Where is banking going in ten years?

There have been a lot of changes in banking in the past few years. Some changes are subtle, but some create a new paradigm, such as the advent of Mobile Banking. Mobile Banking has the potential to be bigger than Online Banking was at its introduction. Why? There is a much larger installed base of mobile smart phones today, 1.5 billion worldwide, than there were PC’s in 1997 when Online Banking went live. Mobile Banking acceptance by younger adults is off the charts. They do not fear using their phones for banking purposes and welcome the convenience Mobile Banking promises them.

So, what are some of the big changes we will see coming in the near future? For starters, it is a foregone conclusion that paper checks are going away. With the proliferation of online bill pay systems, there is very little need for consumers to sit at the old desk and write out checks once or twice a month. You won’t have to lick any of those nasty bill envelopes anymore! Yuck.

Today, it takes me five minutes to pay 7 bills. No stamps, no envelopes, no calculators. Just me, my bills and my PC and my bills are paid in 24-48 hours mostly. It is very easy even for beginners.

Another change will be the new EMV or EuroPay MasterCard/Visa. This is the new “chipped” cards that many have been talking about. Simply put, EMV (sometimes referred to as chip-and-PIN, or chip-and-signature) is the most recent advancement in a global initiative to combat fraud and protect sensitive payment data on cards. A cardholder's confidential data is more secure on a chip-enabled payment card than on a magnetic stripe (magstripe) card, as the EMV card supports dynamic authentication, while the current mag-stripe card does not (the data is static). Consequently, data from a traditional magstripe card can be easily copied (skimmed) with a simple and inexpensive card reading device – enabling criminals to reproduce counterfeit cards. Chip (EMV) technology is effective in combating counterfeit fraud with its dynamic authentication capabilities (dynamic values exist within the chip itself that, when verified by the point-of-sale device, ensure the authenticity of the card). The one thing that  cannot be copied  is the chip in the card. (A  lot of people are saying that if we had EMV cards, the Target data breach would not have happened. Incorrect. The EMV cards would not have protected anyone from Target’s failed attempts at data security on their systems.)

We still see a lot of paper loan applications around today. More and more, financial institutions are moving to paperless processes. Your application is online and all the loan underwriting will be done on line. You will sign with your electronic signature. Do you need to have paper copies of disclosures in your files at home? No, not if you can access them on your phone, tablet or PC whenever you wish. You can save a digital file of your documents on the security of your home computer if needed.

Teller roles are changing and that means that your bank will change as well over time. Some credit unions have installed video Tellers over the past few years. There is one CU that is currently experimenting with a holographic Teller. Tellers are now being trained to offer advice and show you how to use the latest technology, whether it’s online banking, a mobile application, or digital documents; the role of the teller is not what it used to be.

Consider that there is already a lot of automation in banking. Automatic Teller Machines, ATM’s, have become ubiquitous in our banks, convenience stores, airports, and even gas stations. Many of today’s ATM’s will give you a copy of the check you deposited for your records. Credit unions have really changed the paradigm of the ATM as they “share” their ATM’s; meaning that if I bank at Meriwest Credit Union, I can go to virtually any other CU’s ATM, nationwide, and make a deposit to my account at Meriwest. Credit unions have offered shared ATM’s for many years.

Other forms of automation are cash and coin counters. Certain new ATM’s are being equipped with cash counters in them. You deposit the cash in the slot and the machine counts and verifies your deposit. In most of our branches, we offer our members a coin counter. They can dump their accumulated coins in the machine; it counts them and gives them a receipt. Today we take that receipt to a teller who will deposit the amount in our checking account. In the near future, the coin counter will be connected to the financial institution and deposit the coin directly to your account. That is, if coins are still around.

It may be unbelievable, but actual physical money will make an exit from our lives. The dollars and coins with which we grew up will no longer be necessary to make transactions. All of our money will be digitally managed. Today, unless we physically use cash, most of our transactions are now digitally managed.

Your employer pays you by Direct Deposit. You go online and pay your bills with online bill pay. You get a check in the mail for a rebate. You use your Smart Phone to take a photograph of the check and use Remote Deposit Capture to deposit it in your checking account. Your financial institution never has a physical copy of the check, only digital. You walk to the deli and buy a sandwich and a soda with your debit card. We drive across a bridge and “beep,” our bridge tolls are paid automatically from our checking account. We can pay our taxes electronically and receive our refunds in the same manner.

I think it is easy to see the future is now and these changes are coming faster than we think.

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Our next Free Financial Workshop:

Car Buying 101

Saturday, June 14, 2014 at 10 AM

Learn how to plan, select, and make your deal for your next new or used car. We will cover research, financing, and explain how to save hundreds of dollars on vehicle warranties.

Location: Meriwest Credit Union Main Office

5615 Chesbro Ave.

San Jose CA 95123

Unmarried? Buying a Home Together? Read This!!!

Buying a home means making a number of decisions with your money, investment planning (remember, your home is an investment), and we must consider how to accept title in our new home as part of our estate planning. Generally,  California is a community property state. In California, a 50/50 division of community property between a married couple is strictly mandated by statute, meaning that the focus then shifts to whether particular items are to be classified as community or separate property. If one owned property prior to the marriage, that property can be vested as “Sole and Separate Property,” meaning that it belongs entirely to one party in the marriage.

Typically, in the absence of a Living Trust, married couples in California take title to property as joint tenants or as community property. But what if you are not married? What if you are cohabitating with someone and you decide to buy a house together?

Unmarried couples have many of the same decisions to make as married couples when it comes down to home purchasing. One of the most important is how to take title of the home. This can determine what can happen in the case of a dissolution of the relationship or a death of one of the parties to the home’s purchase. Let’s take a look at the different vestings available to unmarried couples and some of the details involved with each particular vesting.

