Category Archives: Credit Management and Credit Cards

Ways to Avoid and Fix Credit Card Debt

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At the beginning of 2023, the total of U.S. credit card debt remained at $986 billion, unchanged from the end of 2022 – according to a Federal Reserve Bank of New York report on household debt. In addition, credit card balances are up 20% from a year ago, according to a recent report from TransUnion. The average balance was found to have risen $5,733 over that same period. These figures are astonishing, however as inflation continues to rise – many consumers have turned to their credit cards to purchase items they feel they need to continue their standard of living. Continue reading to discover ways to avoid credit card debt, and if you’re currently in debt – how to fix it.

Avoiding Credit Card Debt

Know your numbers. Do you know what your Annual Percentage Rate (APR) is on the credit card you use most frequently? If you pay your balance off in full each month, this number might not make a difference to you – but if you carry a balance, you’ll want to make sure it’s on a credit card with as low of an APR as possible. This number determines the interest you’ll pay each month for carrying a balance. And the bigger the balance, the more you’re going to pay in interest. Credit unions have a maximum APR of 18% on all credit cards. Be sure to stop into your local credit union to inquire, or if you live, work, worship, volunteer or attend school in Monmouth or Ocean Counties in NJ – check out our four great consumer credit card options.* We’re sure there’s one out there for you!

You’ll also want to pay attention to if your credit card offers a grace period on payments, if there’s an annual fee associated with your card, what your monthly payment due date is, and if there are any additional fees. Note that late and annual fees can add a balance that you weren’t expecting, which can be worrisome if you’re already carrying a high balance that you’re having trouble paying.

Use your credit card as just that. Using your credit card for anything other than making occasional purchases within your budget, can cause you to rack up more debt from fees and other service charges. For example, using your credit card to make a cash advance, using your credit card at an ATM, or to make a balance transfer can end up costing you more in the long run. Taking a cash advance out of your card balance or using your credit card at an ATM for cash, typically come with higher interest rates on the cash advance and fees for using the service. While a balance transfer promotion offering a lower APR to transfer your balance from another higher rate card might seem attractive, if you don’t pay off that balance within the promotional period or make any new purchases on that card – you may be paying anything remaining after the promotion ends at an even higher interest rate (plus any initial balance transfer fees for using the service). The moral of the story here is – if you are going to use a credit card, use it for regular purchases only that you can afford to pay off within the current billing cycle (usually 30 days).

Avoid auto-saving your card online. If your credit card is saved online within a website you frequently shop, an app, or your mobile phone – delete it. If one-click impulse buying is a problem for you, manually having to get your credit card and type the numbers in for every purchase should really make you evaluate whether that purchase is worth it or not.

Don’t carry your card on you all the time. If you’re always reaching into your wallet for that certain credit card, leave it at home and only take it out when you absolutely need it. This will also stop impulse buying, and you’ll have to plan out your trip to the store you want to use the card at and can decide if you truly need and can afford the item(s).

Already in Credit Card Debt? Here are some ways to fix it:

Evaluate what and where you charge. Start with a monthly budget. You can’t pay off debt if you don’t actually know what’s coming in and going out each month. This will give you the real numbers you need to work with so you know how much you bring in on a monthly basis, and what bills you need to pay in that month with that income. Anything else that is not a necessity should be stopped until your credit card debt is paid off.

Make a plan for paying off your debt. The best approach here, especially if you have multiple credit cards to pay off – is tackling the one with the highest interest rate first. Pay this card all the way down and then move onto the card with the next highest interest rate until all are paid off. Do not charge any additional purchases to any credit cards during this payoff period.

Take out a personal loan from your credit union. Instead of continuing to rack up debt and pay more in interest on high rate credit cards, take out a lower rate personal or consolidation loan from your local credit union.** Use the loan to pay off all your credit card debt, don’t make any additional credit card purchases, and then tackle paying off that personal loan. You’ll pay off your debt at a much lower interest rate, and your credit score may even improve since you’ll be reducing your credit utilization at the same time.

