No, opening a savings account doesn’t directly impact your credit score, but there’s more you should know. Understanding the relationship between your credit score and various financial decisions, like opening a savings account, is critical for maintaining and improving your financial well-being. This article will explore these nuances and help you better understand how a savings account may impact your credit score.

Key Takeaways

What is a Savings Account?

A savings account is a deposit account held at a bank or credit union (called a share savings account). It provides a modest interest rate and is primarily used for saving money and earning interest. Savings accounts are considered one of the most secure forms of investment because they’re insured by the FDIC (for banks) or the NCUA (for credit unions) up to $250,000.

To open a savings account, you typically need to:

Credit Scores and Savings Accounts: Any Direct Link?

The short answer is no. Opening a savings account does not directly impact your credit score. Credit scores, as formulated by the Fair Isaac Corporation (commonly known as FICO) are primarily based on your borrowing and repayment behavior. They assess how you handle debt, including details about:

Since a savings account doesn’t involve borrowing or repaying money, it does not factor into these considerations and therefore does not directly affect your credit score.

How Savings Accounts Can Indirectly Influence Credit Health

Understand Your Credit Score

In conclusion, opening a savings account does not directly affect your credit score, as credit scoring models like FICO primarily evaluate your debt management. However, maintaining a healthy savings account can indirectly improve your credit health by providing an emergency buffer, acting as collateral, and encouraging responsible spending habits. It’s an important part of a balanced financial plan, and alongside wise credit use, it can set you up for long-term financial success.

Opening a checking account can potentially affect your credit score but this is typically minimal or non-existent in most scenarios. Banks and credit unions do not generally check your credit report when you open a checking account; however, they may use a different system such as ChexSystems to verify your banking history. In certain instances, a credit union or bank will perform a credit check and understanding when this happens can help you maintain a good credit score. This article outlines how opening a checking account affects your credit score and some of the more common banking activities that my result in a credit check or lowered credit score.

Key Takeaways:

  1. Checking account and credit score: While opening a checking account can potentially impact your credit score, the effect is typically minimal, with banks and credit unions often using systems like ChexSystems rather than credit reports to assess banking history.
  2. Financial institution policies and hard inquiries: Some financial institutions may conduct hard credit inquiries when opening an account or applying for credit, which can temporarily lower a credit score, emphasizing the importance of understanding a bank’s policies.
  3. ChexSystems and banking history: ChexSystems, used by banks and credit unions, maintains records of consumers’ banking histories and negative entries such as bounced checks or unpaid fees can impact your ability to open new accounts or gain credit approval.
  4. Maintaining a good credit score: Good credit score maintenance requires a range of factors including paying bills and fees on time, promptly addressing any errors on credit reports, and avoiding frequent opening of new accounts.

When Might a Bank or Credit Union Make a Hard Inquiry?

A bank or credit union may make a hard inquiry when you’re applying for credit, such as a credit card, mortgage, or personal loan. Additionally, some bank or credit unions may do a hard pull if you opt for overdraft protection, as this can be viewed as a line of credit.

Consider Your Options Before Choosing a Bank or Credit Union to Avoid a Hard Pull Penalty

It’s always wise to consider multiple options before settling on a bank or credit union. Some financial institutions may conduct a hard pull when you open an account, particularly if you’re applying for credit or overdraft protection. A hard pull can temporarily lower your credit score, so it’s crucial to understand a bank’s policies before proceeding.

Can Using a Bank or Credit Union Decrease Your Credit Score?

Banks and credit unions themselves typically don’t report to credit bureaus unless there’s a significant issue such as an unpaid debt. However, certain activities like failing to pay overdraft fees, closing an account with a negative balance, or numerous account applications can potentially hurt your credit score.

What is ChexSystems?

ChexSystems is a reporting agency that maintains records of consumers’ banking histories. Banks and credit unions use this system to determine the risk associated with potential account holders. Negative entries, such as bounced checks or unpaid account fees, stay on your ChexSystems record for five years unless the source of the information removes it sooner.

What is on Your ChexSystems Record?

Your ChexSystems record may include any unpaid fees from financial institutions, instances of check fraud, bounced checks, or any negative account balances that were not repaid. Information about overdrafts that you have not paid back could also appear on your ChexSystems record.

Don’t Co-sign

Co-signing for a loan or credit card can put your credit score at risk if the primary borrower doesn’t manage the credit responsibly. If they miss payments or default on the credit, it will negatively impact your credit score. Unless you’re willing to take on the risk, it’s generally recommended to avoid co-signing.