To be sure, I am not an attorney. The information I provide here is rather basic so for additional details, please consider consulting with a Realtor, a lawyer or an investment adviser who can help you with some estate planning.

Individual vesting: In this case, only one individual of the unmarried couple owns the property and owns 100% of it. The other individual has no ownership involvement or rights. If the owner dies, the surviving member of the couple is out of a home unless the beneficiaries selected by the decedent (dead) owner allow him or her to continue living in the home with a rental agreement. The owner can bequeath the property to their unmarried partner in a will but that opens up a can of inheritance taxes and Legal issues.

Tenants-in-Common: This vesting is most common for investment properties with multiple owners. In the case of unmarried couples, some people like to retain what is theirs or at least have a dividing line to say this part is mine and that is yours. This is particularly acute when one party to the transaction provides a larger portion of the down payment of a new home. Tenants-in-common allows each borrower to delineate their ownership percentage of the home. If two people have equal down payments and will share 50/50 in the mortgage, the percentage could be set at each owning 50%. If the down payments are unequal or one party will be paying a significantly larger portion of the mortgage, the couple must work out who owns what percentage; 40/60? 30/70? Also, in Tenants-in-common each can leave their portion of the home to their own selected heirs. Their ownership does not automatically revert to the surviving tenant or tenants. You can leave your ownership interest to the dog if you want! This creates some sticky situations if the decedent tenant leaves their portion of the home to someone with whom the surviving tenant does not get along.

Joint Tenants: In Joint Tenancy, the owners own 100% of the property together. There is no delineation of who owns what percentage of the home. Joint Tenants must both sign documents when transferring the property or using it as a security for a loan. Joint Tenancy is often written on title documents as “Joint Tenants with right of survivorship,” meaning that when one tenant dies, the other tenant inherits the property and owns 100% of it. That tenant now owns the entire home and has the right to select his or her own beneficiaries for the home in the case of their own death.

Community Property (with right of survivorship): This vesting is intended for married persons or domestic partners. Similar to Joint Tenants, the tenants own 100% together. There is no delineation of ownership percentages. Since all such property is owned equally, both parties must sign all agreements and documents transferring the property or using it as security for a loan. Adding the “with right of survivorship” may add some tax advantages. On the death of an owner, the decedent’s interest ends and the survivor owns all interests in the property.  

Trusts: Unmarried people may also take ownership in the form of a trust. The trust documents will determine each parties’ (trustees) ownership percentage and will determine what takes place upon the death of a trustee. In this case, funds could be left to the surviving trustee or decided in advance who will inherit the ownership. They can also designate who would manage the trust (successor Trustee) in the case both owners perish at the same time.

If you are unmarried and thinking of buying a house, this is a great time to do it. Despite the lack of inventory in some areas, interest rates remain historically low. There is a lot to take into consideration when purchasing a home such as the neighborhood, schools, transportation availability, shopping,  down payments, loan terms, and how you will take ownership; your vesting.

When the time comes to purchase your new home, don’t forget to check your credit union’s mortgage rates. Judging from the volume of home purchase loans we are doing today, our interest rates and loan terms must be very competitive!

Link for additional information: http://www.clta.org/for-consumers/consumer-holdingtitle.html

This link is to the California Land Title Association's website for vesting information.

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Free Financial Education Class:
Credit Myths & Credit Repair
Wednesday, May 28, 2014 - 6:30-7:30 p.m.
Chesbro Financial Center

5615 Chesbro Ave, San Jose, CA

Your credit is one of the most important things you need to know the FACTS about. Protect your credit by learning about credit Myths vs. Facts.

Understanding Biz Credit Cards

Here is a special bonus for our readers; the Credit Union Guy gets real about Business Credit Cards with Erica Sandberg of CreditCards.com.

You have your high school diploma. Now what’s next?

You got your diploma, went to grad night, and stayed out until morning. What are your plans? You may have plans for college locally or away. You may have a job lined up for the summer. That’s what’s next for you, but what’s next for your money?

1. Have you opened a checking account? Was it at a bank or a credit union? If you opened your account at a commercial bank, you must enjoy paying fees to the bank. If you don’t enjoy paying fees to a bank, you can open your checking at a credit union and keep more of your money. It is not that credit unions don’t charge any fees, they just charge fewer of them than the banks do. Are you required to have a minimum balance in your bank account to avoid monthly service charges? Are you required to have direct deposit for a free checking account? If you don’t maintain these things, how much is the monthly charge? $10? $15?

Generally, at credit unions that is not the case. Most credit unions often offer checking accounts that are free of fees. There are no monthly service charges or minimum balance requirements. Direct Deposit is encouraged but not a requirement for a free account. Credit unions believe it is better for their members to keep their money than to take it from them in the form of banking fees.

2. Are you working? Then you should be saving money. Save what you can afford. If you have a car, you will thank yourself for saving some money. Cars don’t take care of themselves. Tires will go flat, batteries will go dead, hoses will spring leaks, and belts will break, all costing you money. Put some money away for that inevitable day when something goes wrong with the car. Just to tow your car five miles may cost you $100! Do you have $100 in your savings today? If not, you should have that as a minimum start amount and keep saving.

While we are working on savings, let’s talk about an emergency fund. As time goes by, an emergency fund will be important to you. A general rule of thumb for an emergency fund is six months worth of income. The emergency fund exists to fill gaps in your budget when unexpected expenses arise. Not just for fixing your car, but for emergencies such as getting transportation to visit sick family members, or your own emergency medical bills, or paying for your insurance deductible after a car accident are just some examples of good uses for your emergency fund. That emergency fund exists in case we find ourselves unemployed. That six months income in the fund may be what we need to bridge our income gap between jobs! So what’s the best way to save? Try allocating a portion of your check into a savings account as part of an automatic deposit or transfer. Think about it. If you get paid twice a month, that’s 26 checks in a year, if you only took $10 per check and had it automatically deposited into your savings, that’s $260. Now what if you doubled that to $20 per check? That’s $520 you’ve saved! And since it’s being automatically deposited, you probably won’t even notice it coming out of your check.

