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Question and Answers

John from Vida asks how his friend could lose several thousand dollars selling his car on an Internet auction site?

• A common Internet sales scam is for the supposed buyer of the auto, usually from out of the area or even the country, to mail the seller a “cashier's check” for several thousand more than the asking price of the car. They contact the seller apologizing for the error and ask the seller to send them a new cashier’s check for the difference. The seller deposits the buyer’s cashier’s check, issues a cashier’s check for the difference and mails it off. A few days later the original buyer’s cashier’s check is returned stolen, counterfeit, or forged. The seller is out at the least the money sent back to the phony buyer.

  To protect yourself, be wary of any out of area buyer; verify the validity of the check received by contacting the financial institution issuing the check. Never refund money to the buyer until you have confirmed the funds they sent are collected.
  
  

Julie wonders if she is better off keeping her money in savings or paying down the balances on her credit cards?

• Julie, that is a tough question!! At today’s lower savings rates, generally the better choice is to eliminate a much higher rate credit card, typically 10% APR or greater. That said most financial counselors suggest anywhere from 3 to 6 months wages in savings. Julie wonders if she should exhaust her savings to pay off her debts. While that is an individual decision my suggestion is to pay off as much debt as you are comfortable with. Eliminate the high interest rate department store cards first and close the accounts. Next work on the bankcards but do not close all those accounts, leave yourself some available credit you can use in an emergency. Most importantly the payments you were making on the cards should go to replenishing your savings account. Always pay yourself first and rebuild your savings.

Kyle from Noti asks if purchasing an extended warranty for his new car is a good idea?

• Kyle, under most circumstances extended warranties result in additional dealer profit not necessarily additional car buyer protection. Many manufacturers already offer longer term warranties on their cars. Toyota and Volkswagon offer 5 year, 60,000 mile warranties, Chrysler and Lexus six year, 70,000 mile warranties. How long do you typically keep your car? Checkbook magazine suggests the average extended warranty costs over $1000, and warranties on popular SUVs easily cost more than $2000 but on average consumers only collect $250 in repairs. Warranties do provide some peace of mind, if your car manufacturer provides a 3 year, 36,000 mile warranty and you hold your car for longer then maybe an extended warranty makes sense. If you buy one, check out who is behind the contract, how
  are the repairs paid for, and can you transfer the contract to a new owner, finally negotiate
  the price! For more information check out Money Matters.
  
  

Sid from Eugene asks: What is a mortgage broker?

• Sid, A mortgage broker specializes in finding mortgage loans for people wishing to buy real property or refinance their existing home loan. A mortgage broker offers a convenient way
  to shop for a loan. Mortgage brokers have business relationships with multiple lenders and can provide their clients with a multitude of loan options ranging from first time home buyers to new construction loans. Mortgage brokers will help their clients pre-qualify for loans so the client knows what they can afford. Pre-qualifying will make the stressful buying process a bit less stressful. Brokers are paid by lenders on a commission basis. Pick a mortgage broker who is willing to spend time educating you on your options and not just trying to earn a commission in the fastest way possible. Together you should choose the solution that
  is best for you. For more information contact Bonnie at Pacific Cascade Mortgage, LLC
  or call (541)484-3104.
  
  

Mike from Pleasant Hill wonders what “deposit insurance” is all about?

• Mike, financial institutions in Oregon provide federal deposit insurance for the first $250,000 on deposit. In the case of banks the federal insuring agency is the FDIC–Federal Deposit Insurance Corporation and in the case of Credit Unions it is the NCUA-National Credit Union Administration. The insurance protects the depositor from the loss of their principal deposit up to at least $250,000 in the case of the failure or serious financial impairment of the financial institution. Rules governing what accounts are insured can be complex, but in general your savings, checking and certificates are insured to at least $100,000. Certain products available through financial institutions like mutual funds are not insured. Check with your financial institution for the specifics of their insurance. Most will have a helpful brochure that will explain deposit insurance in more detail.
  
  

Several members brought up concerns about one of the fastest growing crime problems in America, Identity Theft. How do you protect yourself?

• Pacific Cascade Federal Credit Union, as all financial institutions, has policies in place to protect every member’s personal information. Here are some steps you can take to help protect your information.

