Month: March 2021

How to Build Up Your Credit from Scratch

Q: I’ve never had a credit card and my credit history is non-existent. I’m ready to build up my credit from scratch. Where do I start?

A: Building a credit history from the bottom up can be tricky business. It may take a while until you see results. But, with time, effort and responsible financial choices, you can build an excellent credit history, which will positively impact your financial health for years to come.

Here are 5 steps you can take to get the ball rolling on your credit file.

1.       Visit Olean Area Federal Credit Union

Stop by Olean Area Federal Credit Union to speak to a Lender about opening your first credit card right here. We offer most of our members secured credit cards even when they don’t have a substantial credit history.

2.       Open a secured credit card

Secured credit cards are starter cards requiring you to make a deposit of several hundred dollars before you can open a credit line in that same amount. The card issuer will hold this deposit as collateral in case of a missed payment. After eight or 12 months, you will get your deposit back if there is no outstanding balance on your card. You can then close your account and open an unsecured credit card. Secured credit cards are not long-term solutions, but they are great first credit cards since almost anyone can qualify.

3.       Open one or several low-balance cards

There are several credit card companies, including Capital One and Credit One, offering cards specifically geared to the new credit card owner. These cards do not require a credit history to qualify, though you may need to prove that you lead a financially responsible life.

4.       Use your cards responsibly

It’s not enough to have credit cards open in your name; you need to use them, too. With a starting balance of $200 or so, you’ll have to be careful to spend just a bit each month and keep your credit utilization at less than 30%. You’ll also have to be vigilant about paying your bill in full and on time each month. You can set up an automatic payment, so you never miss a bill.

5.       Become an authorized user

If you have a family member or partner who has an excellent credit score and a credit card that they’ve had for a while, ask them about making you an authorized user on their card. This will add the card’s payment history to your growing credit file and can increase your score. Keep in mind, though, that any time you use the card, the primary account holder will be responsible for paying the bill. Also, find out whether the card issuer reports authorized user activity to the credit bureaus, so this step isn’t wasted.

Beware the Amazon Watch Raffle Scam

Everyone admires Amazon’s scale, and scammers are no exception. Recently, they’ve been piggybacking on Amazon’s reach and name to pull off a scam that’s already taken in thousands of innocent victims.

Here’s all you need to know about the Amazon watch raffle scam:

How the scam plays out

In the scam, the target receives a text message appearing to be from Amazon and telling them they’ve won an Apple Watch, or a similar prize, such as Airpods or a Garmin Fitness watch.

If the victim clicks on the embedded link, they’ll land on a page asking them to provide their personal information. Alternatively, clicking the link may download malware onto the victim’s device.

Red flags

First, it’s important to note that Amazon will never ask a consumer for their personal information or for remote access to a device.

Second, familiarize yourself with the red flags that can help you spot when you’ve been targeted by an Amazon watch raffle scam or a similar ruse:

  • The text message includes an unusual link.
  • The message promises an instant and/or large reward.
  • The text message urges you to act now.
  • The text appears to be sent from Amazon, but you never signed up to receive text messages from them.

Avoid the scam

Follow these precautions to avoid the Amazon watch raffle scam.

  • Never click on a link sent in a message from an unverified number.
  • If an offer sounds too good to be true, it probably is. If you’re still unsure, call the number to verify if it is legitimate.
  • Never respond to suspicious-looking text messages. Instead, block the number.
  • If you receive a text message that appears to be from Amazon, update the login credentials of your Amazon account. You may want to do a security sweep on your device for viruses and malware if you’ve already clicked on the link.

If you’re still unsure whether a text message has actually been sent by Amazon, you can check out Amazon’s scam information page here to help you verify the authenticity of the message.

Stop the scam

Do your part to stop those scammers by reporting all scam attempts to the FTC and the BBB. You can also warn your friends and family about the circulating scam.

Stay safe!

Watch Out for These Spring Cleaning Scams

As you spruce up your house for spring and summer, watch out for these spring-cleaning scams. Stay safe!

