Debt is more prevalent than ever in today’s society. Data shows that consumer debt has grown to more than $14.9 trillion in recent times, with the average consumer having about $92,727 in debt. And as it becomes more common, it becomes increasingly important to understand how to manage debt.

What is debt?

Debt is created when something, usually money, is borrowed by one party from another. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest.

A loan is a form of debt but, more specifically, is an agreement in which one party lends money to another. Qualifying for a loan requires an approval process to verify the creditworthiness of the borrower and their ability to pay. There is a review of income, employment status, credit score and payment history on other loans and bills and may include verifying collateral to determine its value. The lender sets repayment terms, including how much is to be repaid and when. They usually establish that the loan must be repaid with interest which is expressed as a percentage of the loan amount. Interest is used to ensure that the lender is compensated for taking on the risk of making the loan.

Types of debt

Debt falls into four categories: secured, unsecured, revolving and installment. These categories can and do often overlap. Understanding how loans are classified—and how the classifications work—can help you with your financial decisions

Secured loans
— A secured loan is a loan backed by collateral. The most common types of secured loans are mortgages and car loans, and in the case of these loans, the collateral is your home or car. In addition to the standard review of income, employment, credit score and payment history, the collateral is typically verified and its value is assessed.
— When you take out a secured loan, the lender puts a lien on the asset you offer up as collateral. Once the loan is paid off, the lender removes the lien, and you own both assets free and clear.
— Secured loans represent lower risk to the lender which could mean more favorable financing terms and rates for the borrower.
— Types of secured loans:

— Mortgage
— Auto
— Secured credit card (cash deposit)
— Types of collateral (depending on the type of loan):
— Real estate
— Bank accounts (checking accounts, savings accounts, CDs and money market accounts)
— Vehicles (cars, trucks, SUVs, motorcycles, boats, etc.)
— Stocks, mutual funds or bond investments
— Insurance policies, including life insurance
— High-end collectibles and other valuables (precious metals, antiques, etc.)
— Cash

Unsecured loans
— Unsecured loans do not have any collateral behind them though you are still charged interest
and, sometimes, fees.
— Since there’s no collateral, financial institutions approve or deny unsecured loans based largely on your credit score and history of repaying past debts. For this reason, unsecured loans may have higher interest rates (but not always) than a secured loan. Lenders examine your credit by using credit reports.
— There are roughly 20.2 million personal loan borrowers in the U.S. You can take out a personal loan for nearly any purpose, whether that’s to renovate your kitchen, pay for a wedding, go on a dream vacation or consolidate debt.
— Types of unsecured loans:

— Student loans
— Personal loans
— Credit cards (traditional)

Revolving loans
— A revolving credit account is open-ended, meaning you can charge and pay down your debt
over and over—as long as your account stays in good standing.
— If you qualify for a revolving credit line, your lender will set a credit limit, which is the
maximum amount you can charge to the account. Your available credit then fluctuates each month, depending on how much you use it. Minimum payment amounts may change every month too. Any unpaid balance carries over to the next billing cycle with interest added on.
— Types of revolving loans:

— Personal line of credit
— Home equity line of credit (HELOC)
— Credit cards

Installment loans
— This type of loan is closed-ended, meaning that it’s repaid over a fixed period of time and
payments are made in equal installments (often monthly).
— Installment loans can be secured. That’s the case with auto loans and mortgages.
— Installment loans can also be unsecured. That’s the case with student loans.
— When you make installment loan payments, you’re paying what you borrowed and interest at
the same time. Often, the portion of each payment that goes toward interest decreases as the loan is paid down. This process is known as amortization.
— Types of installment loans:

— Auto loans
— Mortgage loans
— Student loans

Understanding your loans

It’s important to know about and fully understand each loan you have. For each loan, you should know your:

— Total balance
— Interest rate
— Minimum monthly payment
— Estimated payoff date

Once you understand your loans, you need to have a payoff plan for each one and make sure you are comfortable with the plan in light of your personal budget.

Before you’ve even deposited your paycheck, do you already know that there will be very little left over after you’ve paid for necessities like rent, utilities, groceries, or gas? If so, you’re not alone: with the rate of inflation outpacing the growth in wages over the last three years, many Americans are finding themselves living paycheck to paycheck. 