How Can You Maintain a Good Credit Score?

Maintaining a good credit score involves several factors: Paying all your bills and fees on time, addressing any errors on your credit report promptly, avoiding the opening of too many accounts in a short period, and responsibly managing your credit utilization.

Checking Accounts Are the First Step Towards Financial Success

Having a checking account is a fundamental part of managing your finances. It allows you to safely store your money, keep track of your spending, and often it’s required to set up direct deposit for a job.

How Many Bank or Credit Union Accounts Should You Have?

The number of accounts you should have depends on your individual financial needs. However, it’s common for individuals to have at least one checking and one savings account: the checking account for managing day-to-day transactions and the savings account for accumulating funds over time. Some people also find it useful to have additional accounts for specific saving goals. Remember, the key is to manage them responsibly to avoid any fees and to maintain a good banking history.

Choosing the right financial institution can significantly impact your financial journey, and the decision often boils down to credit unions versus banks. Traditionally, credit unions tended to provide better rates and lower fees, with larger banks providing more coverage and a wider range of products. However, the differences between the two have diminished over time with co-op and shared branching, giving credit unions a larger reach; credit unions partnering with fintech and other technology providers to improve the member experience; and banks improving their rates to stay competitive.

This article discusses the intricacies of banks vs. credit unions, comparing them across various aspects such as ownership structure, product offerings, interest rates, security, and even their different loan products.

Key Takeaways:

Ownership vs. Membership

Banks are typically for-profit entities owned by shareholders who expect a return on their investments. These institutions are primarily driven by profit motives, making decisions that maximize returns for their shareholders. Their operations, ranging from interest rates offered on loans and deposits to the fees charged on services, are all designed to generate the highest profit possible.

Credit unions, on the other hand, operate on a not-for-profit basis. They are owned and controlled by their members and place emphasis on member benefits and community impact rather than generating profit. Credit unions reinvest their earnings back into the organization to offer lower fees, better interest rates, and improved services. Their ultimate goal is to deliver maximum benefit to their members, which often results in a more personalized and member-centric service experience.

Advantages of Credit Unions Over Banks

Credit unions often offer several key advantages over traditional banks. The most common is their favorable interest rates. As not-for-profit entities, credit unions typically provide higher returns on savings accounts and lower interest rates on loans and credit cards. This means you can earn more on your deposits and pay less when you borrow. And, because they are member-owned, credit unions often charge lower fees compared to banks, which can translate into significant savings over time.

Another standout advantage of credit unions is their exceptional member service. Because they are smaller and community-oriented, credit unions often provide a more personalized banking experience. Members are more than just account numbers; they’re part owners of the cooperative and have a say in operations. Credit unions are known for their emphasis on financial education and their willingness to work with members through tough times, offering flexible loan repayment options during financial hardships.

Advantages of Banks Over Credit Unions

While there are unique benefits offered by credit unions, banks have their own set of advantages that might make them a better fit for some individuals. One of the primary advantages to doing business with a large bank is their extensive geographic reach and accessibility. Banks, especially larger ones, tend to have more physical branches and ATMs spread out across various regions, including international locations. This can make accessing your funds easier and more convenient, particularly for those who frequently travel or live in multiple locations.

NCUA vs. FDIC

The National Credit Union Administration (NCUA) and the Federal Deposit Insurance Corporation (FDIC) are two governmental agencies that provide insurance to account holders in credit unions and banks, respectively. Both serve to protect consumers’ funds in case of the institution’s failure, offering peace of mind to account holders.

The NCUA, through the National Credit Union Share Insurance Fund (NCUSIF), insures member deposits in federally insured credit unions up to $250,000 per account type, per institution. Similarly, the FDIC insures depositors’ funds up to $250,000 per depositor, per insured bank, for each account ownership category. This means whether you opt for a credit union or a bank, your deposits are federally insured up to the same limit, providing a similar level of security for your money at either type of institution.

Product Offering Differences

When comparing product offerings, banks sometimes have a wider variety of services and financial products. Both banks and credit unions offer checking accounts, savings accounts, and loan options, but banks have the capacity to serve a wide range of financial needs and therefore have many variations on these consumer products. In addition, some banks offer more features like investment and wealth management services, insurance products, and treasury services for businesses. However, depending on the credit union, you may find many of these same products and features available to you.

