Debit or Credit? When to Use Each
Things to Consider When Making a Purchase
Three important decisions need to be made regarding your debit and credit card. The first is quite apparent, and it has to do with which type of card you should be carrying in your wallet or purse. A good rule of thumb would be to always carry both on you. That way, you can withdraw cash if needed (without a fee) and use your credit card to build credit or earn rewards.
The second big decision is to figure out which type of card to use on any given purchase. It’s recommended to use your credit card wherever you can. That way, you earn rewards and have more protection against fraud. Use your debit card in instances where you need to get cash or if the purchase is a low dollar amount.
The last decision is whether you should select debit or credit on the pin pad when using your debit card. When you use your BrightStar Debit Card and select credit, you will be prompted to sign for the purchase. This allows you to earn rewards if you’ve enrolled the card in our Scorecard Rewards.
When to use your Debit Card
- Withdraw cash or make small purchases.
- Avoiding debt. Some people can’t control how much they spend, so using a debit card can help them stay within budget. You can also set limits on the BrightStar Card Control App.
- Some stores require that you use debit cards. For example, Costco will not let you make a purchase unless it’s with your Visa Debit.
- Sometimes you can incur a fee for using a credit card. Why pay extra to use credit when you can use debit?
- When buying from a small business. Businesses don’t set credit card minimums without reason. Often, they must pay extra to process the transaction.
When to use your Credit Card
- Building credit! This is a huge one for most people and is something you should strive to do.
- Making big purchases. If you need to finance something and don’t have all of the money upfront. You want to avoid doing this because of the interest you’ll pay on the purchase.
- Most credit cards come with several consumer protections that people don’t realize they have. For example, BrightStar’s Credit Cards come with NortonLifeLock Identity Theft Protection, Travel Benefits, Accident Insurance, Auto rental, and luggage insurance.
Questions to ask before purchasing a home
What do I need to know?
Buying a home is something that you really need to prepare for. Whether it’s saving for a down payment or figuring out which neighborhood is the best fit for your needs. Right now, the housing market is starving for inventory. Law of demand comes into play making prices for current inventory inflated or slightly higher than they normally would be. If you are looking to purchase a place of your own this next year, here are some critical questions to consider.
1. Is my credit score good?
If you need a mortgage to finance a home, you should know that the higher your score is, the more likely you’ll be approved. Not only will you be approved, but you’ll receive a lower interest rate. Since home prices are higher than usual, you might need a lower interest rate on your mortgage to compensate.
2. Do I have a stable enough job?
It’s important to make sure you have a stable job before jumping into a large purchase like this. Thankfully, the economy is doing well and there are plenty of jobs out there. If you suspect an organizational change or some other unknown factor, it may be a good idea to wait and see what happens before purchasing a home. It’s also a good idea to make a budget and figure out what payments you’ll be able to afford with your current salary.
3. Can I afford the down payment?
You’ll want to put 20% down when purchasing a home to avoid paying private mortgage insurance (PMI). PMI can be costly and can stretch your budget every month. If you’re short on cash for a 20% down payment, finding an extra job or some other income source might be a great idea. You can also rethink the home you’re looking for and maybe find something a bit cheaper that can be renovated.
4. Can I afford the home of my dreams?
Don’t buy a home that you aren’t completely happy with. It’s a big investment so you need to be sure it’s a place that you can see yourself living in for a while. It’s not just a short-term investment. Not only does the house need to be something you like, but also the neighborhood, surround schools, and everything else should be up-to-par with what you want.
STOP overspending on fuel
Save at the Pump!
- Make sure your tires are always filled with the right amount of air
- Use the manufacturer’s suggested engine oil and get it changed as directed
- Use your air conditioner only when needed
- Remove any bike racks or luggage racks that could weigh your vehicle down
- Turn your car off rather than idle if you’re in a situation that allows it
- Drive the speed limit
- Use cruise control
- Use public transportation or some other means to get around
- Accelerate slowly at a stoplight when it turns green
- Use your GPS to find the fastest route
- Combine errands into one trip
- Arrange carpools to share the cost
- Buy gas with the lowest octane rating
- Check websites and apps that list gas stations with the lowest price
- If you have a Costco membership, use their pumps when available
- Don’t drive far out of your way to save a few pennies at another gas station
- Walk into restaurants instead of using the drive-through
- Avoid circling a parking lot to find a space that is a little bit closer
- Avoid gas stations near the highway as those prices tend to be higher than gas stations further away
- Don’t “top off” at the gas pump
For more tips you can visit https://www.balancepro.org/resources/articles/frugal-fill-ups-30-ways-to-save-at-the-pump-2
Kickstart your college savings plan
Get started on your savings!
