BCR Finance Matters 011522

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$ inance

Matters

$ $ $ $ Avoiding Financial Pitfalls

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■ Paycheck-stretching hacks ■ Strategies to ease the burden of student loan debt ■ Expert tips to protect yourself from credit scams ■ Plus much more!

A publication of est. 1851

Shaw Media/ January 2022

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Paycheck-stretching hacks (BPT) - Feel like your paycheck is you’ll also have access to thousands of gone before your next payday? You’re fee-free ATMs to withdraw from.[4] not alone. A 2020 survey, “Getting PLAN AHEAD TO AVOID FEES Paid in America,” revealed that 2 out First, get a clear picture of of 3 Americans are living paycheck where your money is going to paycheck. each month - and when. On a calenNot only is this stressful and frus- dar, map out what bills are due when, trating, it can cause you to have fewer when subscriptions like Netflix will choices for managing your money and charge you, and when you’ll be paid. be more expensive for you in the long If one part of the month contains run. Nearly 12 percent of U.S. households use expensive methods like most of the due dates, call your credmoney orders, check cashers and bill itor to ask if you can move the due pay services to access the money they date, easing the strain on that pay peearn, which can lead to a downward riod. If you can get bills paid on time, spiral of further expense and debt.[1] that means fewer late fees - and a betAnd for those who borrow money to ter credit score in your future. hold them over, it may take about five GO2bank also offers overdraft promonths to pay off loans, costing an average of $520 in additional financ- tection (up to $200).[5] To get started, ing charges.[2] just set up your eligible payroll/benefits direct deposits and opt in for overdraft The good news? There are hacks protection - GO2bank will automatithat can help you stretch your dollar cally cover purchase transactions that further, from one paycheck to the next. exceed your available balance.

3.

1.

GO DIGITAL If you’re not getting what you

need from your current bank or are looking to bank for the first time, you should know that digital banking these days is a safe, accessible and affordable option.

SAVINGS LITTLE 4. BYBUILD LITTLE

Since there’s no way to be ready for every unexpected bill or expense, you’ll have more peace of mind if you start building an emergency fund right away. Setting aside even a small amount each pay period will add up GO2bank is an example of a fully over time. You’ll thank yourself when digital bank that can help you get an emergency doesn’t plunge you into control of your finances right from debt. your mobile phone. It offers all kinds To make your savings go farther, of convenient tools to help you save money, so you won’t have to rely on GO2bank offers a high-yield savings check-cashing services or payday lend- rate at 10X the national average[6] and ers - which charge high fees or interest cash back rewards up to 7 percent rates that take a big bite out of your when you buy e-gift cards from pophard-earned paycheck. ular retailers in the app you may already be shopping at.[7] To download the app, visit the Apple App Store or Google Android App START SAFELY BUILDING . AND IMPROVING CREDIT Store, or go to www.GO2bank.com.

Having a higher credit score makes it easier and less expensive to DIRECT DEPOSIT = borrow money when you need to QUICK ACCESS TO PAY

Did you know you can actu- such as for a car loan or home mortally access your paycheck a day or two gage. Building better credit takes time, early? When you’ve got bills due or but there are ways to do so today that need groceries before your paycheck will open the door to better options tohits your bank, you need your money morrow. GO2bank makes this option quicker. Options like payday loans available to you regardless of credit can end up costing you hundreds in history with its Secured Credit Card fees and even cashing your paycheck with no credit check or annual fee.[8] can delay your payday even further.

Taking these steps may help you With direct deposit of your pay- get to your next payday with a lot less check to GO2bank, you don’t have to stress. A little planning and the right wait too long, as you can access your tools can go a long way in helping you paychecks up to two days early or gov- improve your financial well-being for ernment benefits up to four days early. the future.

[3] And should you need cash quick,

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[1] How America Banks: Household Use of Banking and Financial Services (2020, October 19) [2] Payday Lending in America: Who Borrows, Where They Borrow, and Why (2012, July) [3] Direct deposit early availability depends on timing of payor’s payment instructions and fraud prevention restrictions may apply. As such, the availability or timing of early direct deposit may vary from pay period to pay period. The name and Social Security number on file with your employer or benefits provider must match your GO2bank account exactly or we will decline your deposit.

