Welcome to Bank Notes, the place where our staff offers up some banker's insight to help you reach your financial goals, plan a budget, or whatever else may seem relevant as the year goes on. Check back each month as we add new "notes" and cover new topics.
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May - Summer is coming: beware of the sharks
Did you know that 9% of Kentucky households have no bank account? When you see a payday loan or check cashing center on every corner, it can be easy to handle your finances there rather than go through the hassle of opening an account with a traditional bank or credit union. However, these convenience services come with a hefty price tag, charging 3-5% of the check amount in fees. While that may sound like small amount up front, consider this:
If your weekly paycheck is $500 and the check cashing center charges 4%, you will pay a $20 fee each week. By yearend you will have lost over $1000 of earned income! Thinking ahead to retirement? Me too. Meaning, if you’re 40 years old now you’ll have spent $26,000 in fees by the time you retire, $36,400 in fees if you’re currently 30, and a massive $46,800 lost to fees if you’re only 20.
Even worse, if you’ve gotten a payday loan or other advance, the center may require you provide your banking information as a back-up method for payment. Before you know it, the center has charged your account earlier than you expected and now your account is overdrawn, the bank has charged NSF fees, and the check cashing center adds their own fees on top of all that. This cycle continues to the point that many customers can’t dig themselves out from under the domino pile.
You may feel you have no other option if you have bad credit or past blemishes on your ChexSystems report, but there are 2nd chance programs you can use to start fresh. Bank On Northeast Kentucky offers free financial education classes and partners with many banks in the area, including KFB, to offer checking accounts to those who were previously unable to have accounts of their own.
Of course there are benefits to using a check cashing center, or they wouldn’t exist. So how can you get the benefits of these centers without wasting money in fees or putting your account at risk? With a little out-of-the-box thinking, it is simple to gain these same benefits from a traditional bank.
Using a Check Cashing Center because of the extended hours?
Sign up for Online Banking and Direct Deposit and have access to your money anytime. With features like mobile deposit, online transfers, and bill pay there is rarely a need to visit a branch anymore.
Using Check Cashing Centers for their payday loans when money gets tight?
Banks offer Single Pay Notes, Overdraft Protection, and Credit Cards that can get you out of a bind between paychecks. Community banks are also more willing to work with you through times of hardship than a payday loan company may be.
Using Check Cashing Centers for other conveniences such as making copies, sending faxes, purchasing money orders, etc? Banks offer these services too, typically at no cost to customers!
Ultimately, you have to make the decision that best serves you and your family but when comparing the risks to rewards, we hope you’ll choose a traditional bank, like us, to meet your needs!
Ashland Office Manager
Avoiding Fraud Online and with your Debit Card
As newer, faster, and more convenient technology is created, criminals and fraudsters are close behind, growing more creative and intelligent with each passing day. With seemingly endless stories about security breaches, identity theft, and fraud, it’s very easy to become discouraged or even scared. But don’t worry; with just a few basic precautions, you can help safeguard your information and accounts, and in the process gain some peace of mind. Here are a few tips that will go a long way in keeping things secure.
Look Before You Use. We’re all told about Internet security, making sure that when doing business online we’re dealing with a reputable company and website. It’s so easy to order things these days that sometimes we just go through the routine of inputting our card number and going on about our day. Before you buy from an unfamiliar company, do a quick Google search of the seller to see if they’ve had any problems in the past. Additionally, check the web address to see if it begins with https://, which means it’s secure. There should also be a padlock icon on or near the address bar further indicating it’s secure website.
Another helpful tip in this “Swipe and Skedaddle” world we live in is to take a moment to look at the machine you’re getting ready to use. Fraudsters will sometimes use a device known as a skimmer, which fits over swipe terminals like gas pumps, ATMs and even checkout lane pads. These work by reading the information as the card passes through and saving it for the criminals to use later. If something doesn’t look right on the terminal you’re about to use, hold off and alert someone about it.
