Getting The Best Deal On A New Ride

Getting The Best Deal On A New Ride

image of a red new carWhen purchasing a new or used vehicle, you want to be sure you’re getting the very best deal. The best deal on your trade, the best price for the vehicle you are buying and the best financing, assuring your lowest possible payment.

Let’s face it, dealers will ask probing questions about your trade and payment to make sure they squeeze out every penny of profit for themselves.

How can you tip the scale in your favor? Research is key when buying a vehicle so here are a few tips.

  1. Research your vehicle’s trade in value in two (2) or more places so you have a realistic average trade–in value starting out. Some great resources are kbb.com, nada.com and cars.com.
  2. Once you know the type of vehicle, narrow it down to a couple of makes and models that best suit your needs. Then research the best deals available. Some great resources are TruCar.com, Edmunds.com and Kbb.com.
  3. When purchasing a used vehicle, be sure ask the dealer for a Car Fax report and have a mechanic inspect the vehicle whenever possible. This will help avoid problems after leaving the lot.
  4. Finally, save more by financing your new or used vehicle at E&G Employees FCU. Our rate of 3.99% * and terms up to 84 months for new vehicles and a low rate of 4.49%* with terms up to 72 months for used vehicles, can save you more each month.

E&G Employees FCU helps members get the very best deal every day.

APPLY TODAY! 

* Rate assumes the member is eligible for lowest rate offered. Actual rate is determined by the member’s credit history. Application and approval by loans dept. is required. Call the credit union

Financial Preparation for 2019

Financial Preparation for 2020

Image of woman writing in journal
2020 is almost here. Are you ready?
Remember the Boy Scout motto: Be prepared! A brand-new year, always ripe with resolutions, is the perfect time to reassess your financial attitude, improve, and vow to do more.
“It’s a time of planning for going forward,” shares Sallie Krawcheck, co-founder of Ellevest. “We see a lot of people, often over the Christmas holiday, but certainly in the new year, taking stock of where they are on their personal finances and investments.”
Have you taken any steps to prepare for the financial realities of the coming year?
Here are some tips to get you started.
Tune your budget

It’s a great idea to begin the new year with a plan. A budget is just that-a plan that starts with the income you expect, along with your fixed expenses, such as rent or mortgage costs, homeowners association fees, insurance, utilities and transportation costs. The plan also incorporates your savings goals.

Then, the money remaining is designated for your other expenses. A realistic budget will help you set your financial goals and remind you to stick to them. These last few days in December, as the year draws to a close, is the perfect time to assess last year’s budget or to create a new one if you don’t yet have one in place.

Reviewing where you spent last year’s money will help you make better choices in 2020. If you did not save money for retirement, for example, this can be a new budget item.

While planning for the coming year, make sure to include a method for tracking your spending. You can do this on a spreadsheet or you can simply tag items in your financial account.

Even with a solid strategy in place, there will always be surprises along the way. Losing a job, a leaking roof or an illness can throw off your entire plan. Be sure to build an emergency fund into your budget.

Plan ahead to meet your goals
Next, consider how you will accomplish your goals. You’ll have short-term goals, such as purchasing a new car or home, as well as long-term goals, such as saving for retirement. Each set of goals requires a different kind of planning and saving.
Financial planner, Rachel Rabinovich, recommends setting up a separate savings account for each goal. This way, you can easily track your progress.
Experts suggest working backwards to determine how much you need to save for a specific goal. For instance, if you dream of taking an expensive vacation two years from now, determine the total cost of the vacation and then establish a reasonable time-frame and the amount you’ll need to save each month to reach that goal. Make sure the amount you plan on setting aside each month is doable, or you may just have to move your goal over by six months or more.
Spend mindfully

You can also make your financial future more secure by identifying the difference between your needs and wants. Needs are necessary for your survival, and include items like food and shelter. Wants are things that are not necessary but you would like-such as a luxury car or European vacation.

First, tend to your needs. Then, based on what’s left to work with, consider your wants. This might sound obvious, but for many of us, the line between wants and needs is often blurred. This can lead to awfully tight financial situations, even prompting us to “borrow from Peter to pay Paul.” By clearly differentiating between what you want and what you need, you can avoid this outcome in 2020.

Maximize retirement contributions

Retirement plan contributions can be a valuable source of savings, especially if you have the option of employer-matched funds. If you do, be sure to take advantage of them!

