In the News


DuTrac Community Credit Union Conducts 67th Annual Meeting

DuTrac Community Credit Union’s 67th Annual Meeting was held Sunday, April 6 at the Grand River Center in the Port of Dubuque. Approximately 320 members were in attendance.

DuTrac’s annual meeting began with a presentation of flags by the Dubuque Detachment Marine Corp League, followed by the national anthem, sung by Amelia Spahn and Amber Schute.

Chairman Harlan Pedretti, opened the meeting with an overview of DuTrac’s continued focus on member service, evidenced through the technology and infrastructure improvements implemented throughout 2013.

“Although there is a very nice example of DuTrac’s rate leadership from Datatrac in the Annual Report, DuTrac’s vested interest in members is so much more – it’s our focus on your overall financial knowledge as well as your financial welfare over the long-term – from childhood through your retirement,” said Chairman Pedretti.

President and CEO Andrew Hawkinson shared DuTrac’s commitment not only to putting members first, but also giving back to the communities in which DuTrac serves.

“From investments in infrastructure to delivering leading edge, proven products and services, DuTrac ensures the focus is always on the members’ needs by reinvesting earnings in its members and throughout the communities we serve,” said Hawkinson.

Kevin Mueller and Michael Ready were elected to three-year terms to the board of directors. Robert Mannhardt was elected to fill the remaining unexpired (two-year) term of Donald Pfohl, who retired from the board in August 2013 after over 21 years of service.

At the annual reorganization meeting, the following officers were elected:  Harlan Pedretti, chairman; Dan Deutmeyer, vice chairman; Michael Ready, chief financial officer and treasurer; and Kevin Mueller, secretary.   

Daniel Deutmeyer was appointed credit committee chair and will serve with Vonda Hosch, Kevin Mueller, Associate Board Member Nicholas Specht and Senior Vice-President Lending Bob Upton. Linda MacDonald was appointed audit committee chair and will serve with John Vail, Scott Neyens and Robert Mannhardt.

 

DuTrac Top One Percent of Credit Unions in U.S.

Callahan & Associates released their credit union rankings and DuTrac Community Credit Union was found to rank in the top one percent (1%) of all credit unions in terms of total return of the member as of December 31, 2013.

The return of the member (ROM index) is able to demonstrate a member’s relationship with their credit union while focusing on the main functionalities of savings, lending and product usage. Based on their analysis, Callahan & Associates calculated how well DuTrac’s ROM was in the three categories in comparison to other credit unions across the United States.

“DuTrac has always focused on placing members’ financial needs first and Callahan & Associates’ rankings reflect that DuTrac is achieving its goal,” said Andrew Hawkinson, President and CEO of DuTrac Community Credit Union.

Callahan & Associates is a 25-year-old national firm that provides analytics and analysis for credit union performance across the United States.

 

A 'Smarter' choice for shoppers

BY ALICIA YAGER TH STAFF WRITER - Telegraph Herald

With the massive data breach at Target retailers nationwide during the holiday season, shoppers have become more nervous about using their credit cards and being victims of fraud. "It's totally understandable," said Robert Upton, senior vice president for lending at DuTrac Community Credit Union.

As a response to the consumer fears, financial institutions in the United States are focusing more effort on implementing new "smart" credit cards, outfitted with a chip that resists cloned card fraud. Randy Vanderhoof, executive director of the advocacy group Smart Card Alliance, said counterfeiting cards, where fraudsters steal account information and outfit a fake card, is the most common type of fraud in the nation. "There was already a move forward by the U.S. before the data breach," he said. "It certainly raised awareness (of smart cards) but it was not the start."

Read the full article.

 

Iowa Credit Unions Rank Second in the Nation for Loan and Asset Growth - 4Q 2013 Performance Report

(ICUL - 3/10/14) - The National Credit Union Administration (NCUA) released the Quarterly U.S. Map Review including Iowa credit union performance metrics, for the fourth quarter of 2013. According to the December 31, 2013 report, Iowa credit unions are ranked second in the nation in annual loan growth and annual asset growth. Iowa credit unions also posted strong share and deposit growth.