In October, a Bank of America Institute survey revealed that about 25% of households fall into the “living paycheck to paycheck” camp, with the criteria being that they spend at least 90% of their income on necessities. This means that if any emergency expenses pop up, there’s no safety net to cover them without going into some form of debt.

In this blog, we’ll walk you through 15 steps to stop living paycheck to paycheck so you can break away from this debilitating cycle and find the financial freedom you deserve.

1. Identify Barriers to Getting Started

You know that you’re living paycheck to paycheck, but have you spent any time trying to figure out why? This is an important first step in breaking the cycle. For many people, it’s a cash flow problem—they just don’t make enough money to cover the basic cost of living.

There are others, however, who overspend and dip into funds that should have been reserved for essentials or emergencies.

Keep in mind that living paycheck to paycheck can bring about many different negative emotions: stress, anxiety, and fear. Sometimes, these emotions paralyze you from taking action with your finances. Try these approaches to help neutralize your emotions: 

2. Find Your Why and Remember It

It’s important you believe that making some small changes now can make a big difference down the road. You need to have a strong reason to change your habits and believe that you can actually change them for the better.

To do that, think about the big future goals you’re working toward, like:

If those goals seem too unattainable right now and you just want to envision a life where you don’t have to worry about overdraft fees or hearing your card has been declined, then focus on that. 

Always try to remember your why when:

3. Set Financial Goals

Translate your future goals into financial goals. These goals are important because they’ll keep you focused and will serve as your “why” when it gets difficult to stay within your budget. Write them down and put them somewhere you can see them frequently, like the bathroom mirror or fridge door. 

Then as you make progress on your debt, savings, and budget—you can revise the goals accordingly.

4. Budget, Budget, Budget 

Budgeting is the foundation for successful money management, and it’s the first step toward ending the paycheck-to-paycheck lifestyle. When you budget, you know where your money is going instead of scratching your head and wondering why it’s all gone.

But how do you start? To set up a budget, write down your income and then start subtracting your expenses. These four essentials should be your top priority, so make sure your budget is ready to pay for them before anything else:

After these top four, make a list of everything else you need to pay (perhaps insurance, tuition, or childcare) and prioritize those in order of importance. 

Next, audit your past spending to “stop the bleeding” by figuring out where your money is really going. Look at your want-to-haves list and identify places to cut this type of spending. Once you’ve done all of the above, use your new, bare-bones budget for 6-8 weeks to reset your spending habits. 

Before spending any money at all, refer to your budget to keep yourself on track. This will be particularly helpful in areas like grocery shopping which can add up fast if you’re not paying attention. 

5. Build an Emergency Fund

The best way to save for an emergency fund is to put that money aside first, ahead of the rest of your spending. Set up an automatic transfer on paydays from your checking account to an emergency savings account. The more you can put on autopilot, the better.

6. Make a Plan to Manage Your Debt

First, establish exactly how much debt you’re carrying—across the board. Add up your debt total (with interest rate included) and determine what your monthly minimum payments are per debt that you owe. Then look at your budget to see if it’s possible for you to pay more than the minimum, to refinance any loans, or to transfer your balance to a lower interest rate loan.

7. Sell Stuff

Now it’s time to bring in more money! One of the easiest ways to get your hands on some extra cash is by selling whatever you can. With technology at your fingertips, you don’t have to organize a garage sale—you can sell many things through online marketplaces.

Open your closets, cabinets, and drawers to locate items that you no longer use or wear—but might be attractive to someone else, like:

If you can part with something and get cash for it—what’s stopping you?

8. Take on a Side Hustle 

Sometimes you just need to take on a part-time job for a while to supplement your income. Here are a few great options for making extra money outside of your regular day job: 

Use the extra money you earn to start an emergency fund or pay off more credit card debt. Once you have stashed some money in savings and started getting your debt under control, you’re on the right path.

9. Live Below Your Means

Many people think that increasing their income will fix their financial situation, but this might not always be the case. What can happen is that your standard of living increases WITH the increase in income—and the paycheck-to-paycheck cycle continues. 

This phenomenon is called lifestyle creep or lifestyle inflation. Suddenly, you can afford things you couldn’t before—but instead of saving the extra money, you fall back into the habit of being pretty loose with the purse strings.