3. Do you have credit? Pay your bills on time so you don’t incur any bad credit and to help build strong credit. An unpaid bill can become a collection and hurt your chances to access credit. A cosigner can be very helpful in accessing credit such as a car loan or credit card. The cosigner is on the loan with you so they would suffer if you fail to pay on time. The cosigner is essentially putting their good credit at risk to help you. This should be treated with great respect. You must stay on top of any credit commitments made with a cosigner.

Are you more independent? Don’t want a cosigner? Perhaps a secure Visa or Master Card is in your future. Meriwest Credit Union (as well as many other CU’s) offers a secure Visa card that can be started for as little as $300. Send a $300 check with your application and, if approved, your will receive a $300 Visa credit card. Want a higher credit limit? Increase your security deposit. Your incentive is that if you don’t manage the card well you are putting your savings at risk. If the card is not paid on time, it could be closed and paid off with your secured savings. You would receive whatever is left after pay off. Be aware that these cards usually have an annual fee as well.

Whether you initiate credit with a cosigner or through the secured route, it will take some time to get yourself established. Rome was not built in a day and we don’t build a credit history in three months! Check CreditKarma.com to see your credit score and watch it grow as you manage your credit.

4. Do you have a car? Do you have adequate car insurance? There are a lot of car insurance companies that advertise very low rates and for good reason! They mainly quote the cost of the California Minimum Insurance. What are those minimums?

$15,000 for injury/death to one person.

$30,000 for injury/death to more than one person.

$5,000 for damage to property.

Let’s say you bought this exact amount of insurance. It is very inexpensive. Why? You have very little insurance. Let’s suppose you hit a new Mercedes Benz E-Class sedan from behind and the owner gets a neck injury like whiplash. If the car is totaled, it will cost you over $50,000 to replace it. How much do you suppose the hospital bills would be for whiplash? $100,000? $250,000? Whoa! More than that? Yep.

In this case, your insurance company will give the victim $5,000 for the damage to their car and $30,000 for the hospital stay. You are on the hook for the rest of it and it could be in the hundreds of thousands of dollars. If you don’t have hundreds of thousands of dollars in your emergency fund, you might want to budget for adequate insurance. It may cost you more than the super cheap minimum insurance, but it will help you sleep at night knowing you are not at risk of filing bankruptcy for a car accident.

These four things, opening a checking account, starting your savings, establishing your credit and properly insuring your car can make your financial life so much easier and put you ahead of the game. Many college graduates are not ready for their lives financially when they leave college. If you start your post high school planning with these four simple ideas, you can build a financial foundation that will serve you and your future family for the rest of your days.

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All About Business Credit Cards
On Wednesday May 14th at 10 am PDT the Credit Union Guy, Meriwest CU's Community Relations Manager, Greg Meyer, will take part in a Google+ Hangout with the team at Credit Cards.com to talk about understanding Business Credit Cards. It's fifteen minutes that will bring you up to date on the differences and the proper uses of a business card. Here is the link to watch: http://bit.ly/1i20MX4 .

Free Credit and Identity Theft Workshops

Preventing Identity Theft
Wednesday, May 21, 2014 - 6:30-7:30 p.m.
Chesbro Financial Center, San Jose, CA

Identity theft is on the rise. After the Target Store breach, what more can we expect and how do we protect our hard earned money from these thieves? We share some answers with you.

Credit Myths & Credit Repair
Wednesday, May 28, 2014 - 6:30-7:30 p.m.
Chesbro Financial Center, San Jose, CA

Do you know all there is to know about credit? We review the top ten myths of credit and explain how paying bills, collections, credit inquiries, and divorce can effect your credit standing.

Ten Giant Wastes of your Money

Do you waste money? Do you misuse it to the point that you might as well set it on fire? Do you have money to burn? I am sure you don’t think you do. No one wants to waste money but we often do unknowingly. There are more money wasters out there than I can list in the blog. After you have read my top ten ideas for how we waste money, I encourage you to pass along your own ideas. I will compile them and put your ideas into a future blog. You can respond to this blog or send them to GMeyer@meriwest.com.