Also, check with your HR contact and your accountant to make sure you are contributing the optimal amount to your 401K and IRA. For the coming year, you can contribute $6,000 to a Roth or traditional IRA, or $7,000 if you are making “catch-up” contributions.

Check your flexible savings account (FSA)
If you have unspent money in your FSA, now is the time to use it. These pre-tax dollars often have to be spent before the end of the year. Do you need a new pair of eyeglasses? Are your teeth in desperate need of a cleaning or repair? This might be a good time to spend that money on self-care and other needs you’ve been pushing off. You don’t want to lose this money, so be sure to use it if you can.
Put the brakes on holiday spending
Avoid going overboard on your holiday spending. Think three times before you pull out your credit card. Going over budget now can mean spending the first few months of 2020 playing catch-up with your credit card bills. Spend less, and start the year off with a clean slate!

Fifteen Tricks To Sell Your Home Quickly

Fifteen Tricks To Sell Your Home Quickly

 

Spring is in the air! And aside for thImage of female realtor in front of for sale sign with pad in hande hum of lawnmowers, newly bloomed flowers and the chime of the ice cream truck, spring means the chance at a fresh start in a fresh, new home. 

If you’re looking to sell your home and start over somewhere else, you likely want to see that sale happen as quickly as possible. After all, it isn’t easy to be paying two mortgages at once!  You might also be counting on the proceeds of the sale to help make a down payment on your new home. 

Read on for 15 fantastic tricks to get your home into the hands of its new owners as swiftly as possible. 

1.) Price it right 

You want to get as much as you can for your home, and ironically, that means pricing it lower than the going rate. Find out the true worth of your home, and then hack 20% off that price. You’ll have the buyers rushing to your home – and then bidding up the price to what you really wanted. They may even offer more! 

2.) Choose the right agent 

Do your research before hiring a realtor. Your broker should have an excellent track record that includes lots of recent sales, being updated on the latest market trends and knowing how to use technology to get the word out about your house. Ask for references and credentials before making a decision.

3.) Let the light shine 

After location, the amount of light in your home is the second-biggest selling factor. Change your lampshades, add more lights where necessary and use the maximum possible wattage for every light fixture in your home. You can also scrub your windows, remove the drapes and let the sunshine in.

4.) Rent a storage unit 

You want your house to be clutter-free and your closets to look as spacious as possible. To do this, you’ll probably need to get rid of half the stuff around your home and stored in your closets. Consider renting a mini storage unit to house your belongings until your home is sold.  As a bonus, you’ll have a leg up on the packing when it’s time to move! 

5.) Amp up your curb appeal 

First impressions matter the most. Attract buyers by sprucing up the exterior of your home. Splurge on a striking patio set, trim your shrubs and plant some pretty flowers along your walkway. You’ll likely get a 100% return on the money you spend.

6.) Focus on the kitchen 

The kitchen is where it’s at. Buyers will spend the longest time here, and the offered price will fluctuate according to how updated your kitchen is. Depending on the state of your kitchen, you might want to do a quick remodel, including a fresh coat of paint, new cabinets and more.

Not convinced? Consider this: Replacing your old countertops will run you a few thousand dollars, but a buyer can easily shave $10,000 off the asking price by claiming your kitchen is outdated.

7.) Upgrade – but don’t go overboard 

In addition to the kitchen, you’ll want the entire rest of the home to look its best. It’s a good idea to do basic repairs and some remodeling to make your home sell faster. But don’t go overboard, or you may end up losing money. A paint job and some new light fixtures, door handles and rugs can do the trick.  

8.) Make it impersonal 

To you, it looks homey and lived-in. To potential buyers, it’s just a mess. We’re talking personal effects. Get rid of them before showing your home. You want your visitors to envision their own family and personal belongings here – not yours.

9.) Market it yourself 

Be your own best agent. Let everyone and their neighbor know that you’re selling your home. Post an attractive picture of your house on your favorite social media platforms, tell your friends to tell their friends and be sure to speak in glowing terms about your house to anyone who asks for details. 

10.) Make it sparkle 

Don’t skimp on this one! Give your entire home a deep cleaning before showing it to buyers, scrubbing and buffing until every corner gleams. Nothing turns a potential buyer off like grimy counters or streaks on the bathroom mirror. 