Look for a long-term 0% balance transfer offer. While a short-term credit card balance transfer isn’t usually advisable, a longer term one which offers 0% on balance transfers for at least one year or longer – may work for you if you do it right. This means you will need to fully concentrate on paying off all your credit card debt within the balance transfer period. If that promotional period is 0% for 18 months, then all the debt you have transferred needs to be paid off by the end of that 18 months and no new charges – otherwise you risk adding on more interest at a higher rate for anything not paid off by the time the offer ends. This method requires strict planning and budgeting.

Open a high yield savings account. If you have any leftover funds at the end of each month in your budget, put them in a high yield savings account that will pay you some dividends for keeping your money in it. This will help you build a savings reserve and hopefully prevent you from accruing more debt while you’re trying to pay off your existing balance.

While credit cards can be a great financial tool and resource, it’s good practice to only use them as that. Always use a credit card in moderation, and avoid making tempting but unnecessary purchases on them. If you have questions about credit management or would like to make an appointment with one of our staff to help you with a game plan to pay off credit card debt – visit a local branch or call 732.312.1500.

*APR varies up to 18% for purchases, when you open your account based on your credit worthiness. The APR is 18% APR for balance transfers and cash advances. APRs will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fee. Other fees that apply: Cash advance fee of $10 or 3% of the total cash advance amount—whichever is greater (no maximum), Balance transfer fee of $10 or 3% of the balance—whichever is greater (no maximum), Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa® Credit Card and is available to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

**APR = Annual Percentage Rate. Actual rate will vary based on creditworthiness and loan term. Subject to credit approval. Personal Loan repayment terms range from 12 to 60 months, and APRs range from 10.24% APR to 18% APR. Minimum loan amount is $500. Loan payment example: A $2,000 Personal Loan financed at 10.24% APR for 24 months, would have a monthly payment amount of $92.51. A First Financial Federal Credit Union membership is required to obtain a Personal Loan or Line of Credit, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan.

When to Use Cash, Credit, or Debit

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Not every payment method is the same. At First Financial, we believe that understanding the tools you have at your disposal – including cash, credit, and debit – is vital to achieving financial wellness. By using the right payment method for the right situation, you can enhance your financial security, budget more effectively, and make your money work for you.

Cash: The Tangible Transaction

Even in this digital age, there are certain situations where cash remains king. These include:

  1. Small, Everyday Purchases: For small, incidental expenses like a cup of coffee or a quick snack, cash is a handy option. It helps keep track of your spending in a tangible way that digital forms of payment often can’t match.
  2. Budgeting Tool: Cash can be a powerful visual aid in budgeting. Physically dividing your cash into envelopes or jars for different expense categories can give a clearer picture of where your money is going. Plus, when it’s gone – it’s gone.
  3. In Case of Emergencies: Having some cash on hand for emergencies, such as power outages where digital payment systems may not work, can be a lifesaver.

Remember, while cash offers a direct, tangible way to control spending, it doesn’t provide any kind of record of your transactions or protection against theft.

Debit: A Bridge Between Cash and Credit

A debit card offers the convenience of a credit card, but works like cash because the funds are directly withdrawn from your checking account. It’s a useful tool when:

  1. Avoiding Debt: If you are concerned about overspending or accumulating debt, using a debit card can keep you within your means – because you can only spend what you have in your account.
  2. Digital Convenience: Debit cards offer the same ease and convenience as credit cards for online shopping and bill payments.
  3. ATM Withdrawals: Need cash in a hurry? Your debit card lets you access your money at ATMs.

While debit cards provide more record-keeping than cash and less risk of overspending than credit cards, they may not offer the same level of protection against fraudulent transactions as credit cards do. That’s why it’s essential to have both. At First Financial, you’ll be instantly issued a debit card when opening a checking account.* Our debit card offers great features like no annual fees and more!

Credit: The Power of Borrowing

Credit cards allow you to borrow money up to a certain limit in order to purchase items. They can be a powerful tool in your financial toolkit when used responsibly:

  1. Building Credit: Regular and responsible use of a credit card can help you build a positive credit history, potentially leading to lower loan interest rates and better terms in the future.
  2. Rewards and Perks: Many credit cards offer rewards such as cash back, travel points, or other perks based on your spending.
  3. Protection: Credit cards generally offer more robust protection against fraudulent transactions compared to debit cards.

The convenience of credit cards, however, can often lead to overspending and other common mistakes to avoid. It’s crucial to pay off your balance in full each month to avoid interest charges and potential debt accumulation.