In addition, Callahan & Associates released the Quarterly Performance Summary comparing Iowa credit unions to credit unions nationally for the fourth quarter of 2013. Iowa credit unions posted a strong financial performance, exceeding most national trends.

Below are a few highlights from the Callahan & Associates quarterly report:

• Iowa credit unions posted loan growth of 13.6 percent in 2013, nearly double the national average of 8%.

• Average loan balance at Iowa credit unions increased to $13,080 and share balances increased to $10,034, both higher than the national averages.

• Iowa credit unions originated $2.4B in consumer loans in 2013, the highest amount on record.

 

Important Information Regarding Michaels Stores, Inc. Data Breach

Michaels Stores, Inc. (Michaels) is conducting an investigation of a potential data breach and has issued a report stating Michaels has “recently learned of possible fraudulent activity on some U.S. payment cards that have been used at Michaels stores…. While (Michaels) has not confirmed a compromise to (its) systems, (Michaels) believes it is in the best interest of (its) customers to notify them to this potential issue….” No dates have been released as to when the data breach activity may have occurred.

If you have not used your debit/credit card at a Michaels’ store, DuTrac does not have reason to believe your DuTrac card information was compromised in this latest breach. DuTrac continuously monitors for fraud and if we notice any irregular activity we will notify you individually.

DuTrac is asking all DuTrac cardholders that may shop at Michaels to be mindful of suspicious e-mails with links or that request sensitive information, as well as suspicious phone calls attempting to get this type of information. If you suspect fraud, immediately place a call to the number on the back of your credit card for assistance or contact a DuTrac financial services consultant at (800) 475.1331.

What should I do?
Whether you’re notified or not, it’s always a good idea to check your credit report and be aware of any suspicious activity on all of your accounts.

Will DuTrac be notifying affected members?
We will continue to monitor these accounts and notify members of any suspicious activity.

Has the security breach been fixed?
Michaels reports that it is working with Visa and MasterCard and law enforcement to ensure no further information is exposed.

What are the chances that I become a victim of identity theft as a result of this incident?,
It’s always a good idea to check your credit report regularly for incorrect information. In fact, you’re entitled to one free copy of your credit report every year at www.annualcreditreport.com or by calling (877) 322–8228.

 

Important Tips for Mortgage Borrowers in 2014

Mortgage_thumbnail.jpg

Looking to purchase a home or refinance your existing home? Although the clock is ticking for buyers and homeowners who want to grab a low mortgage rate in 2014, Good Morning America recently featured several tips from Bankrate.com that can help you with your mortgage decisions in 2014. If you stay on top of your game, keep your finances in order and act quickly, you can still grab attractive mortgage deals.

Document your finances.

Lenders will be extra diligent when underwriting home loans in 2014, as new mortgage regulations go into effect in January. The rules put pressure on lenders to verify that borrowers have the ability to repay their loans.

Keep good records of your finances, including bank statements, tax returns, W-2s, investment accounts and any other assets you own. Be ready to explain any unusual deposits to your accounts. Yes, the $500 that Grandma deposited in your account for Christmas could delay your loan closing if you can't prove where the money came from.

Lock a rate as soon as you can.

Rates will likely climb in 2014 as the Federal Reserve is expected to reduce the pace of the economic stimulus program that has long helped keep rates low. If you are planning to get a mortgage, lock in a rate as soon as you are comfortable with the numbers.

Refinance now -- if you still can.

Many homeowners lost the opportunity to refinance at a lower rate when rates jumped in 2013. But those who are still paying more than 5 percent interest on their home loans might still have an opportunity.

If you think you may be able to save with a refinance, but you are not sure, it doesn't hurt to try. Speak to a loan officer and take a look at the numbers to see if refinancing still makes financial sense for you after you consider how long it will take to break even with the closing costs.

Buyers, use your bargaining power.

As mortgage rates climbed, lenders lost a big chunk of their refinance business. In 2014, they will turn their attention to homebuyers and will fiercely compete for their business. Buyers should take advantage of bargaining power they gain with that increased competition. Shop around for the best deal and look beyond the interest rate on the loan.