The bait-and-switch scam

How it plays out: You’ll see a commercial advertising super-low rates on a cleaning service, such as four carpeted rooms cleaned for just $29. Because of this great deal, you’ll quickly book a slot for the service. Unfortunately, when the cleaners arrive at your home, they’ll hit you with unexpected fees for vague factors like “high-traffic areas” to bring the price up by several hundred dollars.

Protect yourself: It’s best to avoid services offering prices that are too good to be true. It’s also a good idea to do some research on any new agency you hire to work in your home. Ask specific questions about possible extra charges, and speak to previous customers if you can. If possible, get the terms and pricing of the job in writing before the agency sends workers to your home.

The bogus house-cleaning agency

How it plays out: You hire a house cleaning agency to help spring-clean your home. Unfortunately, the agency is bogus, and the “house cleaners” end up robbing you blind.

Protect yourself: Never allow workers into your home without proper references and research. Check out any agency you want to use online, look up their business on the BBB website and ask for names and numbers of previous clients. It’s best not to leave the house cleaners alone in your home.

Scammy cleaning products

How it plays out: A salesperson knocks on your door offering a “miracle cleaning solution” at a great price. In truth, the solution is nothing more than a mixture of water and hand soap.

Protect yourself: Stick to the cleaning products you always use and be super wary of anyone hawking products you’ve never heard of before.

The pay-up-front scam

How it plays out: A vendor offering cleaning services of any kind demands full, upfront payment via cash or a prepaid debit card or money order. Once they’ve been paid, you’ll never see them or your money again.

Protect yourself: There’s never a good reason to prepay in full for a service or to be forced to pay via cash or with a prepaid debit card or money order.

Spring Clean Your Finances

Are you ready to make your finances sparkle? Here are six ways to spring clean your money matters:

Sweep out your budget

It’s time to shake the dust from your budget! Pare down your spending until your budget’s looking neat and trim.

Freshen up your W-4

If you received an especially large refund this year, you may want to adjust the amount you withhold. The IRS’s tax withholding estimator can be a useful tool to help you determine the perfect number.

Deep clean your accounts

Do a Marie Kondo on your finances and get rid of any accounts you no longer need. For instance, are there dormant accounts at a financial institution you no longer use, or a 401(k) from your old job? Consolidate it. A minimalist approach to your finances will make it easier to manage your accounts, give your savings a greater chance at growth and help you avoid fees for unused accounts.

Toss out your debt

If you’ve been stuck on the debt cycle, make this spring the season to break free.

First, trim your budget, designating any extra funds for your debts. Next, choose a popular debt-busting approach, such as the avalanche method, in which you pay off debts in order from highest-interest to lowest, or the snowball method, where you start with the smallest debt and then move up your list. Going forward, maximize payments to the first debt on your list, making sure not to neglect minimum payments on the other debts. Before you know it, that debt will be gone!

Dust off your saving habits

Get into the habit of maximizing your savings with a tangible financial goal. You can also make savings an itemized line in your budget so you have funds set aside for this purpose. Finally, automate your savings by setting up a monthly transfer from your checking account to your savings account.

Make your investments sparkle

It’s time for a spring cleaning for your investments! Check if your allocation strategy is still serving you well, whether you need to adjust your diversification, and if your retirement accounts are on track for your estimated retirement timeline.

Follow our tips to make your finances shine!

Saving on Home Renovations

Is your home in desperate need of a facelift? As you probably know, home renovations don’t come cheap. In fact, the average kitchen remodel tops $60,000 and bathroom overhauls can cost $18,000!

With some careful planning, though, you can shave thousands of dollars off these price tags.

Here are 7 ways to save:

1.       Don’t do a complete remodel

Instead of knocking down walls, give the outdated area a fresh coat of paint, new light fixtures and some minor décor upgrades.

Potential money saved: $30,000.

2.       Shop around for a contractor

Find someone professional, reliable and willing to give you a decent price. Check out at least three different contractors before making your decision. Ask for references and meet with each contractor in person to get a feel for their professional conduct and character. Also, be sure to sign a detailed contract.

Potential money saved: several thousand dollars.

3.       Consider long–term benefits

It often makes sense to pay more now if it’ll save you big down the line. For example, if you’re installing clapboard siding, you’ll save in the long run by paying more for pre-primed and pre-painted boards. Using the prefinished boards means you’ll need half as many paint jobs in the future.