1. Unused memberships for which you are still paying. Gym memberships, online gaming, dance clubs, fraternal organizations, etc. These memberships take money from us every month. If we are not using the advantages of these memberships, why are we still paying for them?
2. The social life is cool, but at what cost? One or two nights a week out drinking and carousing can cost you $30-$50 a night depending on the bar. It’s not all booze because when you are out drinking you invariably want to go out to eat. Who’s going to run home and fix pasta after four drinks? Besides, all those cool people at the bar are not at your home!
3. Regularly eating lunch in restaurants or take out. How much does it need to cost before you decide to start making your lunch at home and taking it with you? A cheap lunch of a deli sandwich and a soda can run $7 today, much more if you want something more elaborate. If I eat out four times a week all year long how much does that cost at my (low) average of $7 per day? Try nearly $1,500! It runs about a third as much to bring your lunch regularly.
4.  Style. Addicted to style and fashions? Do you have fashion magazines coming to your door? Is the next thing from your fav designer the next must have fashion addition? Cool your jets. This is a problem for men and women. You can be helped; you just have to admit you have a problem! Now, repeat after me, “I am addicted to fashion!”  Good, now get some counseling!
5. Gas hogs. Have you checked the gas mileage on your car lately? A ten mile per gallon difference, going from 20 mpg to 30 mpg, can be a $1,000 savings at $4 per gallon! (based on US resident avg. mileage of 15,000 miles annually)
6. Cable Premium Services. Do you still have HBO, Showtime, Starz, Cinemax, and the Movie Channel? It may be costing as much as $50 monthly/$600 annually to maintain these movie channels. Is it worth it? A subscription to  a streaming video provider is much cheaper!
7. Tired of paying for cable? Did you know your local broadcast TV stations still broadcast on the air? Modern flat screen TV’s have digital tuners built into them. A $10 rabbit ear  style TV antenna from your local electronics store connected to your Flat Screen can bring in a lot of programming; 54 stations in San Jose alone without a cable box or a satellite dish! Local television stations now broadcast in digital, meaning they have a lot more programming available. What was one channel prior to the advent of digital broadcasts is now 3 or 4 different channels. You want more? Consider internet TV. There are a variety of inexpensive internet TV devices ($100 or less) that work with your high speed wireless internet to bring you 1,000 channels of programming such as Youtube, the major TV networks, and most cable networks. Your Smart TV or BluRay DVD player may have this access built in to it. If you have a fast internet connection and an antenna on your TV, you might be fixed and be able to tell cable and their rising monthly fees good bye. Typical cable bills can be >$100 monthly. Would that look better in your savings account?
8. Still getting the newspaper at home? If you have the internet and a smart phone, is the newspaper necessary? Every news item in the paper was a news item 24 hours ago on the internet. Why do you want old news delivered to your door?
9. Do you buy extended warranties? When you check out of electronics stores with your gadgets, you are often asked if you want the extended warranty. These are unnecessary as the manufacturers generally have pretty good warranties to begin with. The extended warranties have a laundry list of exclusions that often prevent you from using the warranty as it was originally intended. Extended warranties are seldom used and make a lot of profit for the store where you purchased your item.
10. You don’t maintain a budget. You get paid and have no idea where your money goes because you don’t track it or pay attention to it. You hope that payday comes soon as you may be running out of money. That’s no way to live your life! Build a simple budget and use it to control your spending. You will save some money!

Get out last month’s checking account statement and see where your money went. How much was your cable bill? How much did you spend eating out? What was your gasoline bill for the month? You may find some fine incentives that can help justify one or two lifestyle changes that can help you save a few dollars here and there. The only question remaining is, are you ready to make that change? I am sure your savings account and your wallet would be happier. 

Turbo Charge Your Retirement

Q:Hey, Credit Union Guy, I'm in my 40s and haven't saved nearly enough to prepare for retirement. How can I 'turbo-charge' my retirement savings to catch up?

 A: The good news is that you still have a lot of peak earning years ahead of you. Many people don't hit their professional stride until they reach their 40s, 50s and 60s, and they have their best earning years, by far, late in life. If you qualify for a traditional pension, so much the better, because many systems use your highest-paying three or five years to calculate your benefits. These traditional pensions, however, are getting quite rare.

   

The bad news is this: Interest rates are at or near record lows. That's great for borrowers, but it makes things a lot harder on savers. Chances are, you will need to save a lot more money to generate a given level of retirement income than your forebears did a generation or two ago.

Here are some ideas: 

Rein in spending sharply. Learn to enjoy cooking, rather than eating out. Cut back on cable TV packages and take up exercise instead. The lower your monthly expenses, the more free cash flow you will have available to invest. All solutions to your problem start with this one step.

  

Pay down consumer debt and credit card debt. With credit card interest rates in the high 20s for some people, this is often the very best return on your investment you can get. Every dollar you pay down in credit card debt sooner or later nets you a return on investment equal to the interest rate on the card - with no risk, and no taxes due. Pay it off early and keep your future dollars.

  

Next, make sure you are making the most of your tax-advantaged retirement savings opportunities. Are you working for someone else? Increase your 401(k) contributions. Maximize your IRA or Roth IRA contributions if you are eligible.

Do you own your own business? Can you start one? If so, you have some additional options: You can form and contribute to a SEP IRA, or simplified employee pension plan. This plan allows you to contribute up to 25 percent of your income from the business into a SEP IRA, or up to $49,000 per year, tax deductible. No taxes are due until you take the money out. Some businesses may be better off forming a SIMPLE IRA or Solo 401(k), depending on the specifics. Consult a qualified financial advisor with experience in retirement planning to find out which alternative is most appropriate for you and which will enable you to maximize your contributions.

  

Want more ideas? If you are self-employed and have your own business, you have few or no employees and a steady stream of cash flow, you can make nearly unlimited tax deductible contributions to an insured pension fund, under Section 412(i) of the Internal Revenue Code. (Make sure you have an experienced advisor working with you on these. This might not be a job for your nephew who is just getting started in the life insurance business).

Have you spoken to your investment advisor about the growth in your account? How much risk can you honestly accept? The saying is the higher the risk the higher the yield. Is that risk and the stress worth the yield? A good advisor will set you up with some options that can mitigate or modify your risk. 

  

Are you renting? It might be time to buy. That may sound expensive now, but interest rates are extremely low as of this writing. Even if rates rise to five percent or more, it would still be historically low. If you're in your 40s, you will have that 30-year mortgage paid off in your 70s. At that time, you may want to convert the equity in your home to a stream of income via a reverse mortgage. It's not for everyone, but if you rent rather than buy, you won't have that option. You can make that decision when you get there.

  

Above all, save money. Squirrel money away every way you can. Cash is still king, and there's no substitute for healthy cash reserves in your credit union account, whether in checking, certificates or other conservative savings options. You might not get a great return, but it's safe, secure and steady. Most of your success is going to come from controlling spending decisions, rather than from making brilliant investment decisions. Set things up so you don't have to be brilliant to succeed, just prudent.

