Credit Card Archives - Common Trust FCU

Helping Young People Manage Their Money.

Whether a few bucks from the grandparents on their birthday or their first paycheck from a summer job, teaching young people how to manage their money is one of the most important lessons they’ll ever learn. They already know how to spend the money. The challenge is to show them how to earn it, save it, and maybe spend it more smartly.

To help, we’ve pulled together a few tips, some timely suggestions, and even thrown in a few good deals. Yes, because we’re a credit union – but we were young once, also. 

Earning It.

“Slow feet don’t eat.” Your kids might not miss any meals, but instilling an appreciation for the daily hustle can only serve them well in the long view. Chances are good they’ve already been introduced to the free-market economy by being paid cash for services rendered – shoveling snow, washing the dishes, vacuuming the floor, etc. Valuable stuff, but don’t neglect the flip side – don’t do the work, and they don’t get paid.

Eventually, many older kids become someone else’s employees, and nothing offers real-life money lessons better than a real-life job. First-time employees have to show up on time, work for someone who won’t care how cute they once were, and pay taxes. Oh, and one additional real-life lesson worth learning: Seeing Uncle Sam’s piece of their paycheck. 

Saving It.

If your kids earn more dollars than coins, it’s time for their first bank account. Make it theirsdon’t connect it to your account in case of overdrafts or a stolen identity. Do be the signer on the account to see spending behavior. It’s your opportunity to show young account holders how to balance their budget, track spending, and understand the long-term benefits of saving. A first car, college, that VR headset they didn’t get as a gift – if they want it, they need to start saving for it. From now until June 1st, Common Trust Federal Credit Union is offering a Youth Savings Account promotion. Open a savings account with us, and they’ll be automatically registered to win a new bike.

Now, Give Them Some Credit.

Some of those things worth saving for require not only cash but credit. Good credit takes discipline, which young people don’t always have. Hey, we don’t judge – plenty of adults learned the hard way about the importance of having and keeping good credit. An excellent plan for getting young adults started on the path to good credit is the credit-builder loan. That’s a special kind of loan specifically designed to boost credit scores. The young person  – aka “the borrower” – pays a lender in monthly installments and, in the end, receives that money in a savings account. The lender reports their on-time monthly payments to the credit bureaus, thus building (or rebuilding) their credit history. At Common Trust, it would be an honor to help a young person establish a good credit history with a credit-builder loan. 

Making Tax Prep Less Taxing

It’s NOT The Most Wonderful Time Of The Year.

Nobody likes tax season. From late-night comics and memes to the family dinner table, no one holds back their feelings about kicking up to Uncle Sam. It could be the last thing left uniting all Americans – extreme dislike of tax season.

What seems to fuel much of America’s ill will towards tax time isn’t what’s due or what’s owed, but the preparation required for it. Tracking down old receipts, gathering all the necessary forms, and waiting impatiently for statements to arrive in the mail. Then, either settling in to do the math or finding someone to do it for us. 

The truth is, filing taxes will never be stress-free, but tax preparation can be less stress-inducing. Adding a little more proactivity and organization to the process can make a big difference. Here are a few helpful suggestions from CFTCU on how you can make tax season prep less taxing:

File Earlier, Not Later.

We’re not judging, but many of us wait until late winter/early spring to start tax prep (even though tax season began officially on January 1st). Experts recommend we file our tax returns as soon as all the relevant information is collected – remember those receipts and statements? – to complete the form. On the plus side, that’s the fastest way to get a refund. But even if there’s no refund and money is owed, filing early provides more time to plan and budget.

Have The Right Paperwork.

Remember Roz in “Monsters, Inc” and how she pestered Mike Wazowski for never having the correct paperwork? Well, when it comes to the IRS don’t be like Mike – have the right paperwork. That includes any W-2s, 1099s, and letters from the IRS about stimulus checks or child tax credit payments you might have received during the year. Did you trade stocks or cryptocurrencies? You’ll want that documentation handy, too.

Follow The Changes.

Did you know taxes are due April 18th this year? Or about the expanded child and dependent tax care credit which, if you’re planning on claiming, requires saved receipts for what you spent on child care last year (you may have received a letter from the IRS about this, which you saved…right?). To stay current with all the latest changes and updates to this year’s new tax changes, visit the IRS website.

Don’t Be Afraid To Ask For Help.

Accountants and tax consultants might be the only people who look forward to tax season. Hiring one could be a relief and a wise investment (at the very least you’ll get one more festive card this holiday season). They’ll compile all the necessary information, ensure your taxes are accurate and that you are claiming the benefits you’re eligible for. 

