Storming the Capitol

April 7, 2015

Storming the Capitol

You can make a difference and help to protect credit union members from unnecessary regulation

National credit union organizations are extremely busy these days, waging battle on your behalf.

Maybe the biggest fight is the battle against overzealous regulatory burdens that squeeze credit unions' ability to offer the best possible products and services to over 100 million consumers and small businesses.

Check out some of the hotly contested issues the National Association of Federal Credit Unions (NAFCU) is taking up before Congress. Feel free to click on the links for more information on any of the topics.

Protect the Credit Union Tax Exemption

Comprehensive tax reform remains on the Congressional agenda. Various proposals could impact the credit union federal tax exemption or Unrelated Business Income Tax (UBIT). Both the Senate Finance Committee and House Ways and Means Committee are holding hearings on business taxes and tax expenditures. The data in NAFCU's study shows how vital the tax exemption is to credit unions, to their members and to the economy.

Learn more about the credit union tax exemption issue.

Data Security

NAFCU and other credit union trade organizations have bent lawmakers’ ears on data security in the wake of the Target data security breach. They continue to insist that retailers do their part to prevent breaches, and own up to their liability when a breach originates from the merchants. When they are at fault, retailers must cover fraud costs and the expense to reissue credit and debit cards.

Learn more about data security.

Regulatory Relief

NAFCU reintroduced the Five-Point Plan for Regulatory Relief to encourage Congress to focus on enacting real relief for overburdened credit unions. The cumulative regulatory burden our industry faces from various factions is staggering. Now more than ever, credit unions need lawmakers to step in and address duplicative and over burdensome regulations. Your credit union's individual story paints an invaluable picture for lawmakers about how these rules impact the ability of credit unions to serve over 100 million Americans who rely on you.

Learn more about Regulatory Relief for credit unions.

Risk-Based Capital Reform                                  

According to NAFCU, the National Credit Union Administration’s (NCUA) second proposed risk-based capital rule (RBC2) is too costly and unnecessary, given that credit unions are well capitalized and weathered the worst financial crisis of our time much more effectively than many bank counterparts. NAFCU is lobbying Congress that this proposal will only impose more regulatory burden on an already extremely well-capitalized industry.

Learn more about capital reform and risk-based capital.

Housing Finance Reform

Debate continues in Congress about the future of housing finance reform. The secondary mortgage market is critical for credit unions in managing interest rate risk and facilitating the flow of mortgage credit to their members. Credit unions are an important part of the mortgage market and should not, under any circumstances, be shut out by larger players. Given the complex nature of the housing finance market, lawmakers need your immense expertise and insight as a lender.

Learn more about housing finance reform.

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Plan and Finance Your Home Improvement Projects

Paying for home improvements, whether major renovations or unexpected repairs, is one of the biggest challenges homeowners face. In some cases you may plan a renovation for years, but it is not always possible to predict when you will need a new furnace or roof. That is why it is important to have a flexible plan for any eventuality when you take on the responsibility of owning a home.

Here are some strategies that have helped many homeowners keep a snug and leak-free roof over your head.

Make a budget

As a rule of thumb, expect to spend 1% to 4% of your home’s value on maintenance every year. So on a $200,000 home, budget from $2,000 to $8,000 annually. In years when repair bills are lower, you should still be setting aside the same amount, saving up for the day when you need to fix something major. For larger renovations like a kitchen or bathroom remodel, plan ahead. Knowing that a large expense is coming two or three years down the road gives you a chance to divide the price tag into manageable monthly savings goals.

Look for flexible financing

It is not always possible to pay for a major home project with savings alone. If you need to borrow money, financial institutions like Alta One Federal Credit Union offer a variety of home loan options, each suitable for different types of projects.

Home equity loan

These fixed-rate loans allow homeowners to borrow against their equity. Usually, lenders prefer that you retain at least 20% equity in your home. That means your primary mortgage plus your home equity loan should add up to no more than 80% of your home’s value. The lender may require an appraisal.