The challenge is knowing how and when to start saving. What’s the right age, how much should you save, and which savings plans are the best? Doing research years in advance is vital to ensure that you’re ready. Check out these tips on how you can get your college savings plan on track:
1. Start very early!
The best time to start saving for college is NOW! Even if you have other financial obligations that you need to save for, starting now is vital. You don’t need to pump an insane amount of money right away, but every bit will help. You can visit this simple College Savings Calculator to plug in your personal information and create a meaningful savings plan, no matter what age you or your children are.
2. Set expectations
Setting expectations is good because it gives you a goal and a realistic idea of how much you will need. The average annual in-state college tuition in Florida was $14,000 for the 2019-2020 academic year. On top of that, you will need money for rent, food, books, and much more. The cost of college is expected to grow with inflation. But remember, you don’t have to accumulate all of this cash on your own.
3. Choose a monthly contribution you can handle
Everyone’s plan will be different according to what they can afford. You want to do the most for your children and make a real contribution, but don’t overextend your budget to do so. You should avoid borrowing money that you can’t payback. A high-interest loan or second mortgage may seem like acceptable options to free up additional funds, but they may put you at tremendous financial risk.
4. Research different savings plans and select the right one for you
Options like 529 Plans are a popular way for parents to save for their children’s college expenses. Several investment options will help contributions grow over time, and withdrawals are tax-free. With these types of plans, starting early is crucial. Another popular option is a Coverdell Education Savings Account. They are similar to 529s with one main difference: They let you invest in any stock, bond, or mutual fund.
Regardless of how your family chooses to prepare for college, start early so you aren’t stressed when the time approaches. I promise it will come faster than you think! For more information, visit https://www.balancepro.org/resources/newsletters/four-tips-that-will-kickstart-your-college-savings-plan/
Raising Financially Responsible Children
Raising a Financially Responsible Child
Thankfully, the Consumer Financial Protection Bureau (CFPB) released a guide to help families raise money-smart kids. Here are a few important takeaways from the guide that you should consider implementing in your child’s life.
Ages 3-5: Introduce basic savings and spending concepts
As many of us know, children around this age want everything in sight. They don’t quite grasp the concept that money isn’t an infinite resource for many. According to the guide, parents should introduce the concept of saving and spending.
A great way to illustrate this to your child is to give a limited number of coins and talk to them about using them to purchase things or saving them to purchase something more significant in the future. Initially, your child might choose instant gratification over saving for something bigger, but the more you do this exercise the more willing they will be to save.
Ages 6-12: Set savings goals
When kids enter this range, it’s important that they start to grasp the concept of planning. Savings goals during this period are important and will help with the rest of their financial development down the line.
An exercise that you can do with your kid is to have them write down what they would like in the short, mid, and long-term. This is a great way for them to layout their financial future and then associate a price for each goal. To take it even further, you can attach a budget to show how much they would have to save monthly to reach each of those goals.
Ages 13-21: Boost financial confidence
Building confidence is so important for teens and young adults. As a parent or a guardian, you can empower your child by ensuring they follow through with their financial plans. If they tell you a goal, continuously check-in and see how they are doing. If you notice them slipping, offer some guidance to get them back on track.
The CFPB says that children this age are able to identify trusted sources of financial information. Having the knowledge and confidence to say “No” to financial scams is a valuable skill. For more information, visit https://www.balancepro.org/resources/newsletters/how-to-make-your-child-financially-capable-may-2018/
Spring into Some Extra Cash
Spring Cleaning is Upon Us
Hold a Yard Sale
Yard sales are a great way of getting rid of random items you have around the house. Put them on display in your yard and watch as people line up to take a look. Even with social distancing protocols, you can have a successful sale. Consider teaming up with people around your block to gain more attraction from people passing by.
Sell on Facebook Market or Offer Up
Virtually list your items on a social media platform to gain attraction from members of your community. This is one of the easiest ways to get rid of unwanted items. Once you list your item, people will direct message you, either accepting your price or giving you a counteroffer. This is an excellent option if you have a lot of things and want to list them quickly. It takes about 5 minutes for each item to post, and once published, you can sit back and relax.
Learn to Earn
Online marketplaces like eBay, Facebook, and Offer Up are all excellent sources of knowledge. If you’re trying to sell something, you can look at these sites to see what people offer for comparable items. Rarely will you be able to sell an item above the market price, so doing your research before you list an item will save you a lot of time and effort.