Credit unions typically offer a more streamlined selection of products, focusing on the most common financial needs such as checking and savings accounts, credit cards, and loan products like mortgages and auto loans. Some larger credit unions may offer a wider array of products similar to those found at banks, but the selection is generally more limited. However, what credit unions may lack in product variety, they often make up for with more competitive rates and lower fees. Their technology offerings have significantly improved over the years as well, with many credit unions offering online and mobile banking capabilities.

Interest rates and Fees

As not-for-profit, member-owned institutions, credit unions often offer higher interest rates on savings products and lower rates on loan products compared to banks. The profits they make are returned to members in the form of better rates, which can lead to significant savings, especially on larger loans like mortgages or auto loans. Additionally, credit unions often charge lower fees for their services, including lower overdraft fees, minimum balance fees, and ATM fees.

Banks, being profit-driven entities, often offer lower interest rates on savings accounts and charge higher rates on loans and credit cards. The fees charged by banks can also be higher, with charges for maintaining accounts, overdrafts, and using ATMs. However, it’s worth noting that many banks offer ways to waive these fees, such as maintaining a certain minimum balance or setting up direct deposit.

Credit Union vs. Bank Mortgage

Because credit unions are member-owned and not driven by profit, they can afford to offer mortgages at lower rates and with fewer fees, potentially saving borrowers a significant amount of money over the life of the loan. Some credit unions also offer more flexibility with loan terms and down payment requirements, which can be particularly beneficial for first-time home buyers or individuals with unique financial situations. Credit unions also offer homebuyer or other financial education options for new homebuyers.

Credit Union vs. Bank Auto Loan

Credit union auto loans typically come with lower interest rates and more flexible terms than banks. This stems from their not-for-profit status and commitment to serving their members’ interests. Lower rates could mean lower monthly payments and less paid in interest over the life of the loan, making the overall cost of the car lower for credit union members.

Credit Union vs. Bank for Small Business

For small businesses banking, both banks and credit unions have their advantages. Banks, particularly larger ones, sometimes provide a broader range of services tailored to businesses, including business credit cards, merchant services, payroll services, and a wider variety of commercial loans. They may also have more resources to offer comprehensive digital banking tools and dedicated business advisors. However, credit unions may offer more competitive rates on business loans and a more personalized approach to service. They may also be more willing to work with newer businesses or those with unique needs. Larger credit unions also provide similar levels of technology and services as banks.

Credit Union Credit Cards vs. Bank Credit Cards

Credit union credit cards often offer lower interest rates and fewer fees compared to bank-issued cards, thanks to the member-centric, not-for-profit nature of credit unions. This can make credit union credit cards an attractive option for those who occasionally carry a balance. On the other hand, bank credit cards often come with a wider variety of reward programs, such as travel rewards, cash back, and points systems (though credit unions also have credit card rewards programs).

Are Credit Unions More Secure Than Banks?

When it comes to security, both credit unions and banks offer significant protection for their customers assets. Federally insured credit unions are protected by the National Credit Union Administration (NCUA), while banks are insured by the Federal Deposit Insurance Corporation (FDIC). Both agencies insure individual deposits up to $250,000, offering equal protection from institutional failure.

In terms of cybersecurity and fraud prevention, both credit unions and banks invest heavily in security measures. Ultimately, the level of security between the two can be considered largely equivalent, with the choice coming down to personal preference and specific institution practices.

Community Give Back: Credit Unions Vs. Banks

Credit unions, with their community-oriented focus, often dedicate more resources to local community service and financial education programs compared to banks. This might include sponsoring local events, providing financial literacy resources to schools, and reinvesting earnings back into the community. Some credit unions even offer programs to assist members with low incomes or those who are financially vulnerable.

While banks also participate in community service activities and offer financial education, the scale and emphasis can vary greatly depending on the bank’s size and mission. Therefore, if strong community engagement and service is a priority for you, credit unions could be a more appealing choice.

So, which is right for you?

In determining whether a credit union or a bank is right for you, it fundamentally boils down to what aspects of banking are most important to your lifestyle and financial goals. If you prioritize higher interest rates on savings, lower interest on loans, fewer fees, and a community-oriented, personalized service experience, a credit union could be an excellent fit for you. Conversely, if you value a wide array of financial products, extensive physical and digital accessibility, and potentially more advanced a large bank might better suit your needs. Understanding your personal banking needs and priorities will enable you to make an informed choice between a credit union and a bank.