Learn your rights as a borrower.

Mortgage borrowers will get many new rights as consumers this year when new mortgage rules created by the Consumer Financial Protection Bureau go into effect in 2014. If you run into issues with your mortgage servicer in 2014 or fall behind on your payments, make sure you are aware of your rights and put them to use.

Take good care of your credit.

It's nearly impossible to get a mortgage without decent credit these days. That will continue to be the case in 2014. If you are planning to get a mortgage, monitor your credit history and score until your loan closes. The best mortgage rates usually go to borrowers with credit scores of 720 or higher. You may still get a mortgage with a score of 680, but lower scores will mean higher rates or higher closing costs.

Don't overspend.

Lenders don't want to give out loans to borrowers who will have little money left each month after they pay their mortgages and other debt obligations such as credit cards and student loans. If that becomes the case, the lender will tell you that your DTI, or debt-to-income ratio, is too high and you don't qualify for a loan. Try to keep your monthly debt obligations, including your mortgage and property taxes, below 43 percent of your income.

Consider alternative mortgage options such as ARMs.

Mortgage rates are rising, but there are alternatives to grab a lower rate, depending on your plans.

A homeowner planning to keep a house for seven to 10 years could take advantage of lower mortgage rates by choosing a seven- or 10-year ARM instead of the 30-year traditional fixed-rate mortgage. Rates on adjustable-rate mortgages can be as much as one percentage point lower than on fixed-rate loans.

If you are not sure for how long you plan to keep the house, a fixed-rate loan is probably the better choice.

Considering an FHA loan? Reconsider.

FHA loans have long been popular among first-time homebuyers because they require low down payments and have somewhat less strict underwriting standards than conventional loans. But they come at a price. Mortgage insurance premiums on FHA loans are likely to continue to rise in 2014, and after recent changes, the borrower is now required to pay for mortgage insurance for the life of the loan. Try to qualify for a conventional loan before you apply for an FHA mortgage.

Don't panic.

Yes, mortgage rates will likely climb in 2014. But don't panic, thinking you have to buy a home now to grab a low rate. If you are shopping for a home, do your best to move quickly, but remember that this is one of the biggest financial decisions of your life. Get your mortgage and buy your home when you feel ready.

 

US News Highlights the Benefits of Joining A Credit Union

A recent U.S. News & World Report article put a national media spotlight on the many benefits credit union membership offers American consumers.

The article also provided answers to common questions about credit unions, and described how credit unions differ from banks in structure and purpose.

"Customers frustrated with bank fees might want to consider their options, including switching their money over to a credit union," opens the article, headlined "The Benefits of Joining a Credit Union." "According to the Credit Union National Association, more than 96 million Americans use credit unions, which generally offer higher savings rates and lower fees than traditional banks."

The article explains that credit unions are owned by members rather than shareholders. Although the average credit union is smaller ($149 million in assets) than the average bank ($2.2 billion in assets), most credit unions still provide a full menu of financial services--and most Americans are eligible to join a credit union.

On average, credit unions offer lower rates on loans and higher rates on savings accounts, and credit union deposits are insured by the federal National Credit Union Administration, which provides the same protections that the Federal Deposit Insurance Corporation, the article said.

Also, credit unions pride themselves on being a source of financial information for their members, the article noted. "Many offer seminars and information on topics such as preventing identity theft and managing credit cards," the article said. "More information on any of these topics can be found at the NCUA website or by contacting a local credit union."

 

2014_DBQgifts.jpgDuTrac Embraces the Credit Union Philosophy of “People Helping People”

Through various staff fundraisers, DuTrac’s Community Action Committee raised over $3,000 to assist families throughout all of our communities this holiday season.   

In Dubuque, DuTrac worked with New Beginnings Domestic Violence Shelter provide gifts and support to eight women and their children. In addition, board games were purchased for a toy drive at Operation New View and more than 60 packages of new socks and underwear were purchased for distribution in the West Dubuque area.