File Online.

The IRS is struggling to process paper returns and they’ve gone on record saying filing online is the fastest and easiest way to submit your information. With this in mind, Common Trust Federal Credit Union, in partnership with Love My Credit Union, is offering special member savings with TurboTax. Filing online with TurboTax, members can save up to $15 on federal products and are guaranteed to get their taxes done right and their maximum refund. To learn more, click here.

How to Manage Credit Card Debt Wisely in 9 Steps

According to Experian’s 2019 Consumer Credit Review, 75% of American consumers with credit cards carry an average balance of over $6,000. And the impacts can be financially devastating. 

Credit cards can be enticing, offering not only the ability to buy now and pay later, but also a bevy of rewards like cash back and airline miles. However, there are downsides. Credit card offers often come with high interest rates, a variety of fees and the potential to damage your credit score, if mismanaged. 

Learning how to manage credit card debt today can help improve and keep your credit score high. In return, a high credit score will help your borrowing power should you someday need to get a mortgage, open up a HELOC or take out a personal loan

Here are 9 steps to help you manage credit cards to minimize interest payments, avoid fees and take full advantage of the benefits many credit cards offer:

1. Live Within Your Means

The number one key to learning how to manage credit card debt (and your entire financial life) is to live within your means. In short, this means identifying the difference between your net income from paychecks (plus other sources like Social Security or investment income) and your consistent monthly debt obligations. 

To calculate your monthly debt obligations, list your rent or mortgage payment then any car or loan payments, as well as the money you need for gas, groceries, streaming services and cell phone bills, plus other expenses you incur on a month-to-month basis. This figure should not be larger than your take-home pay each month. If it is, it’s time to reevaluate not only your spending but your employment situation to see about earning more income, possibly from a second job or side hustle.

2. Set Up Autopay

According to a CreditCards.com survey from May 2020, seven of the country’s top 16 credit card issuers now charge customers up to a $40 late fee, even if you miss your due date by a single day. The easiest way to avoid late fees is to enroll in autopay. You can typically set this up for the minimum payment due, the full statement balance or any amount in between to be paid automatically from your checking or savings account each month, on the due date or any date before. By taking advantage of autopay, you’ll never forget to make your payment or pay a late fee.

3. Pay More Than the Minimum

You should always pay at least the minimum payment due each month. However, paying only the minimum will leave you in debt longer and could mean paying thousands of dollars in interest. 

As an example, let’s say you’re carrying a $6,000 balance on a credit card that charges a 14.99% interest rate, and you make only the minimum payments. In doing so, you may eventually pay upward of $4,000 in interest before you even pay off your original $6,000 balance! 

4. Pay in Full

The opposite of paying the minimum is paying in full. When you pay your entire statement balance in full before the due date each month, you’ll pay no interest. If you’re using a rewards credit card and have learned how to manage credit cards effectively in this way, you’ll get all of the benefits (cashback, airlines miles, hotel points, etc.) while paying the credit card issuer nothing for these rewards. This is the pinnacle of wise credit card management.

5. Pay Your Bill Only After Your Statement Period Ends

Speaking of those rewards… It’s great to pay down your balance or pay your credit cards in full as soon as you have the money to do so. But there’s a caveat… If you pay current charges before the statement period ends, you could be missing out on the rewards for those charges. This is because rewards are often calculated based on the charges posted and due at the end of each statement period. If you pay off or pay down this balance before the monthly statement period closes, that’s less you’ll earn rewards on. The sweet spot to pay your credit card is after the statement period closes but before the due date.

6. Track Your Spending

You can either track your spending habits on your own or use a free credit card spending tracker app. Some of these apps even offer color-coded summaries to easily identify how and where you typically spend your money. 

For example, are you spending hundreds on groceries each month yet still ordering a lot of takeout? Tracking your credit card spending will illuminate trends and point you toward ways you might improve your financial life. No matter how you keep tabs on your spending, it’s a key step toward learning how to manage credit cards successfully.

7. Find a Credit Card with No Annual Fee

While many rewards credit cards carry an annual fee (although some may be waived for the first year), some credit cards offer no annual fees. Choosing a card without annual fees could save you upward of $99 each year while still allowing you to build your credit history and improve your credit score.

*Make sure you check out Common Trust Federal Credit Union’s MasterCard® with no annual fee!