Guaranteed Asset Protection (GAP) insurance and Mechanical Repair Coverage (MRC) are two types of auto insurance add-ons that provide extra protection for car owners. GAP insurance can protect against financial loss if a car is totaled or stolen, while Mechanical Repair Coverage can protect against unexpected repair costs. As with all insurance products, it’s important to read the policy terms carefully and make sure that the coverage suits your individual needs and circumstances.

Learn more about GLCU Guaranteed Asset Protection (GAP) insurance.

Learn more about GLCU Mechanical Repair Coverage (MRC)

Key Takeaways:

What is GAP Insurance?

Guaranteed Asset Protection (GAP) insurance is a type of auto insurance coverage that’s designed to cover the “gap” between the actual cash value of a vehicle and the amount still owed on its financing or lease. This gap can occur when a car is totaled (or stolen and not recovered), and the insurance payout doesn’t cover the full loan amount. In this way, GAP insurance covers more than comprehensive or collision insurance.

How does GAP insurance work?

When you purchase a new car, the vehicle’s value begins to depreciate the moment you drive it off the lot. If you finance or lease the car, there’s a good chance the loan or lease amount is higher than the depreciated value of the vehicle. In the unfortunate event of an accident, standard car insurance policies generally only cover the current market value of the car, which might be considerably less than the outstanding debt. This is where GAP insurance comes into play.

Here’s how GAP insurance works: If your car is totaled or stolen, your standard insurance policy will typically pay the car’s actual cash value — the original price minus depreciation. If you owe more on your loan or lease than the car’s depreciated value, you’re left with a gap that you’re still responsible for paying. GAP insurance is designed to cover this difference.

For example, suppose you purchase a car for $25,000, and a few months later the car is totaled. The auto insurance company determines that the car’s actual cash value is $22,000, but you still owe $24,000 on your loan. GAP insurance would cover this $2,000 “gap,” ensuring that your loan is paid off. This way, you’re not left with a heft bill for a car you can no longer use.

How do I know if I have GAP insurance?

What is mechanical repair coverage (MRC)?

Mechanical Repair Coverage (MRC), also known as an extended warranty, is a policy that covers the cost of certain types of mechanical repairs and parts replacements that are not covered by a traditional auto insurance policy. MRC can be particularly beneficial for people who own older vehicles that may be more prone to mechanical issues.

The specifics of MRC policies can vary significantly. Some cover almost every type of mechanical repair, while others only cover certain components of the vehicle. The cost of the policy may depend on factors like the age of the vehicle, its mileage, and the coverage level chosen.

How does mechanical repair coverage Work?

Mechanical Repair Coverage (MRC), often known as an extended warranty, is a plan that kicks in to cover the cost of certain repairs and parts replacements once the manufacturer’s warranty has expired. Unlike regular car insurance, which primarily covers costs associated with accidents, MRC is designed to pay for mechanical breakdowns that happen over time due to wear and tear.

When a covered repair is needed, you would typically pay a deductible, and then the MRC policy would cover the remainder of the costs up to its limit. Specifics of what’s covered can vary greatly by plan, so it’s important to read the terms and conditions carefully before purchasing.

Is mechanical repair coverage worth it?

The value of Mechanical Repair Coverage (MRC) can vary based on several factors, making it more beneficial for some individuals than for others. Some factors that may contribute to purchases mechanical repair coverage include:

GAP insurance vs. Mechanical Repair Coverage Summary

Guaranteed Asset Protection (GAP) insurance and Mechanical Repair Coverage (MRC) are auto insurance add-ons that provide extra protection, with GAP insurance covering the “gap” between a vehicle’s actual cash value and the amount still owed on its financing in the event of total loss, and MRC covering certain mechanical repairs and parts replacements, particularly useful for older vehicles. The worthiness of these add-ons is dependent on individual circumstances, such as the car’s depreciation, reliability, and age, and one’s financial situation.

Mobile and online banking has made handling your finances more convenient than ever. You can check your account balance while sitting in line at the grocery store, send a payment before you even get up from the table, and transfer money across accounts during the opening credits of your favorite show.

What’s not convenient is opening your banking app and seeing a message that your account was hacked. You can take some simple yet effective steps to protect your bank account from hackers and fraud, such as using strong passwords, two-factor authentication, and avoiding phishing scams. Here, we’ll delve into eight practical tips on how to protect your bank account from hackers and ensure that your hard-earned money is safeguarded.