1. Put a lock on your mailbox and do not send mail out from your mailbox.
2. Shred everything that has personal information on it like receipts & account statements.
3. Always review your billing statements.
4. Check your Credit Report.
5. Keep all account information with contact phone numbers in a secure place so that you may contact them right away in case of a problem.
   
   

Mark from Junction City likes the convenience of plastic cards, but wonders how to make sure that they can't be abused by someone else.

• I suggest the following steps in protecting your card information:

1. Do not carry plastic cards you seldom use. Instead, keep them in a secure place.
2. Never keep your PIN numbers with your plastic cards
3. Never divulge your PIN numbers to anyone
4. Never share your account information with anyone over the phone or Internet when you did not initiate the contact and are not very sure of who you are dealing with.
5. Always review your account statements very carefully every month, contact your financial institution as soon as you realize there is a problem so they can stop fraudulent activity.
   
   

John has asked about 100% home equity loans, are they a good idea?

• John, my two cents says emphatically No! There are lots of lenders willing to lend you 100% or even 125% of the equity in your home at interest rates that would choke a horse. While there is a place for such loans in some commercial or business loan situations, it is never a good idea to completely tie up 100% of your entire equity.
  
  

Anne from Springfield asks, "Interest rates on Savings accounts are so low. Is there anything
I can do to increase my earnings?"

• Interest rates for savings are still relatively low and are likely to stay low for some time. Certainly shopping around may help, looking at investments other than savings accounts may help. This is a good time to seek advice from a financial planner.

But, Anne, let's assume your comfort level is to keep your money in your current financial institution. One tactic you can use is a technique called laddering. Instead of all your money in a low rate savings account, you purchase several certificates with differing maturity dates spread over an investment time frame you are comfortable with, like three years. As the certificates mature you use the funds or reinvest to fill out the next step in your ladder. In this way you can smooth out interest rate volatility, have access to some of your funds and on average earn a higher yield than if you leave the funds in the savings account.

Carolyn from Creswell is concerned about the safety of doing her banking over the Internet.
She asks, "Is it safe to bank online?"

• Financial institutions are very concerned about the security of their home banking systems. Our regulators require that security measures be in place. Anytime you communicate over
  the Internet with your financial institution your message is encrypted, meaning it is scrambled and can only be decoded by the financial institution using the proper encryption keys. Very sophisticated firewalls work to prevent hackers from breaching our systems. I am confident that financial institutions can protect your account. But if there is a breach, regulations require that your financial institution protect you from loss.

Please remember, Carolyn, these systems are only secure when you protect your data. Never share passwords, do not have your computer save them, never walk away from a home banking session without signing off the website. In short, you must keep your business confidential. And above all, protect yourself from internet phishing scams.
No financial institution will email you asking you to confirm your information by completing an on-line form. We know your information and will not ask you to send us your sensitive, personal information.

Karen wants to know what is the difference between a bank and a credit union when they all seem to offer the same products?

• The differences in fact are less about what we offer and more about how we are organized to do business and what that means to our members. First, you are a member not a customer. Credit unions are not-for-profit cooperatives owned by the members who use their services. As a member you elect a volunteer board of directors who oversee the business conducted by the credit union on your behalf.

The credit union philosophy "not for profit, not for charity, but for service" embodies how credit unions serve their members. We may have the same products as banks but our delivery is driven by our members. For 15 years a Gallup survey has ranked credit unions higher than banks in customer service. If you are not a member of a credit union, give us a try.

Stan from Eugene asks "What's a credit score?"

• Stan, the reality is your credit history has been reduced to a number. Scary as that may seem, it is true that almost all lenders now use a credit score provided to them by one of three national credit reporting companies. While lenders typically use more than the score to make the loan decision, it is an important tool because it predicts the likelihood of the borrower going delinquent. It is also used by many lenders to determine your interest rate on your loan. A higher score means you will pay a lower loan interest rate-- saving you money.

So how do you get a higher score? Most important is pay your bills on time. Do not max out your credit cards. Too many credit accounts lowers your score. Only apply for credit when you truly need it.

Finally be sure your file at the credit reporting companies is correct. Check your credit report at www.freecreditreport.com.

Edith asks what is this Visa Debit Card she keeps hearing about?