8. Manage Your Credit Utilization Rate

This tip is all about managing your credit score. One of the factors that goes into calculating your credit score is your credit utilization rate. This is the amount of your credit card’s spending limit you regularly use. 

For example, if you have $6,000 in credit card debt but a credit limit of $20,000, your utilization rate is 30%. The lower your credit utilization percentage, the better, because it means your credit cards aren’t maxed out. A low percentage also shows potential lenders that you know how to manage credit card debt.

9. Consolidate Your Debt

If your past credit card usage has become a heavy burden, debt consolidation may help you get a handle on your credit card debt. Learning how to use home equity to consolidate debt or applying for a debt consolidation loan through Common Trust Federal Credit Union may help get your financial life in order and improve your emotional well-being. 


Source: Blog post written by Taylor Rohwedder on January 20,2021 – Prosper.com

What is the Importance of a Good Credit Score?

Credit, creditworthiness, credit report, and FICO are all terms that may ring a familiar bell for you as it relates to your financial education and lifestyle planning. But what do they all actually mean for you and your financial goals? Credit scoring can be confusing and cause head-scratching on how it works. Common Trust is your go-to resource to illuminate credit-centric terminology, as well as reveal how to obtain good credit and what it means to have a good credit score. Establishing credit is an important barometer allowing you to achieve your financial and personal goals. As ever, Common Trust is here to help you recognize the value of having good credit and support your prosperity. 

Credit Score & Credit Score Factors

A credit score is a rating of how reliable you are when borrowing money from a financial institution. Lenders use credit scores to determine the likelihood of repaying on time if given a credit card or loan. Your credit score is formulated on your accrued credit history and can range from 300 to 850. A good credit score is the access key to your financial well-being and creditworthiness. The higher your score is, the less you are viewed as a credit risk by lenders.

Your credit score is made up of key factors that formulate your total score. FICO (Fair Isaac Corporation) is the most widely used credit scoring calculator to generate an individual’s credit score and is based on several factors. The core factors that affect credit scores are:

  • Types of accounts you hold and the age of these accounts, including the ratio of the limits on the card versus the balance owed.
  • The total debt you hold and/or how many credit cards you hold, auto loans, mortgage payments, etc.
  • Payment history and late payment history: On-time payments on your accounts help your scores, whereas missing payments can hurt your scores.
  • Credit score activity: whether you’ve recently applied for or opened new accounts, it can affect your score. 

These factors are indicators of your credit history that affect your credit score when it is calculated. Knowing your score also illustrates what you need to address in your credit history to increase your creditworthiness. When you monitor your credit, it also helps you keep an eye on how you can improve your score; remember that on-time payments can strengthen your score, whereas late payments can lower it.

A Good Credit Score & Why It Matters

Credit scoring occurs within a range of 300 and 850 to indicate creditworthiness. A good credit score is 690 to 719 on the scale commonly used for FICO scores. A score of 800 or above is considered to be an outstanding credit score. On average, most people have a credit score that falls between 600 and 750. The higher your score, the more confident creditors are that you are able to repay debts per the debt parameters. Creditors can set their own determinations for what is considered as good or bad credit when consumers apply for loans or credit cards. 

A good credit score is essential to your future and what you want to accomplish personally and financially. Having a good score also determines if you are approved to borrow money and how much you can pay back with interest. In addition, a good credit score can help you get a credit card with a decent interest rate or even a balance-transfer card, an auto loan or lease, or a home mortgage with a favorable interest rate. 

In summary, a good credit score can be the difference between qualifying for a home or auto loan or obtaining credit cards with healthy limits and interest rates. The relationship between a credit card and your credit score factors in the timeline you are paying off your card, and your bottom line score can impact how much you will have to pay in interest on your accounts. Additionally, credit reports/scores can even impact non-lending-related matters, such as whether a landlord will rent you an apartment. Some insurance companies also may use your credit score to help determine your auto, home, or life insurance premiums. Finally, credit scores matter to some employers who might review your credit when hiring or offering a promotion. In practice, though, a good credit score is the one that helps you get what you need or want, whether that is access to new credit in a pinch or lower mortgage rates. A good score is an important gateway to specific lifestyle achievements.

Common Trust’s MasterCard Credit Card

Paying attention to your credit score and maintaining its strength is a vital part of your comprehensive financial health. Common Trust’s Mastercard Credit Card is a card you can afford to carry and can help you start your credit journey towards excellent financial standing. Using a credit card enables you to build a good credit score when used correctly, and we are here to advise you on best practices.

