1089-0311-NL February 2011 Trimming your credit cards If you’ve reached a point where you know you have too many cards and want to trim them to simplify your life or to get your finances under control, think carefully before you act. Some of your credit cards are better than others, so careful consideration is in order. 1. Decide how many credit cards you really need. You may have applied for a card to earn a bonus or gift, but do you really need as many as you have? More than one or two shouldn’t be necessary. On the other hand, you don’t want to close too many accounts too quickly, since that could lower your capacity—the amount of credit you have compared with the amount you’ve actually borrowed. If you have a card you don’t need but don’t want to close the account, don’t carry the card with you. 2. Pay off and close high-interest credit cards. Of course, the first thing to pay off is the high-interest cards because they can eat you alive. Take out all your credit cards, and list them (use a code name, not the account numbers, so your list is of no value if it gets into the wrong hands), the balance, credit limit, interest rate, and fees for each card. This will show you, at a glance, what your credit card situation is. Keep an eye on credit cards that have teaser rates coming due because they will go up soon too. 3. Look for high fees. This can be tricky, but read the fine print. The cards you keep should be the best ones with the lowest fees. Depending on your balance, a large fee may have even more of an impact on your bottom line than the interest rate. Though you don’t plan on being late, it does happen sometimes, so check out the late fees, too. 4. Close unused accounts. If they have high rates, you want to close them anyway. But even if they don’t, there’s no reason for inactive accounts to show up on your credit report. 5. Keep your credit union credit card. Because you do all your banking with the credit union, you’ll want to hold onto this card. Chances are, the rates are better and the fees are lower on this card anyway. ________________________________ IRA CONTRIBUTION DEADLINE COMING! The clock is ticking and the deadline for making your IRA contribution is fast approaching. You can contribute up to $ 5,000 for 2010 and 2011 tax years. If you are age 50 or older, you can make an additional $ 1,000 catch-up contribution. For your contribution to qualify for the 2010 tax year, it must be made by April 18th, 2011. Please give us a call or stop in at the Credit Union to see which options would be best for you. Rebuilding Home Equity From March 2006 when the housing market peaked through November 2009, U.S. homeowners lost about six trillion dollars in home value. Most of us have difficulty wrapping our brains around such a figure. Rather than dwell on the past, it is better to see what you can do to help your own situation now. When seeking ways to recover lost home equity, consider these questions: • What’s my best move? If you have plans on staying in your house for many more years, you have time for it to regain value. If you plan to move soon and need to sell, you’d need to act sooner to boost your home’s value, and thus your equity. • Should I do home improvements? If you need to sell, doing minor fix- ups can enhance your home’s appeal and value, and hence your equity, without costing a lot of money. • Is it smart to do major renovations? Doing major remodeling just to boost your house’s value usually doesn’t pay. Renovation projects don’t earn a dollar-for-dollar return in increased home value. • Could I refinance? Mortgage rates are at historic lows. You may be able to refinance to a fixed-rate mortgage at a lower rate. Talk to the credit union and see what we have to offer. • Should I pay off my mortgage faster? If you do, you’ll build equity faster and pay less total interest over the life of the loan. You might refinance from a 30-year to a 15-year mortgage. Or keep the longer- term mortgage and pay extra when you can. • Is there a better use for my money? Financial planners urge homeowners to look at the big picture. Putting extra money into your mortgage won’t build you wealth over time. Instead, you could put that extra amount toward paying off high-interest debt, contributing to your 401(k) to get the employer match, or investing conservatively. Give the credit union a call. We can help you sort out your options. Speak with one of our experienced mortgage lenders; they will be happy to assist you.