Mortgage Rates

Mortgage Rates Remain Near 7-Month Lows

Mortgage rates touched seven-month lows early this month, and stayed there last week.
According to Bankrate.com’s weekly national survey, the benchmark 30-year fixed mortgage rate inched lower last week, moving from 4.04 percent down to 4.02 percent.

The larger jumbo 30-year fixed nosed up to 4.00 percent, and the average 15-year fixed mortgage rate settled at 3.25 percent. Adjustable mortgage rates were mixed, with the 3-year ARM slipping to 3.48 percent while the 7-year ARM climbed to 3.60 percent.

Bankrate points out that, despite another interest rate hike by the Federal Reserve, mortgage rates are hovering at the lowest point since mid-November and are little changed from where they were 18 months ago when the Fed started boosting interest rates.

The common theme then, as now, has been a slow growth economy with low inflation. This week brought additional evidence of low inflation and the recent softening has garnered the attention of the Fed, who noted in their statement that they are “monitoring inflation developments closely.”

Mortgage rates are closely related to yields on long-term government bonds, which appeal to investors any time uncertainty, or low inflation, is in the air.

Car Prices

Car Prices: Something Funny Is Going On

People are paying way too much for new vehicles these days, with average transaction way out of whack with average household incomes.

According to Kelley Blue Book, the estimated average transaction price (ATP) for light vehicles in the United States was $33,261 in May 2017. According to the government, the median household income in the U.S. was $56,000 in 2015.

This is just too much, once we apply the time-tested “20/4/10” rule.

Use This Rule to Determine How Much Car You Can Afford:

This rule stipulates that a car is affordable when a buyer can make a down payment of at least 20%, use financing lasting no longer than four years — with principal, interest and insurance not exceeding 10% of a household’s gross income.

If a median-income household cannot buy a median-priced new vehicle using the “20/4/10” rule, then we have a problem with affordability.

So, why are new vehicle sales so strong? The answer to this is simple: people aren’t following the “20/4/10” rule, and automakers keep coming up with ingenious new financing strategies that ensure they won’t.

Think about the number of “0 Down” financing schemes on offer; think of all of the factory leasing deals.

Leasing used to represent a tiny portion of new vehicle transactions. Today, more than 50% of all new vehicles are leased in certain vehicle categories.

In short, car companies are making it easier than ever to help Americans drive away in vehicles that they cannot really afford (according to the “20/4/10” rule).

Don’t Buy the Payment

Car salesmen are trained to “sell the payment” to buyers. If the monthly payment is do-able, a sale can be made. The trouble is, getting that monthly payment down to an “affordable” level often means stretching payment out to 60 months, 72 months or even more. It also means factory lease deals that may seem cheap, until you factor in that they leave you with nothing at trade-in time.

Before You Shop for a Vehicle, Go See ProMedica FCU

The simple truth is that following the “20/4/10” rule is still an excellent way to buy a new vehicle without threatening your long-term financial health.

If you’re considering a new vehicle purchase, do yourself a favor and go see ProMedica FCU before you drive to a dealer lot.

ProMedica FCU will help you to see how different car buying scenarios fit in with your other financial goals – such as saving for emergencies and retirement. It’s the best way to ensure that you don’t buy yourself a shiny new mistake.

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Identity Theft

Consumers, be wary: Identity theft is on the rise

If you’ve been a victim of identity theft, you’re not alone. Thirty-three percent of Ohioans reported that they’d been victimized by fraud and/or identity theft in a year-end 2016 survey conducted by the Ohio Credit Union League. More could have suffered at the hands of fraudsters without knowing it yet.

In 2015, Ohio had the twelfth greatest number of identity theft-related complaints filed with the Federal Trade Commission. Dayton ranked 34th and Cleveland/Elyria ranked 38th among the 50 largest U.S. metropolitan areas with the most identity theft-related consumer complaints.

According to a study by Barclays, most identity theft that occurs happens in the United States (about 47 percent); 55 percent of these identity thefts are caused by a malicious outsider, followed by an accidental loss of the card (25 percent). EMV chips (which stands for “Europay, MasterCard, and Visa” and is a global standard to authenticate and secure global card transactions) have caused a decline in the use of counterfeit cards.