  1. Regularly Monitor Your Bank Account

Regularly monitoring your bank account is a critical first step in defending against fraud. With online banking, it’s easy to check your transaction history and promptly identify and report any suspicious activity to your bank. Look out for small, unauthorized transactions, as fraudsters often make minor withdrawals or purchases first to test the waters.

  1. Use Strong and Unique Passwords

Using strong and unique passwords is essential to protect bank accounts from hackers. Using uppercase and lowercase letters, numbers, and special characters can significantly enhance the security of your online banking account. Avoid using easily guessable information like your birth date, name, or common words. Also, remember to change your password periodically.

  1. Enable Two-Factor Authentication (2FA)

Two-factor authentication may feel inconvenient, but it adds an extra layer of security to your account. If you need help setting up two-factor authentication on your accounts, reach out to a member specialist or search for an FAQ on the service’s website. Most banks offer this service, and it’s a crucial feature for bank account fraud protection.

  1. Be Careful with Emails and Phishing Scams

Phishing is a common technique that fraudsters use to trick you into providing your banking details. Be wary of emails that appear to be from your bank but ask for sensitive information. Banks will never request your password or PIN through an email. Also, avoid clicking on links in these suspicious emails, as they can lead you to fraudulent websites.

  1. Use Secure and Updated Devices

Ensure that your computer, mobile device, and applications are up-to-date. Regularly update your mobile apps, browser software, and computer operating system to protect against the latest threats. Installing a reliable security software solution to guard against malware and other potential threats is also advisable.

  1. Avoid Public Wi-Fi for Banking Transactions

Public Wi-Fi networks are often unsecured, making them a favorite hunting ground for hackers. If you’re wondering how to protect your bank account from fraud, avoid using public Wi-Fi for banking transactions. Instead, use a secured and private network. Virtual Private Networks (VPNs) provide a secure solution for those using a public network.

  1. Sign Up for Account Alerts

Many banks, including Bank of America, offer checking account fraud protection services such as automatic alerts for certain types of transactions. These can include international transactions, online and phone purchases, or cash withdrawals over a specified amount. Signing up for these alerts can help you quickly spot any irregularities and report them to your bank.

  1. Regularly Review Your Credit Report

Regularly reviewing your credit report can help detect any fraudulent activities. Make a note of any transactions, accounts, or activity you don’t recognize; it could be a sign of identity theft. Many banks offer free credit reports and tracking on mobile and online banking platforms. You may also request a free annual credit report from the major credit reporting agencies in the U.S.

Understanding how to protect your bank account from hackers and fraudsters is crucial in the digital age. This list of tips to protect your bank account from hackers and fraud isn’t exhaustive, but it’s a good start. Even if you only follow a few of these suggestions, you can improve the security of your financial information and gain some peace of mind.

What is a CD and what are its benefits?

A Certificate of Deposit, commonly referred to as a CD, is a financial product that is offered by credit unions. They are a type of savings account that pays interest and reserves money for a certain length of time — the longer the term, the higher the interest. CDs are a secure and safe place to keep money that you aren’t planning to spend anytime soon. To initiate a CD, there is usually a minimum amount you need to deposit.

A CD is different from other types of savings or money market accounts, because you are assessed penalties if money is removed before the end of the term. By agreeing not to withdraw any money during the term of the CD, you will receive a higher interest return than other types of deposit accounts. You are guaranteed that you will get the return on the agreed rate regardless if interest rates fluctuate.

Benefits of CDs

–Better rate of return
— In exchange for liquidity, regular checking or savings accounts typically offer lower interest rates than CDs.
–Generally with CDs, the longer the term, the higher the interest rate. Therefore, CDs can be useful for sums of money that you don’t require immediate access to but also don’t necessarily want to tie up in a higher-risk, long-term investment, such as a bond.
— The interest rate on a CD is generally fixed for the specified duration of the term. The security of knowing exactly how much you’ll get back when your CD matures provides peace of mind.
–Removes temptation to spend
When money is too liquid, it’s too easy to spend, so CDs can be an effective way of preventing you from spending your money on things you don’t really need, especially if you’re an impulse buyer.

Things to consider

— Suppose that interest rates rise in the next two years. Locking some of your cash in a six-year CD means that you could have used invested it in a higher-earning CD.
— It’s important to know that if you choose to withdraw the money before the maturity date, you’ll have to pay a penalty. For that reason, you should have a liquid emergency fund set up for medical catastrophes and other unforeseeable events; hardship withdrawals from a CD should be a last resort.