11.) Hide your pets 

Not everyone is an animal lover. If you’ve got some furry critters at home, hide the evidence! Don’t leave out a bowl of dog food or a half-chewed ball of yarn. If you’re hosting an open house, send your pets to a friend’s place for the day.

12.) Time it right 

Spring and summer are by far the most popular times for house hunting. Placing your home up for sale when more people are looking to buy will put you ahead of the game from the start. 

13.) Hire a professional to help you set up your home 

Unless you’ve got an awesome eye for aesthetics, you might want to hire a professional to help you stage and photograph your home. They can help you arrange your furniture so it maximizes space and then shoot photos showing your house in the best possible light. 

14.) Use extra rooms 

Do you have a spare bedroom that houses your baby gear or boxes of your college stuff? Now’s the time to clear it out! Set up an empty room as something useful, like a guest room, an exercise nook or even a hobby room. It will look a lot more attractive to potential buyers than a room full of stuff! 

15.) Encourage people to explore the entire house 

Entice visitors to check out the upstairs and to peek into bedrooms by placing a piece of artwork, a pretty vase of fresh flowers, an interesting light fixture or even painting an accent wall near the end of a hallway or at the top of a set of stairs.

You’re all set! Now get out there and put your home’s best face forward!

Why Choose A Credit Union?

Why Choose A Credit Union?

 

Q: I love my credit union, but I also have a checking account at a bank. Should I move my checking account to a credit union?

A: As a credit union member, you can expect to have a more rewarding experience. Because credit unions are member-owned and not-for-profit, they are more attuned to the needs of their members.

While banks and credit unions offer nearly identical services and account choices, there are some differences.

Let’s take a look at how having a checking account in a credit union differs from a bank.

1.) Image of a woman at the credit union teller lineAccount fees

To the unsuspecting consumer, big banks may not feel like money-hungry monsters. But while they’re happy to hold onto your money, once your account is up and running, expect to get hit with steep maintenance fees. The average bank charges consumers close to $150 each year for having an open checking account.

On the flip side, many large credit unions offer free checking or make it easy to avoid the fees, so you can set up your account and keep it running without it costing a dime.

2.) Overdraft fees

Sometimes, you miscalculate the funds in your account and overspend. If you make this mistake on a checking account at a bank, get ready to cough up those overdraft fees!

These fees usually top $30, and some banks will make consumers pay the penalty for each transaction they make while their account is overdrawn.

Most credit unions will be more willing to forgive the occasional error. While some credit unions do charge an overdraft fee, on average, these fees are a lot lower than what banks demand.

3.) Fewer strings attached

Most big banks won’t allow you to open a checking account unless you have a minimum balance of several hundred dollars. In contrast, 76% of credit unions have no minimum balance requirement at all.

4.) Credit unions are government-regulated

Both credit unions and banks are federally governed. A credit union that’s federally insured, like a bank with federal insurance, covers your accounts up to $250,000.

However, credit unions face more government restrictions on their investments and loans than banks do. This means your credit union has to be super-careful with how it invests your money.

5.) Superior service

When you’re banking with family, you don’t have to worry about overworked tellers, curt managers, or representatives who are indifferent to your individual needs.

When you stop by your credit union, you’ll be greeted with friendly, familiar faces and representatives who actually care. They’re always ready and willing to help you because they only have your best interests in mind – always.

Why choose a credit union for your checking account? With lower fees, fewer strings attached and better service, it’s the best place possible to park your money!

All You Need To Know About Ransomeware

All You Need To Know About Ransomeware

 

Image of dark hoodies with red words, hacker, ransomware, virus, instead of faces Ransomware is evolving like an uncontrolled virus. Don’t be the next victim! Here’s what you need to know about ransomware:

What is ransomware?

Ransomware is a subset of malware that isolates a victim’s data and then demands a payment for release. It is often embedded inside seemingly harmless software and applications. It activates as soon as the user launches the program. Devices can also be infected through email links or malicious websites.

How does a ransomware attack work?

There are two primary types of ransomware: locker and crypto.

Locker ransomware locks victims from using important device functions, like accessing a desktop or browsing the internet.

Crypto, the more common form, encrypts files using a unique algorithm and demands a ransom payment.

Cybercriminals usually demand payment in bitcoins. This form of digital currency allows you to pay for goods or services remotely, using a mobile app or a computer. Every bitcoin transaction is anonymous, making it the payment method of choice for cybercriminals.

