Author: Chonce Maddox

When it comes to choosing a bank, you may become stuck between settling with a traditional bank and a neighborhood credit union. On the surface, banks and credit unions are quite similar. They both offer checking and savings accounts, loans and other financial products. However, there are quite a few important differences.

This post will show you how they’re different. Then you’ll know which one is right for you!

The Main Differences

Generally speaking, a bank is a business that holds onto your money and creates a profit by investing the money or loaning it out to others. The bank also makes money by charging you with account fees and ATM fees.

Credit unions are member-focused institutions that operate as non-profits. A checking account is commonly known as a ‘share draft’ because when you deposit money at a credit union, you’re actually buying shares of the company. With a credit union, instead of being a customer, you’re a partial owner.

Credit unions generally offer the same services as a bank. On top of that, there is also a greater sense of community. It’s also common to find lower interest rates for loans. Basically, credit unions are known for friendly faces and low rates.

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Traditional Banks are Convenient

Traditional banks are on almost every corner, making it accessing your cash an easy feat. If you’re traveling or just need cash quickly and have a major bank like Wells Fargo, Bank of America, or JPMorgan Chase, you won’t have to go far to find a branch. You can even utilize their various different ATM locations when the bank is closed.

Most traditional banks also offer convenient tools like online banking and mobile apps so you can track and manage your account on the go. Large banks have the client-base necessary to create these conveniences. Expect smooth online operations at big banks.

The one downside with large traditional banks is that they can be very impersonal. You may be subject to long lines. You may never get the same teller twice.

Credit Unions are Personable

While credit unions may not be located on every corner, they take a more personalized approach and generally get to know their customers. At a credit union you’ll feel more like a member. You’ll have more of a say in what type of service and experience you want to have. When it comes to getting a loan, credit unions will be more lenient and willing to work with you and understand the financial factors that don’t show up on paper.

However, credit unions operate on a smaller scale than traditional banks and run fewer branches with stricter hours of operation. This may be an inconvenience for some people who live far from their credit union or work late hours. Friendly faces are nice but only when you see them!

The Truth about Fees and Interest Rates

Credit unions generally offer fewer fees and better interest rates for savings accounts, hands down. According to a recent report from Wallet Hub, credit unions continue to offer leading interest rates for savings accounts (while still being inferior to online banks) as well lower interest rates for personal loans. Credit unions also have lower checking account fees.

Most traditional banks have a long list of rules and requirements when you open a checking account. It’s important to read the fine print to ensure that you aren’t overpaying by getting charged a monthly fee, multiple withdrawal fee or any outlandish overdraft fees. At a credit union, there is less of a chance that you will get stuck with so many fees because these institutions do not rely largely on fee money for profit as is the case with banks.

Which is Better?

The answer to the age old question of whether you should choose a credit union or a traditional bank is almost always going to be subjective. In the end, it all depends on what you value: saving money or convenience.

If you are looking for convenience, easy access to your money when traveling, superb mobile banking tools and a wide variety of credit card programs, you may prefer to use a traditional bank. Just remember to read the free agreement before signing! If you don’t require the convenience of multiple locations and prefer a more member-focused type of institution with lower fees and better interest rates, you should consider a credit union.

It’s important to do your research and read the fine print before opening an account with either types of institution.

 

Do you prefer a credit union or a traditional bank? Let us know in the comments below!

Originally posted 2015-09-18 10:00:22.

Time for a new car?

One of the hardest parts about buying a new car is choosing something you can absolutely afford. Persuasive car sales people combined with shiny paint can ruin a person’s budget in a hurry!

At the end of the day, most people need a reliable car. The process of car shopping on a budget isn’t too difficult. But it does takes heaps of self-control. When shopping for a car, you can remain within your budget by taking the following steps:

Figure out How Much You Can Afford

Create a new budget by listing out all your current expenses. Compare your income and expenses. What you have left over can be used to pay for your car. If you feel you don’t have enough left over, you may have to cut your expenses and prioritize your spending by avoiding costly budget busters.

Consider expenses like fuel, auto insurance and maintenance. If you can only afford $400 per month to spend on a transportation, don’t sign for a $350 car loan. Instead you might, want to spend $200-250 per month on a vehicle and the rest for insurance, fuel and savings for maintenance and repairs. The car itself is only part of the overall transportation costs.

Bankrate has a very helpful tool to help you create a realistic car budget.

Try to Stick with Cash

If you have some savings and don’t want to deal with the burden of having a car note, try to purchase with cash. This may not be possible for everyone, but the earlier you start preparing the better. If you know you want to buy a car or notice that your current car on its last leg, start setting money aside each month. A little each month goes a long ways.

Unless you have $15,000+ lying around, you will most likely need a used car. Luckily, there are plenty of used cars in good condition for as little as $4,000. If you don’t have enough to pay for a car completely with cash, you should still try to save up a large down payment to lease or finance a car.

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Leasing or Financing?

There has always been a big debate between leasing and financing options. When you finance a car, you pay a down payment and a lender loans you the rest of the money. You then pay it back with interest for a certain amount of time. Once you’ve paid back the entire loan plus interest, you own the car.

With leasing, you pay a fixed amount each month (usually a lower than a monthly payment than with financing) plus interest. When the term is over, you must either renew your lease or return the car. You may also be able to buy the car once the lease expires.

If you can’t pay for a car in cash, financing is the wiser option. Often, when you lease a car, there is a penalty for driving a certain amount of miles so you watch your odometer. Also, there is no point in hustling to pay back your lender and make extra payments with a lease. Doing so won’t get any closer to owning the car.