  

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Meriwest’s Spring Pre-Owned Car Sale is this Weekend!
Sat-Sun: April 12th and 13th
Chesbro Financial Center, San Jose, CA

Sale Hours:

• Saturday, April 12th:
  9:00 a.m. - 6:00 p.m.
• Sunday, April 13th:
  10:00 a.m. - 5:00 p.m.

Event Location:

Chesbro Financial Center
5615 Chesbro Avenue
San Jose, CA 95123

Take advantage of this special event!

• Low auto loan rates
• Huge selection of over 200 quality vehicles
• Up to 100% financing available for qualified buyers*
• Fast and friendly service
• Trade-ins welcome

Plus PRIZES and more!

Zombie Debt

Even Zombies say, "Zombie debt bad!"

Zombies are more popular now than at any time I can remember. There are new zombie movies coming out, zombie games, zombie parties, and even self-defense products for the upcoming zombie apocalypse.  There is one more Zombie Threat you must protect yourself from, ZOMBIE DEBT!

Zombie Debt is a collection that has been “termed” off your report. In other words, it has reached its seven year expiration and been removed automatically from your credit report. Then collectors try to call and collect on “Dead Debts” or “Zombie Debts.” It is as if the seven plus year old debt has risen from the grave and come back to haunt us. Imagine your old debts doing the slow zombie shuffle to your door yelling, “Pay me, pay me!”

Zombie Debt Collecting is becoming more common. This is particularly true with people who don’t track their finances well and don’t follow their credit report. Bill collectors are taking advantage of their naiveté and making threats about legal actions if payments don’t start right away. These tactics are working in the lower income communities. Typically they are going after old credit card debt.

Consumers need to know their rights in regards to credit reporting. I present a workshop in the community and at my credit union titled, “The Myths of Credit.” The presentation goes over the top ten myths of credit and an emphasis is put on managing and understanding collections. Too many people don’t understand that a collection can only be collectable for seven years and not beyond that. However, these collection agents continue to attempt to collect debts that are well beyond the seven year period. Also, once families go into an agreement with the collector on a Zombie debt, they need to stick to it and make their payments as the collection agent could now make this a new collection for nonpayment due to the payment agreement/promissory note the consumer might sign.

How should a person handle collection calls and avoid Zombie Collections? Regrettably, it is not as simple as shooting a zombie in the head and ending the threat.

Before a collector calls:

1.       Access your credit report through AnnualCreditReport.com. You can access all three bureaus’ reports here. You will never be in the dark about your credit status. You will always know when a collection has gone on to your report and when it expires. This is a free service.

2.       Sign up for CreditKarma.com. They will notify you of any changes in your score and provide the info for those changes; such as a collector “re-aging” a collection or putting an old expired collection back on your report with a new date to make it appear current. This is also  a free service.

When a collector calls:   

1. Don’t admit to anything. Don’t agree to payments. Your agreement to making payments  or even acknowledging the debt could provide the company the legal right to collect the debt and may reinstate a dead debt and make it a real Zombie!
2.   Make them identify themselves and the details of the debt they are collecting; dollar amounts and the date the collection became active on your credit report (AKA First date of delinquency: The legal term for the first day a debt goes on your credit report). This date can clue you into whether they are collecting on a Zombie debt.
3.  Don’t fall for the traps. Agencies will sometimes “re-age” the debt, (reporting the debt to the credit bureau as if it’s new). They might promise to wipe off the “red checkmark” on a credit report, of sometimes do a “bait and switch” where they tack on the balance of a zombie debt to a new credit card offer. 
4.  Ask them to validate the date and amounts of the collection and send them to you in writing. This should also include asking them for the credit card agreement you signed. Double check the statute of limitations in your state. Generally, seven years is the accepted period of collection. If the debt was discharged thru a bankruptcy they cannot collect it.
5.  If you have determined that you are not responsible for the debt due to age of the debt or other written agreements such as settled or paid in full, write a letter to the collection agency and inform them that you will not pay the debt and share the reason for it as well as any copies of evidence you have showing the debt is no longer collectible.
6.  Collectors often like to threaten payees with court. “If you don’t pay this, we will take you to court!” With most modest credit card debts it is just not economically feasible to hire attorneys to go after the payees. This is a common threat with Zombie debt. If your debt is expired and the collector makes this threat, it is an empty threat with nothing to back it up. No one is going to spend big money ($500 per hour!) to hire an attorney and pay for court costs to collect small expired debts.  
7.  Check your credit report annually. Review it and compare it to the previous year’s report and determine that all items on the report are current and valid.

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Save The Date!
Meriwest Spring Pre-Owned Car Sale
Sat-Sun: April 12th and 13th
Chesbro Financial Center, San Jose, CA

Sale Hours:

• Saturday, April 12th:
  9:00 a.m. - 6:00 p.m.
• Sunday, April 13th:
  10:00 a.m. - 5:00 p.m.

Event Location:

Chesbro Financial Center
5615 Chesbro Avenue
San Jose, CA 95123

Take advantage of this special event!

• Low auto loan rates
• Huge selection of over 200 quality vehicles
• Up to 100% financing available for qualified buyers*
• Fast and friendly service
• Trade-ins welcome
• Plus PRIZES and more!

Learn More

Debit Cards vs. the Fraud at Target Stores

With the recent electronic data theft from Target, Neiman Marcus, and others in the 4^th quarter of 2013, many people are looking for an alternative to their bank or credit union issued debit card. We are getting a lot of questions like:

•          How safe is my debit card?
•          What happens if I find unauthorized electronic debits in my bank statement?  
•          How do I get reimbursed for unauthorized usage of my card? How long does it take?

Bank customers and credit union members all over the country have concerns about the safety of their data. Let’s be clear here, your financial institution very likely has the best anti hacking software made today. There has not been a significant breach of banking data since 2011. How often are retail merchants the victim of identity theft hackers? It seems like every month we hear about a new breach! 