[4] Fee-free ATM access applies to in-network ATMs only. For out-ofnetwork ATMS and bank teller withdrawals, a $3.00 fee will apply, plus any additional fee charged by the ATM operator in addition to our fees.

[5] A $15 fee may apply to each eligible purchase transaction that brings your account negative. Opt in required. Balance must be brought to at least $0 within 24 hours of authorization of the first transaction that overdraws your account to avoid the fee. We require immediate payment of each overdraft and overdraft fee.

Overdrafts are paid at our discretion and we do not guarantee that we will authorize and pay any transaction.

Learn more about Overdraft Protection (PDF).

[6] Interest paid quarterly on the average daily balance of savings during the quarter up to a $5,000 balance and if the account is in good standing. 1% Annual Percentage Yield (APY) as of January 2021. APY may change before or after you open an account. See Deposit Account Agreement (PDF) for terms and conditions.

The average national savings account interest rate of 0.05% is determined by the FDIC as of 10/23/20. National rates are calculated based on a simple average of rates paid (uses annual percentage yield) by all insured depository institutions and branches for which data are available. Savings account rates are based on the $2,500 product tier of insured depository institutions for which data is available. Visit https://www.fdic.gov/ regulations/resources/rates/ to learn more.

[7] Active GO2bank account required to receive an eGift Card. eGift Card merchants subject to change. See Deposit Account Agreement (PDF) for details.

[8] Available only to existing GO2bank accountholders with direct deposits totaling at least $100 in the past 30 days. Eligibility criteria applies. Other fees apply.

Student loan debt in the United States is growing. According to EducationData.org, federal student loan debt has grown at an annual average rate of just under 28 percent since the start of

the 21st century. Private student loan debt also is a significant burden, totaling $132 billion by the end of 2020.

As student loan debt has risen, managing that debt has become an import-

multiple loans only need to make a single payment each month. That impression is correct, but there’s more to consolidation than simplifying repayment. The experts at Credit.com note that consolidation typically allows borrowers to change their repayment terms. Longer repayment terms will increase the amount of interest borrowers pay over the life of the loans.

But longer repayment terms also allow borrowers to pay less each month, which can free up money to pay bills and build savings for large purchases, including a home.

■ Know your loans. Many borrowers signed their student loan documents when they were 18, while others might have signed when they were 22 or 23 and about to enter graduate school. It’s easy for young borrowers to overlook important details like interest rates, but individuals who have multiple loans must recognize that the interest rates on loans that have not been consolidated almost certainly vary. Learn the interest rates on your loans and make a concerted effort to pay extra principle each month on the loans with the higher interest rates.

Doing so can save borrowers a lot of money over time and get them that much closer to eradicating their student loan debt.

Student loan debt is a significant burden for millions of individuals.

Finding ways to ease that burden can help borrowers secure their financial futures. MM21C533

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Strategies to ease the burden of student loan debt

ant component of financial planning.

Individuals with student loan debt can look into various strategies to help ease their debt burdens.

■ Reconsider your employment. As student loan debts have risen, employee repayment assistance programs once associated strictly with government jobs have grown in popularity at private companies. The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed around the onset of the pandemic in 2020 included a taxfree provision for employer-sponsored loan assistance programs. The tax benefits helped both employees, who did not have to pay income taxes on loan assistance money provided by their employers, and businesses, who received payroll tax exclusions on funds paid to employers via the program.

The CARES Act provision was temporary, but experts at Goldman Sachs have noted that many private companies have gotten creative in regard to helping employees pay down student loan debt. For example, some have allowed employees to redirect PTO and vacation pay toward their student loans. Individuals with sizable student loan debts whose companies do not currently offer such benefits can look for new employment opportunities with firms that will help them pay down their debts.

■ Consolidate loans. Consolidation is often viewed through the lens of simplifying loan repayment by combining all loans into one so borrowers with

Shaw Media/ January 2022

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Expert

tips

to protect yourself from credit scams (BPT) - While credit scams have been around forever, they’ve recently exploded in number. According to Mint, from 2019 to 2020, the number of identity theft reports went up by 113% and the number of reports of identity theft by credit cards increased by 44.6%. The amount of fraud by new credit card accounts saw a 48% increase from 2019.