Home equity line of credit (HELOC)

These loans are best for big projects where you are unsure of the total price tag. You can usually access them with a check or a debit card tied to the account, and you pay interest only on the amount borrowed. Interest rates fluctuate based on market conditions. Home equity loans and HELOCs generally carry low interest rates, like mortgages, and you can deduct the interest paid if you itemize on your taxes.

Personal loan

Unlike home equity loans and HELOCs, personal loans are not secured by your home, so the rates are usually higher, and the interest is generally nondeductible. This may be a good option if you do not have enough equity to tap for your renovation.

Credit cards

Borrowers should avoid using credit cards to pay for big renovations, if possible. That is because interest rates tend to be high, and running up your credit card balance can have a negative effect on your credit score. If you are forced to put a large emergency repair on a credit card, you may be able to get one of the other types of loans listed above to pay down the balance, or transfer the balance onto another card with a lower interest rate to pay it off faster.

Other financing options

If you need funds to pay for necessary upkeep or even improvement projects, you may be able to get a loan backed by the government. The Department of Housing and Urban Development backs Title I loans of up to $25,000 for single-family homes, and some cities and states also offer loans at competitive rates to help owners keep properties in good repair. If your renovations will improve your home’s energy efficiency, check with local utility companies about relevant loans and grants.

Paying for renovations and major repairs is less burdensome if you make a careful plan ahead of time. With a combination of savings and smart financing, you’ll have a better chance of taking good care of your home without skimping on your other financial goals.

Virginia C. McGuire, NerdWallet

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Hidden Tax Breaks

In recent years, the average tax refund has been about $3,000. If you effectively determine and utilize the available tax credits, you may land a sizeable check this spring. Here are several commonly overlooked deductions worth a look.

Home office deduction 
Home offices have many perks: no commutes, casual dress code, etc. Add a tax break to the list of benefits. If you spend the majority of your time conducting business from home, you might be able to deduct some costs using IRS Form 8829. 

Renewable energy tax credit
Have you installed a renewable energy device, such as a solar water-heating system? If so, you might be able to deduct up to 30% of the cost. Form 5695 helps you determine the credit amount, if you qualify. 

Child adoption costs
Expenses related to adopting a child may be written off for 2014. That includes court costs, lawyer fees and traveling expenses such as lodging and meals. The maximum deduction is $13,190 for those who qualify. Refer to Form 8839 for more information.

Job-hunting costs
Travel expenses, fees paid to employment agencies and the cost of printing and mailing your resume can be claimed as miscellaneous itemized deductions on your tax return. Just be aware that you will only qualify for these tax breaks if you were looking for employment within your previous line of work. 

Relocation expenses
Some job relocation costs may be written off from your tax bill with the help of Form 3903. However, the IRS stipulates that your new workplace must be “at least 50 miles farther from your old home than your old job location was from your old home” to qualify. 

Child and dependent care credit
Costs to care for parents is listed as dependents and child day care expenses might qualify for the child and dependent care tax credit. Refer to Form 2441, which stipulates you and your spouse have to file a joint return and both must either have been employed or “actively looking for work” to qualify.

Earned-income credit 
Taxable earnings under a certain dollar amount in 2014 might qualify for the earned income credit. The limit is determined by the number of children, along with your tax filing status. If you are not married, have three or more children and earned less than $46,997, you may qualify. If you are married and have three or more children, the limit jumps to $52,427. For singles with no kids, the limit is $14,590.

Keep in mind that a direct deposit refund helps speed up its delivery. All you need is a checking or savings account at a financial institution such as AltaOne Federal Credit Union.  

We encourage you to take advantage of all available credits and deductions. A large tax refund can go a long way toward helping you to pay down debt and to set up emergency and savings funds. 

Tony Armstrong, NerdWallet

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Credit Unions: Membership Has its Privileges

Credit Unions are no longer the best kept secret of the financial world. According to the Credit Union National Association (CUNA), as of mid-2014:

• Credit union memberships total 100.1 million and assets exceed $1,125 billion.

• Credit union savings stand at $961 billion, while loans total $689 billion.

• There are 6,671 credit unions. Some 4,027 are federally chartered, and 2,644 are chartered under laws of various states and Puerto Rico.