These days, 45 percent of identity theft is committed online. Online fraud gives hackers and predators a multitude of ways to get your information. From creating fake forms to posing as legitimate companies, the internet has spawned a wide array of tactics to get your personal and financial information, which means consumers need to remain vigilant.

Some of the most common forms of identity theft are:

• Child ID theft: Children’s IDs are vulnerable because the theft may go undetected for many years. By the time they are adults, the damage has already been done to their identities.

• Tax ID theft: A thief uses your Social Security number to falsely file tax returns with the Internal Revenue Service or state government.

• Medical ID theft: This form of ID theft happens when someone steals your personal information, such as your Medicare ID or health insurance member number, to get medical services or to issue fraudulent billing to your health insurance provider.

• Senior ID theft: These ID theft schemes target seniors. Seniors are vulnerable to ID theft because they are in more frequent contact with medical professionals who gather their medical insurance information, or caregivers and staff at long-term care facilities who have access to personal information or financial documents.

• Social ID theft: This type of thief uses your name, photos, and other personal information to create a phony account on a social media platform.

Despite the prevalence of identity theft, only half of the League’s survey respondents closely monitor their accounts to check for fraudulent transactions. On the other hand, 10 percent figure that someone will let them know if any of their accounts have been compromised and just leave protecting their identity and accounts to their financial institutions.

Here are some steps savvy consumers can take to protect themselves from identity theft:

• Guard your (and your children’s) personal information: Don’t carry your Social Security card in your wallet or write your number on your checks. Only give out your Social Security number when absolutely necessary. Ask if there is an alternative way for you to verify your identity. Don’t respond to unsolicited requests for personal information and store personal information in a safe place.

• Keep an eye on your accounts: Pay attention to billing cycles. If bills or statements are late, contact the sender. Collect mail promptly and put your mail on hold when you’re away for several days, so thieves don’t have a chance to get to account information on mail left in your box. Review your receipts and compare them to your account statements. Watch for unauthorized transactions. Shred receipts and credit card offers and other paperwork you don’t need, but that could contain personal information.

• Be vigilant online: Install firewalls and virus detection software on your home computer and create complex passwords that fraudsters can’t easily guess. Change passwords often, especially if a company or organization has your information and has suffered a database breach.

• Order your credit report once a year: Review it to make sure it doesn’t include accounts you have not authorized. Check it more frequently if you suspect someone has gained access to your account information. You can pull this information for free at sites like www.CreditKarma.com and www.annualcreditreport.com. If you are having trouble reading your credit report, please contact ProMedica FCU for assistance.

ProMedica FCU’s Pinnacle Checking Account includes identity theft protection for up to 3 generations of family.

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Teen Driver

Breaking News: Parents and Teens Disagree on Auto Ownership

Here’s a finding that will surprise nobody: 76% of teens say they’re ready for a car, while 85% of parents disagree.

This comes from independent research conducted for Junior Achievement & American Honda Finance Corporation.

The discord may lie in the fact that 86 percent of teens feel that parents should help them with automobile expenses such as insurance, repairs and gas, while 91 percent of parents believe assistance is unreasonable.

According to the results, nearly one-fourth of teens expects a car with their cap and gown this graduation season.

At the same time, 61 percent of parents expect their teen to complain about the financial upkeep of a car within 30 days of getting their vehicle.

“When it comes to newly licensed drivers, in addition to important discussions about distractions and curfews, parents should rev up the car talk about the financial aspects of car ownership,” said Jack E. Kosakowski, president and chief executive officer of Junior Achievement USA. “It’s a great way to prepare them for future financial security both on and off the road.”

Interestingly, 61 percent of parents say that a car is a more effective means of teaching kids financial responsibility than a credit card.

To that end, 96 percent of parents say they would only help their teen buy a car if they first demonstrated responsibility, such as by preparing a budget to pay for expected and unexpected expenses, having a certain amount of money saved or explaining what is required to buy a car.

A third JA-AHFC survey conducted among young adults ages 18-25 may reveal the truth about teens’ financial understanding.

According to this more mature cohort, looking in the rearview mirror, 73 percent admit they did not understand the financial responsibilities of owning a car when they were in high school.