DuTrac’s Maquoketa, Monticello and Davenport offices worked with local agencies and churches to assist families in their respective areas. In addition, a donation was made to DOVE Family Resources in Davenport and the offices in Eldridge and Dyersville donated funds to local food pantries.

“Every year, DuTrac employees give generously of their time, as well as their treasure, to a variety of charitable and volunteer opportunities throughout our communities,” said Andy Hawkinson, President and CEO of DuTrac Community Credit Union. “I am honored to work with such a caring group of people and DuTrac is proud to support communities to help spread some cheer – during the holidays and throughout the year.”

 

Important Information Regarding Target Debit/Credit Card Breach

Updated 01/14/14 - We want to assure you that we are aware of the reported incident at Target impacting some credit and debit cardholders who used their cards at Target stores between November 27 and December 15, 2013.

Protecting member and account information is a top priority and we take it very seriously. We have rigorous fraud systems in place that actively monitor our customers’ accounts for suspicious activity. If we suspect fraud, we will contact you to confirm the fraud, then close your account and reopen it with a new account number.

As always, DuTrac members have zero liability for fraudulent activity. We encourage you to monitor your accounts and if you notice any activity that you do not recognize, you should call the number on the back of your card as soon as possible.

You can also enroll in account alerts to help you keep track of activity on your accounts. On the DuTrac website, go to Credit Cards, then Credit Card Options. Scroll down to the bottom of the page and click on Register for Credit Card Text Alerts to set up text or email alerts based on your preferences.

Additionally, as a result of the recent Target credit/debit card compromise, affected DuTrac cardholders were issued new cards. In order to check your balances and transaction history, DuTrac strongly encourages members to access their card accounts via PC Branch.

Once inside PC Branch, click on "account summary" and then credit card(s). By doing so members will be able to view card transaction history and balances for both new and previously issued credit cards. If you are not yet subscribing to PC Branch, please contact an expert financial services consultant to enroll you by calling (800) 475-1331 or by visiting your local DuTrac office.

Members who access their card balances and transaction histories via MyCardInfo directly instead of via PC Branch, may not see a complete transaction history at this time. Complete transaction histories are anticipated by mid-January, 2014.

If you have any questions or concerns, please contact a DuTrac financial services consultant at (800) 475.1331 or stop by any of DuTrac's convenient locations.

Frequently Asked Questions Was my data compromised? Target is reporting that some credit and debit cards used at Target stores between November 27 and December 15 were compromised. If you did not use your card at a Target store during this timeframe, we do not have reason to believe your Capital One card information was compromised. We continuously monitor for fraud and if we notice any irregular activity we will notify you individually. We also understand that information Target gathers about its guests may also have been compromised, so we ask all Capital One cardholders that shop at Target to be mindful of suspicious e-mails with links or that request sensitive information, as well as suspicious phone calls attempting to get this type of information. If you suspect fraud immediately place a call to the number on the back of your credit card for assistance. 
What should I do? Whether you’re notified or not, it’s always a good idea to check your credit report and be aware of any suspicious activity on all of your accounts. 
Will Capital One be notifying affected customers? We will continue to monitor these accounts and notify customers of suspicious activity.
Has the security breach been fixed? Target reports that it is working with Visa and MasterCard and law enforcement to ensure no further information is exposed.
What are the chances that I become a victim of identity theft as a result of this incident? We were informed that unencrypted Social Security numbers were not compromised, which should help limit identity theft risk. However, it’s always a good idea to check your credit report regularly for incorrect information. In fact, you’re entitled to one free copy of your credit report every year at www.annualcreditreport.com or by calling (877) 322–8228.

Frequently Asked Questions

Was my data compromised?
Target is reporting that some credit and debit cards used at Target stores between November 27 and December 15 were compromised. If you did not use your card at a Target store during this timeframe, we do not have reason to believe your DuTrac card information was compromised. We continuously monitor for fraud and if we notice any irregular activity we will notify you individually. We also understand that information Target gathers about its guests may also have been compromised, so we ask all DuTrac cardholders that shop at Target to be mindful of suspicious e-mails with links or that request sensitive information, as well as suspicious phone calls attempting to get this type of information. If you suspect fraud immediately place a call to the number on the back of your credit card for assistance or contact a DuTrac financial services consultant at (800) 475.1331.
 