If you sense this could be happening, refer back to Step #2! Remember why you took on that extra job in the first place, stay true to your budget, and continue to find ways to cut back for a few months by: 

10. Save Up for Necessary Repairs or Purchases 

If you own a car or a house, there will inevitably be a repair expenditure in your future. The tires will start wearing thin or the washing machine will wear down. These aren’t considered emergency repairs because you know in advance that they will eventually happen. The best way to combat this is to set up a separate account for these kinds of expenses. 

11. Make Lifestyle Changes If Possible

Sometimes you need to change more than just your spending habits to find financial freedom and stop living paycheck to paycheck. You could consider relocating to a less expensive area or downsizing your home or apartment to save money. 

Alternatively, you could go back to school or switch careers if you think your current professional situation is not providing you with an optimal income or a long-term trajectory to success. 

12. Choose Someone to Help You Stay on Track

Work with an advisor, relative, or trusted friend to help keep you on track. Set up regular check-ins to assess your progress as well as celebrate your successes. 

13. Be Patient With Yourself

This might not be the quickest process, so be patient and give yourself grace. Moving to a savings frame of mind when you haven’t been a saver can be difficult. Breaking old habits is always a challenge, but it is completely doable if you lock in and stay focused.

14. Make Time to Learn About Finances Every Week

Knowledge is power. Every week, set aside 15 to 20 minutes to expand your financial knowledge—for free—by:

You’ll be surprised how much you can learn in a short period. And the more you absorb about finance, the easier it will become to make good choices.

15. Remember: This Is About Your Financial Freedom

It can be daunting to think about how to stop living paycheck to paycheck. If you’re reading this blog, give yourself credit for taking the first step towards changing your financial circumstances for the better – you’re already on the path to financial empowerment. 

The information in this post is for educational and informational purposes only and does not constitute investment or financial advice. You should consult a licensed financial advisor before investing in any financial product or service.

The holidays may be a fun and festive time, but they can also bring additional safety concerns when you’re shopping for gifts. Thieves see the season of giving as a golden opportunity to steal your money or personal information, especially with more people shopping online for gifts.

There are all sorts of sneaky schemes scammers use to steal your hard-earned cash. But with a little know-how, you can outwit those thieves and keep your festivities fraud-free.

To stay safe and prevent crooks from ruining your cheer this holiday season, check out these shopping tips.

Use Your Credit or Debit Card for Peace of Mind

Not only are credit and debit cards more convenient than carrying cash, but they also provide an extra layer of security while you’re shopping. What’s more, using a debit card can prevent you from blowing your holiday budget.

With a debit card, you’re limited to the amount of money you actually have in your checking account, so you’re less likely to rack up debt or spend more than you can afford. Plus, some financial institutions offer special bonus rewards for using your debit card during the holiday season. That can help you stay on budget and keep you from overspending.

Most debit cards also come with built-in fraud protection. So if a scammer steals your card info and starts racking up charges, you likely won’t be on the hook for paying them. Your card issuer will investigate any dubious charges and reimburse you for the fraudulent ones.

And while you’re at it, set up account alerts so you get a text or email anytime there’s a charge over a certain amount. That way you’ll know right away if something shady is going on. While this might seem like extra work to keep tabs on your accounts, it’s worth the peace of mind knowing your hard-earned money is protected.

Guard Your Personal Info and Consider Using a Digital Wallet  

When you’re checking off that holiday shopping list, it’s easy to get caught up in the spirit of the season and let your guard down. One simple step to keep yourself safe is to be cautious about sharing details like your birthdate, Social Security number, or bank account info with stores, whether you’re shopping online or in-person. If a retailer asks for more than the basics to complete your purchase, think twice before handing it over.

Consider using a digital wallet instead of your actual card. A digital wallet generates a unique code for each purchase. It’s like putting a virtual lock on your financial data. It also lets you pay with your phone using features like Apple Pay or Google Pay.

All your sensitive payment info is encrypted and stored securely in your digital wallet, so even if your phone is stolen, the thief can’t go on a shopping spree with your money. Plus, if your phone has biometric security features like a fingerprint scanner, you can add an extra layer of protection.

Cheats and Swindlers and Scams – Oh My!

From fake charity drives to bogus gift cards, be on the lookout for anything that seems suspicious. Watch out for fake “delivery notification” emails that claim there’s a problem with your holiday package delivery. They might look legit, but clicking the links or downloading the attachments could install malware on your computer without you even realizing it.