As more information is digital today, on top of the increase in health and financial stressors, scams designed to access your credit accounts or personal information are on the rise.

Having financial or credit accounts hacked can have long-lasting implications, beyond financial loss and inconvenience.

Here are tips to help protect your credit and personal information.

PRACTICE GOOD CYBER HYGIENE Use long, strong passwords unique to each account or website - or use a password manager to help create better passwords and keep track of them.

Change the password on your home’s router. If you’re using the same password for several accounts, or haven’t changed passwords in a while, now’s the time to clean up your digital act.

BACK UP YOUR DATA Having digital and physical backups for your data protects you from not only losing important information, but also from ransomware attacks - when a hacker freezes or destroys your data unless you pay them in bitcoin. While this is more likely to happen to businesses, it can give you peace of mind to have your data backed up.

ing an account in your name. You can check any of the major credit reporting companies for free once a year.

However, because identity theft is becoming more frequent, you should check your credit score more often.

One tactic is to rotate which company you request a report from, requesting one every few months.

You can also check your credit with VantageScore, which uses credit scoring models that provide lenders and consumers with highly predictive credit scores that are easier to understand and actually score more people.

Access yours for free through the providers at VantageScore.com.

Consider both a Cloud backup as Check your credit reports for: well as on a physical hard drive - and/ or printing out vital information or ■ Credit accounts/debt that isn’t documents. yours.

MONITOR YOUR CREDIT REPORTS ■ Inquiries indicating a company Keeping an eye on your credit re- accessed your report without your ports alerts you to attempts to steal permission. your identity, such as someone open-

■ An address where you’ve never lived. This could be a sign someone’s tried to use your identity to open an account.

(that looks real). Instead, access your account from the website you always use to see if there’s a problem. Contact the company directly, not through the email. Most likely it’s a phishing If you see items like these on your attempt to get your personal login or report, contact the credit agency right financial information. away. A change to the Fair Credit Reporting Act (FCRA) in 2018 allows Scammers may take advantage of consumers to put a freeze on their current crises, claiming to be COVIDcredit reports for free, so credit re- 19 contact tracers, or referring to govporting companies will restrict access ernment stimulus checks. Never give to your reports, not allowing lenders personal or financial information like with whom you do not have an exist- your birthdate or Social Security numing relationship to pull them. This can ber over the phone or via email. Other help prevent fraudulent credit appli- common scams involve taxes or unemcations from being opened. Then you ployment compensation. can choose when to “unfreeze” the credit reports and put them back into View any email or text asking for incirculation. formation or to reply with an account login or other personal information 4. BE ALERT TO COMMON SCAMS as suspect, and contact the supposed You may receive an email saying sender directly. one of your credit accounts has been blocked or suspended. It may look Learn more about tips and credit like an email from a legit company. strategies at VantageScore.com.

Never click links within the email, as they may take you to a fake website

High consumer debt can compromise individuals’ financial futures and have an adverse effect on their overall health. Debt has long been an issue that threatens individuals’ well-being, but the good news is that certain debts seem to be on the decline.

According to the “Quarterly Report on Household Debt and Credit” that was released in May 2021 by the Federal Reserve Bank of New York, credit card balances were $157 billion lower by the end of the first quarter of 2021 than they had been at the end of 2019. Authors of the report credit that decline to paydowns by buyers and reduced consumption opportunities related to the pandemic.

Individuals who want to avoid debt can keep an eye open for these pitfalls.

• Retail credit cards: Many retailers offer their own credit cards. Consumers may be enticed to sign up for such cards by the opportunity for instant, and often significant, savings.

For example, a home improvement store may offer an immediate 25 percent discount to customers who sign up for a store credit card and use the card to make a purchase. As enticing as such savings can be, consumers should recognize that a recent study

by CreditCards.com found that the average retail credit card APR is 25.9 percent. That’s more than 6 percent higher than a general purpose credit card. Consumers who cannot pay balances in full each month could end up paying much more in interest if they use retail credit cards instead of general purpose cards.