What should I do?
Whether you’re notified or not, it’s always a good idea to check your credit report and be aware of any suspicious activity on all of your accounts. 

Will DuTrac be notifying affected members?
We will continue to monitor these accounts and notify members of suspicious activity.

Has the security breach been fixed?
Target reports that it is working with Visa and MasterCard and law enforcement to ensure no further information is exposed.

What are the chances that I become a victim of identity theft as a result of this incident?
We were informed that unencrypted Social Security numbers were not compromised, which should help limit identity theft risk. However, it’s always a good idea to check your credit report regularly for incorrect information. In fact, you’re entitled to one free copy of your credit report every year at www.annualcreditreport.com or by calling (877) 322–8228.

  

CC_Statement.jpgTimely Credit Card Payments are Crucial, Especially for Millenials

Between juggling student loan payments, rent, and other bills, millenials might be tempted to skip a credit card payment. Don't do it. Missing a payment can lower your credit score, which can lead to difficulty getting a loan or even a job.

Millennials, young adults ages 19 to 29, actually have the fewest number of credit cards and the lowest average balance on them, according to Experian's annual state of credit report. But, they also have the lowest credit scores and frequently make late payments on their cards.

The average overall credit score in Experian's report is 681; the average for millennials is 628. Shorter credit histories and high utilization rates are two factors that account for the low scores.

To learn more about your credit score and give it a boost, understand:

  • What makes up a credit score: Payment history, amounts owed (especially as a percentage of credit available--the utilization factor), length of credit history, new credit, and types of credit in use determine your credit score.
  • How to improve your credit score: Pay all bills on time, every time. Also consider using a secured credit card. A secured card trades access to credit for your commitment to keep a certain amount of money in a savings account.
  • Regularly check your credit report: You can request one free credit report a year from each of the three major credit reporting bureaus by visiting annualcreditreport.com, the only website authorized to provide these free reports. You also can call 877-322-8228 or complete the Annual Credit Report Request Form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA, 30348-5281.

Effectively managing your finances is always important, not only in improving your credit score, but in achieving your financial goals and dreams. DuTrac's Advance® is a complete review of your financial picture, integrated with an online personal financial management (PFM) tool to assist you in budgeting, evaluating spending habits, tracking goals, and building wealth. Learn more about advance on dutrac.org or contact one of DuTrac's financial services consultants.

 

DuTrac Sponsors Kids Concert Program

For more than two decades, in partnership with local area schools, DuTrac Community Credit Union has sponsored the Kids Concert programs being aired on radio stations for Dubuque and surrounding areas.

“The Kids Concert program brings the spirit of the holidays to the area,” shared Jason Norton, senior vice president of marketing and business development at DuTrac Community Credit Union. “DuTrac has proudly supported this program for 21 years and is pleased to continue providing the community with wonderful holiday sounds from area youth choirs and orchestra groups.”

Click here to view the schedule of Kids Concerts to be broadcast on KAT FM 92.9 radio from December 1 through December 23.

Click here to view the schedule of Kids Concerts to be broadcast on KDST FM 99.3 radio from December 8 through December 24.

 

Winter_Driving.jpg'Tis the Season to Prepare for Winter Driving

As the weather gets colder (and a few snowflakes begin to fall), AAA reminds motorists that cars need seasonal checkups to maintain safety and maximize operational efficiency. Regular maintenance and seasonal checkups can also help prevent unexpected repair costs in the future.

“No one wants to be stranded in the cold by a vehicle breakdown,” said John Nielsen, managing director of AAA Automotive Engineering and Repair. “Properly preparing your vehicle for winter driving is essential for the safety of all passengers and will greatly decrease the chances of your vehicle letting you down.”

Using this simple checklist from AAA can help determine your vehicle’s fall and winter maintenance needs. Many of the items on the list can be inspected by a car owner in less than an hour, but others should be performed by a certified technician.

