Credit Card Debt

American Household Credit Card Debt a Growing Burden

American households with credit card debt have an average of $16,061 of it, according a study from NerdWallet. NerdWallet adds that consumers who carry credit card debt pay an average of $1,292 per year in interest on it.

Now, maybe you read that top line statistic and say, “great! I’m below the average.” But there are two big points to consider when it comes to credit card debt:

1. It’s all relative. Just about any amount of credit card debt becomes unsustainable when a financial crisis occurs. Keep that in mind before you accumulate it.

2. All credit card debt is very expensive. Credit cards are a bad bet. Meaning, the companies that issue them are betting against you at every step. They are betting that you won’t pay balances off before “0 interest” promo deals expire. Especially companies where purchase rates are in the high double-digits.

In other words, it’s all bad debt. You need to pay off your credit cards each month.

If you can’t, come see ProMedica FCU. We have some ideas to help you to consolidate some of the high-interest debt into a lower-interest solution. We can also discuss how to free up cash flow to pay down your cards quicker.

Again, the best solution is to pay of those cards each month. If you can’t come see ProMedica FCU before you find yourself shelling out hundreds or thousands of dollars on interest.


The Fed Who Cried Wolf

If you remember the story of the Boy Who Cried Wolf, you have a pretty good idea of the Federal Reserve’s behavior over the past year.
Like the boy in the story, the Fed cried “Wolf!” several times over the past twelve month, but the wolf failed to appear.

OK, the Fed didn’t actually cry “Wolf!,” it cried “Interest Rate Hike!” But you get the idea.

After threatening to raise rates for months, the Fed finally came through with a small bump in the federal funds rate last week.

Markets were fully expecting this move. You may have noticed that mortgage rates have been rising for the past seven weeks. Still, it’s a brave new world when the Fed raises rates for only the second time since the Financial Crisis. It’s a big deal.

The good news is that the Fed felt bold enough to move on rates. They only did this because the economy is finally threatening to speed up to the point where a tighter money supply, (to keep inflation in check) may finally be necessary.

We say “may” here because it’s indeed debatable whether the economy needs any slowing. Sub-3% growth in GDP, teeny-tiny productivity gains and workforce participation numbers straight out of the disco-groovin’ mid-1970s are not exactly reasons to fear an overheating economy and runaway price inflation.

Unless, of course, we’re talking about over-inflated asset classes like stocks or real estate. Which are over-inflated specifically because of the Fed’s freewheeling monetary policies.

Maybe, then, the takeaway from this move is that the Fed believes that the economy is entering a more normal state after years of needing life support. This would indeed be a good thing.

So how does this interest rate hike affect PFCU and our Members? Certain rates will be re-priced eventually, though not immediately. PFCU along with most Credit unions savings rates have stayed well above the rates offered by the banks. Please contact PFCU with any questions.


Consumer Comfort Level with Financial Apps

From Candy Crush Saga to Google Translate, consumers have thousands of mobile apps to choose from. While numerous people are quick to download music or movie-streaming apps, not everyone is as confident with financial apps.

According to a 2016 Mid-Year Consumer Survey conducted by the Ohio Credit Union League, 52 percent of respondents don’t use a financial app. The 48 percent who said they do, mainly use it for basic banking needs. Thirty-six percent said they use a financial app to deposit or transfer funds, 32 percent track financial accounts, 25 percent track where their money is going, and 17 percent keep a mobile budget. While nearly half of Ohioans use a financial app, 82 percent of users said they aren’t sure how safe their information is when using the app, and figure someone will let them know if any information is compromised.

Although threats to mobile data security have made consumers wary of using financial apps, market research shows that the number of consumers downloading them is increasing. A survey conducted by Market Force Information found that 77 percent of consumers whose financial institution offers a mobile app have downloaded it, an increase of 5 percent over 2015 and 12 percent above 2014. Those who are 18 to 24 years old have the highest adoption rate at 92 percent. Half of those older than 65, also use their financial institution’s app.

With so many apps outside of your primary financial institutions out there, how do you know which ones are safe, effective, and useful? Here are some tips for choosing safe third-party financial apps.

• Determine your goal: There are apps available for most financial initiatives. Are you looking at understanding where you money goes? How about building and sticking to a budget, or making the most out of your credit cards? There are even apps that will round up your debit/credit card purchases and invest the difference.

• Confirm an app is legitimate: If you decide to download an app to manage money, do the research. Check with the Better Business Bureau’s comprehensive database, and read customer reviews online before downloading a third-party financial app.

• Don’t ignore Terms of Service (TOS): Not only will the TOS outline the app’s privacy and security policies, but it will also summarize any important disclaimers.

• Use advanced security: Take advantage of security features such as fingerprint ID or a numeric passcode on your smartphone and on the app, if it allows it. This offers an added level of protection against fraud or theft. Bottom line, do your due diligence and find the app you are most comfortable with.