• Edith, a Visa Debit Card is a convenient plastic card that works just like a check. You may
  use the cards anyplace Visa is accepted: they can be used for mail orders, phone orders and merchants doing business over the Internet. A purchase made with a Debit Card will be charged to your checking account. Used with a PIN number you can use the cards in ATMs
  to receive cash or at merchants to make your purchase and receive cash back. But really,
  with the card, you will hardly ever need cash.

The card is convenient and secure but only as secure as you make it. Know who you are giving your card to. Keep your PIN number confidential. Never record your PIN number and keep it with your card. Used properly it is a wonderful tool.

Joe says he wants to refinance his current mortgage loan, he asks, "What should I be
looking out for?"

• Mortgage rates remain very low so this is a great time to be looking for a mortgage. At these rates more people are moving to 15 year fixed rate loans. On a $100,000 mortgage loan, Joe, you can save yourself $60,000 in interest charges by taking out a 15 year mortgage instead of a 30 year mortgage. Lenders are required by law to provide you with a document called a "good faith estimate". Be sure to get this document from each lender you shop. Compare loan interest rates and the loan fees. Be wary of the lender who says they will not charge you any up front fees or closing costs, and check out the interest rates they are charging you. They might make up for the low fees in their interest rate; an extra 1/4 of 1 percent is a lot of money on a $100,000 loan. For more information, contact Bonnie Smith at Pacific Cascade Mortgage, LLC.
  
  

Derek from Springfield asks “What’s the best kind of IRA ?”

• Derek, that is a question best answered by your financial planner or tax advisor. Not all taxpayers are eligible to use IRAs as a retirement investment. That said, there are two types of IRAs, the traditional IRA and the Roth IRA. The traditional IRA allows you to deduct the amount you invest from your taxable income. The Roth IRA does not provide a tax break; but the Roth IRA still allows interest and dividends to accrue tax free. Additionally, Roth IRAs provide, under certain situations, the owner access to the invested funds that is not available with a traditional IRA. Both types of IRAs give the owner control of their investment choices. If you are eligible, IRAs should be part of your retirement planning.
  
  

Steve from Eugene asks “Why did Pacific Cascade tell me to apply for my new car loan at the dealer and not the credit union office?”

• It is all about providing convenient service for our members. We used to ask members to visit us first to be pre-approved for their car loans. Most credit unions and new car dealers in this area are now using the services of Credit Union Direct Lending. This service provides our members and potential members a quick and convenient way to apply for their car loan at the dealership, receive an immediate approval and drive off with the comfort of knowing they have received a great deal on a credit union loan. We are happy to be partnering with our local dealers to provide this service; look for the Credit Union Direct Lending logo the next time you visit your new car dealer.
  
  

Pacific Cascade members ask our staff every day how to correct errors on their credit report.

Errors may be detrimental to your credit score resulting in you paying higher loan interest rates. The Fair Credit Reporting Act gives you clear rights in your effort to correct your credit file. Contact the creditor in question and ask them to correct their report. If you do not receive satisfaction from the creditor, contact the credit reporting agency providing the report. The agency is required to help you resolve your dispute. There are three primary reporting agencies in the US; each have web sites with information that is helpful in resolving such disputes. Click here to go to our helpful informtion link page.

John from Harrisburg asks “Will closing some of my credit card accounts improve my
credit score?

• John, too many credit accounts certainly can lower your credit score. If you can’t afford them, close them. But closing all the accounts could lower your score. That is because your score is in part determined by the amount of unused credit available to you. Your score will be higher if you have used only 10% of your available lines of credit than if you have used 90% of your available lines. Reduce your accounts to 5 or less and keep the account balances small relative to their limits and your score should improve. For more information about credit scores our members are welcome to stop into Pacific Cascade Federal Credit Union and talk with our staff.
  
  

Janice says, “I am overwhelmed by my bills, what can I do?”

• Janice, the obvious answer is to increase your income or reduce your expenses.
  But, often the obvious is easier said than done. Here are a few things you can do.

1. Know where you spend money, track every expense you have for a month and reduce those you can. Pack your lunch, don’t eat out every workday.
2. Talk with your creditors, don’t avoid them. Many have programs to help reduce payments for customers with debt problems.
3. Contact Consumer Credit Counseling of Mid Oregon in Eugene at 342-4459. They may be able to help you consolidate your debt, reduce your interest rates, and reduce your monthly payments.