Also be careful of any innocent looking “Happy Holidays!” e-cards or package tracking emails in your inbox. They could be phishing scams designed to steal your personal info. Stay alert and use common sense while online shopping this holiday season. If a deal looks suspicious or an email seems fishy, trust your gut and steer clear.

Social media scams are common around the holidays when everyone’s looking for deals and doing their shopping online. If you’re scrolling through your feed and an ad suddenly pops up promising a huge discount on the hottest new gadget or designer jacket, don’t click on it.

It may take you to a sketchy website asking you to enter your personal information and credit or debit card details. Once they have your info, the seller disappears without ever sending you what you ordered.

These “deals” tend to ramp up during peak shopping periods like Black Friday, Cyber Monday, and the weeks leading up to the holidays. The posts usually have a limited time frame to pressure you into forking over your credit card details or clicking a shady link without giving it a second thought.

Take a minute to scope out the company behind the offer before you buy. Check for typos and grammatical errors, too, which could be sign that the site is fake.

Stay Safe Online by Shopping on Secure Websites

Stay one step ahead by only shopping on secure websites, never sending money to unverified individuals, and keeping a close eye on your credit card and bank statements for any suspicious activity.

Staying safe shopping online requires constant vigilance and a keen eye. As you navigate the digital marketplace, it’s crucial to stay alert and attentively watch for any signs that indicate potential fraud or security risks, such as unfamiliar websites, unsecured connections, or requests for sensitive information. Then, take proactive steps to protect your personal and financial data.

First off, only buy from websites you know and trust. Look for the padlock icon and “https” in the URL at the top of the page to know it’s a secure site. If a deal seems too good to be true, it probably is! Be wary of any individual seller asking you to send them money directly. No matter how convincing their story is, just say no.

Another smart idea is to regularly check your credit card and bank statements. If you spot any charges you don’t recognize, report them to your financial institution. It could be a sign that a hacker got ahold of your information. The sooner you catch any fraud, the easier it is to clear up.

When you’re out shopping for gifts this holiday season, it’s important to keep your personal info safe and secure. Resist the urge to hop on that public Wi-Fi network at your local café to shop. Public networks are less secure than private ones.

Instead, stick to your mobile data plan or wait until you’re back on a network you trust. You can also use a virtual private network (VPN) to protect yourself while using public Wi-Fi.

Stay Merry, Bright, and Safe This Holiday Season

When you’re out there battling the crowds to get your holiday shopping done, the last thing you want to worry about is your personal and financial information getting compromised. Don’t let scammers dampen your holiday spirit. Stay sharp and savvy and you can jingle all the way to a scam-free season!

Learn more about protecting yourself from fraud and how GLCU can help.

The information in this post is for educational and informational purposes only and does not constitute investment or financial advice. You should consult a licensed financial advisor before investing in any financial product or service.

Your credit report is your financial secret weapon.

Your credit history provides valuable insight into your financial health and opportunities for improvement. And that knowledge helps you make informed decisions about your money.

Credit reports contain a wealth of information that can be initially overwhelming. But we’re here to walk you step by step through that document. Read on to learn how to understand your credit report and use it to guide your financial journey.

Why Your Credit Report Matters

Your credit report is a detailed history of your debts and how well you’ve managed them. A great history shows responsible use of credit—on-time payments, low usage of available credit, years of positive records, and more.

Better-than-average credit makes you an attractive applicant to lenders. So you’re more likely to be approved for loans, credit cards, and lines of credit and receive competitive terms.

But a solid credit history is vital for more than just financing. People with good credit typically see lower rates for home and auto insurance. And they’re more likely to receive approval when renting a property, setting up utility accounts, and even seeking some jobs.

How to Read a Credit Report

Wondering how to understand your credit report? Let’s examine each section to explore what’s in your history.

Summary

Some reports include a high-level synopsis of your credit history. This section may include a tally of each account type you possess, your total balances, credit limits, accounts in collections, and more.

Personal Information

This section features variations of your name, including maiden names, names with a middle initial, etc. You’ll also see your Social Security number, date of birth, current and past addresses, phone numbers, employers, and any existing security alerts or credit freezes you’ve placed on your report.

Accounts

Your report includes a list of all open debts, plus accounts closed within the last ten years. Here, you’ll see loans, credit cards, lines of credit, mortgages, student loans, and more.

Each account will feature details of that debt—account number, type of account, open date, outstanding balance, loan terms, etc.