• Credit union memberships are now growing at more than two times the rate of U.S. population growth.

In California, there are 377 chartered credit unions, with a combined total of nearly 10 million members. Basically, one-fourth of the state population belongs to a credit union. Nationally, the credit union movement has continued on a meteoric rise for several decades. In 1970, 23 million Americans belonged to a CU. By 2000, that number soared to 80 million. Today, there are over 100 million credit union members in the U.S. 

In 2014, credit union members throughout the U.S. reaped some $7.3 billion in financial benefits. That’s an average of $140 per member household according to Credit Union National Association’s economics and statistics department. 

Why are credit unions consistently biting into the banks’ market share? 

Credit unions save members money by charging lower interest rates on loans and paying higher interest or dividends on deposit accounts and investments. They also charge fewer and lower fees. So the more you use our credit union, the more you save … and the more you earn. 

Consider this: Financing a $20,000 new car for 48 months at AltaOne Federal Credit Union at our special promo rate would likely save you up to $300 per year or more over a major national banks. That is a savings of $1,200-plus over the span of the four-year loan.

Across the board, you will see the same kind of rate advantages on loans and deposits with AltaOne and other credit unions. Even though the vast majority of credit unions cannot match the marketing power of national banks, consumers have been attracted to CUs like bears to honey, mostly due to the sizeable membership benefits. In addition to the rate advantages, credit unions traditionally charge low or no service fees compared with banks. And now that credit unions such as AltaOne have greatly enhanced their services such as online banking and mobile apps, it is really a no-brainer when it comes to choice.

The bottom line – AltaOne exists for its members. We do not answer to stockholders. We are a not-for-profit organization and our vision is to be the community’s choice for their financial services throughout all stages of life.

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Smart Savings for All Life Stages

There is no doubt that in today’s low interest environment it is challenging to put your money to work for you. In addition to finding the right financial institution that is going to offer the best possible return on your deposits, it is also important to determine the best savings vehicle for your current life stage.

Your savings needs typically vary a great deal as your life and circumstances change. No matter where you are in life -- whether you are a child, teen, young adult or retiree – it is vital that you learn which savings options are best.

Youngsters: Type of account: Basic savings account with a parent

It is never too early to begin teaching your little ones about the value of saving. (OK – maybe you can wait until they can talk.) Many financial institutions such as AltaOne offer savings accounts for children, as well as programs to help them to understand the basics of money management. AltaOne’s CUB Club program rewards little tykes for saving with fun gifts such as “Super Saver Capes.” It is amazing to see how quickly a child learns the value of fiscal responsibility when it is taught to them at an early age.

Teens: Savings accounts, youth certificates, college funds

As your children hit their teen years, they should already be fairly astute savers. The savings products offered by financial institutions become a bit more sophisticated for this age group. Some organizations provide interactive programs and games to help teens enhance their financial IQ. AltaOne’s Successful Savings for Teens program includes savings accounts, and even teen certificates, Visa cards and loans for those who qualify.

Young adults: online banking, mobility, online account opening

Millennials (18-34 year old consumers) have grown up on technology. Many have yet to realize the value of face-to-face interaction with professional credit union representatives. Therefore, most quality financial organizations provide online banking services that include mobile apps, BillPayer and online account opening.

Thirty- and forty-somethings: Money market savings account, certificates

As consumers enter their thirties, they are raising families, purchasing homes and realizing a greater need to save for their future. This is when products such as money market funds and certificates should peak your interest. This is also a good time to begin scheduling regular financial “check-ups” to better understand the best long-term options for your needs.

Fifty-plus and retirees: High-yield savings account

Hopefully, as you enter your fifties and beyond, you have been able to manage your money wisely and are in a position to set yourself up for a relaxing retirement. This is the time when solid wealth management advisors can help. They may recommend a variety of products to fit your needs, such as securities, variable and fixed annuities and retirement plans.

As you can see, there are numerous savings products available. These suggestions are certainly not etched in stone. Conduct some research, chat with the pros at your financial institution and determine for yourself what is best for you and your family throughout your life.