Ditch the Storage Unit
Why are you paying for a place to store stuff you rarely use? This could save you hundreds of dollars a year and give you some extra cash when you sell the unnecessary things within it. Think about items that you may use once every couple of years and ask yourself if it would be cheaper to rebuy that or keep paying to store them. You might surprise yourself with what you can get rid of.
Don’t be Emotional!
Emotional connections to “things” are only temporary! Don’t keep items just because you might feel bad 5 minutes after selling them. Declutter your space and get some cash for those unused items. Not only will your bank account thank you, but you’ll breathe a sigh of relief once your living space is more organized.
https://www.balancepro.org/resources/newsletters/quick-tips-march-2014/
The Consequences of Debt
What happens if you don't pay your debt?
- Unpaid debt will be sent to a collection agency
- Your credit history and score will be affected
- Debt takes a hefty amount of time to disappear
- Contact from debt collectors
Collection Agency
"Under the federal law an original creditor can send your account to a collection agency once it's 31 days past due, though some creditors may try to collect the payment on their own for up to 180 days," according to Christina Lucey, director of product and financial advocate at the personal finance website CreditKarma.com. If you default on a credit card, loan, or monthly utility payments, you run the risk of having your account sent to a third-party collection agency in which you are still liable to pay off the debt.
Credit Score
Debt consumes an outstanding 30% of your credit score. Payment history, credit utilization, age of accounts, and recent inquiries can all negatively impact your credit score if you are dealing with debt. Quickly paying off your balances helps raise your credit score by lowering your credit utilization. If you lose control of your debt and are forced to choose debt settlement or bankruptcy, it will severely damage your credit score in which it takes several months, even years, to recover.
Impact of Debt
Unpaid debt reported to creditors takes an excessive seven years to disappear from your credit report. Creditors reference credit scores as a factor in their decision to offer credit cards, loans, or even approval for housing or vehicles. Debt also contributes to stress and depression, which can lead to more extensive mental health issues.
Financial Advisor
Bad news? You're in debt. Good news? BrightStar Credit Union offers its members free advisors to help with consolidating debt, surviving rough financial patches, and many more financial questions you may have. Advisors at BrightStar use their knowledge and expertise to construct personalized financial plans to achieve their clients' financial goals. Our advisors check in with their clients regularly to re-evaluate current situations/future goals and plan accordingly for continued success.
Make the Most of a Reduced Paycheck
Don't worry you will get through this!
Don't stress out!
Determine whether your situation is temporary or permanent
If you fully expect to be back to your full salary soon, you may only have to adjust to lessened cash flow for a limited time. But before you tap into your reserves (and retirement savings, home equity, cash value life insurance, etc.) it would be wise to behave as if the salary reduction is long-term. Cut down on spending now. Securing your old income may take longer than you think.
If you do not expect to make as much money as you once did, you may be experiencing anxiety, which is normal. You may be panicking about the practical matters to contend with as well, such as how you will pay your bills. Adopting a systematic approach and devising a plan will help you manage the anxiety.
Recognize that your salary is not you
This is a deceptively obvious statement. Of course your salary is not you. But many people’s self esteem directly corresponds with how much money they make—the higher the income, the more important they feel. If your mood declines when your income drops, make every effort to dispel the attitude that financial wealth equals worth. It does not, nor does having an abundance of money guarantee happiness. Think back to when you were making more money then you do now. Were you genuinely happier, or did you just have the ability to buy more?
Seize the day
Hardship can hone skills and challenge entrenched ideas. Perhaps you worked in the high-tech field because the money was good, but that is not where your passion (or even perhaps talent) truly is. Consider this your opportunity to discover what you really want out of life. After all, if you are going to dedicate forty or more hours a week to your job, it should be something you love. Or at least like.
If you are currently unemployed or are working fewer hours, use this “extra” time wisely. Your options are as varied and abundant as your desires. Consider taking a class—one that will boost future earning potential or for pure pleasure. Write that book, paint the kitchen, start an exercise routine. Or just relax.
Analyze your expenses
When cash is copious, it is easy to spend arbitrarily. However, when the salary that sustained such a lifestyle is gone or drastically reduced, its time to take a good look at what you need to spend your money on, not what you can. Prioritize expenses now, and identify which bills take precedence. Mortgage versus car payment? Credit cards versus utilities? Analyze the ramifications of missing or not paying each. If you need help deciding, contact a financial counselor for help.
Develop a spending plan.
It will help you to discern between those expenses you can and cannot live without. If you find there is simply not enough money to support your necessities, much less your desires, at the very least you now know how much you will require from your next job. If expensive dinners are now a thing of the past, relish in the delights of a cheap pizza, or making cold cuts stretch with lots of lettuce. Enjoy and appreciate the things you may have begun to take for granted.