Money saved: $1,250 (for a 10×40 area).

4.       Pick decent but midgrade materials

When long-term functionality is not a criterion, choose the midgrade option. One area where you’ll see this at play is in carpeting. Olefin and polyester carpeting will run you $1 to $2 per square foot, while wool costs upward of $9 to $11 per square foot.

Money saved: $400 (for a 40-square-feet area).

5.       Bring in natural light without windows

Looking to bring a splash of sunshine into your kitchen? Instead of adding a window, consider installing a “light tube.” It slips between the rafters on your roof and works to funnel sunshine down into the living space below.

Adding a double-pane window can run you $1,500; a light tube costs $500.

Money saved: $1,000.

6.       Lend a hand

Save big by doing some of the demolition work yourself, painting some walls, or even sanding walls to prep them for painting. You can also lend a hand with the cleanup instead of hiring a crew.

Money saved: $200 or more.

7.       Increase efficiency, not size

Cramped kitchen? Don’t assume you need to push out walls to make it work. Instead, reorganize your kitchen for optimal efficiency and save tens of thousands of dollars. Upgrade your cabinets with Lazy Susans, pullout drawers, dividers and more. Consider hiring a professional organizer to show you how to maximize your space — you’ll still save big overall.

Money saved: up to $60,000.

Before making any decisions, be sure to call, click or stop by Olean Area Federal Credit Union today to learn about our fantastic rates on Home Improvement Loans, Fixed Home Equity Loans and Home Equity Lines of Credit (HELOC)!

Don’t Get Caught in an Auto Warranty Scam

Another phone call, another scam. It’s not just you, those robocalls just won’t stop! More than just an annoyance, scam calls cost 56 million Americans a financial loss in 2020. One of the most common scams over the phone is the auto warranty scam. Here’s all you need to know about it:

How the scam plays out

In this ruse, scammers posing as representatives of a car dealership or manufacturer call to tell you that your auto warranty is about to expire. The scammer then goes into a pitch for renewing your warranty. During the call, you may be prompted to press a number to stay on the line, and then you’re asked to provide personal information to continue the process of renewing your warranty. If you follow instructions, you’ll be playing right into a scam.

How to spot a scam

Look out for these red flags:

  • Hello, it’s Robot calling. When it’s a robocall on the line, you’re almost certainly talking to a scammer.
  • Feel the pressure? Scammers notoriously lead victims to act first and think later by claiming their offer is available for a limited time only.
  • Just a small fee … Is the caller demanding a small processing fee before supplying you with real details and information on the plan? If yes, you’re being scammed.

Protect yourself

Some things in life are not meant to be shared, especially your private information. Never share your Social Security number, credit card information or checking account details with an unverified caller.

Be skeptical of mail and phone calls warning that the warranty on your car is about to expire. If you buy a service contract, you may find that the company behind it won’t be in business long enough to fulfill the commitments.

It’s instinct to grab the phone when it rings, but hold off just a moment. First, check the Caller ID. Legitimate telemarketers are required to display their phone number and the name/or phone number of the company they represent. If this information is missing, you’re being phone-tagged by a scammer.

Don’t let an authentic-looking Caller ID fool you, though. Scammers often spoof numbers to make it appear as if they are calling from a legitimate company. If you suspect spoofing, ignore the call, and then call the number of the company that allegedly reached out to you, to ask about the call.

If those robocalls are not letting up, you can always block the number on your phone. That’ll show those scammers!

Stay safe!

How to Spot A Credit Repair Scam

Credit repair scammers tell you they can make credit repair quick and easy. Unfortunately, when they’re done, your score may still be low, you’ll have lost a nice chunk of change and may even be facing criminal charges.

Here are the warning signs of a credit repair scam:

1.       Upfront payment

Under the Credit Repair Organizations Act (CROA), credit repair companies are forbidden to request or receive payment until they’ve completed the services they’ve promised.