Keep Those Passwords Strong (and Secret!). All of us hate changing our passwords, so much so that we probably reuse the same one for multiple websites and hardly ever change it. But as irritating as it might be, it’s a good idea to use different passwords for different sites, and to change those passwords every so often. Many sites these days will prompt you to change your password after a certain interval, and will have basic requirements for the new password such as using at least one letter and one number, using special symbols, capitals and lowercase, etc. The more random the password and the more variation in characters, the harder it is for fraudsters to crack them.
Also, when it comes to your Kentucky Farmers Bank accounts, we encourage you to add a password to your file so that if and when you call in, you have another added level of security to ensure that only you get your information by phone. For details, call our Customer Solutions Department at 606.929.5000 and we’ll be happy to answer your questions.
Review Your Accounts Often. In years past, the best way to keep up with your bank accounts was to reconcile your check register to your monthly statement. But in today’s world, transactions happen at the speed of light. That’s why it’s a good idea to stay on top of your accounts (checking, credit and debit cards, etc) by using online access and mobile apps. Most banks and credit cards offer a secure website and mobile app to help you keep track with what’s going on in your account. By signing up for online banking, you can look at your accounts daily (or if you’re like me, several times a day!) to make sure there are no surprise or fraudulent activities going on. Many apps also allow you to set up text alerts for high dollar transactions, low balances, and other unusual activity.
Most banks, KFB included, provide automated fraud protection on card transactions, but it’s important to keep tabs on your account and alert us if you see anything wrong. Your money is ALWAYS safe with KFB so the sooner you let us know if something is amiss, the sooner you can get back to your day with peace of mind.
Kentucky Farmers Bank is always here for you if you have any questions or concerns. Feel free to call us, email us, or stop by one of our branches and our friendly staff will be more than happy to work with you to answer your questions and help keep your accounts safe.
Customer Solutions Manager
SPRING into a Mortgage!
With warmer weather on the way you might be getting spring fever. Days will be getting longer, flowers will start blooming, and outdoor activities will be in full swing. It is a good time to start house hunting. Or, maybe you want to update your home or install a pool? The mortgage process is an exciting experience but we know it can be intimidating too. Here are some important elements to consider when choosing a financial partner to assist you in this journey.
Do your research and compare interest rates in the area. Compare these rates on the same day because rates can fluctuate weekly. Some banks will even match interest rates so it is important to communicate with different lenders even if they don't have the same rates posted initially. Watch out for online lending companies that may offer competitively lower rates- these rates can increase after the introductory period is over. Ask your lender to see an amortization schedule to determine how much of each payment will actually go to principal vs interest.
Mortgages are usually associated with a 30-year term. While this may suit your needs, a shorter term can be more beneficial. By choosing a shorter term (for example, 15 or 20 years), you can usually get a lower interest rate which means paying the loan off faster at less cost to you! It is important to evaluate your personal situation and decide on a payment you are comfortable with. Talk to your lender- they can help you determine how much you can afford and the options available to you.
Loan costs are the fees associated with starting your mortgage. You should find out exactly what the lenders, and their affiliates, plan to charge. Don’t be afraid to shop around! Once you find out, ask yourself these questions: Are the fees transparent? Do they seem reasonable? Some lenders will offer what seems like a great deal but might charge a lot of unnecessary fees in the long run.
Quality of Service
If a lender makes a good first impression, this is something you are likely to remember! Take time to think about the quality of service you received. Were your questions answered clearly? Did the lender make time to sit down with you and discuss your options? Your mortgage lender should be your financial partner- someone you trust and know is reliable. Verify that your lender will be available when you need them. If you get an uneasy feeling, or feel like you are being pressured, steer away!
Shopping for a mortgage might seem daunting but start early so you have enough time to consider what is best for you. The experience doesn’t have to be scary and whoever you choose as your financial partner should make the process as smooth as possible. Keep these tips in mind and you will be well on your way to buying your new home, or…maybe getting that pool installed to enjoy on sunny days?
Mortgage Loan Processor
Ah, February. It’s the month of love, romance, hearts, and flowers.