To pay or not to pay?

Experts are on the fence about this million-dollar question.

Joseph Bonavolonta, the ASA in charge of the FBI’s Cyber and Counterintelligence Program, claims that the FBI often advises people to pay the ransom, explaining that when more people pay the ransom, it keeps ransoms low. He also believes that most scammers keep their word and will decrypt the victim’s files.

However, other FBI officials urge victims not to pay the ransom. They say there is never a guarantee of the files’ return and that paying the ransom encourages more attacks.

Everyone agrees, though, that victims should seek assistance from law enforcement agencies and share the details of the attack. The law enforcement agents will tell them whether they’ve seen this group attack before and whether it tends to decrypt files in return for payment.

If your computer has been infected and you decide to pay the ransom, your payment can be anywhere from $200 to $10,000. Before you pay, though, do a quick search to find out if there’s a decryption tool online.

If you decide not to pay the ransom, shut down your computer and disconnect from your network. Scan your computer with an anti-virus or anti-malware program and let it remove everything on your device.

Prevention

Be proactive. Strengthen your email’s spam filter, don’t ever click on suspicious links, and never download mobile apps from unfamiliar application stores.

Make sure your operating system is protected with a strong firewall, spyware and sufficient, updated anti-virus software.

Finally, back up your files on an external hard drive or on a USB every few weeks.

If the unthinkable happens, contact a law-enforcement agency for assistance and check for a decryption tool online. If you do decide to pay, be sure to take preventive measures against future attacks.

Look Before You Pump! Don’t Get Skimmed At The Gas Station

Look Before You Pump!

Don’t Get Skimmed At The Gas Station

 

Two Young Women with coffee at pumping gas into carGas-pump skimming is an old crime making a comeback, and your card may be at risk. Since skimmer devices are almost invisible, they can be difficult to spot. And Bluetooth technology lets the scammer remotely obtain the info it collects from as far as 100 yards away.

While EMV-enabled cards are more commonplace, gas stations have until 2020 to update their systems, making them vulnerable. Protect yourself against this hack by learning about card skimmers. 

How it works 

Hackers usually outfit the pump farthest from the convenience store with their skimmer. This way, they are out of the range of any security cameras at the shop’s entrance. The hacker places a skimming device on top of the pump’s card reader or inside the pump itself, and then leaves the area. 

Choose your payment method wisely 

You may seek extra protection by using a credit card or cash to pay at the pump. A credit card lets you easily dispute fraudulent charges. And, depending upon your financial institution, a debit card may not have much purchase protection. At [credit union, we . . . ]. 

The safest payment method might be cash, but remember that it cannot be replaced if lost or stolen.

How to spot a skimmer 

If you don’t like the idea of using cash, you can still protect yourself by being on the lookout for skimmers. If something looks suspicious, don’t use that pump! 

4 ways to spot a skimmer: 

  • Use your eyes. Do numbers on the PIN pad look newer or bigger than the rest of the machine? Does anything look like it doesn’t belong? Is the fuel pump’s seal broken?
  • Check the tape. Many gas stations place serial-numbered security tape across the dispenser to protect their pumps. If the tape has been broken, or there’s no tape on the dispenser at all, it’s likely been compromised.
  • Use your fingers. Feel the card reader before sliding your debit card into the slot. Do the keys feel raised? Is it difficult to insert your card?
  • Use your phone. There are several free skimming apps, like Skimmer Scanner, that can scan a card reader for a skimming device and alert you if one is found. You can also check your phone’s Bluetooth for any strange letters or numbers appearing under “other devices.”

General card safety 

It’s always a good idea to practice general safety when using a card to pay at the pump. Choose the pump closest to the store and always cover the number pad with your hand when inputting your PIN. It’s also a good idea to periodically check your account statements for suspicious charges. 

What You Need To Know About Inheriting An IRA

What You Need to Know

About Inheriting an IRA

 

No one likes to think about what happens when a family member passes on, but it’s best to plan for the financial repercussions of a death in the family long before the time comes. 

Older woman with young woman having a discussionMost people assume an inherited IRA account will work just like any other asset they may inherit from a loved one. However, there are many rules and regulations at play when it comes to inheriting an IRA. The wrong choice can cost the beneficiary a whole lot of money in taxes and penalties. That’s why it’s important to take the time to research your options now. Then, when the time arrives, you will have a plan in place, allowing you to fully focus your attention on the right matters without worrying about financially messing up. 