2.       Big promises

Scammers may claim they can remove negative information from your credit report, even information that is accurate and current. Don’t believe them; no one can do this. They might also promise to boost your score in just a few weeks. This, too, isn’t true. It takes at least 30 days for changes to be evident on your credit report.

3.       Offers a “new credit identity”

In these scams, companies promise to create a new credit identity for a fee. After you pay, the company will provide you with a nine-digit number. They may refer to this number as a CPN – a credit profile number or a credit privacy number. Alternatively, they may direct you to apply for an EIN – an Employer Identification Number.

The company instructs you to use this form of ID to apply for credit, telling you it is legal. However, it’s not — and you’ve just been scammed. These companies are selling you a stolen SSN. They walk away with your money and leave you in hot water because you’ve just committed multiple federal crimes.

Falling for a credit identity scam could mean facing fines or prison time.

4.       Tells you to dispute accurate information on your credit report

Disputing accurate information on your credit report is illegal.

5.       Evasive when questioned
The Credit Repair Organizations Act made it illegal for credit repair companies to lie about your rights and their services. These companies must explain:
  1. A written contract detailing your legal rights
  2. Your three-day right to cancel the contract without charge
  3. The anticipated time it will take until results are evident
  4. The total cost you will pay for their services
  5. Their guarantee

If you’ve hired a credit repair company that hasn’t lived up to its promise, you can choose to sue the company for your losses in federal court. Along with other victims, you can file a class action lawsuit against the company.

Finally, it’s best to report the scam to your local consumer affairs office or to your state attorney general. You can also file a complaint with the Federal Trade Commission (FTC). File your complaint online at ftc.gov/complaint.

All You Need to Know About the New Stimulus Bill

It’s another stimulus bill, and that means more checks are a-comin’! But don’t hit the shops just yet. Although the new bill promises bigger stimulus checks, there are stricter eligibility requirements. And that’s just the tip of the iceberg that is this bill.

Below, we’ve outlined some of the most significant measures included in the American Rescue Plan.

Stimulus payments

The third round of stimulus checks are set at $1,400. Here’s who is getting checks:

  • Single taxpayers with an adjusted gross income (AGI) of $75,000 or below.
  • Taxpayers filing as heads of household with AGIs of $112,500 or below.
  • Married couples filing jointly with AGIs of $150,000 or below.

Parents will also be getting checks for every child they claim as a dependent on their tax return, including college students and adult children with disabilities.

Older relatives who are living with taxpayers will also be counted as dependents.

Higher earners will receive partial payments, but these will phase out quickly. For single filers, the checks stop at an AGI of $80,000. For heads of household, the checks stop at AGIs of $120,000, and for joint filers, the cutoff is $160,000.

To be eligible for a payment, an individual must have a Social Security number.

Changes to unemployment insurance

The relief bill will extend unemployment benefits for another 25 weeks, until Sept. 6. The weekly supplemental benefit of $300 will continue running through that date, too.

The first $10,200 of benefits will be tax-free for people whose income is less than $150,000. This only applies to unemployment paid in 2020.

In addition, unemployment benefits received through the Pandemic Unemployment Assistance program will run through Sept. 6. Benefits received through the Pandemic Emergency Unemployment Compensation program would also run through that date.

Changes to the child tax credit

The relief bill will expand the child tax credit to $3,000 for children ages 6 through 17, and to $3,600 for children ages 5 and under. The credit will now also be fully refundable.

In addition, half the child tax credit may be advanced to parents before the end of 2021. Plans for the distribution are still being finalized, but lawmakers are hopeful that parents will start getting monthly payments toward their child tax credits for 2021 as early as July.

Married couples with a modified AGI of up to $150,000 (or up to $112,500 for heads of household and up to $75,000 for single filers) would receive the full value of the new benefit.

Changes to student loans

There will be no income tax on forgiven debt for those that qualify for loan forgiveness or cancellation. This would apply to all debt forgiven between Jan. 1, 2021, and Dec. 31, 2025.

Feeling Stuck in Your Car Loan? Might Be Time to Shop Around!

Some bills can’t be changed. For other bills, though, a little legwork can make a big difference in your monthly payment. Your car payment is a great example. Refinancing your vehicle loan can lead to a lower monthly payment, a shorter payment term or both! It depends on various factors, including the value of your vehicle, how much you owe and your credit standing.