• Too many accounts: A 2019 study from the credit reporting agency Experian found that the average American has four credit cards. Though many consumers can effectively manage that many cards, the more cards an individual has, the easier it can be to lose track of spending. More cards also means a greater potential for more debt, as each card has its own limit that is unrelated to the limits on other cards.

• Bonus hunting: Another pitfall to avoid is the temptation to use credit cards instead of cash in an effort to accumulate more travel miles or cash back bonuses. Consumers should aspire to use cash over credit whenever possible. Doing so ensures consumers are not spending money they don’t have, which is one of the most common ways that individuals build significant consumer debt.

• Failure to budget: A budget is the most effective way for individuals to gain control of their spending. That lesson seems to resonate more with young people than older men and women. A 2019 poll from Debt.com found that 74 percent of consumers between the ages of 23 and 38 use a budget to govern their spending, while only 67 percent of consumers between

the ages of 39 and 54 use a budget. A failure to budget can increase the risk of spending impulsively and make it hard for consumers to see what’s coming in and what’s going out. That’s a recipe for accumulating debt.

Avoiding certain pitfalls can help consumers avoid accumulating debt that can adversely affect their financial futures. MM21C530

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Pitfalls to avoid falling into debt

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How an electric vehicle can help you meet your goals in 2022 (BPT) - Do you want to be more budget-conscious? Perhaps you’re looking for new ways to eliminate emissions from your car’s tailpipe? Goals related to finances and the environment are popular resolutions for Americans year after year. While there are many ways to accomplish these two goals separately, switching to an electric vehicle (EV) might be a simple way to help you accomplish both.

An electric vehicle can help save you money through lower maintenance and fueling costs while reducing your amount of tailpipe emissions. Here’s more about how driving electric can get you closer to keeping these two important resolutions:

Just how much fewer emissions do EVs generate? According to the U.S. Department of Energy, EVs produce an average of 3,700 pounds of CO2 equivalent emissions per year, compared to more than 11,400 pounds of average CO2 equivalent emissions from gasoline-powered vehicles. That’s a lot of CO2 that won’t end up in the air if you’re driving electric.

EVS COME WITH BENEFIT OF FLEXIBLE CHARGING Once you make the decision to switch to an EV, you’ll have the benefit of flexible charging options to keep your car up and running.

According to the National Renewable Energy Laboratory, more than 80% of EV charging is done at home, and residential charging equipment can most likely be installed in your garage.

Beyond the home, public EV charging station options are also growing rapidly, with strong support from policymakers, businesses and consumers.

EVS SAVE MONEY EVs typically mean lower maintenance and fuel costs. According to Energy.gov, light-duty battery electric vehicles are generally cheaper to maintain than traditional gas-powered vehicles. Plus, the National Renewable Energy Laboratory estimates EV drivers can save up to $10,500 in fuel costs Electrify America, the nation’s over a 15-year time span compared to largest public network of ultra-fast a gas vehicle.

EV charging stations, offers charging options along highway routes and in Electric cars also help you save metro areas, and in many places you through a more efficient drivetrain. visit regularly: alongside restaurants, EV batteries can last for 12-15 years by grocery stores, at major retailers in moderate climates, and an electric and shopping malls, close to convecar’s drive system doesn’t lose as much nience stores and gas stations - even energy as a traditional gas car’s engine. near financial services like banks.

This means an EV can save you more money, long term.

To help drivers feel confident taking their electric vehicles on longer When you factor in the improved trips, Electrify America offers multienergy efficiency and reduced main- ple cross-country routes and several tenance costs (such as a lack of oil north-to-south routes, and many other changes), driving electric can save you interstate options along the coasts thousands during the life of the vehicle and Middle America. And the station (average vehicle lifespan is 12 years). Ac- growth continues: by 2026, the comcording to Consumer Reports, those sav- pany plans to have more than 1,800 ings may range between $6,000-$10,000. fast-charging stations and 10,000 individual chargers installed in the U.S. If you’re looking to purchase an and Canada.