Read on for all you need to know about inheriting an IRA. 

Inheriting from a spouse

The surviving spouse has two options when inheriting a traditional IRA: 

1.    Spousal rollover 

The surviving spouse can either change the IRA’s title to have their own name listed as owner, or transfer all the funds to their own existing IRA. If possible, the transfer of funds should be done within 60 days of the departed spouse’s death to avoid heavy taxes on the distribution. Once transferred, the money can continue to grow, tax-deferred. 

This is the most popular option for surviving spouses. However, it is not always the best choice. Surviving spouses cannot access transferred IRA funds without paying the 10% early-withdrawal penalty—in addition to income taxes—until they reach the age of 59 ½. Also, if the surviving spouse is older than 70½, they must take an annual minimum distribution. 

2.    Open an inherited IRA 

With this option, the new owner will remain the beneficiary of the original IRA and open a new inherited IRA account in their own name. This allows the surviving spouse to avoid the 10% early-withdrawal penalty even if they are younger than 59½ years old. 

The owner of the inherited IRA must then begin taking distributions from the account before Dec. 31 of the year of their spouse’s death. 

There are 3 ways to take distributions from an inherited IRA:

  • Distributed evenly over the rest of the beneficiary’s lifetime. Each withdrawal amount will be based upon the beneficiary’s life expectancy. The surviving spouse also has the option to calculate their life expectancy based on the original owner of the IRA instead of their own. This can be a convenient choice for spouses who were much older than their departed partners, as it allows the surviving spouse to withdraw less money each year and let the remaining amount collect additional interest until they need to access it.
  • Over the course of five years. Emptying the entire IRA in the five years following the original owner’s death will force the beneficiary to pay heavy income taxes on the withdrawals.
  • In one lump sum. The income taxes on a single, full withdrawal of funds can be steep enough to offset any gains.

Non-spousal inheritance

Inheriting an IRA from someone other than a spouse comes with its own set of rules. Primarily, beneficiaries of these IRAs cannot choose to transfer the funds in the inherited IRA into their own accounts. Instead, they will need to begin taking distributions after the IRA’s owner has passed on. They can choose to take distributions over their lifetime, within five years after the deceased’s passing or in one lump sum. 

Beneficiaries of non-spousal inherited IRAs cannot make new contributions to the account. Instead, they must begin taking distributions by Dec. 31 of the year following the death of the IRA’s original owner. 

The exact amount that will need to be withdrawn annually depends on the inheritor’s age. You can check out the IRS’s Single Life Expectancy Table here to calculate how much you would have to withdraw each month from an inherited IRA at various ages. 

Failure to withdraw the Required Minimum Distribution (RMD) can mean getting hit with a 50% penalty on the remaining RMD. For example, if you were required to withdraw $7,000 from an inherited IRA per year, but you only withdrew $2,000 one year, you will need to pay a full 50% penalty on the remaining $5,000. That means that $2,500 will go to Uncle Sam instead of into your [credit union] checking account. 

Multiple beneficiaries 

When there are several beneficiaries for a single IRA account, each beneficiary must open their own inherited IRA account and transfer the funds accordingly. In most cases of multiple beneficiaries, RMDs are calculated according to each beneficiary’s age. However, if the assets aren’t divided before the Dec. 31 deadline, the RMDs will be based upon the age of the oldest beneficiary until the funds are distributed into each of the beneficiaries’ inherited IRAs. 

Roth IRAs

Roth IRAs are not tax-deferred like traditional IRAs, so there is never any income tax to pay on withdrawals. There are also no RMDs at play for the original account owner. RMDs will not affect the surviving spouse either, as long as they change the title of the Roth IRA to list their own name as owner. 

However, there are RMDs for non-spousal beneficiaries of Roth IRAs. These beneficiaries are required to begin taking distributions from inherited Roth IRAs in any one of the three manners listed above. If the money has been in the Roth IRA for more than five years, the beneficiaries will not be required to pay any taxes on these distributions. 

It’s important to weigh your options now so, if you are the beneficiary of an inherited IRA account, you already have a plan in place for the funds. 