The problems really lie with the retailers like Target. Their security was so poor the thieves were able to use common malware that had been used before in other data breaches and the bad guys didn't even encrypt where the money was going! Essentially, Target was broken into by an amateurish gang who left all kinds of evidence of what was happening, but Target’s IT department failed to recognize the danger. (See the article in the Minneapolis Star Tribune  for a story on the methods of the thieves.) 

Target will not be paying for anyone’s monetary losses resulting from the fraud. They won’t be paying the millions of dollars it cost the financial institutions to replace all the compromised debit and credit cards. Retailers have no responsibility to their customers when there is a data breach. For many of you this is a very surprising revelation but that is how it works today. The financial institutions are forced to pay for their customer’s losses after a hacker has broken into the merchant’s computerized payment system. Target’s breach cost banks and credit unions $200 million so far! It cost credit unions in Wisconsin $750,000 alone. The numbers for California are still being calculated.

(Okay, I am done with my “I am so mad at Target’s weak data protection.” screed. Now, let’s talk about Debit Card security.)

The debit card is a viable alternative for paying in store charges as well as preauthorized transfers. When managed properly, it has very strong anti-fraud/anti-theft procedures. The Federal regulation known as Regulation E provides consumer protections for fraud against unauthorized use of a debit card. One has 60 days from the issuance of their account statement in which the problem or error occurred to contact their financial institution and file a Reg E complaint. This is true for banks and credit unions.

Once the complaint is filed it takes about 48 hours for most institutions to issue provisional credit to their clients for the disputed items. Each will have a different procedure so you should make yourself familiar with the procedure at your institution. The reimbursement is pending an investigation into the fraud. Most investigations are completed within 10 days resulting in final credit or revocation of credit. Reg E limits a consumer's liability for unauthorized electronic fund transfers, such as those arising from loss or theft of an access device, to $50; if the consumer fails to notify the depository institution in a timely fashion (>60 days after the statement was issued), the amount may be $500 or unlimited.

The key to this is that customers of banks and credit union members need to keep an eye on their accounts. It is so much easier today than 10 or 15 years ago as we now have online and mobile banking. Our customers and members can keep up on their accounts while on the run and be able to address any inconsistent transactions immediately with their institution. The faster someone reports an unauthorized transaction, the faster the institution can reimburse them.

One of the reasons credit cards are being pushed as a payment alternative is that the credit card companies are pushing this issue and have been for many years. My friends at Visa would want people to pay all their bills and groceries with a credit card and then write one check at the end of the month to pay all. According to the credit card companies this protects your checking account from being exposed to fraud. Of course, the credit card companies would be very pleased if you could only pay a portion of their bill. Then the consumer will be paying interest and that is the issuers’ primary desire!

For domestic payments, I would use my debit card and keep a close watch on my checking account thru my online banking program. I would definitely use a credit card when traveling internationally.

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Our Next Free Teen Financial Education Class:
Real World Budgeting for Teens and College Students
Saturday, March 22, 2014 - 10:00 -11:00 a.m.
Chesbro Financial Center, San Jose, CA

Attend this FREE, fun and interactive class made just for teens! Various life scenarios involving everyday finances are covered:

• Learn how to make wise money decisions when starting an "adult life".
• Learn tips and find out the steps on how to rent that first apartment.
• Learn the best tricks for making ends meet when you are on your own.
• Find the hidden costs of being on your own.
• Learn how saving money can improve your lifestyle.
• Learn how your down payment on your first car can effect your payment and interest rate.

Teens, learn what it's like to be on your own in the real world!

Parents are also welcome to attend.

RSVP today to Greg Meyer, Community Relations Manager - gmeyer@meriwest.com or call (408) 365-6328

Minors with Credit Cards-Good idea?

As minors cannot sign a contract until they are 18 they cannot be involved as a co-signer on a card. A parent cannot cosign for their kids as the kids cannot sign on to the card with them. Cosigning for your kids is a relatively straightforward process, both of you will be on the application and both will sign. The parent’s credit will be evaluated for approval. If it is approved, the proper management of the card and the parent’s credit background will elevate their adult child’s credit score. Of course, if the card is not managed well or the parents have a lapse in managing their credit, that can be detrimental  to the young person’s credit score. 

 

 

However, being younger than 18 does not lock a young person out of having a credit card. They can be placed on an established credit card as an authorized signer. This gives them all the rights of usage without the responsibility. But it will start to build their score for them provided the parent has a good score to start with. Yes, the minor can start building that FICO score while they are a minor. The best option:  Parents can remove the minor from the account anytime they wish! 

 

This is especially helpful when the card has been misused.

 

The major disadvantage of minors with credit cards is their occasional lack of responsibility. They might use the card for parentally unauthorized usages like a Miley Cyrus concert or go hog wild buying MP3’s on iTunes or Amazon. There are a variety of opportunities for minors to misuse a card. It is up to the parent to ensure the child understands the limitations and responsibilities related to managing the card and teach them how their current authorized usage will benefit them in their adult life.

 

One option that families have in training their kids to manage money is the Meriwest Credit Union Flow Card. The Flow Card is an electronic checking account (no checks allowed) that is managed by a parent and their child. Flow Cards come with free online banking, online bill pay, and mobile banking options. Your child cannot overdraft a Flow Card! The account is ideal for those students who are aged 13-24 years old. It gives parents an opportunity to teach their kids about managing money with a debit card as the parent and the kid will both have access to the account information. This is good training for eventually managing a credit card.

 

Meriwest Credit Union is an Equal Housing Lender. All accounts are insured by the NCUA to $250,000.

