are greatly helping to improve the availability of financing for small business owners,” says Jacqueline Reses, head of Square Capital. “Ensuring that the financial system is more inclusive and addresses the needs of small business owners who may have been previously underserved by traditional lenders is paramount.”

The Federal Reserve study has shown steadily increasing numbers of small businesses, with annual revenues of less than $1 million, seeking financing through non-traditional sources such as online lenders. In 2014, just 18 percent applied to online lenders, while in 2016, 21 percent did.

As the alternative lending industry continues to grow, small business owners should keep five points in mind when evaluating loan offers, Reses says:

Total payback amount of a loan

Knowing how much a loan is going to cost isn’t always easy. For a small business owner, being able to see exactly how much you will need to repay and accounting for that in your budget is crucial, and you should always look for transparency. Total payback amount is the dollar value that represents all costs, so business owners know exactly what they will owe over the life of the loan. Businesses should look for this when they assess loan offers. Assessing offers solely on other metrics like APR may not always provide a fair or easy comparison.

Repayment Method

The ease of repayment is also important to consider and there are some unique options available to small businesses looking for flexibility when it comes to repayment. With Square Capital for example, a fixed repayment amount is automatically deducted from the business’s daily card sales processed through Square until the loan is repaid, enabling the business to pay more when things are busy and less if things slow down. Businesses also have the opportunity to repay early and without penalty at any time before the end of the loan term.

Speed

Traditional small business loans can take weeks to process from the time you collect all the paperwork to apply, to the time you actually get approved, to when you see the money in your account. Yet, according to the Fed’s survey, the majority of small businesses that applied for credit in 2016 did so in situations where time was a factor; 64 percent wanted to expand their business or take advantage of a new opportunity, and 45 percent needed the money to cover operating expenses.

While some funding sources have a reputation for being faster to approve, getting the money can still take time small business owners don’t have. Others have been able to tackle both of those challenges. For example, Square Capital can see the health of a small business based on its sales and transaction data, allowing it to evaluate the business’s stability and actual ability to repay over time. With this unique insight, it can assess eligibility for a loan and deliver offers right to the small business owner. From there, an application takes as little as a few clicks to complete and once approved, funds are deposited as quickly as the next business day.

Affordability

Business owners may know how much they need, but be less aware of what size loan they can afford. It’s important to accept a loan offer that your business can repay within a reasonable time period while also helping it grow.

Square Capital’s ability to use unique data to assess the eligibility of a business for a loan also enables it to provide access to loan offers tailored to a business’s cash flow, reducing the risk of businesses borrowing more than they can afford to repay. Loans are sized based on a reasonable projected payback period so that a small business can use its funds to grow and not be stuck in debt for extended time periods.

Trust

Before applying for credit from any lender, it’s important to do your research. Know how they present their offers, look for transparency and flexibility that puts the borrower first and understand customer satisfaction and lender dependability. Working with a trusted brand is important to many small business owners and should be to you as well.

While online lenders are opening up access to the financing small businesses need to run and grow, it’s important to do your homework and carefully determine which financial partner best meets the needs of your business. To learn more about small business loans through Square Capital, visit www.squareup.com/capital.

Read more

Tips to prepare your budget before buying a home

(BPT) – It’s virtually impossible to know what size home you can afford if you aren’t fully aware of how much money you are earning and how much you are spending each month.

Start with your income: How much do you bring home after taxes and retirement plan contributions?

Next, look at your expenses: What are your necessary expenses? How much are you paying each month toward your debt? What additional expenses do you have that wouldn’t be deemed “necessary?” How much money do you have left (if any)?

This will help you see how much breathing room is in your current budget, what expenses might be on the chopping block and the space you have for additional home and mortgage expenses when buying a home.

Consider the potential costs of being a homeowner

While rent payments are generally straightforward and predictable, the same can’t always be said for homeownership costs. Your situation can vary depending on a variety of factors, but here are a few things you might need to prepare your budget for.

Property taxes: The amount you pay will depend on the area in which you are purchasing a home. This amount can be subject to annual adjustment by the municipality or local taxing authority.

Homeowners insurance: Lenders will require you to provide proof of coverage before closing. The amount you pay will depend on your level of coverage, your property and the location. Insurance costs can increase from time to time.

Private mortgage insurance (PMI) or mortgage insurance premiums (MIP): If your down payment is less than 20 percent on a conventional mortgage, your lender will require you to carry private mortgage insurance. If you have an FHA loan, you’ll be required to pay mortgage insurance premiums throughout the life of the loan.

Home ownership assistance: A company like Unison Home Ownership Investors can strengthen your down payment overnight and eliminate the need for private mortgage insurance (see their Unison HomeBuyer program). Using this method will typically save you between 15 and 20 percent per month on your mortgage payment, but you could owe a portion of the appreciation on the home when you sell.

Homeowners association fees: Fortunately, not all homes have a homeowners association to pay into. Purchasing a home with HOA-covered amenities could cost, on average, an additional $200-$400 per month.

Maintenance fees: Ah, the pitfalls of being a homeowner. The costs that would normally fall to a landlord, like fixing broken plumbing or a heater on the fritz, will now fall on your shoulders. Some suggest saving one percent of your home’s value annually for maintenance.

Utility costs: Unless your rent has included the cost of utilities, this is probably already an expense you’re used to. However, if you’re moving into a bigger home with less energy efficient appliances, you should be prepared to see an uptick.

Start living like a homeowner

If you want to avoid experiencing sticker shock after your home purchase is complete, start living like a homeowner now.

Consider your current rental or home-ownership costs and compare them to the costs for a home in your target price point. Can your current budget handle the difference? Are you still able to pay for your necessities plus shore up your financial future through short- and long-term savings? Or do you find yourself feeling desperate by the end of the month?

Not only will this allow you to get used to the change before the stakes are higher, but it can also help you save more money to put toward unexpected costs for your future home purchase.

Determine where to make adjustments

Does living like a homeowner make you a little wary for what’s next? Now is the perfect time to create space in your budget by cutting back expenses and paying down debt.

Now that you know where your money is going, determine the unnecessary leaks. Maybe your monthly food bill is exorbitantly high. Or maybe your subscription services have gotten out of hand. If your priority is purchasing a home — and being financially comfortable in that home — work to cut expenses that are contradictory to that goal.

Next, tackle your debt. There are two big benefits to beefing up your debt repayments now: You can lower your monthly obligation and improve your chances of getting approved for a loan. It’s a win-win.

Read more