We invite you to learn more about our exceptional Mastercard Credit Card, perfect for shopping, travel, and emergency use here.

Summer Safety Tips

 

Temperatures are rising, swimming pools beckon, and family activities are in full swing as summer is officially here. An air of a more ordinary summer means adventure awaits, and we forecast that our community is excited for an active summer. Common Trust encourages a summer of fun sustained by safety to enjoy the season to its fullest. So whether you’re laid back at home poolside with a summer reading list or hitting the road for the beach, here are some helpful reminders to live your best and safest summer.9[op

Take Shade & Hydrate

People often forget how serious heat-related issues are when sun over exposure and poor hydration clash. Carry water with you wherever you go, as dehydration is the most common heat-caused illness. Hydrate more than you think is necessary, and take breaks in the shade when outside. It is more important to make sure younger children drink plenty of water, even if they are not thirsty. Wearing loose clothing that dries quickly also helps to keep cool. Be vigilant of overheating symptoms when hiking or doing outdoor group activities; typically, if one person has symptoms, chances are others do too. Don’t overdo it if you crave more exercise— opt for a walk in a cooler environment like the mall. When it hits 90° or above and is humid, children should not play outside for more than 30 minutes at a time.

As we all know, the sun can cause severe sunburns and sun poisoning in its worst form. Sunscreen is your summer staple, so carry a small bottle with you everywhere. Lathering up on cloudy days is essential as it is no myth that the sun’s burning rays pierce through clouds.

Swimming & Water Safety

Thousands of adults and children are hurt in avoidable swimming and boating accidents every summer. Water safety spans from simple swimming precautions to having life vests for everyboat rider. Younger children are notably less experienced swimmers and always need to be supervised by an adult or lifeguard. Where diving is involved, always watch for the person to come up as back and head injuries can occur. An at-homepool is best protected with a fence that stays locked and out of reach for kids. An extra layer of pool precaution is to have cameras or gates with sensors that connect to mobile apps and send alerts if a pool gate is left open. If your child ventures to a neighbor’s pool, confirm an adult at home watching at all times.

The most common boating accidents happen when drinking is involved for adults, so designate an experienced boat driver who won’t partake in the libations. Lastly, always have your cellphone charged in case of an emergency, and in some cases, for longer boating outings, keepflares aboard.

Roadtrip & Air Travel

With so many Americans chomping at the bit to roadtrip, car safety is paramount. A regular car maintenance check is a good safeguard against unforeseen car troubles. If your car use was down over the last year, it is wise to have the tires checked and rotated. It might be a great time to purchase a tire gauge to keep in your car, too, especially if you plan to drive on rockier terrain on your adventures. We also recommend purchasing a mobile phone holder so you can be as hands-free as possible when using your phone’s GPS. Lastly, a First Aid Kit is the best accessory for your glove box.

If you plan to hit the skies for vacation, mandatory mask-wearing and regular hand washing persist as TSA protocol. While airlines continue to adhere to strict sanitation standards and improve air circulation systems, it will put you more at ease to take these precautions when traveling. Before you set out on your adventure, contact Common Trust to ensure you do not experience issues with your card while you are traveling. Apply for Common Trust’s Mastercard Credit Card today before hitting the road. 

Going Out and Outdoor BBQs

Restaurants, bars, and even music venues are opening their doors for livelier times but have a mask handy if required. A backyard gathering is best when summer time food is cooked over a fire. Still, grills and campfires are to be tended to as adults and children risk burns caused by fire proximity. Placing the grill far enough away from anything flammable and inspecting the grill before using it prevents gas tank malfunction. Fireproof mitts and long-handled utensils help avoid exposure to flames. Make sure kids are closely supervised around a campfire or at a BBQ.

Safety and fun do not have to be mutually exclusive. Remember to plan ahead, keep a vigilant eye, and lean on friends and family for support. Let Common Trust know how we can help you enjoy your summer more with credit cards or vacation loans to help pay for your travels. Our team wishes you and your family a safe and memorable summer.

3 WAYS TO BUILD A GOOD CREDIT SCORE

Building a good credit score is often a key to financial freedom, but establishing or improving your credit score can be overwhelming. There are many suggestions out there about building and maintaining a solid credit score, some of which might be more accessible than you think. Three simple ways to build your credit score are making payments on time, limiting your number of credit card applications, and taking out a credit builder loan. Let’s dive into the nitty-gritty of how you can put these steps into action. 