Once you learn the tips and tricks to using a credit card, you’ll get to enjoy the benefits of having one. Whether you’re looking for a card with extra perks or are working on building your credit, we offer four different credit card options that will suit your needs. With our Visa® Cash Plus Credit Card, you can earn cash back on eligible purchases.**

Navigating Your Payment Options

Every payment method comes with its own strengths and weaknesses, and the best choice often depends on the situation. At First Financial, we’re here to help you navigate these decisions and make the most of your financial resources. Whether you’re choosing between cash, debit, or credit – our team is ready to support you with expert advice tailored to your individual financial circumstances and goals. Visit a local branch or call 732.312.1500 to get started.

As always, we encourage our members to spend wisely, budget regularly, and make informed decisions about their financial health. Stay tuned for more insights and tips on personal finance from us by subscribing to our First Scoop Blog!

*Debit Card must be linked to a First Financial Checking Account. Debit Cards are available for First Financial members with Checking Accounts only. A First Financial membership is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the program. Click here to view full Rewards First program details.

 **Your First Financial Visa® Cash Plus Credit Card will earn cash back based on your eligible purchase transactions. The cash back will be applied to your current credit card balance on a quarterly basis and be shown cumulatively on your billing statement. Unless you are participating in a limited time promotional offer, you will earn 1% cash back based upon eligible purchases each quarter. APR varies up to 18%, when you open your account based on your credit worthiness. This APR is for purchases and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fees. Other fees that apply: Balance Transfer and Cash Advance Fees of 3% or $10, whichever is greater; Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa® Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties.

What to Know About Disputing Your Credit Report

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Your credit report impacts almost every aspect of your financial life. If you ever want to purchase a home, take out a loan, or apply for a credit card – financial institutions will reference your credit report to determine your creditworthiness. That’s why it’s crucial to ensure the accuracy of the information on your credit report. We wanted to shed some light on disputing your credit report – should there ever be a discrepancy, and what the process looks like.

How to Dispute Your Credit Report

Disputing your credit report is a right guaranteed to you under the Fair Credit Reporting Act (FCRA). Here’s a step-by-step guide to help you navigate through the process, should you ever need to.

1. Obtain Your Credit Reports: The first step in this process is to get a copy of your credit reports. You are entitled to a free copy from each of the three major credit bureaus — Experian, Equifax, and TransUnion — once a year through AnnualCreditReport.com. We also offer a credit assessment tool on our website to help you get an idea of what yours may look like.

2. Review Your Reports: Go through each report meticulously, identifying any errors. These could include incorrect personal information, incorrect account details, fraudulent accounts opened, and outdated information.

3. Gather Evidence: If you find inaccuracies, gather supporting evidence to substantiate your claim. This could include bank statements, payment records, or correspondence from the creditor or collection agency.

4. File Your Dispute: Write a dispute letter to each credit bureau that is reporting the inaccurate information. Include your name and address, a detailed explanation of the dispute, and copies of supporting documents. TransUnion offers free online disputing services as well.

5. Follow-Up: After filing your dispute, the credit bureau has 30 days to investigate. They will contact the information provider, who will then need to investigate the dispute. If the provider finds the information is incorrect, they must notify all three credit bureaus to correct your credit file.

6. Review the Outcome: Once the investigation is complete, the credit bureau must provide you with the results and a free copy of your credit report if the dispute resulted in a change. You will want to review this report to ensure the corrections have been made.

Common Questions About Disputing a Credit Report

Understanding your credit report and the process of disputing it is important for the big picture of your financial future. Below are some common questions we’ve heard from some of our members.

How often should I review my credit report?

You should review your credit report at least once a year. However, if you are planning a significant financial move, such as purchasing a home – you should review your credit report several months in advance.

What should I do if a dispute is unsuccessful?

If your dispute was unsuccessful, but you still believe the information is incorrect – you can request that a statement of the dispute be included in your future credit reports. You can also file a complaint with the Consumer Financial Protection Bureau (CFPB).

Can I have a third party dispute items on my behalf?

Yes, you can have a credit repair company dispute items on your behalf – but it’s important to understand that some companies might charge high fees for utilizing their services. It is often more beneficial and cost-effective to dispute any errors yourself.