And, with age, comes wisdom.

Ninety-three percent of these young adults are confident that they fully understand the financial responsibilities of owning a car, and they turn to a wide variety of sources for information when considering purchasing a vehicle, including financial institutions, car dealers, online forums, magazines and social media.

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Travel

Travel Smarter and Save Bigger this Summer Vacation

Spring flowers are in full bloom, which can only indicate one thing: summer is nearly upon us. For many, that means it’s time for a well-deserved vacation with family and friends. In a year-end 2016 survey conducted by the Ohio Credit Union League, an overwhelming majority of respondents, 71 percent, are planning to get some rest and relaxation with a vacation this summer.

Whether heading somewhere new or traveling back to a family favorite, most Ohioans plan their vacations in advance, but at varying times – 34 percent plan six months to a year in advance, 31 percent plan three to six months in advance, and 15 percent plan one to three months in advance. And, while ample time to organize is important, budgets definitely play a role in those plans as well, with 70 percent of Ohioans surveyed noting the cost of the trip as a major influence on where they go for vacation. Other factors included travel distance, scheduling, and amenities or activities at the destination.

We all want and need downtime, but a large financial burden will long outlive the benefits of a vacation. In 2016, households likely to take a vacation spent $1,798 on average, up roughly 11 percent from 2015, according to Condé Nast Travel. In addition, a survey conducted by ValuePenguin noted that the typical vacationing family spends 44 percent of their travel funds on transportation.

Since many vacation decisions are driven by cost, here are a few tips to spend wisely when you take those hard-earned vacation days.

• Scheduling matters: When planning low-cost trips, timing is everything. To save money booking accommodations, try traveling during an off-season or even a few weeks before peak-season starts. If you’re booking airfare, do so at least a month in advance, if not earlier. Airlines price their flights differently depending on the day of the week, so use an airfare tracker site or app, like Hopper, to keep up with changes.

• Travel smart: Many vacation destinations take advantage of the naiveté of travelers, so tourist hot spots may be higher priced than smaller, locally-owned places. Do your research before deciding where to say, what to eat, and what activities you should embark on and you’ll likely save during your trip.

• Use rewards: ProMedica FCU’s VISA Platinum Card earns rewards points that can be redeemed for airfare or other vacation expenses. Even though you may not consistently travel, airlines, and booking services may also offer rewards points.

• Set aside a little at a time — If traveling is important to you, make room for vacation savings in your annual or monthly budget. ProMedica FCU has an account specifically for saving for your dream vacation. ProMedica FCU is also a great resource to consult if you’re looking for ways to save and budget for vacation.

To learn more about ProMedica FCU and how they can help you afford life, call us at 419.479.4040.

Debt

Drowning In Debt

Nearly three quarters of Americans are struggling with debt and the burden is significant in terms of both size and duration, according to a new study from insurer Northwestern Mutual.

The company found that, among Americans with debt, 4 in 10 (45%) spend up to half of their monthly income on debt repayment.

Nearly half of Americans (47%) are carrying at least $25,000 in debt, with average debt of $37,000 excluding mortgage payments. Notably, more than 1 in 10 say their debt exceeds a staggering $100,000.

More than one third (36%) said they will be in debt between 6 and 20 years while 14% expect to be in debt for the rest of their lives.

When looking at the sources of debt, similar to 2016, mortgages (29%), credit card bills (19%), and personal educational loans (7% gen pop and 23% for Millennials) topped the list.

See your Credit Union Today
There’s no magic bullet for getting rid of debt. Sure, we’d all like to win the lottery, but the odds are stacked against that happening. What we can do is manage our debt load better – and this is where ProMedica FCU can be a real help with two certified financial counselors ready to assist.

For starters, it’s helpful to lay things out on the table. Consumer debt creeps up on us, with so much revolving and installment credit available to most of us. We open so many accounts, with so many different terms, that it’s hard to keep track of it all.
Sometimes, it’s easier psychologically to not keep track of it all. This is a game we play with ourselves.

Putting it on the table, and sharing that knowledge with an experienced representative can really help us to face the reality of our debt load, and to find better ways to manage things.