Motorists can identify reliable, high-quality repair facilities with certified technicians by looking for the AAA Approved Auto Repair sign. These facilities must meet and maintain high professional standards for customer service, technician training, tools, equipment, warranties and cleanliness. Nearby shops can be located at AAA.com/repair.

Winter Car Care Checklist

Battery and Charging System – Have the battery and charging system tested by a trained technician. A fully charged battery in good condition is required to start an engine in cold weather. AAA members can request a visit from a AAA Mobile Battery Service technician who will test their battery and replace it on-site, if necessary. AAA Approved Auto Repair facilities can also test and replace weak batteries.

Battery Cables and Terminals – Make sure the battery terminals and cable ends are free from corrosion, and the connections are tight.

Drive Belts – Inspect the underside of accessory drive belts for cracks or fraying. Many newer multi-rib “serpentine” belts are made of materials that do not show obvious signs of wear; replace these belts at 60,000-mile intervals.

Engine Hoses – Inspect cooling system hoses for leaks, cracks or loose clamps. Also, squeeze the hoses and replace any that are brittle or excessively spongy feeling.

Tire Type and Tread – In areas with heavy winter weather, installing snow tires on all four wheels will provide the best winter traction. All-season tires work well in light to moderate snow conditions, provided they have adequate tread depth. Replace any tire that has less than 3/32-inches of tread. Uneven tire wear can indicate alignment, wheel balance or suspension problems that must be addressed to prevent further tire damage.

Tire Pressure – Check tire inflation pressure more frequently in fall and winter. As the average temperature drops, so will tire pressures – typically by 1 PSI for every 10 degrees Fahrenheit. The proper tire pressure levels can be in the owner’s manual or on a sticker typically located on the driver’s side door jamb. Also, check the spare.

Air Filter – Check the engine air filter by holding it up to a 60-watt light bulb. If light can be seen through much of the filter, it is still clean enough to work effectively. However, if light is blocked by most of the filter, replace it.

Coolant Levels – Check the coolant level in the overflow tank when the engine is cold. If the level is low, add a 50/50 solution of coolant and water to maintain the necessary antifreeze capability. Test the antifreeze protection level with an inexpensive tester available at any auto parts store.

Lights – Check the operation of all headlights, taillights, brake lights, turn signals, emergency flashers, and back-up lights. Replace any burnt out bulbs.

Wiper Blades – The blades should completely clear the glass with each swipe. Replace any blade that leaves streaks or misses spots. In areas with snow, consider installing winter wiper blades that wrap the blade frame in a rubber boot to reduce ice and snow buildup that can prevent good contact between the blade and the glass.

Washer Fluid – Fill the windshield washer fluid reservoir with a winter cleaning solution that has antifreeze components to prevent it from freezing.

Brakes – If there is any indication of a brake problem, have the system inspected by a certified technician to ensure all components are in good working order.

Transmission, Brake and Power Steering Fluids – Check all fluids to ensure they are at or above the minimum safe levels.

Emergency Road Kit – Carry an emergency kit equipped for winter weather. The kit should include:

  • Bag of abrasive material (sand, salt, cat litter) or traction mats
  • Snow shovel
  • Flashlight with extra batteries
  • Window washer solvent
  • Ice scraper with brush
  • Cloth or roll of paper towels
  • Jumper cables
  • Extra warm clothing (gloves, hats, scarves)
  • Blankets
  • Warning devices (flares or triangles)
  • Drinking water
  • Non-perishable snacks for both human and pet passengers
  • First-aid kit
  • Basic toolkit (screwdrivers, pliers, adjustable wrench)
  • Mobile phone and car charger pre-programmed with rescue apps and important phone numbers including family and emergency services

Android and iPhone users can also download AAA Roadside, a mobile smartphone app that lets motorists in roadside rescue situations to request help without making a phone call. The user simply enters the details of their situation and clicks an onscreen button. AAA Roadside then transmits the information, and the user’s location as established by the phone’s GPS technology, directly to AAA Roadside Assistance. The app also displays nearby AAA Approved Auto Repair locations so members can easily choose where to have their vehicle towed, if necessary.