How long does negative information stay on my credit report?

Most negative information will stay on your credit report for seven years, while bankruptcy information can stay on your report for up to ten years.

Does filing a dispute hurt my credit score?

No, filing a dispute does not hurt your credit score. However, if the dispute results in a change to your credit report, it could indirectly affect your credit score – either positively or negatively, depending on the nature of the change.

At First Financial, we encourage our members to take an active role in managing their credit so they can achieve their financial goals. We’re here to help throughout the process! Visit a local branch or call 732.312.1500 to learn more about ways to manage your credit score.

Related Article: Steps to Improving Your Credit Score

For more money advice, subscribe to our First Scoop blog.

Credit Card Mistakes to Avoid

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Credit cards can be a useful financial tool when used wisely. They can help you build credit, earn rewards, and manage your expenses. However, there are also potential pitfalls associated with credit card use, such as credit card scams and other mistakes that can lead to financial trouble. Here are some of the top credit card mistakes to avoid, whether you’re a new cardholder or are looking for a refresher.

Carrying a balance

One of the most common credit card mistakes is carrying a balance from month to month. When you carry a balance, you’re charged interest on the amount you owe, which can add up quickly and lead to long-term debt. It’s important to pay off your credit card balance in full each month to avoid interest charges and improve your credit score. If you can’t pay off your balance in full, be sure to pay more than the minimum payment to reduce the amount of interest you’ll accrue.

Falling for credit card scams

Credit card scams are a growing problem that can cost you money and put your financial information at risk. Some common credit card scams include phishing scams, where scammers try to obtain your personal information by posing as a legitimate company, and fake credit card offers that require you to pay a fee upfront. To protect yourself from credit card scams, be wary of unsolicited offers, never give out personal information to someone you don’t know, and monitor your credit card statements regularly for any unauthorized charges.

Maxing out your credit limit

Another mistake credit card users make is maxing out their credit limit. When you use up all of your available credit, it can negatively impact your credit score and make it harder to obtain additional credit in the future. It’s important to keep your credit utilization rate below 30%, which means you should use no more than 30% of your available credit. For example, if your credit limit is $10,000, you should try to keep your balance below $3,000. If you do need to make a large purchase, consider spreading the cost over multiple months or using a personal loan instead.

In addition to these top three credit card mistakes, there are other pitfalls to be aware of, such as paying your credit card bill late, using your credit card for cash advances, and opening too many credit cards at once. By avoiding these mistakes and using your credit card responsibly, you can improve your financial well-being and achieve your long-term goals.

At First Financial, we’re committed to helping you make informed financial decisions, including managing your credit card use. We offer 3 consumer credit card options with competitive rates and rewards, as well as educational resources to help you use your credit card responsibly. Our Visa First Step Card is a great card for building credit as a first-time cardholder as well.*

Whether you’re a first-time credit card user or a seasoned pro, we’re here to help you achieve your financial goals and secure your financial future. Contact us to get started, or stop by your local branch to speak with a representative today!

Want to see more articles like this? Subscribe to First Financial’s monthly newsletter for financial resources and advice.

Related Article: Steps to Improving Your Credit Score

 *APR varies up to 18% when you open your account based on your credit worthiness. These APRs are for purchases and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fees. Other fees that apply: Balance Transfer and Cash Advance Fees of 3% or $10, whichever is greater; Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties. See firstffcu.com for current rates.

What New Credit Card Users Need to Know

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Have you thought about the age you can typically start building credit? While age 23 may be the minimum age requirement for opening a credit card, the idea of even having a credit card may be nerve wracking for some.

We’re here to tell you everything you need to know so you can build your credit with confidence. Here are some important tips to consider before applying for your first credit card.

Don’t just make minimum payments.

You might think covering the minimum payment each month is enough, but in reality – you’ll end up paying more in interest that way. Credit cards typically have a grace period from when your statement closes to when your bill is due. If you pay off your balance in full ahead of the due date, you won’t be charged any interest (this is the ideal scenario).

Say for example, you have a $5,000 balance on your credit card with a 15% interest rate. If you only pay the minimum payment, it could take you three years to pay the full balance with an extra whopping $1,500 in interest charges. Long story short, always try to pay your balance in full.