Additionally, you’ll observe detailed records of your payment history for each account. Those data show payment dates, payment amounts, whether those payments were on time, and how delayed any late payments were. You’ll also find notes about foreclosures, collections, repossessions, bankruptcies, and more.

Public Records and Collections

This section of your report itemizes public records related to your finances—typically monetary judgments against you, tax liens, and bankruptcies. Your report may also include collections against you and bankruptcies you’ve filed.

Hard Inquiries and Soft Inquiries

Your report lists all hard and soft credit inquiries in your name.

You trigger a hard inquiry when you authorize a bank, lender, landlord, etc. to run your credit. These requests typically stay on your report for two years. Too many hard inquiries can negatively impact your credit history.

Soft inquiries have no impact on your history. These requests do not require your permission. You may see them appear when you check your own credit, when businesses review your existing accounts, or when a company wants to make you a promotional offer for credit.

Disclosures and Contact Info

Here, you’ll find contact information for the reporting credit agency. You may also see information about your credit report rights and the process for disputing report data.

What’s Not on Your Credit Report

While your credit report includes plenty of detail about your finances, it doesn’t provide these pieces of information:

Check Your Credit Report Annually

Your credit report matters. So set a reminder to review yours at least once a year.

Keep in mind that you typically have three credit reports—one from each of the major credit bureaus (Equifax, Experian, and TransUnion). A government-authorized website lets you access your reports for free once a year.

When you do, confirm the validity of the information. Mistakes could be simple errors or signs of identity theft. Each report provides details on how to dispute information you believe is inaccurate.

Harness the Power of Your Credit Report

When you understand your credit report, you’ve armed yourself with critical information about your financial health. From there, you’re ready to take action to improve your credit, if necessary. And you can empower yourself to reach your financial goals faster.

Looking to improve your credit score? Explore our credit builder loans.

The information in this post is for educational and informational purposes only and does not constitute investment or financial advice. You should consult a licensed financial advisor before investing in any financial product or service.

Between tuition, books, room and board, and meal plans, college costs can add up quickly. Managing your finances as a student can be challenging, but you don’t have to do it on your own.

Below, we answered the top questions students submitted to the GLCU Foundation for Financial Empowerment as part of our recent scholarship application process. Read on to learn more about college student finances, key financial terms, and more.

What Should Students Focus on as They Prepare for College?

As you’re getting ready to start the school year, here are a few things to consider:

It’s common to feel pressured by friends and social media to spend beyond your means (this is often called “keeping up with the Joneses”). However, budgeting for the things you want can help you not overspend. Consider setting boundaries for yourself so you don’t blow your budget.

What Is Some Common Terminology I Should Know?

Here’s some background on a few of the financial terms you may encounter on your financial journey:

How Does Applying for a Credit Card Affect My Credit Score?

Another part of transitioning to a more financially independent lifestyle in college is applying for a credit card. There are a lot of factors to consider when applying for a credit card, including if it can affect your credit score to apply for one. The answer is: yes, it can. When applying for a credit card, it can trigger a “hard inquiry” on your credit report.

Multiple hard inquiries within a short period of time can negatively impact your credit score, so be mindful when applying for new credit cards, and do your research on the terms, APR, and fees.

Giving Student Finances the Old College Try

Navigating the financial side of college can feel overwhelming, but armed with the right tools and knowledge, you can set yourself up for success. By making informed decisions and setting boundaries for spending, you can feel more confident and secure in your financial choices.

As a not-for-profit credit union, GLCU empowers its members through community giveback programs, financial education, volunteerism, and competitive interest rates. Learn more about our scholarships and student loans, and check out our college resource center.If you or someone you know needs help with college financial planning, contact us.

The information in this post is for educational and informational purposes only and does not constitute investment or financial advice. You should consult a licensed financial advisor before investing in any financial product or service.

*APY = Annual Percentage Yield.

*APR=Annual Percentage Rate.

Your credit score is a key part of your financial well-being. Think of your credit score as a report card that shows lenders how likely you are to pay back the money you borrow. If you have a good credit score – one that’s 700 and above – you’re more likely to be approved and receive better interest rates on loans.

A bad credit score – one that’s 600 and below – can make borrowing money more expensive and difficult. For example, if you apply for a loan with a low credit score, you’re more likely to be denied or charged a higher interest rate. A bad credit score can also impact your ability to rent an apartment.