Stay safe this winter!

 

DuTrac Christmas Club Rewards Thrifty Members

With the holiday season approaching, DuTrac Community Credit Union is ready to help brighten the holiday season for thrifty members…and area retailers!

DuTrac recently paid nearly $2 million in Christmas Club deposits to approximately 1,700 members participating in the Club savings account.

By participating in the Christmas Club, members can alleviate some of the stress of holiday shopping by saving throughout the entire year. Plus, Club members can benefit area communities by shopping at local retailers.

“DuTrac offers a variety of products and services to help members achieve their financial goals and dreams,” said Andy Hawkinson, President and CEO of DuTrac. “Specifically, DuTrac’s Christmas Club program is designed to encourage financial preparedness, allowing members to save throughout the year for the increased spending habits of the holidays.”

“If you have ever thought of opening a Christmas Club account, now is the perfect time,” according to Hawkinson. “By starting or renewing your Club account now, you can maximize your saving potential for next year’s holiday season!”

For more information about DuTrac's Club accounts, click here or stop by one of DuTrac's convenient locations.

 

A Good Reason to Buy a Home Now: Low Rates Equal More Equity

According to a recent article on TheStreet.com, when it comes to mortgages, everyone knows a low rate is better than a high one, because the interest charges are smaller. But there's another benefit that's often overlooked: A lower rate helps you build home equity faster.

It's another factor to consider in deciding whether to buy or refinance now or wait until later, when interest rates might be higher. If you're thinking of moving, for instance, it might be more convenient to hold off until next summer to move during the school break. But since rates could rise, moving sooner would allow you lock in the dual benefits of lower rates - less interest and faster-growing equity.

Rates rose fairly substantially from spring through summer, with the typical 30-year fixed-rate loan going from about 3.5% in May to 4.75% in early September. The increase anticipated an economic recovery that would cause the Federal Reserve to eventually pull back on its policy of keeping rates low. But the Fed has postponed that move, and the rate has drifted down to about 4.5%.

That's awfully good by historical standards, as borrowers have often paid 7% or more. It seems highly unlikely we'll be back at 7% anytime soon, unless a Washington stalemate on budget talks leads to a debt default early next year.

But for the sake of argument, let's consider the difference between a $100,000 loan at 7% versus 4.5%.

The 7% loan would charge $665 per month, and you'd pay $139,500 in interest over 30 years. At 4.5%, the payment would be $507 and total interest $82,405. That's clearly a good reason to borrow when rates are low.

But what if you kept the loan for just 10 years, about average given the pace at which people move or refinance? The 7% loan would charge $65,665 in interest over that period, versus $40,891 for the 4.5% mortgage, a huge difference.

Plus, after 10 years you'd still owe $85,811 on the 7% loan, but just $80,089 on the 4.5% loan. If you sold your home, you'd pocket about $5,000 more if you'd had the loan with the lower rate.

Why is this? It has to do with the calculations for creating an amortization schedule, which determines how each month's payment is divided between principal and interest. As each payment reduces the outstanding loan balance, the interest charge gets a little smaller, as if a new loan were being issued for a slightly smaller amount. Since the monthly payment stays the same, the reduction of the interest charge allows more of the payment to go to principal, causing an even greater reduction in the interest charge the following month.

If you pay a lower interest rate, this process moves faster, because a bigger portion of the payment goes to principal right from the start. With the 7% loan, the first payment allocates $82 to principal, compared with $132 with the 4.5% loan.

Paying principal off faster means building equity faster, since equity is the difference between the home's value and the outstanding debt. It's what you'd pocket after using the sales proceeds to pay off the loan balance.

If you keep the mortgage for the full 30 years, this is no longer a factor, since both loans would reduce the balance to zero with the final payment. Of course, you'd still benefit from the lower-rate deal because overall interest charges would be smaller.

But if you expect to own the home for just five or 10 years, the lower-rate loan will provide that extra benefit of paying down principal faster. It's just another reason not to procrastinate on a home purchase or refinance. Most experts agree that the odds of rates going up over the next year are much stronger than the odds they'll go down.