1. Make Payments On Time

When it comes to good credit, reliability is incredibly important. With busy schedules and multiple bills to keep track of, missing a payment is too easy! Making payments on time will help avoid a negative impact on your credit score. This includes but is not limited to rent, loans, and credit cards. Setting a reminder about payment deadlines is an excellent strategy to ensure you make payments on time. If possible, coordinate paying most or all of your bills on the same day each month, so you don’t have to remember multiple deadlines.  

Scheduling automatic payments is another great way to avoid missing a payment. Remember that it is still important to check your accounts to confirm automatic payments went through to avoid late fees and negative impacts on your credit score.

2. Limit How Many Credit Cards You Apply For

There is an abundance of tempting credit card deals available to apply for, but you should monitor how many credit card accounts you have. Applying for too many credit cards can negatively impact your credit score due to credit checks that financial institutions run to determine if you qualify. What’s more, having too many cards can be a sand trap for spending beyond your means, which may lead to debt. Should you find yourself in this situation, consider a debt consolidation loan to help get back on track.
If you’re reading this and wondering if you have too many credit cards, don’t rush to close them. Closing credit card accounts can negatively affect your credit score, so you shouldn’t close one without good reason, such as steep annual fees. Once a card is open, in most cases, the best strategy is to leave it open and aim to spend a smaller amount than what you have available.

3. Take Out A Credit Builder Loan

If you are looking to start building credit, taking out a credit builder loan can be an excellent way to get your foot in the door. These loans are designed specifically to help people start establishing credit! For these typically smaller loans, it is important to make regular payments, proving that you are reliable to the credit bureau, which will receive a record of all payments. Once you are approved, the bank will hold the loan amount for you to receive after all payments are made.

SPECIAL OFFER: CREDIT BUILDER LOAN

Are you looking to start building your credit score? Common Trust’s Credit Builder Loan could be the right place to begin. From now until May 31, 2021, we are offering members a chance to get started establishing credit through this loan. We are offering rates as low as 8% with loan terms of up to 9 months. Learn more here, or reach out to one of our team members if you are ready to get started!

What Is Considered a Good Credit Score?

Highlights:

  • Credit scores are calculated using the information in your credit reports.
  • Credit scores generally range from 300 to 850.
  • Different lenders have different criteria when it comes to granting credit.

What is a Good Credit Score?


It’s an age-old question we receive, and to answer it requires that we start with the basics: What is a credit score, anyway?

Generally speaking, a credit score is a three-digit number ranging from 300 to 850. Credit scores are calculated using the information in your credit report, including your payment history; the amount of debt you have; and the length of your credit history.

There are many different scoring models, and some use other data in calculating credit scores. Credit scores are used by potential lenders and creditors, such as banks, credit card companies, or car dealerships, as one factor when deciding whether to offer you credit, like a loan or credit card. It’s one factor among many to help them determine how likely you are to pay back the money they lend.

It’s important to remember that everyone’s financial and credit situation is different, and there’s no “magic number” that may guarantee better loan rates and terms.

Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good, and 800 and up are considered excellent. Higher credit scores mean you have demonstrated responsible credit behavior in the past, which may make potential lenders and creditors more confident when evaluating a request for credit.

Lenders generally see those with credit scores 670 and up as acceptable or lower-risk borrowers. Those with credit scores from 580 to 669 are generally seen as “subprime borrowers,” meaning they may find it more difficult to qualify for better loan terms. Those with lower scores – under 580 – generally fall into the “poor” credit range and may have difficulty getting credit or qualifying for better loan terms.

Different lenders have different criteria when it comes to granting credit, which may include information such as your income or other factors. That means the credit scores they accept may vary depending on that criteria.

Credit scores may differ between the three major credit bureaus (Equifax, Experian, and TransUnion) as not all creditors and lenders report to all three. Many creditors do report to all three, but you may have an account with a creditor that only reports to one, two, or none at all. In addition, there are many different scoring models available, and those scoring models may differ depending on the type of loan and lenders’ preference for certain criteria.

What Factors Impact Your Credit Score?

Here are some tried and true behaviors to keep top of mind as you begin to establish – or maintain – responsible credit behaviors:

  • Pay your bills on time, every time. This doesn’t just include credit cards – late or missed payments on other accounts, such as cell phones, may be reported to the credit bureaus, which may impact your credit scores. If you’re having trouble paying a bill, contact the lender immediately. Don’t skip payments, even if you’re disputing a bill.

 

  • Pay off your debts as quickly as you can.