Is there a way to avoid these issues?

Yes! Supercharge your savings with a CD ladder strategy

What is a CD ladder?

CD laddering is a savings strategy where you invest in multiple CDs for varying lengths of time. One is, initially, shorter-term, while the others are successively longer-term. Over time, all CDs will help you maximize your earnings by earning the higher interest rate, yet one CD will become available each year if cash is needed, providing more flexibility than a single, long-term CD strategy. With CD laddering, a portion of your cash is freed up each year for you to reinvest in another CD at current rates (if rates are rising or level) or use for other purposes.

As the shorter term CDs mature, you’ll reinvest those funds into longer-term CDs and lock in the higher rates. Instead of initially locking up your money in the longest-term CD with the highest rate (up to 5 years or more), you create a CD ladder to safely move your money into higher rate CDs over time.
Eventually, you’ll have a ladder of CDs, all earning the highest interest rate available for your term. Ideally, at least one CD will mature each year, giving you access to some of your money as you need it.


How can a CD ladder boost your income?

As interest rates rise, using a CD ladder can help you take advantage of rate increases and boost your income over time.
For example, if you invest $75,000 in a 5-year CD at 2% APY and interest rates rise 1 percentage point each year, the rate on a 5-year CD would be 5% after 3 years but you’d be missing out on those higher rates if your money was locked in for 5 years at 2%.

But if you took that same $75,000 and split it up into the CD ladder from the above example and still assume that interest rates rise at 1 percentage point each year, after one year, your first CD would mature and you could invest it in a 3-year CD at the improved 4% interest rate.

The next year, rates rise again and your next CD matures. You can now invest those funds into a 3-year CD at 5% interest. Finally, your original 3-year CD matures and you can reinvest at the new 6% interest rate.
Here’s what rising rate CDs look like over time using a CD ladder.


How do you build a CD ladder?

This all depends on your short- and long-term goals, and when you think you’ll need access to the cash. The goal is to take advantage of longer maturities and higher interest rates, while making some of your money available at regular intervals.

How to build a CD Ladder in 4 steps

1. Determine how much you want to invest in a CD
–Before you open any CD accounts, determine the amount you want to invest in your laddered CD strategy. This needs to fit within your total budget and the money needs to be able to be locked away for a period of time.

2. Evaluate the term length that’s best for you
–Once you’ve determined the amount you want to invest, look at the term lengths for each part of your CD ladder. Remember: You’re opening short-term, medium-term, and long-term CDs, at equal intervals (usually annually).
–Look at your short- as well as medium- and long-term goals: Do you plan to buy a car in a couple of years? Do you foresee needing a large amount of cash for that wedding next year? Think carefully about when you need access to your cash and select CD ladder time frames to support your financial goals.

3. Open your CDs at staggered intervals
–Once you’ve determined how much to invest and the term lengths, it’s time to open your CD accounts. Split your money between each account and stagger when each CD will mature. This will give you several “rungs” in your CD ladder to grow over time, allowing you to reinvest and “ladder up” your interest rates.

4. Continue the CD laddering strategy
–As each CD matures, climb up the interest rate ladder by reinvesting those funds into the longest-term CD in your strategy. This will give you regular access to your money (at your set interval) and allow you to lock in the highest rates available. Continue this as long as it suits your investment strategy – enjoy the returns.
Is CD laddering for you?

Before laddering CDs, consider if the following applies to you:

You have emergency funds in a savings account.

While CD laddering can be a powerful savings strategy long-term, consider leveraging it as a supplement to a traditional savings account, which likely offers more liquidity.
–If you plan on building a CD ladder for the purposes of an emergency fund, make sure you have more frequent access to the funds. Instead of annually maturing CDs, consider ones that mature monthly or every 3 months.
–You may need to open several accounts to take advantage of the longer-term rates, but this can be a great way to put your emergency fund to work (without losing access to short-term funds if needed in a pinch).

You prefer less risk.

CDs keep money secure while typically earning more interest than a checking or savings account. And if the account was opened with an institution that’s backed by the FDIC or the National Credit Union Association, the CD and its funds are insured up to $250,000 per depositor, for each account ownership category.

You’ve planned ahead so funds will be available for projected expenses.