Remember: credit is not supplementary income
When money is tight, credit cards can take on an unusually seductive glow. However, a $40,000 line of credit is not a bonus in disguise, no matter how you much you wish it was. If you use credit to maintain the lifestyle you’ve grown accustomed to, it won’t be long before you “hit the wall”. Without an income to support repaying the balance in full every month, you’ll be paying in installments. Interest rates on unsecured credit is not cheap, and if you fall behind by 60 days, the rates will likely skyrocket. Late and over limit fees will add to an increasingly daunting balance. And soon you’ll be wishing you could return all the merchandise you bought and the meals you ate just so you don’t have to open another statement and look at those big, scary numbers. Credit cards are not designed to be emergency savings accounts.
Develop a plan
To thwart procrastination, write down what you want to achieve during this time. Be specific: include names of people you need to speak to and proposed accomplishment dates for each task. Update and refer to it regularly. Apathy’s enemy is a detailed and well-thought-out plan.
Go forward
Get professional assistance, talk to friends, and find others who are in like circumstances. It is too easy to think you are alone in this—support is key. Vent to those who can empathize; ask for help from those who can assist. Shock, shame, and anger are normal and feeling these emotions is expected. But by adopting a positive attitude and taking pragmatic steps, you can adapt to a reduced income, and achieve a financially stable future.
Blog Credit: https://www.balancepro.org/resources/articles/how-to-make-the-most-of-a-reduced-paycheck/
Your Stimulus Check and How to Use It
Suggestions on How to Manage the Money
Everything will be fine!
Establish a plan and take care of your immediate needs
Before you spend any of the money, you need to make a plan and budget. Make sure you have food, rent, bills and any other necessities. These should be your biggest priority and are what many will be using the money for. Once your basic necessities are taken care of, you can allocate money to other things.
Pay off debt
This is a perfect time to pay off high interest credit cards or loans that are racking up your extra funds each month. The average American has $8,000 of credit card debt with an APR around 22%. Once you pay this off, or pay a portion of it, you will have more money for necessities when you’re not paying that high interest fee. If your debt is paid off and you have the ability to save this or put it into an interest-earning checking, savings, or money market account, you could get ahead on your savings goals. Whatever you decide to do, make sure you make a smart financial decision.
Add to or start an emergency fund
A good rule to follow is to have 6 months of expenses saved for. This fund should be easy to access and pull from when needed. For many people, this fund could be in use right now with times being as challenging as they are. For others, this would be a great time to add to it and to create an extra buffer for when things aren’t going as planned. The Coronavirus is a perfect example as to why this emergency fund is so important to have.
Help the community
If you’re fortunate enough and willing to, the community could use your help. There are many people that are struggling to buy supplies and stay afloat. Consider donating to trusted sources such as the World Health Organization, the American Red Cross, and various other nonprofits. You can also check with your local government to see if there are any nonprofits that are directly assisting your community.
We're in this together!
Everyone will have a different plan as to how they are going to use the relief deposits. Figure out what works best for your situation but make sure you stick to a budget. Along with being financially responsible, we need to remain positive and support our community. We are all in this together and will get come out of this stronger than ever!
How to Survive a Layoff
Surviving a Layoff
Everything will be fine!
- Make sure you’re receiving everything that was promised to you. For example, if you’re promised a certain amount of paid vacation days and sick days, check your final paycheck to make sure it’s all there.
- Don’t panic! You may even want to take a few days off to relax and clear your mind before you make any decisions. Becoming overly panicked and worried will only stress you out more resulting in poor choices.
- Review your company’s policies. Figure out how to file for unemployment if that’s what you decide to do, and make sure to check how long your company-paid health insurance will be in effect. These are immensely important to understand incase there is an emergency.
- Make sure to look over your budget and make adjustments. There are many ways to cut costs when you really need to, so revisit and make changes to your monthly expenses. This might be as simple as cutting on grocery expenses. Click here for some tips on how to lower your monthly grocery expenses.
- Update your resume! You should continuously be updating your resume even when you’re employed, but make sure you have a current resume to give to prospective employers.
- Assess your goals. Are they the same as they were before you were laid off? If they aren’t, make sure your future plan is clear and attainable.
- Start applying for jobs! There are many online portals that you can use! For example, Indeed and LinkedIn are great tools that you can use to find jobs.
- Your family will always want the best for you. If your family sees you struggling and offers to help, swallow your pride and accept it! There is no shame in needing a little extra help when things go bad.
- Don’t get discouraged! It could take some time to find a new job, but you’ll eventually get that offer! Who knows, the layoff could lead to much bigger and better things.