 

  • Keep your credit card balance well below the limit. A higher balance compared to your credit limit may impact your credit score.

 

  • Apply for credit sparingly. Applying for multiple credit accounts within a short time period may impact your credit score.

 

  • Check your credit reports regularly. Request a free copy of your credit report and check it to make sure your personal information is correct and there is no inaccurate or incomplete account information. You’re entitled to a free copy of your credit reports every 12 months from each of the three nationwide credit bureaus by visiting www.annualcreditreport.com. By requesting a copy from one every four months, you can keep an eye on your reports year-round. Remember: checking your own credit report or credit score won’t affect your credit scores.


You can also create a myEquifax account to get six free Equifax credit reports each year. In addition, you can click “Get my free credit score” on your myEquifax dashboard to enroll in Equifax Core Credit™ for a free monthly Equifax credit report and a free monthly VantageScore® 3.0 credit score, based on Equifax data. A VantageScore is one of many types of credit scores.

If you find information you believe is inaccurate or incomplete, contact the lender or creditor. You can also file a dispute with the credit bureau that furnished the report. At Equifax, you can create a myEquifax account to file a dispute. Visit our dispute page to learn other ways you can submit a dispute.

How to Switch Credit Cards and Save Money While Doing It

We’ve all done it. You open a credit card and the rates look great at an initial glance—because you’ll never miss a payment, right? A big purchase comes around and you find yourself in a little more debt than you anticipated. That’s when your interest rate hits hard, each time increasing your already-unpayable balance to even higher levels. What should you do when credit card debt gets a little out of hand? In this blog, we’ll focus on how to successfully switch credit cards, and transfer your credit card balance, in order to both lower your interest rate and save you money.

What Are My Options?

Here is a short list of things you can do when you find yourself faced with an overwhelming balance:

  • Dip into your savings account. One way or another, the debt has to be paid or it will naturally accumulate interest via the rate you and your credit company agreed upon. This is typically the primary option since you won’t have to deal with any fees or interest rates from new loans. Understandably, however, you may not have the cash on hand to pay the balance and it’s not a practice you’d want to make a regular habit of doing.
  • Pay off the debt with a loan. This type of loan is designed to pay off your credit card debt and allow you to make payments according to a flexible repayment plan. The interest rate will be drastically lower than your credit interest rate, allowing you to pay off the principal balance much faster. That said, it’s always important to read the terms thoroughly and ask questions—some debt payoff loan promotions may have a maximum loan amount or a slew of extraneous fees.
  • Transfer the balance to a lower-rate card. This debt consolidation option is typically the most cost-efficient. But it really depends on who you choose to work with. Big banks often have low or even 0% APR offers, but they’re almost always for a limited time and change to a high-interest rate after a couple of months. By contrast, some credit unions, like Common Trust, will give you an ongoing rate that never changes, so you can rest easy and budget accordingly. The rate will be much lower than that which you are currently paying, so you’ll be able to pay off your debt quicker. Promotions can also impact the rate you’ll receive, ultimately saving you even more money.

Transferring Your Credit Balance

So, you spent too much at the annual outlet sale and found yourself in some serious debt. Time to panic, right? Wrong. While there is a bounty of debt-eliminating options you can resort to—including a Debt Payoff Loan or Debt Consolidation Loan—a balance transfer credit card is typically the smartest, safest option.

To reap the benefits of a transfer balance credit card, you’ll start by filling out a card application. As with all big steps, be sure to ask as many questions as you need to finalize your decision. Make sure to double-check that there aren’t any drastic opening or closing fees, surprise rate increases, or any other types of random costs. In order to be approved for the new card, you may be subjected to a soft inquiry credit-check to be sure you make your payments on time and aren’t a huge credit risk. The bank will then pay off your credit card company for the current balance, and in exchange, you’ll owe the same balance with a comparably-lower interest rate. It’s that simple!

Changing Future Habits

After the dust has cleared and you’ve made the final payment to your Credit Balance Transfer account, you’ll likely want to re-think the way you manage money so you avoid future debt pitfalls. Making a resolution to manage and spend better is an optimal preventative measure to any type of debt.

The key to a healthy credit score and credit report is managing your money in a productive way and staying out of debt. Try to avoid spending money that you don’t have, and keep frivolous purchases to a minimum. Doing so will allow you to keep track of balances and ensure no line of credit is getting out of hand. Don’t open too many credit cards (even if the incentive is really great)—managing multiple accounts can lead to missed or late payments and breed into skyrocketing interest balances once again. If you do have multiple accounts open, checking in with Credit Karma every once in a while will help to manage all balances and keep them in check. Though this may not be the end-all to any financial hardship, it’s a huge step in the right direction.