Your credit score is based on the following factors:

Read on to learn about how to start building good credit.

Pay Your Loans and Credit Cards on Time

Because payment history is one of the key factors that impact your credit score, missing payments or making late payments can hurt your score. Instead, make sure you make your payments on time every month to build positive credit history.

Keep Your Credit Utilization Low

Maxing out your credit cards can hurt your credit score. Avoid spending more than 30% of the total credit available to you to improve your credit score. Paying your credit card balance in full each month can help keep your credit usage low.

Have a Mix of Credit Types

The types of credit you have impact your credit score as well. For example, it helps your score if you have a mix of credit types, like loans and credit cards. However, your credit score can be negatively impacted if you apply for too many types of credit at once.

Build Credit History

Showing lenders that you have a history of using credit responsibly can improve your credit score. Specifically, the longer credit history you have, the better.

Consider a Credit-Builder Loan

If you’re just starting out on your financial journey and don’t have a credit score yet, or you have a low credit score, a credit-builder loan can help you build or improve your credit score. Credit-builder loans provide an opportunity to increase your credit score through making on-time payments. With an improved credit score, you can continue working to meet your financial goals.

Securing a Strong Financial Future with Good Credit

Building good credit takes time. If you check your credit regularly and use it responsibly, you can improve your score in the long run. With a good credit score in hand, you’ll put yourself on the path to reaching your financial goals and securing your future.

The information in this post is for educational and informational purposes only and does not constitute investment or financial advice. You should consult a licensed financial advisor before investing in any financial product or service.

Elder financial abuse refers to intentional or unintentional neglectful acts by caregivers, family members, friends, or other individuals that cause financial harm to senior citizens. Elder financial abuse and fraud costs senior citizens between $2.6 billion and $36.5 billion annually. While elder financial abuse happens frequently, it’s not always recognized or reported. Knowing the signs of abuse can help detect and prevent harm to senior citizens.

Warning Signs of Elder Financial Abuse

Changes in seniors’ banking activity or transactional patterns are some of the most common red flags for elder financial abuse. Some warning signs to look out for include:

Common Elder Financial Abuse Tactics

One of the most common tactics for elder financial fraud and abuse are romance scams. Oftentimes, seniors may lose someone close to them and experience loneliness. As a result, they turn to online dating websites or other channels to meet others. Romance scammers on these channels will then build a relationship with a senior to take advantage of them. This process can take months as the scammer works to build trust with the elderly person.

Eventually, the scammer will ask the senior to send them large amounts of money – sometimes under the guise of a family emergency or home repair. Once the funds are sent to the scammer, it’s very unlikely they can be recovered. This can have a devastating effect on an elderly person, especially if retirement funds are lost.

According to the Consumer Financial Protection Bureau, some other common scams and tactics include:

How to Prevent Elder Financial Abuse

Keeping lines of communication open is key to recognizing and preventing elder financial abuse. Help educate elders about common financial scams and talk with them on a regular basis to understand what their typical day to day looks like. That way, if there’s a change in behavior, you can address it right away.

It can be difficult to have a conversation with a senior about financial abuse. This is a contributing factor to it often going unreported. Seniors may stay silent about abuse to avoid embarrassment. As a friend, caregiver, family member, or neighbor of an elderly person, letting them know you’re looking out for them can make the topic easier to discuss.

Raising Awareness and Reporting Elder Financial Abuse

Elder financial abuse is a growing issue. Talking about it with the seniors in your life can help prevent it, even if it’s embarrassing or difficult to talk about. If you suspect that a senior is a victim of financial abuse, you can report it to your local Adult Protective Services office. You can locate one near you through the National Adult Protective Services Association.

This blog was written to commemorate World Elder Abuse Awareness Day on June 15, 2024. Visit the UN website to learn more.

When you join a credit union, you become part of a financial institution that is more than just a place to bank. You’re part of a global movement of more than 393 million members around the world who follow the long-held credit union philosophy of “people helping people.”

But what exactly are the differences between a bank and a credit union, and how do credit unions benefit members?

Read on to learn more about the seven key benefits of credit unions.

  1. Credit Unions Are Member-Owned

Unlike banks, which are owned by shareholders and return profits to their owners, credit unions are not-for-profit financial cooperatives, owned by their members — or customers.