Article courtesey of TheStreet.com


Credit Unions Are Looking Out For Hard-Working Americans

As tax reform debate picks up in Congress, credit unions are looking out for the interests of hard-working Americans on the issue, says Credit Union National Association Chairman Pat Wesenberg in a recent guest column in the Enterprise-Journal.
 
"For years, big banks have been trying to saddle their non-profit credit union competitors with new taxes. They see a congressional tax reform push as their best chance to sneak such taxes in," said Wesenberg, who also is president/CEO of Central City CU in Marshfield, Wis.
 
"Consumers should hope that the big banks don't succeed," Wesenberg wrote, adding that new taxes on credit unions would impact all Americans by reducing competition in the financial services sector.
 
Although credit unions and banks offer similar service, "they couldn't be more different in philosophy and structure," she said.
 
"As non-profit financial cooperatives, credit unions exist solely to benefit their member-owners. They do so by charging low or no fees and offering higher interest rates on savings and lower rates on loans. They've done that since the 1930s, when Congress authorized their creation and granted them non-profit status," Wesenberg said.
 
For every dollar in new credit union taxes, the government would wipe out $10 in member benefits, she said.
 
"The federal tax code certainly merits reform. But lawmakers must prevent change from coming at the expense of average Americans. Slapping credit unions with new taxes would do just that," she concluded.

 

DuTrac and Davenport School District Open Iowa's First High School Credit Union

Davenport West High School and DuTrac Community Credit Union have launched a collaborative project to provide students with real opportunities to learn how to manage their money, along with hands-on work opportunities in the financial sector. A branch credit union has opened at West High School with membership open to West High School students and staff members only.  Branch hours are currently 11 a.m. to 1 p.m. Monday, Thursday, and Friday.

The Davenport West Falcons Branch, A Division of DuTrac Community Credit Union, is staffed by West High School students with the support of a full-time DuTrac Credit Union employee and the business academy teachers at West High School. The branch offers a checking account that is accessible only through a debit card, as well as a savings account.  

The credit union is a school-driven program with a focus on financial education for students. “It’s important for everyone to learn good money management skills,” said Steve Verdon, WHS Business Academy teacher.  “It’s important for students to learn the difference between the fund balance shown in their checking account and the actual funds available for them to use. For example, insufficient funds charges can mount up quickly.” Another tool that will be available to students is “Advance,” an online budgeting tool that can help students set savings goals for things that are important to them, such as a prom dress, class ring, or a yearbook.

“We’re excited to offer a career-development opportunity for students who may be interested in working in the financial sector in the future,” said Andrew Hawkinson, President/CEO of DuTrac. “Students are working in a professional environment and are expected to meet real-world standards in terms of a dress code, customer service, and compliance standards. The branch will also undergo an audit, just like any of our branches.”

The DW Falcons Branch began opening accounts on the first day of the school year, August 12, 2013, and already has 120 members.

 

Forbes: Credit Unions Have Become Auto Lenders of Choice

A recent Forbes.com article cited Credit Union National Association (CUNA) figures to show credit unions have become the auto lender of choice for an increasing number of U.S. consumers looking to purchase cars.
 
"That's partly because credit union membership is growing; partly because credit unions can often beat the interest rates banks charge, due in part to tax breaks; and according to credit union officials at least, because the Great Recession eroded public trust in big banks," wrote Forbes contributor Jim Henry in an article, "Credit Unions Gain Share In Autos, Trading On Local Image."
 
The article cited comments by Richard Cordray, director of the Consumer Financial Protection Bureau, in which he said the CFPB recognizes that credit unions were not one of the causes of the recent financial crisis.
 
Credit union membership is growing at roughly 2% annually, compared with about a 1% annual growth rate for the overall U.S. population, according to CUNA statistics provided to Forbes.
 
Also, credit unions issued 22.2% of all outstanding U.S. auto loans as of the end of the second quarter--an increase from 21.7% at the end of second quarter 2012, Experian Automotive told Forbes.  Banks accounted for 35.6% of loans in the same time frame, which is nearly flat, compared with 35.7% a year earlier.