Struggling to keep up with credit card debt? You’re in luck! Until March 31, 2020, Common Trust is proud to be offering our Credit Card Balance Transfer promotion. With a rate of 6.99% that stays fixed until your entire balance is paid off, you can focus on paying off your principal debt balance and not worry about having to get it done in a stressful, limited time period. This offer only lasts a few months, so don’t miss your chance to live debt-free—give us a ring or reach out via email today!

5 Steps to a Debt-Free 2020

The holiday season is a great time to buy sentimental gifts for all of your family and friends. Unfortunately, this also means spending much more than you typically do during the rest of the year. After the holidays are over, you can be left with a lot of debt. With 2020 in full stride, has your debt got you down? Here are 5 steps to a debt-free future.

1. Minimize Your Spending

When debt is growing each day from high-interest rates leading to even higher balances, it can become a serious hindrance to your mental health. Try to minimize spending during this time of repayment. The more you add on to your principal balance, the more money you’ll end up having to pay in the long run. Only buy the things you need, like groceries, gas, utilities, and bills of course. If needed, try to stay away from any stores or places that may lead you to splurge. Don’t highly restrict yourself, but don’t spend frivolously either.

2. Take Advantage of a Low-Interest Loan

If your debt is getting out of hand, it may be time to consider paying it off with a lower-interest loan in order to prevent tacked-on interest payments. Since most credit cards usually rest around a 20% APR interest rate, that’s a lot to save over time. Act quickly when you realize the interest rate on your credit card is starting to rack up, and start searching for a debt payoff loan that works best for your needs. Either way, you’ll likely be paying around 10% less on a loan than in credit card fees.

3. Credit Balance Transfers Are Your Best Friend

Another quick alternative to lessen the blow of built-up debt is a Credit Card Balance Transfer. Similar in savings to a loan, this is when you transfer your higher-interest balances onto a lower-interest credit card and pay a lower rate until your balances are paid off. Over time, this solution will save you loads of money and help you make more payments on your principal balance rather than mountains of accumulating interest.

4. Save, Save, Save!

In this instance, you may not have been prepared for the oncoming holiday debt. Make it a New Year’s resolution to start saving more in preparation for big spending. It’s nice to not think about your funds when continuously swiping your credit card, but it’s even nicer to have a large nest-egg to fall back on when you’re in need. 

Open multiple savings accounts to track these goals and save up enough to shower your friends and family with the gifts they deserve. The incentive for planning ahead is a higher interest rate, meaning you’ll have even more money when the terms are up. Select the type of account that works best for you, and start stockpiling those pennies! With this easy step, you’ll be ready for any financial hardships or random splurging. 

5. Steer Clear of Future Debt

We understand how hard it is to stay out of future debt. It’s easy to grab a whole new wardrobe while scouring the racks of Nordstrom, or a funky piece of furniture at that cute antique shop on the corner. Try to build the habit of saying “no” as you move into the new year. 

If you absolutely must buy that thing, make sure you have a reputable and low-interest credit card at your side. And if you find yourself in another financial sinkhole, don’t hesitate to pay off debt with lower-interest loans before the interest starts accumulating. If you have a hard time staying true to your spending limits, try constructing a budget and sticking to it. Staying out of debt will have a long-term benefit on both your credit report and score.

Holiday debt lingering a little longer than intended? It’s time to find a solution. Our team is highly knowledgeable in financial planning and can help you get back on track. With low-interest rates and a wide variety of flexible products, a better financial future is right around the corner. Don’t let the pressure of debt bring you down – give us a ring or reach out via email today!

Risk or Responsible: Your Quick Guide to Credit Reports & Scores

 In the tumultuous world of finances, different numbers and scores can start to blend together into one confusing blob. Thankfully, there is a bounty of helpful guides and articles to help you differentiate between contrasting numbers and their meanings. In this week’s blog, we’ll discuss the main differences between Credit Reports and Credit Scores—and how to maintain them. 

While the words “Credit Report” and “Credit Score” are sometimes used interchangeably, there is one main difference between the two.

Your Credit Score illustrates how much of a credit risk you are to lenders. It is a numerical value most commonly scored between the ranges of 300 and 850 (we’ll delve deeper into what constitutes a “great” score a little later).