EV, you might be able to save even more through federal tax credits of Whether you’re looking to save up to $7,500. Some state and local money or eliminate your tailpipe governments may offer additional in- emissions - or both - in the next year, centives too. an EV is a great option for sticking to those resolutions. As more EVs EVS SUPPORT A SUSTAINABLE LIFESTYLE come to market - and support for If you’re looking for simple ways to electric cars and the stations that live a less carbon-intensive lifestyle, charge them continues to grow - you driving an EV is a great choice as they can feel good knowing you’re ahead typically emit lower levels of green- of the curve by making the switch to house gases than the average new gas- electric now. oline car.

(BPT) - What are your goals for the people age 50 and older. If that’s not future? If retirement planning is top of possible, consider increasing your contribution a bit every year. mind, you’re not alone.

Remember to explore all options of your employer’s retirement plan to create a savings approach that is right for you. For example, some employers offer a Roth 401(k), which is funded with taxed dollars. There are no income limits on a Roth 401(k) and withdrawals are tax-free at age 59¬Ω Whether you’re just getting started as long as your initial account contrior looking to kick it up a notch, here bution was made five or more years are some of the best ways to save for prior to the withdrawal. retirement in 2022 and beyond: CONTRIBUTE TO AN IRA IRAs are another retirement tool to UNDERSTAND YOUR COMPLETE consider directing savings into. IRAs FINANCIAL PICTURE It’s important to look at your fi- are great options for self-employed nances from where you are in the workers, small businesses, teens with present and where you want to be in their first job and those who are maxthe future. Make sure you’re in a good ing out their employer retirement spot now, so you can stay on track to plan. Even if a spouse isn’t working, they may be eligible to fund a spousal accomplish future financial goals.

IRA. Remember, you can save in both One simple way to start is under- a 401(k) and an IRA. standing where your money is going Which type of IRA is right for you? and any barriers that are holding you back from meeting your goals. Utilize A traditional IRA gets a tax break uponline tools that can help provide a front because it is funded with pretax holistic snapshot of your financial life dollars and a Roth IRA is funded with and commit to making changes where post-tax dollars, so you can pull that necessary. For example, determine money out in retirement and not have areas you can decrease spending and to pay additional taxes on the contributions and earnings. If flexibility is put more money toward saving. important, a Roth IRA might be a good MAXIMIZE RETIREMENT SAVINGS PLAN choice because you can withdraw your contributions without penalties at any PERKS Don’t leave “free” money on the time if needed. table. If you have an employer-sponsored 401(k) plan (or 403b, 457 or CONTRIBUTE TO A HEALTH SAVINGS other), enroll and meet your match. ACCOUNT This is the money your employer proHealth savings accounts (HSAs) are vides to match what you set aside for retirement, so you can save more than a convenient way to set aside money for expenses related to your health, if you did it individually. but they are also a smart financial Additionally, check out the IRS tool. HSA contributions reduce your 401(k) limits and consider maxing taxable income so you benefit come out your contribution. For 2022 the tax time. HSA earnings growth and IRS allows individual contributions qualified withdrawals are also tax of $20,500 per person and $27,000 free, rounding out HSAs’ triple tax ad(including catch-up contributions) for vantage. In 2022, an individual with According to new research from Empower and Personal Capital, 36% of Americans are making retirement planning a priority this year. That’s more than those who said losing weight (28%), buying a house (14%) or getting a new job (11%).

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coverage under a qualifying high-de- ask for help. A financial advisor can ductible health plan can contribute up help you determine exactly what your financial goals are, walk you through to $3,650, according to the IRS. your options, and provide a personalWhat’s more, there’s also no “use it ized plan. Getting trustworthy advice or lose it” requirement, and many pro- can have a big impact on how configrams allow you to invest your HSA dent you feel about your prospects money once you hit a certain thresh- going forward. old. This means it’s a great way to No matter what stage of life you’re save for health expenses now as well in, it’s never too early to start saving as during retirement. for retirement. There are plenty of paths you can take, and the earlier you GET HELP FROM A PRO Financial planning can be confus- start, the better off you’ll be. ing and complex, so don’t be afraid to

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Retirement readiness hacks to help you save smarter

Shaw Media/ January 2022

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