Love, Money, and Joint Tenants

I can understand why married couples are often opting for separate accounts when it comes to consumer credit such as car loans and credit cards. It is mainly because the errors of one spouse normally don’t have an effect on the other spouse’s credit. If a husband has a late payment, it won’t affect his spouse’s credit. That is until they buy a house. The house is a major purchase in which both parties are deeply involved. This usually takes both incomes to make the purchase, thus both spouses are applying for credit jointly. It is usually at that point that a lot of couples start combining their credit.

But in this modern age, there are couples who are maintaining completely separate finances. There may be a variety of reasons for this. As mentioned above, a spouse may have very bad credit or perhaps even a bankruptcy on their record. The spouse may have problems managing a checking account and has repeated overdrafts or had written checks on non-sufficient funds. Many couples find that the best solution is to have a joint account in addition to each keeping an individual account.

A creditor can be justified in attaching those jointly held funds to pay a debt that only one spouse may have incurred. If a marriage is foundering or if a couple has severe disagreements about how to manage money, they may want to maintain separate accounts. With joint accounts, either party can "clean out" the other simply by withdrawing all the funds in the account.

As for savings, checking, and investment accounts it is wise to hold vesting as Joint Tenants or as a Totten Trust. In the case of a joint account, both parties, or tenants, are each other’s beneficiary. Each one is an owner of the account with equal rights of ownership and transaction.

One might explain Joint Tenancy as: Each tenant owns 100% of the account. Should one owner die, the other has the “right of survivorship” and will take over the funds without probate upon the death of the other joint owner. This is the most common form of account vesting for married couples here in California.

A Totten Trust places a beneficiary or multiple beneficiaries on an account. In the case of the accountholder’s demise, the funds go directly to the beneficiary without having to go through probate. It is a very simple process. In the case of multiple beneficiaries  the funds are divided equally between them. A Totten Trust can be very helpful when a couple is hesitant to have joint accounts for any reason but do wish to leave their assets to each other.

Of course, the difference is that in the Totten Trust the beneficiary has no rights to transact on the account while the accountholder is alive. In a joint account, each joint owner has equal rights to transact on the account.

If you have a complex estate or have multiple beneficiaries, it may be helpful for you to have a Family Trust or what is also known as a Revocable Living Trust. These types of trusts allow you to have very detailed instructions on how your estate is distributed. For more information on Living Trusts, please contact an attorney who specializes in family and trust law.

Love is good but it does not pay the bills or pay them on time, nor is love a good retirement planner. Sometimes love has to take a back seat to the realities of financial acumen and management. Today more than ever, your choice of a spouse can make a difference in the way you approach your finances. A spouse with poor credit and poor money skills who lack savings or a 401k could create an uphill battle for spouses who are good at money management. Let’s keep in mind that 70% of all marital arguments are about money! Ouch! Money is often cited as the cause of divorce.

One thing I have heard that is encouraging: If nearly 50% of marriages end in divorce, then over 50% last forever! That’s a stat I can live with.

Financial questions to ask before getting married

Questions you might ask yourself prior to making this financial decision:

• Do I want a joint account with this person?
• Do I trust this person to communicate with me about our spending plan?
• How did his/her parents manage money?
• How well does this person manage money?
• Does this person take risks with their investment money or are they conservative? Has this person had a big loss due to a poor investment decision?
• Will you pay the bills together or is one person to be responsible for them? Which way are you most comfortable?

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FREE Financial Education Class JUST for Teens

Teens: Learn what it's like to be on your own in the Real World.

Whether you're starting high school or about to graduate from college, learn the necessary skills to start making smart money decisions.

Teenagers learn about the real world of
living on their own!

Real World Budgeting
Wednesday, February 19, 2014
6:30-7:30 p.m.

Meriwest Credit Union
Chesbro Financial Center
5615 Chesbro Avenue
San Jose, CA 95123

Attend this FREE, fun and interactive class made just for teens! Various life scenarios involving everyday finances are covered:

• Learn how to make wise money decisions when starting an "adult life".
• Learn tips and find out the steps on how to rent that first apartment.
• Learn the best tricks for making ends meet when you are on your own.
• Find the hidden costs of being on your own.
• Learn how saving money can improve your lifestyle.
• Learn how your down payment on your first car can effect your payment and interest rate.

Teens, learn what it's like to be on your own in the real world!

Parents are also welcome to attend.

RSVP today to Greg Meyer, Community Relations Manager - gmeyer@meriwest.com or call (408) 365-6328

Student Loans: Think Before You Borrow

The total amount of outstanding student loan debt in the United States now tops $1 trillion. To make matters worse, recent graduates have been emerging from colleges and universities, with diplomas in hand, into one of the worst job markets in living memory.

Yes, we have had higher unemployment rates in years past: It reached 12 percent during the height of the 1981-82 recession. But that recession was over relatively quickly. And we have never had the combination of stubborn unemployment, underemployment and high student loan debt that we have today.

College costs have been outpacing incomes for a generation, fueled in no small part by the easy access to credit for college costs. The federal government has sought for years to make college more accessible for middle and working-class families. It routinely provides generous guarantees against default for student loans. However, the more money that’s available for any commodity, the higher consumers will bid up the prices for it, and education is no different.

Many of today’s students are having difficulty in making the payments on their student loans once they’ve graduated or left college. This is particularly true of humanities and arts graduates, who could wind up working low-skill service jobs that pay wages that are not designed to support a hefty student loan payment and the raising of a family.

As a result, the rates of default on student loans are soaring. An October 2012 report from the U.S. Department of Education notes that 13.1 percent of student loan borrowers have defaulted within three years of graduating. The Bureau of Labor Statistics is reporting that over 14 percent of Americans aged 20 to 24 are unemployed. That figure drops to 7.9 percent for 25-34 year-olds – but a large number of them are underemployed.