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Holiday Films & Money (Or how to turn heart-warming movie classics into a financial management class)

Yes, it is the holiday season – time for family, friends, warm-tidings and good cheer. Well, since we are a financial institution, we thought it might also be an appropriate time to point out some money management advice viewers may glean from some of the most famous holiday films: It’s a Wonderful Life, A Christmas Carol, The Grinch Who Stole Christmas and Elf.

1. Treat everyone with equal respect

In It’s a Wonderful Life, the movie’s villain Mr. Potter sticks it to poor George Bailey, only to see George overcome his troubles. Whether you are dealing with others in the business world or in your personal life, treat everyone with the respect and dignity you desire for yourself.

2. Cherish what you have

When things go south for George Bailey, he wants to end it all. Thanks to his guardian angel who shows him what life would be like without him, George sees the light. Remember, almost all financial problems are short-term. Things will turn around over time, with smart money management and positive thinking (a guardian angel helps, as well).

3. Be your elf

In the holiday classic “Elf,” Buddy never changes from his kind, helpful self, no matter what obstacles he faces. In the end, Buddy’s Christmas spirit shines and helps to save the day. It is important for everyone to be true to yourself. Do not spend over your head just to impress others. Maintain a solid budget and remember to allocate something for yourself and reward yourself for attaining your savings goals.

4. Surround yourself with those you trust

George Bailey makes a huge mistake by trusting goofy Uncle Billy with the bank’s money. No matter how close they are to you personally, make sure they are smart with money and ultra-trustworthy before delegating important financial matters to anyone.

5. Giving is far better than receiving

That miserable miser Ebeneezer Scrooge found out this lesson the hard way. He had to be scared nearly to death before he realized the joy one finds when they give to others – especially those in need (right, Tiny Tim?).

6. True happiness has nothing to do with money

Just as the Grinch found out when all those Whos in Whoville sang cheerfully – even without any gifts or toys -- the true meaning of the holidays cannot be found in a gift box or a money envelope. The true gift comes from the heart.

Happy holidays from AltaOne Federal Credit Union!

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Trim Your Holiday Budget

Make a list – and check it twice: Santa does it. You should, too. Compose a shopping list for your family and friends. If you are on a tight budget, pre-determine how much you can spend for each person on your list.

Hunt for coupons: There are lots of online coupon sites – Groupon, Couponcabin.com and Retailmenot.com are just a few possibilities. Of course, there are lots of Black Friday and Cyber Monday deals, as well.

Avoid impulse shopping: You have your list. Stick to it. You probably do not need the complete set of lighted reindeer and elves for your front lawn.

Pre-paid cards can help you stick to your budget. Simply add whatever you can afford to the card, and use the pre-paid card for your holiday shopping.

Do not wait for the holiday season to do your holiday shopping. Keep your eyes peeled throughout the year for great deals. You may even be able to finish your shopping long before the shopping insanity even begins.

Like to go crazy with lights? If so, the electric bill may soar. Consider LED lights, which use 99 percent less energy than traditional lights.

Speaking of decorations … Purchase your knickknacks after the holiday. Most stores have clearance sales and you can find some great deals.

Choose plastic wisely: If you plan to use a credit card for holiday gifts and other expenses, do a little research into the best card for your needs. Financial institutions often offer credit card promotions to help with holiday shopping.

Delegate your dinner menu: Are guests visiting for the holidays? Planning to whip up a big holiday meal? Delegate various menu items to your guests to save on your food bill.

Do you have a creative flare? If so, you may consider some clever, hand-made items for those on your gift list. Oftentimes, a thoughtful hand-made gift is cherished more than expensive presents.

Draw names: It has become popular to draw names among family members in order to limit the number of gifts you may need to purchase.

Hit the garage sales: You may be able to find some terrific gift items at garage sales.

Save on postage: Anyone in your family have a flare for technology? You may consider creating a holiday web page with family photos and a holiday greeting. Then send a link via social media or email. This could potentially replace your holiday cards and save a bundle on postage and cards.

Spend a few moments researching cost savings items online. You will find a bunch of ideas that may save you a ton of money.

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