Read on for three common life changes that might mean it’s a good time to refinance your vehicle.

1.       Your credit rating improves

One of the biggest factor determining your auto loan status is your credit score. When your lender builds a loan package, they pull a credit report as a central part of that process. That number can determine your interest rate, whether you’ll pay an insurance premium and what other fees your lender might charge.

Keep a copy of the documents your lender provided regarding your credit score. That can allow you to revisit what it was to see if your credit score has improved. Nine months of steady repayment can boost your credit score, resulting in a less costly loan.

If you didn’t have much credit history when you purchased, refinancing could do you a world of good. Interest rates as high as 18% are common for new borrowers. Just a few months of solid payments may cut that rate in half.

2.       You didn’t shop around initially

Many people feel railroaded throughout the car-buying process. They choose a car, and then are told the price, the monthly payment and everything else. It’s almost like the lender for your car loan is predetermined.

Dealers usually have a smaller range of lenders with whom they exclusively work. Those lenders have limited exposure to competition, so they can charge higher fees and rates. Do your own comparison shopping. Dealer rates can be 1 to 1.5% higher than those offered at smaller lenders, like credit unions.

If you’ve never shopped around for a car loan, it’s worth doing now. Do your shopping inside a 15-day period, though; multiple checks on your credit could negatively impact your credit score.

3.       You need to change your monthly payment

Your financial situation may have improved since you bought the car and you can now afford to pay more per month. You’ll save money in the long term by doing just that. Shorter-term loans usually have lower interest rates. Also, you’ll pay off the overall balance on your car faster.

If money is tight, consider refinancing for a longer term. Although you’ll pay more in interest, you’ll reduce your monthly payment and save the money you need now. You may also be able to reduce the monthly payment if your credit score has improved, interest rates have dropped or if you’re getting a better rate from another lender.

Contact Olean Area Federal Credit Union to find out how refinancing can improve your financial life!

Your Complete Guide to Using Your Credit Cards

Using your credit cards responsibly is a great way to boost your credit score and your financial wellness. Here’s all you need to know about responsible credit card usage.

Refresh your credit card knowledge

A credit card is a revolving line of credit allowing the cardholder to make charges at any time, up to a specific limit. Each time the cardholder swipes their card, the credit card issuer is lending money for the purchase. Unlike a loan, though, the credit card account has no fixed term. Instead, the cardholder must make payments toward the balance each month until the balance is paid off in full.

Credit cards tend to have high interest rates relative to other kinds of loans. The most recent data  shows the average industry rate on new credit cards is 13.15% APR (annual percentage rate) and the average credit union rate on new credit cards is 11.54% APR.

Pay bills in full, on time

Paying bills in full and on time has multiple benefits:

  • Build an excellent credit score
  • Skip the interest charges
  • Stay out of debt
  • Avoid late fees
  • Enjoy rewards from the credit card issuer

Brush up on billing

There are several important terms to be familiar with for staying on top of credit card billing.

A credit card billing cycle is the time between credit card billings. It can vary from 20 to 45 days, depending on the credit card issuer. Within that timeframe, purchases, credits and any fees or finance charges will be added to and/or subtracted from the cardholder’s account.

When the billing cycle ends, the cardholder will be billed for the remaining balance, which will be reflected in their credit card statement.

Credit card bills will also show a payment due date, which tends to be approximately 20 days after the end of a billing cycle. The timeframe from when the billing cycle ends and its payment due date is known as the grace period. When the grace period is over, and the payment due date passes, the payment is overdue and will be subject to penalties and interest charges.

Make sure you read the disclosures for your credit cards to find important information that relates to each particular card.

Spend Wisely

Do:
  • When making a purchase, treat your credit card like cash.
  • Remember that credit card transactions are mini loans.
  • Pay for purchases within your regular budget.
  • Decrease reliance on credit cards by building an emergency fund.
Don’t:
  • Use your credit card as if it provides you with access to extra income.
  • Use credit to justify extravagant purchases.
  • Neglect to put money into savings because you have access to a credit card.
Video Banking