ProMedica FCU has options for doing this. Not-for-profit options that put your interests first.

Work with PFCU to determine a budget, and to find ways of accelerating the repayment of your debt. There are multiple options depending on your personal situation. It all starts with a visit to ProMedica FCU.

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Mortgage

Mortgage Rates Do an About-Face

Mortgage rates started the year on a tear, continuing an upward trend that push them to highs not seen in years. There was one-party rule in Washington! A new president who wanted to spend a trillion on infrastructure! An aggressive Fed eager to push interest rates higher and higher! And then, reality set it.

First, the one-party rulers failed to pass a healthcare bill. This exposed deep rifts within the party, and cast doubt on the spendy president’s ability to get his agenda passed.

All of this played out against a backdrop of global uncertainty, with a (potentially) unravelling European Union, a horrible civil war continuing in Syria and an emboldened young tyrant in North Korea, eager to play with his nuclear toys.

According to Bankrate, the international tensions, coupled with a spate of weak economic data, have prompted more investors to move into safe haven instruments like U.S. Treasuries.
When bond prices rise, bond yields fall and mortgage rates are closely related to the yields on long-term government bonds.

And fall they have: last week, the benchmark 30-year fixed mortgage rate fell to 4.16 percent – its lowest level of the year, Bankrate said.

Weakness, uncertainty, and nervousness, which have each been in plentiful supply in recent weeks, are good news for bond investors and mortgage shoppers alike.

Expectations for a June Fed interest rate hike have also eased slightly, further contributing to the downward adjustment on bond yields and mortgage rates.

Financial Literacy

Why financial literacy isn’t just one person’s responsibility

Since 2003, April has been designated “Financial Literacy Month” by the federal government, and for good reason. Although most would agree it’s important for people to learn (preferably early) the life skills that set them up for financial success, studies consistently indicate Americans are generally not sufficiently educated about their personal finances.

Respondents in the Ohio Credit Union League’s 2016 end-of-year consumer survey strongly agree that financial literacy is essential to a child’s education. On a scale from one to five (where five is “extremely important” and one is “not important at all”), parents ranked the importance of teaching their children about finances an average of 4.6. Without a doubt, parents recognize how essential a formal financial education is for their children.

That said, when respondents were asked about how they received their financial education, an overwhelming 62.6 percent stated that they learned from experience or life lessons. Despite the widely-accepted belief that parents should play a part in teaching their children financial literacy, only 20.6 percent indicated they received financial education from their parents.

The overwhelming demand for financial literacy training and simultaneous lack of access for Ohio consumers aligns closely with national trends. And when parents fail to educate their children about finances, schools don’t always fill the gap. While the demand for financial literacy courses in high school is nationally apparent, the Council for Economic Education says only 17 states (including Ohio) require students to take classes in personal finance.

In a survey by the National Financial Educators Council about which high school-level course would have benefited participants the most, 54.1 percent stated a money management class would have been the most useful.

Despite a lack of formal education opportunities, there is a multitude of easy, convenient resources parents can leverage to put their children on the path to financial health.

• Start now and involve the family: There is a lot of information to increase personal financial literacy that is appropriate for all ages and levels of wealth. Start now, right where you are. Use age-appropriate activities, including games and challenges to make it fun for kids, and get the whole family better educated about finances.

• Find a personal finance app: Using a personal finance app is an easy way to put money management at your fingertips and help you stay on track with your financial plans. There are many no- and low-cost apps available to help you budget, invest, or pay bills automatically. Check the user reviews to see what aligns best with what you’re looking for in a financial tool.

• Take advantage of online resources: The U.S. government sponsors www.mymoney.gov, which is dedicated to teaching the basics about financial education, including topics like buying a home, balancing a checkbook, or investing in a 401(k) plan. Additionally, with free credit union-funded resources and tools from MoneyAndStuff.info and bizkids.com, the “money talk” is the easiest talk to have with kids.

• Consult ProMedica FCU: According to OCUL’s survey, only 5 percent of participants received formal financial education from financial institutions. ProMedica Federal Credit Union however, has two Certified Financial Counselors on staff to assist you one-on-one with your financial health questions. This is a free service. Financial seminars are also offered monthly. Please check ProMedica FCU’s Facebook page for upcoming events.