Invest in What You Care About

Invest in What You Care About

Q: I’m looking to make some investments, but I don’t want to compromise my principles. How can I make investment decisions that reflect my values?
A: It’s easy to see people doing bad things in the world. Whether it’s cigarette companies marketing to minors or companies employing cheap overseas labor, corporations are certainly not free from wrongdoing. Investors can quickly get a bad taste in their mouths after researching a company they’re considering.
Fortunately, there are a number of ways investors can use their money for good. If you’re interested woman with little girl on her lap reading to herin doing good and making good money in the process, read on. Here are three ways to identify investments that match your values.
1.) Ethical ETFs
ETF stands for exchange traded fund. They’re a kind of mutual fund people can buy and sell shares in. There are all kinds of ETFs, from those that focus on a specific sector to those that seek a certain level of fixed income.
There are also ethically focused ETFs. For example, the largest such fund is Barclay’s Women in Leadership fund (WIL). This fund targets companies that have a higher number of women in leadership roles, and it currently has about $30 million in assets under management.
There are other, similar funds, like those that target low carbon emission companies, or those that adhere to certain religious values and exclude alcohol, tobacco or pornography companies. Whatever your ethical stance is, there’s an ethical ETF that can help you invest according to your principles.
Of course, sticking to your guns has costs. These funds, as a category, have trailed behind their peers in the recent market rally. Their limited exposure shields them from market declines, but it also prevents them from taking full advantage of rallies.
2.) Microlending
If your concern is more with doing the most good for people with your investment dollars, you might consider going into the microlending business. Several sites, like Lending Club and Prosper, offer you the opportunity to make loans to individuals who might have difficulty accessing traditional financial institutions. It could be because they live in an area that is underserved by banks and credit unions, or because their credit history isn’t enough for what they’re trying to borrow. For people in the developing world, for instance, access to credit services is a serious barrier to entrepreneurship that microloans can help overcome. No matter the reason, microlending helps people get loans from everyday people instead of from financial institutions.
Of course, there are significant risks involved with microlending. There’s a reason why financial institutions set standards for credit scores and debt-to-income (DTI) ratios. People trying to borrow on microfinance sites may not be able to repay their loans. There’s also little in the way of verification. Someone might claim to need a loan to help pay for medical bills when, in actuality, they want to spend the money on luxury goods for themselves.
Despite the risks, microlending remains a viable way to use your investment dollars to achieve social good. Just be cautious about your lenders, and never invest more than you can bear to lose.
3.) Community investment
Perhaps you’re more concerned with improving your community. You want your dollars to stay local and improve the lives of people around you. The opportunity exists for you to do just that through community investment, and it’s easier than you think.
When you become a member of E&G Employees FCU, you help make it possible for us to make loans to local small businesses and individuals right here in the community. Just by opening a certificate or putting a larger deposit in your share account, you can enableE&G Employees FCU to finance projects that make our community a better place to live.
Unlike the alternatives, community investment bears very little risk. It still offers the same goods as other forms of ethical investment. You still get a return in the form of interest and the knowledge that you’re investing according to your values.

How To Spot an Investment Scam

How To Spot an Investment Scam

 

Image of Lock with the word securityYou’re online, and there’s a contest open to all. You know the answer, and the free gift is enticing. Should you enter?

You go into a shopping mall and are asked to fill out a form to enter a sweepstakes to win a car. You’d love to have the car, and, hey, someone’s going to win it. There’s no purchase necessary, so why not? “Don’t do it!” says Eric Stein, a scam artist who was interviewed (while in jail!) by The Wall Street Journal. He should know. In his interview, Stein provides the following information that will prove useful in avoiding the investment scams you so often read about.

  • Don’t respond to email or snail mail that you didn’t request, no matter how legitimate it looks. Scam artists have become very professional and will produce something slick, glossy and easy to understand. Don’t fall for it.
  • The online contests and car sweepstakes you see in stores are both used by scammers to target names and addresses. Don’t fill them out.
  • Avoid funds that are advertised as “low risk, high return” or “safe,” or promise an outrageous return such as 25% per quarter. If it sounds too good to be true, it probably is.
  • Don’t purchase financial products because a friend or clergy person recommends them. They may have already fallen for the scam without knowing it.
  • Don’t talk to a financial salesperson on the phone if you don’t know him. Don’t be polite – simply hang up. Anyone can call himself a “financial adviser” or a “business consultant.”
  • Buy stocks only from a licensed, registered broker.
  • Don’t buy unregistered securities. Keep your eyes open.
  • Don’t let the fact that traditional investments aren’t giving you the returns you want turn you into bait for scammers.