You may be thinking it’s time to take your relationship to the next level….by adding them to your bank account. The convenience of sharing an account can be beneficial to pay shared bills or buy groceries, or show how much you trust your partner, but it can also cause problems if things go sour. Here are some important tips if you are considering taking a leap in love...
There are a few different options when adding your significant other, or anyone else, to your account.
With a Joint Account, you will both become owners of that account. Both parties will have access to any and all funds available, meaning that they will be able to deposit money into and withdraw money out of the account, without each other’s knowledge or consent. Just remember that with a joint account, credit scores of both account holders can be impacted should the account not be kept in good standing. Also, with this type of account, neither person can be removed if the relationship goes south, so you would have to close your joint account and open a new one.
Alternatively, you may choose to add your sweetie as a Signer on your account. A signer is able to make withdraws, sign checks, and obtain information on the owner’s behalf. However, signers cannot deposit any of their own checks, such as a payroll check or direct deposit, into that account. An important thing to remember is that a signer’s privileges are only good while the account owner agrees. If the account owner changes their mind or passes away (morbid – I know!), the signer’s privileges would immediately cease, no new account necessary.
Ok, so what if you want to make sure your honey is taken care of if something happens to you, but aren’t ready to share that much information yet? A POD Beneficiary (payable on death) might be what you’re looking for. This would mean the account is still yours alone and your significant owner can have no access without you being present but they would receive any money that is left in the account if you pass. This way, your mind can rest at ease about the future even if you aren’t so sure about where you stand today.
Want more info on other “joint” endeavors, like buying a home? We’re covering that next month!
Customer Solutions Representative
New Year… New You!
The New Year brings about reflection of the past and hope for the future! As we reflect on the past, we should celebrate our successes as well as the lessons learned. As we look forward to the New Year, we often set goals and make resolutions. Maybe you want to lose weight, exercise more, or renew friendships; all goals to become a better you. Have you thought about taking control of your money? If you haven’t made finances part of the “new you” plan, perhaps you will when the Christmas bills arrive! I encourage you to make 2018 the year you become financially empowered. After all, lack of financial understanding can lead to late bills, wasted money, and a lot of stress that can negatively affect both your health and relationships.
Understanding what money you have and where it is going is the first step towards financial empowerment. Here's where you should start:
- List all of your income.
This is the money you have coming in each month to spend or save. Account for wages, benefits, retirement, alimony, child support, interest and any other income.
- List all of your expenses.
This is where it gets tricky! When you're watching your budget, you must be as honest about what you spend as you are about the calories you consume when you're watching your waistline!
Your expenses include rent or mortgage payments, utilities, food (groceries and eating out), insurance, taxes, medical bills, cell phone bills, clothing, entertainment and any other ways you spend your money.
Once you have made a list of all the money you are spending, it is important to review each item. Is the expense a need or a want? You need shelter or a roof over your head; food, water and basic healthcare to maintain your health; and appropriate clothing for your body. You may want a new winter coat and they are on sale; but if you have one that keeps you warm in the winter, a new coat is a want, not a need!
List your needs and how much you have committed to each item. Now compare the total dollar commitment for needs to your monthly income. If your needs exceed your income, you must find less expensive ways to meet your needs (or find a way to increase your income such as getting a second job or finding a better paying job). If on the other hand, your income is greater than your needs, congratulations, now you have some extra money to play with!
- Save, save, save!
With the remainder of your income, you can take care of some of your wants and save for a rainy day (actually I tend to stay home on a rainy day so...). There are always unexpected expenses, such as car repairs, housing repairs, and medical bills. And sometimes they all hit at once – when it rains, it pours! A good rule of thumb is to save up 3 months living expenses. This "nest egg" would tie you over if you lost your job, became ill, or had an unexpected expense.
They say money can’t buy happiness and I believe that is true. But lack of money sure can cause a lot of stress which adversely affects our health, relationships, and happiness. Check out this budgeting template to get started! Figure out where your money is going and make smart decisions about how you spend your money. Make 2018 the year you take control of your money!
April Russell Perry
Chairman of the Board