To learn about ProMedica FCU how they can help you afford life, call 419-479-4040.

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Vacation

Does Vacation Shaming Keep You from Relaxing?

U.S. workers are feeling more guilt than ever before about planning and taking their vacations, according to a new survey from Alamo Rent A Car.
Overall, the rental car firm’s Family Vacation Survey  around half (49 percent) of all American workers report feeling vacation shamed – being made to feel shame or guilt by co-workers for taking a vacation – compared with only 47 percent in the 2016 Alamo Family Vacation Survey.

And, vacation shaming is particularly on the rise among millennials. Significantly more employed millennials in 2017 reported feeling guilty for planning and taking a vacation (68 percent vs. 59 percent in the 2016 study) – a 19 percent year-over-year increase.
Millennials are more likely than non-millennials to say that vacation shaming would likely keep them from planning or going on a vacation (40 percent vs. 17 percent).

On the other hand, millennials report that they’re significantly more likely than older generations to shame their own co-workers (33 percent vs. 14 percent). Overall, 53 percent of workers feel their colleagues are serious when they engage in vacation-shaming activities.

Also for the first time, Alamo’s annual research indicates that fewer than half of all workers – only 47 percent – are using all of their paid vacation days, compared with 60 percent in the 2015 study and 57 percent in the 2016 study.

Equally surprising, just one in five (18 percent) workers use all of their vacation days to actually go on a vacation, as opposed to activities such as staying home and running errands.

Among workers who left paid vacation days unused, more than half (57 percent) report feeling guilty when they do go on vacation because their co-workers have to take over their job duties, and nearly half (48 percent) feel the need to justify to their employer why they’re using the time off to which they’re entitled.

Here are two things to ponder:

    1. It has been proven by science that taking a vacation reduces your stress level, and actually makes you more productive at work. Conversely, people who don’t take vacation suffer from burnout, and lose more days to illness than those who take vacations.
    2. Americans are about the only people in the world who fall victim to vacation shaming. Europeans, for instance, think we’re crazy for being so vacation-averse.

 
Think about it: not taking a vacation is counter-productive and just plain unhealthy.

Planning and saving for a vacation is the best and most stress free way to go. ProMedica FCU offers a free Vacation Account that can be used as your savings vehicle. Set your goal and budget and you are on your way! For more information please call 419-479-4040.

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Technology

How is technology changing the way consumers manage their finances?

Consumers rely on their financial institutions for multiple reasons and define their convenience based on their habits. As technology continues to evolve, these habits are drastically impacted.
In a time when smartphones are becoming more and more integral to consumers’ daily lives, financial institutions are increasingly using mobile devices to provide services to their customers. About 35 percent of consumers who participated in a consumer survey conducted by the Ohio Credit Union League reported they rarely visit branches in person. They carry their branch in-hand on their mobile phones, taking advantage of what mobile access has to offer. That is not to say people are foregoing in-person transactions. More than half of the survey’s respondents stated that they regularly visit a branch of their financial institution one to four times a month.

In a 2016 study conducted by the Federal Reserve, 53 percent of all smartphone users with an account at a financial institution have used mobile access within the last year. For consumers who’ve made the switch to online or mobile access, the most-common reason is convenience.

Technological advances are synonymous with the financial industry, and here are some ways to ensure you are taking full advantage of the financial technology at your fingertips.

Download your institution’s smartphone app: PFCU has a fully functional mobile app that enables our members to utilize services on the go.

Investigate any online financial planning tools: Calculators, budget templates, and finance tips are often available from financial institutions. Account-linked tracking and analyzation tools can help clarify spending trends and assist with tax filing or budget forecasting.

Sign up for e-alerts: When there is potential fraudulent activity on your account, or your account’s balance dips below a certain level to help you stay on top of your available funds and avoid overdraft fees. Click here to set up PFCU e-alerts.

Utilize online bill pay: Instead of checkbooks, stamps, and folders full of invoices and canceled checks, pay your monthly bills online with a click of a mouse. PFCU offers this service at no charge.

To learn more about how ProMedica FCU can help you afford life, call 419-479-1313 or stop in to one of our four locations.

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