Your Credit Report is a record of your credit and lending history. This includes payments, debts, number and types of accounts you’ve had, and so much more.

Why Should I Maintain Them?

If the chance to be labeled “excellent” on your credit score isn’t incentive enough, it’s important to note that having a score above 700 usually leads to lower interest rates and more member perks. Having a good credit score isn’t just a financial title. It can help save you hundreds of thousands of dollars over your lifetime. You won’t be hit with high-interest rates and can negotiate loan terms more freely. Plus, having a great credit score can instantly make you eligible for bigger loans and higher credit limits, ensuring that you never have to cough up the full payment amount for any big purchases. You’ll automatically get better rates when signing up for things like insurance, and approval for apartments or leases will be a breeze.

Do I Need to Look at Both?

The short answer—yes! It’s important to stay up-to-date on both your credit report and credit score. Doing so will allow you to know how lenders will assess your financial responsibility before approving or denying things like loan requests or opening a new credit card. Sites and apps like Credit Karma provide free access to your credit score and will send you copies of your credit report upon request. You can check as often as you need, or want, and it won’t negatively impact your score. Conversely, if you are trying to raise your credit score, monitoring your credit report will allow you to see what may be impacting it and how to take preventative measures in the future. 

It is important to note that checking both your credit score and credit report regularly can help prevent fraud. Always be sure to analyze for anything that looks faulty or incorrect, and if anything seems out of place always reach out for further information. Your credit score is one of the most important things you have in your possession and can make or break anything from purchasing a pair of boots to purchasing your first home. 

What Is Used to Calculate Your Credit Score?

This aspect of credit is where both credit scores and credit reports cross paths. There are a few main aspects of your credit report that impact how your numerical credit score is calculated. Although it is important to note that each credit-reporting system utilizes their own unique formula to calculate your score, generally it is made up of the following:

  1. Payment history accounts for 35% of your credit score. If you have not historically made your credit card or loan payments on time, your score will naturally go down.

    Tip: To keep your score in tip-top shape, you should make a point to schedule all payments before the due date. Doing so will also save you money – say good-bye to accumulating more and more debt via hefty interest rates!
  2. How much you owe on your accounts makes up 30% of your credit score. Especially if you don’t make payments on time, you may see a dip if you continuously rack up debt on your open accounts. Do you really need those sparkly heels?

    Tip: Try to avoid accumulating too much debt on credit cards or loans at any time.
  3. Length of credit history accounts for 15% of your credit score. The longer, the better. This portion illustrates that you have been financially responsible for longer, and are more-likely-than-not going to continue making payments on time and are thus less of a risk.

    Tip: Even if you haven’t used your high school credit card in years, keeping it open can help lengthen your credit history. 
  4. Opening new cards is a significant factor in the equation. In fact, 10% of your score is based on new credit, and how many accounts you have opened recently.

    Tip: even if a $100 best buy gift card or low APR is at stake, don’t open too many new credit cards at once. Not only are they hard inquiries, but doing so categorizes you as a credit risk and can quickly lower your score. 
  5. Multiple lines of credit and being able to maintain them can positively impact your score by illustrating that you are financially responsible. 10% of your credit score is based on existing lines of credit. Do you have a variety of accounts? Do you have multiple accounts?

    Tip: explore ways to maintain multiple lines of credit (without opening a bunch of credit cards at once). Successfully managing multiple accountscar loans, credit cards, school loans—can yield major positive dividends for your score.

Keeping the above factors in good standing is crucial to maintaining your credit score. Don’t fret if you have an off-month, though. One missed payment won’t completely diminish your score. And if you happen to have a few mishaps, you’ll be relieved to know that they do eventually fall off your report. Just keep making on-time payments and maintaining your credit lines—eventually, your score will fully recuperate!

What’s a “Good” Score?

Your FICO® credit score falls into five general categories:

  • BAD: 300 – 560
  • POOR: 560 – 650
  • FAIR: 650 – 700
  • GOOD: 700 – 750
  • EXCELLENT: 750 – 850

Not instantly listed as “Excellent” or even “Good”? Not to worry.  Over time, as long as you keep up with your payments, your score is sure to pick up.

Got Credit Q’s? Looking to open a new line of credit? Have questions about your credit score, report, or just need some quick credit advice?  We’re here to help. At Common Trust, we thrive on helping our members successfully manage their credit in every way, from HELOCs to car loans to credit cards and everything in between. Give us a call today or shoot us a message and we’d be happy to chat. We look forward to hearing from you!

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