How Many Credit Cards Should I Own?

How MANY CREDIT CARDS SHOULD I OWN?

 

Hopefully, you’re working hard at keeping that score high by using your cards and paying your bills on time. You may be wondering, though, if more is better. Should you open a few more and get more available credit? Or, are too many cards a liability to your score?  

Read on for the answers to all your questions. 

How your credit score works 

Before we answer the number of cards question, let’s explore the way FICO and other credit scoring agencies, like VantageScore, calculate that all-important credit score. 

Here are the major components of your credit score:

  1. Your payment history. The timeliness – or lack thereof – of your payments comprises 65% of your FICO score, making it the most important factor. VantageScore, another major credit scoring company, doesn’t share the percentages it uses, but it calls payment history “extremely influential” in determining your score.
  2. Your credit utilization. Credit scoring companies look at how much of your available credit you are using. A large amount of available credit – even in aggregate across multiple cards – is not always a good thing.
  3. The age of your credit. Next up on the list of influential factors is how long you’ve had your credit cards open. Lenders want to see a long and active history of credit cards and on-time payments.
  4. The kind of credit you have.  A variety of credit indicates that you are an attractive borrower.

The benefits of having multiple cards

Having one open credit card is not sufficient for achieving a high credit score. In order to give you the best shot at excellent credit, make sure you have several open cards. In the long run, having multiple cards can boost your score in two important areas:

  • Your payment history. When you pay several credit card bills on time instead of just one, this component of your score will go up.
  • Credit utilization rate. FICO likes to see a low credit utilization rate. This means that the more unused credit you have, the higher you will score in this area. Having multiple cards open will automatically increase your available credit. You’ll also be able to spread your credit use across several cards, further lowering your credit utilization rate.

The right number of credit cards

Are you waiting to hear that magic number telling you exactly how many cards you should have in for achieving and maintaining a high score? Well, unfortunately, there is no such “magic” number.

As mentioned, you do need to have several credit cards to increase your credit age and available credit, but there is no specific amount you should have. Instead, let’s take a look at the credit cards of consumers who have excellent scores.

The FICO high-achiever statistics track people with FICO scores that top 785. These statistics find that the average FICO high-achiever has 7 open credit cards. Of these cards, only four have outstanding balances. The average credit account is 11 years old and the most recently opened account is 28 months old.

So, while you may be quick to observe that several cards may be a good thing, consider the age of the cards in the wallets of high achievers. Perhaps lots of NEW cards won’t help you achieve excellent credit. Rather, a proven track record of on-time payments and responsible use of credit is the vital factor here.

When not to open new cards

If you’re planning on taking out a large loan, like a mortgage or an auto loan, within the next year, it’s not a good idea to start applying for new cards. Here’s why:

  • Hard checks on your creditEvery new credit card you apply for means another time your credit history gets pulled. Lots of “hard checks” can negatively affect your score – just what you don’t need before applying for a large loan. It may hurt your chances of approval and/or increase your approved rate.
  • Your credit age will decrease. The age of your credit is determined by taking an average age of all your cards. By opening lots of new cards, you’re bringing that average down and hurting your score.
  • Your credit variety will be lessened. Similarly, opening more unsecured cards with revolving credit will lower your credit variety, because you will suddenly have a much heavier amount of unsecured credit lines and less of other types of borrowings.
  • Too much open credit. While once considered a positive attribute across all credit scoring companies, the recent modifications to the VantageScore have changed all that. Lots of open credit will now negatively affect your VantageScore. This score is used for auto loans and other large loans; though most mortgage lenders currently only consider your FICO score.

Here’s the final word on having lots of open credit cards: If you’re just starting to build your credit and don’t plan on taking out a huge loan soon, it’s a good idea to open a few cards. Pay them on time and try not to go above 30% of your available limit on any of them. But, if you plan on applying for a large loan in the near future, give that card acquisition a rest and focus on using the cards you have responsibly.

Whichever category you fall into, remember to use your cards and pay those bills on time! The easiest way to do this is to make it automatic. Set up each of your credit cards to pay for a monthly bill. Then, set up your credit card bills to be paid automatically as well.

Keeping your credit score strong can have positive effects on your finances for years to come!