For the most part, leasing just allows you to drive a nicer, newer car at a lower price for a short amount of time. Buying with cash or financing are the superior alternatives.

Check Your Credit

If you do choose to move forward with financing a vehicle, you’ll need to check your credit first (this link shows you how do check it for free). Your credit score will be key in determining how much money you get approved to finance and your interest rate. If you don’t have good credit, you may run into problems.

Pull your FICO Score several months before you decide to go car shopping. Make sure it’s doing okay. Credit Sesame lets you monitor your credit for free and also lets you see credit scores and reports for TransUnion and Equifax. Make sure to always keep an eye on your credit score in the future. Here’s a way you can keep track of your credit score for free.

It’s important to pay off as much debt as you can before you take on more debt. Try to only use 25% of your credit limit each month. You might also want to wait for some of your old credit inquiries to fall off your report before you add new ones.

Try to increase your score as much as you can. Higher scores mean lower interest rates. Your credit score is your ticket to savings.

If necessary, wait until your credit score climbs before applying for a loan. Even just waiting 3-5 months for a new car may save you hundreds per year in interest. Wealthy people are usually patient people.

Compare Vehicles and Pricing

When you are car shopping on a tight budget, it’s important to focus strictly on your needs and requirements instead of becoming emotionally attached to a car. Logic should trump emotion when car shopping. Always be ready to walk out the door without the car.

To help keep the price down, you should search online for economical used vehicles with low mileage. A car will probably cost less than an SUV or a truck in most cases so keep it simple.

You should also research various makes and models to become more knowledgeable about which type of cars last longest and require the least amount of maintenance. It’s best to be open-minded and compare various types of vehicles before settling on one.

To compare vehicle prices online, use online vehicle pricing and comparison tools like TrueCar or Edmunds. Although not necessary. it’s wise to check Carfax before making an offer. Carfax gives buyers the scoop about how the car has been treated in the past.

Overall, it’s important to thoroughly do your research and stay within your means when buying a new car. All of these steps will make the car buying process easier and cheaper.

 

Are you car shopping? Do you plan to pay with cash, get a lease, or finance?

Originally posted 2015-09-02 10:00:24.

August 17 is National Thrift Shop Day this year. As if thrift stores and consignment shops couldn’t sell products for any less, this special day is the perfect time for frugal deal seekers to visit second hand stores in their neighborhood and score even better deals on the merchandise.

Most thrift stores have special discount days throughout the year, but National Thrift Shop Day usually offers some of the best savings. Getting the opportunity to be able to buy used everyday items and even furniture and electronics for an extremely discounted rate can really help decrease your spending and increase the amount you are able to save.

Here are a few ways thrift shopping can be great for you and your wallet.

Helping the Environment

When you shop at thrift stores, you’re not only helping yourself find great deals for less, you’re also helping the environment. Thrift stores like Goodwill and Savers help keep gently used items like clothes, toys, furniture, tools, electronics and small appliances from getting thrown out and sent to landfills.

Reusing, recycling, and repurposing are some of the most eco-friendly actions you can take to help eliminate waste and clutter.

The Best Place to Find Gems

Thrift stores are the best places to find high quality gently used merchandise that would normally retail at a higher value in mainstream stores. Whether you get excited when you come across a gently used designer handbag for cheap, name brand electronic devices or fancy home decor at an affordable price, I classify all these items as being ‘gems’ since they can be found at thrift stores for a quarter of the retail price.

If you want to spice up your wardrobe but don’t have money in your budget, head to the thrift store in search of these gems. It’s important to get past the thought of being uncomfortable wearing someone else’s clothes or using items that were in someone else’s home if you want to find top notch products at the thrift store.

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When you think about it, we share and reuse tons of items with other people all day long whether it’s the dining room table at a restaurant, your shopping cart at the grocery store or even the gas pump handle at gas stations. According to America’s Research Group (a consumer research firm), about 16-18 percent of Americans shop at a thrift store during any given year. More people should be taking advantage of thrift store and resale shops to soak up all the savings.

Find Children’s Necessities For Less

Kid’s clothes, toys and books are some of the best items to find at thrift stores. As a parent of a young child who is constantly growing, it’s more economical for me to purchase some clothing items and toys from Goodwill so I’m not overspending on items that my son will either wear out or lose interest in over the next few months.

From my experience, young kids are only interested in certain toys temporarily (when they’re new) and have little interest in clothes AT ALL. So it always made little sense to me why parents would spend so much money clothing their children with outfits from retailers like GAP, OshKosh, and Under Armor. If I really wanted to find a GAP or Nike shirt at a thrift store for my son I probably could, but spending time together and investing in activities and outings that we both enjoy sounds like a much better way to spend my money.

Thrifting Can Be Therapeutic

As much as I hate to say it, shopping can be therapeutic when done in moderation. I wouldn’t exactly agree with the whole ‘retail therapy’ concept that embodies the idea of running out to the store when bad things happen in your life to buy items in an attempt to make yourself feel better.

On the contrary it has been proven that shopping with friends can help relieve stress and let’s face it, when you find a good deal on a household item you need, it’s hard to escape that feeling of success just by knowing that you kept more money in your wallet instead of spending it.

It’s important to set a budget before you go thrifting and plan your shopping trip with the intention of picking up something you really need and that would be of value to you. It’s a great feeling to walk away with items that you wanted without disturbing your budget.

What’s are your favorite thrift store finds? Do you take advantage of special discount days?

Originally posted 2015-08-17 10:00:53.