Always make your payments on time.

Another way you could end up paying more than anticipated on a credit card, is if you miss a payment or are past due. Even if you’re only a day late, your credit card company could charge you a late fee – which can also add up if you’re frequently late. We recommend setting up automatic payments to avoid any future late fees.

Only charge what you can afford.

If the goal is to pay off your credit card balance in full each month (which it should be!), it’s important to only charge what you can afford. Don’t get trapped in “I’ll pay it off later,” because that’s how many people get stuck with credit card debt that becomes out of control.

Instead of thinking of your credit card as “free money,” treat it like a debit card. Meaning, don’t put it on your credit card if you don’t have enough money in the bank for the purchase. This may seem obvious, but it’s also very tempting to just swipe away when you get your card.

Shop around for a credit card.

Not all credit cards are created equal. Some cards are meant for new users, while others are made for more seasoned credit cardholders. It’s always best to first shop around for a credit card that meets your needs and spending habits – before committing to one just because of the alluring benefits.

For example, a store credit card may save you $20 on your next purchase, but it also may typically have a higher interest rate. Plus, those exciting discounts are usually only available in that specific store – which is smart for the business, but likely not ideal for you.

At First Financial, we offer 4 consumer credit card options that each have benefits like a 10-day grace period and no annual fees.+ Our Visa First Step Card is a great card for building credit as a first time cardholder as well.*

Always review your credit card statements.

Every month you’ll receive a bill for your credit card with a list of purchases. You should always review your statement. Why? You can catch any fraudulent charges sooner and have a better grasp of your spending habits. Many card companies offer a detailed report of your spending categories which comes in handy when budgeting and cutting costs where you can. You can even save on paper by receiving your statements online instead of through the mail.

Are you about to begin your credit card journey and don’t know where to start? You can rest assured knowing our financial experts are happy to give you advice based on your situation. Contact us to get started, or stop by your local branch to speak with a representative today!

*APR varies up to 18% when you open your account based on your credit worthiness. These APRs are for purchases and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fees. Other fees that apply: Balance Transfer and Cash Advance Fees of 3% or $10, whichever is greater; Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties. See firstffcu.com for current rates.

+No late fee will be charged if payment is received within 10 days from the payment due date.

Steps to Improving Your Credit Score

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Maintaining a good credit score is an important part of building your financial future. Not only does your credit score help lenders determine your credit risk, but it also affects the interest rates and fees you pay. Without a good credit score, you’ll have difficulty securing a loan or mortgage down the line. But don’t stress! If you take action to improve your credit score now, it will start increasing in no time.

What makes up your credit score?

Understanding your credit score is a crucial piece of planning your financial success. The bulk of your credit score is made up of your payment history (such as on time or late payments) and the amount owed. Additional factors include the length of credit, new credit (or the accumulation of debt in the last 12-18 months), and the type of credit.

What will hurt your credit score?

Maintaining a good credit score means being cautious with how your handle your money. Your credit score can be negatively impacted by:

  • Missing or late payments
  • Maxing out credit cards and shopping for credit excessively
  • Opening up numerous loans and credit cards in a short time frame
  • Closing credit cards out (as this could lower your available capacity)
  • Borrowing from finance companies

How to improve your credit score

Poor credit won’t haunt you forever, and it’s still completely possible to turn your credit score around! While there is no quick fix, there are long-term improvements you can make to help boost your score over time.

Here’s what you can do to better your credit:

  • Pay your bills on time – You may have to set a reminder on your phone so you don’t forget, but this is very important!
  • Pay off or pay down your credit cards. Come up with a payment plan that focuses on paying down the highest interest cards first, even if that means maintaining minimum payments on your other accounts in the meantime. The goal is to keep credit card balances low and pay them off when possible.
  • Don’t close credit cards – This may decrease your capacity, thus negatively impacting your score.
  • Slow down on opening new accounts as this approach could backfire and actually lower your credit score.
  • Contact a financial advisor or creditor if you’re having trouble making ends meet. They will help you better manage your credit and pay on time.

Don’t let your credit score stop you from bettering your financial future! Use our guide to managing your credit and getting out of debt for additional tips and resources, or stop into your local branch to speak with a representative!