Is there a big expense in your future, such as a wedding, college or business expansion? Think ahead and ladder CDs so they mature at intervals that will accommodate your financial needs.
–CD ladder for retirement
–A CD ladder can be a great way to invest for retirement and to create predictable income during retirement.
–When you retire, a CD ladder can help provide predictable income. If you start your ladder prior to retiring, you can complete the “laddering-up” process by the time you need the income and have several years of high-interest income available.
–CD ladder for college savings
–If you’re saving for college, many 529 plans offer the CD investment opportunities. You can create a college savings CD ladder to safely grow your interest earnings.
–Using a CD ladder for college savings gives you a predictable rate of return. And if you start early, you will have many years to “ladder up” your CD investments.


Managing your CD ladder

Stay on top of rates and maturity dates.
–If you expect rates to go down, lock as much as you can in a longer-term CD. If you’re living in a low interest rate environment, you may anticipate a rise and therefore, consider shorter-term CDs.
–Be flexible — if a six-month CD matures but pays a lower rate than it did previously, invest in a one-month CD until rates improve.
— You may even find that savings or high-yield checking accounts sometimes pay higher interest than do shorter-term CDs such as three- and six-month CDs.
–Create calendar alerts for CD maturity dates so you can reinvest efficiently.

When you’re taking out an auto loan, it’s important to shop around and find the best lender for you. Be sure to include your local credit union in your list of options because they always give their members competitive rates and great service. As well as lower rates, a credit union auto loan might be more flexible so you can borrow the amount you need over the term you want. Read on to find out why your local credit union could be the best choice.

1. Not-For-Profit Business Model

One of the main ways that credit unions are different from other financial institutions is that they aren’t trying to make money for themselves. Instead, the revenue a credit union makes from interest and fees is given back to you – the valued members. Members receive credit union revenue in the form of:

2. Competitive Rates

As mentioned, credit unions can offer great rates on auto loans because of their not-for-profit business model. Here are a few pointers on how interest works and why you should consider a credit union auto loan:

3. Lower Minimum Loan Amounts

You don’t want your car payment to use up most of your paycheck. Luckily, credit unions often let you borrow a smaller amount for your auto loan compared to other financial institutions. A lower auto loan minimum can be helpful if:

4. Dedicated to Helping Members

All credit unions come with a story. They are usually established to meet the needs of a particular group in a community, which might be underserved by big financial institutions. For example, Great Lakes Credit Union was founded to serve civil servants in Lake County, Illinois, at a time when there weren’t many other options. In addition to competitive rates on auto loans, credit union revenue is used to fund:

5. Local Service

These days, there’s something nice about talking to an actual person who lives, works, or worships in your same ZIP code. When you become a member of your local credit union, you’ll be able to:

Thinking About Applying for a Credit Union Auto Loan?

There’s no doubt about it, an auto loan is a convenient way to purchase a car – and your local credit union might offer you the best deal. The next question is, how much car can you afford? Before you apply for your credit union auto loan, it’s a good idea to crunch some numbers and figure out the right loan amount for your budget. The car sticker price is just one of many factors you should consider. Don’t forget you need to include repairs, gas, and insurance in your monthly budget. Plus, you might want to save up for a down payment. Click below for some simple tips to determine how much you should spend on your car!

How Much Car Can I Afford?

With all the brands, models, and options that exist, the process of buying a car can seem overwhelming!

But the basics can focus on one simple question: how much car can I afford? The search for that answer begins before you even set foot on the lot. Read below for tips in finding your new ride!

Get Your Budget On Track

Be proactive in preparing for your car search! Go into the car purchasing process with key numbers from your budget. This is the best first step in figuring out how much car you can afford.

Take a few minutes to run down what you spend every month. From your monthly take-home pay, subtract rent or mortgage, bills, groceries, child expenses, savings, and miscellaneous spending.

When you calculate that amount (your net income), consider the 20% rule, which is the idea of limiting your expected monthly car loan payment (excluding fuel, maintenance, and insurance) to 15% or less of your net income. Following this rule helps ensure you have money left over each month to cover the rest of life’s varied expenses. 

Know Your Monthly Auto Expenses

Once your budget is organized, it’s time to figure out the ongoing costs of car ownership. This includes not only your monthly payment but also the cost of insurance, car maintenance, and fuel.

Monthly auto expenses differ based on your location, driving history, and vehicle. It may take a little time to determine the specifics, but knowing these costs can help you choose the car that works for you and your budget.

A few tips to get an accurate estimate:

Breaking Down the Monthly Payment

Your monthly car loan payment is largely affected by your loan amount, interest rate, and loan term. These figures will usually depend on factors such as trade-in value, down payment amount, and the Annual Percentage Rate (APR).