There’s a common misconception that it’s hard to join a credit union. While it used to be true that most credit unions were based on a “common bond” approach and members had to work at a certain organization or worship at a specific church to be able to join, many credit unions now have community charters. This means if you live in a certain geographic area, you may be able to join a local credit union.

  1. Credit Union Members Have Voting Rights

All credit union members are allowed to vote on important credit union decisions, including who sits on the volunteer Board of Directors. That’s because when you become a member, you also become a co-owner of the credit union.

Credit unions are required to invite members to join their annual meetings, where their Board of Directors and executive leadership team presents the previous year’s financials and plans for the upcoming year. Members can also vote on policies. This ensures that a credit union’s decisions are made in the best interest of their members.

  1. Lower Loan Rates, Higher Savings Rates, and Reduced or Eliminated Fees

Because credit unions are not for-profit, they give back to their members in the form of lower rates on loans, higher rates on savings, and reduced or eliminated fees.

As not-for-profit organizations, credit unions often focus on serving underbanked populations. This includes offering loans that help build credit, as well as checking accounts for those who need to rebuild or establish positive financial history. 

  1. Credit Unions Provide Financial Education

Credit unions recognize that for individuals to achieve their financial goals and contribute meaningfully to their communities, they first need a solid foundation of financial knowledge.

To that end, many credit unions provide workshops and educational opportunities for members and the community so they can improve their financial literacy. In fact, credit unions offer financial education services that some banks don’t — such as housing and financial counseling.

  1. Credit Unions Are Community Focused

When members bank with credit unions, they’re not only doing it for the betterment of their own financial well-being, but for the empowerment of their local communities. Because outreach is at the heart of credit unions’ core values, they work hard to provide valuable resources and tools for individuals striving to secure their financial future.

Credit unions also often offer volunteer opportunities for employees to contribute meaningfully to their local communities, such as working at food banks, reading to children, cleaning up communities, and participating in financial literacy workshops.

Some credit unions offer scholarships to members and employees. Together with their employees and members, credit unions truly make a difference, empowering people to transform their lives through improved economic stability and financial freedom.

  1. Credit Unions Offer Cooperative ATMs and Shared Branching

Not only do credit unions share knowledge and resources with one another, they also participate inshared branching and a cooperative ATM network. This means that credit union members can visit the branches of other credit unions in their network to access banking services. With more than 5,600 branch locations nationwide and nearly 30,000 ATMs, credit union members can easily bank throughout in the United States.

  1. Deposit Insurance

Banks federally insure their accounts up to $250,000 through the Federal Deposit Insurance Corporation (FDIC). Credit unions have the option of insuring their accounts through private insurance or being federally insured through the National Credit Union Association (NCUA). At GLCU, member deposits are insured through the NCUA, carrying the full faith and backing of the US government, up to $250,000.  

Key Takeaways on the Benefits of Credit Union Membership

Here are a few key takeaways about the benefits of credit unions:

When you bank at a credit union, you can rest assured that you’re contributing to the greater good and the betterment of your community, supporting financial empowerment and the credit union philosophy of “people helping people.”

As a not-for-profit credit union, GLCU promotes the financial well-being of our members. In addition to our many educational resources and outreach efforts, we also give back to our members in the form of reduced or eliminated fees, higher savings rates, and lower interest rates on loans. Check out our rates and consider opening an account today.

The information in this post is for educational and informational purposes only and does not constitute investment advice. You should consult a licensed financial advisor before investing in any financial product or service.

Figuring out how to pay for medical expenses can be daunting. A health savings account (HSA) allows you to put money aside to pay for medical expenses. HSAs also have certain tax benefits and allow you to pay for qualifying healthcare expenses tax-free.

But what exactly is an HSA, and who is eligible to open one?

Read our blog to learn more about the features, benefits, and requirements of HSAs.

What Is an HSA?

An HSA is a personal savings account designed to pay for certain healthcare costs for people covered under an HSA-qualified high deductible health plan (HDHP). An HDHP typically costs less than a traditional health insurance plan, so you can put the money you save on your insurance premiums into your HSA.

One of the key benefits of an HSA is that you can make tax-free contributions to your account. You can also withdraw money from your account tax-free. Your HSA contributions aren’t included in your taxable income for federal taxes. You can also use your funds to pay for eligible medical costs for your partner and dependents (if they qualify), even if they’re not included in your HDHP coverage.