Bankruptcy is Not an Option
Most people who get into debt over their heads can seek refuge in America’s generous bankruptcy laws. Low-income individuals who can’t pay credit card debt or consumer loans, for example, can file a Chapter 7 personal bankruptcy and discharge some or all of the debt. They are allowed to keep a limited amount of assets with which to start over.

But federally-guaranteed student loan debt is not normally dischargeable through bankruptcy. The courts only discharge federally-guaranteed student loan debt in the event of extreme hardship.

How You Can Protect Yourself
Consider your employability after graduating. Some fields, such as psychology for example, tend not to pay well until you have a master’s degree. Here are a few additional tips to consider:

• Lean towards STEM majors. That is, science, technology, engineering and math. These fields provide students with hard skills that are more marketable to employers.
• Don’t co-sign student loans for your children if you cannot afford the risk of default – especially if they won’t be obtaining a marketable degree, or one that is not from a recognized, accredited institution.

Scholarships

A scholarship can make a big difference in the costs of your schooling. A $10,000 Cal Grant can pay $2,500 in tuition annually. That is $10,000 that does not have to come out of your pocket or borrow in a student loan and pay interest on! Also, many credit unions offer scholarships and student cash awards. Meriwest Credit Union has an annual Essay Competition that offers up to a $1,000 cash award for winning entries. We are preparing to announce the winners of our 2013 Essay Contest in February.

If you know a high school student or are one currently and wish to participate in our contest next year, put a mark on your calendar in September and watch our Meriwest Messenger Newsletter and emailed announcements for details.

• Make maximum use of scholarships and the Post 9/11 GI Bill. Tip: Some veterans with the Post 9/11 GI Bill are able to transfer unused GI Bill benefits to family members. If you have a veteran in your family, explore this option.
• Here is a great site for scholarships: http://www.collegescholarships.org/

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Have you made your IRA contribution yet? Yes, it is that time of year. Our Financial Service Representatives are ready to assist you in making your annual contribution. 

This is also a good time to do an annual review your investment portfolio. Meriwest Credit Union can connect you with licensed Financial Consultants* who are available to help you and share a second opinion on your personal and retirement investments. 

Comprehensive financial planning, long-term and short-term investment strategies and retirement planning are available to all of our members on a confidential basis. They can also help with your education planning. How much will it cost to send your child to college in ten years? Our Financial Consultants can help with those answers.

You can discover your options by meeting with one of the registered representatives in the convenience of any of our Meriwest financial centers or by calling (408) 866-1002.

* Security and advisory services offered through Cetera Advisors LLC (doing insurance business in CA as CFGA Insurance Agency), member FINRA/SIPC. Cetera is under separate ownership from any other named entity. The products offered are not insured by the NCUA, NCUSIF or any other regulatory agency, are not deposits or obligations of, nor guaranteed by the credit union or any affiliated entity, and may lose value.

What do you know about Identity Theft?

With the recent news about Target and Neiman Marcus getting their customer records hacked, we thought it was the right time to focus our blog on identity theft.  

Today we present some important statistics about identity theft. As you read some of these frightening numbers, I hope you will take some extra time to consider what you and your family are doing to prevent yourselves from being victims. 

Recent Identity Theft Statistics

Compiled from the FBI and U.S. Bureau of Justice Statistics 

·         As many as 12 million Americans are victims of identity theft annually. That’s over 32,000 victims per day.  

·         About 15% of ID theft victims don’t find out for four years.   

·         85% of incidents involved the fraudulent use of existing account information, such as credit card or bank information.  

·         Nearly $250 billion a year is lost by businesses who are victims of identity theft.  

·         14% of victims experienced an out of pocket expense of >$1. About half of those experienced losses of more than $100.  

·         On average, a victim of identity theft will lose between $2,000 and $14,000; victims will subsequently spend an average of $851 to $1,400 in expenses related to their case.  

·         If 14% took losses of some sort, then 86% were victimized and had to have, at minimum, a new checking account and/or a debit or credit card re-issued for them. The costs of these replacements are generally born by the financial institution.  

·         Over 50% of victims have most of their issues solved after 24 hours. About 29% spend about a month resolving problems.  

·         The total average of time spent repairing the damages realized through identity theft is approximately 330 hours.  

·         50% of identity theft victims experience trouble getting loans or credit cards as a result of identity theft.  

·         20% of victims will experience higher credit card rates, while 16% of identity theft victims have higher insurances rates because of the theft.  

·         72% of identity theft victims will have trouble resolving or terminating the negative information left on their credit reports or other information left on their personal records.

WHAT TO DO IF YOU'RE A VICTIM OF IDENTITY THEFT

Step One: Contact the fraud department of the three major credit bureaus

·    Experian (TRW) 888-397-3742

·    TransUnion 800-680-7289

·    Equifax 800-525-6285

Step Two: Contact the account issuer in question

·    Ask for the fraud/security department of the compromised or fraudulent account issuer.

·    Notify them by phone and in writing.

·    Close all tampered or fraudulent accounts.

·    Ask about replacement cards.

Step Three: Contact your local police department

·    Notify the police department in the community where the identity theft occurred.

·    Obtain copies of all police reports made.

Keep a detailed log of all contacts:

·    Location called.

·    Name of person(s) you spoke to.

·    Title and call back number with extension.

• Ask and write down what the procedures are for that entity.

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The Credit Myths Workshop provides you with information on the top ten myths of managing credit. Join us to bust some myths and catch up on the latest methods of managing and protecting your personal credit.  

Our next FREE Credit Myths financial education workshop will take place:

January 22^nd 6:30 pm 

Meriwest Credit Union Main Office Training Room

5615 Chesbro Ave

San Jose CA 95123 

To RSVP, please contact Greg Meyer at gmeyer@meriwest.com or 408-365-6328