Interest Rates

Auto loan interest rates are based on several factors, such as your income and debt, as well as your credit score.

Your credit score is often the most significant factor determining your interest rate. The higher your credit score, the lower your auto loan interest rate. If your credit score is less than stellar, consider finding ways to build it up before shopping for a car. 

GLCU can help you with tips to improve your credit score.

Term Length

When deciding on what loan term length is right for you, consider your overall budget and financial situation. 

If you prefer to save on the total amount you pay for your car, choose a shorter loan term or a less expensive car. A shorter loan term usually means your monthly car loan payment will likely be higher because you’ll pay off the loan balance with fewer monthly payments but pay less in interest.

How Much Car Can I Afford? Let GLCU Help!

Now that you’ve figured out your budget, have estimated your monthly costs, and are happy with your credit score, it’s almost time to go shopping! 

But remember that getting pre-approved for an auto loan can give you an advantage at the dealership. Talk to one of our loan consultants today and get pre-approved for a loan ahead of time. This will give you confidence and bargaining power at the dealer, plus you will know where you stand with budget and payments before you make your final decision.

You can also be confident that you’re on the right path with GLCU’s auto loan calculator. Input your unique financial information and it can help you find an accurate monthly payment that will work with your lifestyle.

Here are a few security reminders that can help protect your online and mobile accounts, including your GLCU digital banking accounts, from being accessed by a fraudster as a result of data breaches that occur at other institutions

GLCU also puts security measures in place to better protect our members’ information:

If our system alerts us to changes on your account that seem out of place, a GLCU representative will contact you to confirm the change. If we are contacting you, we will not ask you for your account number, password or PIN.

Fraudsters are constantly finding new ways to target unsuspecting consumers, but you can outsmart them by simply following best practices.

For home buyers on a budget or who want some of the perks of apartment life, buying a condo is one option. 

According to the Institute for Housing Studies at DePaul University, the majority of neighborhoods in Cook County have condos, with a higher concentration in urban areas with high property values. If you’re considering buying a condo, here are a few key things to consider.[1]

Lifestyle: Condos are often located in busy, urban areas. Additionally, shared walls can make it so that you can hear your neighbors at any time of the day or night, similar to an apartment. Increased interaction with your neighbors isn’t all bad, however. 

Many condo communities offer regular social events, making it easier to get to know your neighbors. Having a group of neighbors so close by can also be a benefit in case of an emergency.

Affordability: Condos are often more affordable than single-family homes, particularly in urban areas or for first-time homebuyers. However, condos come with additional fees, called Homeowners’ Association (HOA) fees to offset the cost of shared maintenance. These fees are paid in addition to the mortgage. They are applied toward things like repairs, maintenance of amenities, and building updates. Condos have reserves to pay for large purchases. A condo with healthy reserves can indicate better financial health overall. 

There is no firm rule, but prospective buyers can ask to see a reserve study, which details the size of the reserve and any recent repairs or larger capital expenditures. If a condo has insufficient reserves to cover projects, the board can level an assessment, which requires condo owners to pay an additional amount of HOA fees.

Privacy and Freedom: For those who value being able to decorate and renovate exactly how they want, a condo might not be the best choice. The HOA can dictate how members can renovate and decorate, whether they can have pets, and what kind of outdoor decorations they can display. 

Noncompliance with the HOA’s terms, whether through nonpayment of HOA dues or through another breach, may result in fines or even legal judgments.

Amenities: Depending on the size, location, and price of the condo, many offer amenities like lawn care, weekly social events, snow removal, and even a pool. These can be an attractive perk for homeowners who would otherwise not be able to afford them.

Financial Management in Community: Being part of an HOA means that financial decisions are made with group input. The board of directors has a responsibility to act in the best interest of the HOA as a whole. The HOA should have a healthy budget and reserves, meeting at least four times per year. In addition to reviewing the budget and reserves, attending HOA meetings and talking to prospective neighbors are good ways to assess the financial and community health of the condo.

Condo ownership isn’t for everyone, but it can be ideal for those looking for an affordable option and a close-knit community. If you’re considering buying a condo or want to know more about homeownership options, our HUD-certified counselors are here to help. Contact us at 224-252-2620 or housing at glcu dot org.

  [1] For further reading on aspects of condo ownership compared to owning a single-family home, see https://www.investopedia.com/articles/mortgages-real-estate/09/issues-purchasing-condo.asp