Like other types of savings accounts, you can earn interest (dividends) on your HSA funds. For example, you can earn 1.50% APY* on a Great Lakes Credit Union HSA. With an HSA, you can grow your savings over time.

And unlike a flexible savings account (FSA), you can save your unused funds for future expenses. Money in your account is always yours, even if you change employers or switch financial institutions.

Anyone can contribute money to an HSA. Typically, the account owner or their employer contributes to the account. However, there are limits on how much you can contribute to an HSA each year. The maximum amount you can contribute to your account each year depends on:

Total contributions made by or on behalf of an HSA owner cannot exceed the annual contribution limit for the given year. For more information on contribution limits, check out IRS Publication 969.

What Expenses Can I Use My HSA For?

You can use your funds to pay for certain IRS-approved items, including:

With the flexibility an HSA provides, you can pay for your medical expenses through checks, debit cards, or transfers. You can check IRS Publication 969 for a full list of approved expenses. HSA funds used for non-qualified medical expenses are subject to income tax, addition to a 20% tax.

Am I Eligible for an HSA?

There are a few requirements you’ll need to meet to determine if you’re eligible to open an HSA. You can open an account if:

If you’re unsure if you’re covered by an HDHP, you can reach out to your insurance provider and ask. HDHPs must also meet certain requirements, which vary depending on if the HDHP covers just you, or your family, too.

Key Things to Know about HSAs

An HSA is a savings account that can be used to pay for certain healthcare costs, including doctor’s visits, eye exams, dental work, and more. HSAs offer certain tax benefits, including tax-free contributions and withdrawals and are available to people covered by HDHPs.

With an HSA, you can save and spend your funds in a way that works best for you. If you’re enrolled in an HSA-qualified HDHP, it’s never too late to open an account and start saving money to support your health and financial well-being.

As a not-for-profit credit union, GLCU promotes the financial well-being of our members. In addition to our educational resources and outreach efforts, we also give back to our members in the form of reduced or eliminated fees, higher savings rates, and lower interest rates on loans. Check out our rates and consider opening an HSA today.

The information in this post is for educational and informational purposes only and does not constitute investment advice. You should consult a licensed financial advisor before investing in any financial product or service.

* APY = Annual Percentage Yield. All dividend rates and APY may change at any time.

Glory and her husband Isaac moved from Nigeria to America in 1993. The couple rented an apartment next to GLCU’s Chicago Uptown branch, where Isaac took care of all the household finances.

After Isaac passed in the spring of 2020, Glory fell behind on her rent. Her property management company had a history of not communicating well with tenants, which didn’t help. On top of that, after not making any rent payments for a year, Glory fell victim to scammers, leaving her virtually destitute.  

Once she understood she could be evicted, Glory made an appointment with the GLCU Foundation for Financial Empowerment. There, she met with John Borthwick, senior housing counselor. John helped Glory organize the necessary paperwork and even taught her how to access her email. Then, he helped her apply for the Illinois Rental Payment Program and tracked her application.

Throughout this time, John continued to help Glory navigate the application process, create an affordable budget with the income from her part time job, and talk about managing expenses once she was current on rent again.

Unfortunately, they soon found themselves hitting another roadblock. A payout error caused only $6,400 of Glory’s $8,200 balance to be paid in the summer of 2022. John tried to contact the Illinois Housing Development Authority and the property manager to fix the error, but once the payment had been received, they could not revisit the application.

Glory did her best to try and pay when she could, but the remaining balance kept growing and by the spring of 2023 she found herself in eviction court. John enlisted the help of Chicago Volunteer Legal Services to navigate court-based assistance but that too eventually led to a dead end based on eligibility. He kept looking up legal referrals and Glory continued to use any resource John provided to help her.

Thankfully, John’s tenacity paid off, and Glory eventually worked with Greater Chicago Legal Clinic to reach a settlement with her property manager, where she would pay a lump sum along with a little extra on her monthly rent. When she finally became current on her rent and shared the good news with John, she thanked him wholeheartedly, and said, “Since all of this trouble began, I’ve met different people that said they would try and help, but you are the only one that stuck with me through everything.”

Glory managed to get an extra shift at her job to meet the payments and is still working with John to make sure she is following the court order and managing her household budget. After fighting an uphill battle for two years together, they fondly refer to each other as a “good neighbor.”

If you or someone you know is in need of financial counseling assistance, you can learn more and schedule a free screening here.