
Oswego County Today talked with Aimee Glerum from Oswego County Federal Credit Union about “Tackling Credit Card Debt and Building Fincial Health.”
Here is my interview:
Fred, “Aimee, tell me about your background in banking.”
Aimee, “So I’ve been with the credit union for 21 years. I actually started as a part-time filer, and I have worked my way up to vice president of lending. I’ve been in the lending field for over 15 years, probably closer to 18 years. Really enjoy what we do here at the credit union, being able to actually assist our members to building credit, repairing credit, and really giving them an education that they need that they do not get with most other companies”
Fred, “Can you give a little background on what we’re talking about today with the credit issue that affects many people in the United States? “
Aimee, “Yes, so nowadays, you know, a lot of times, especially in our community and most of the United States, people live in paycheck to paycheck, and with the economy, especially right now with the rise of the cost of groceries, fuels and pretty much everything people are starting to rely heavily on credit cards in the issue with that is that credit cards though there are attractive in that I can only pay a minimum payment of this really what you’re doing is adding debt pain, minimum payments and paying those for over 10 years And this has become a real problem with not only our community but also with the general United States people are just relying so much on those to get through and not realizing the impact not only on their credit but also the impact on how long it’s going to take to actually pay off those steps.“
Fred, “It sounds to me like a lot of people have just accepted it and just say while I’m always goanna owe it so why do I worry myself overpaying it off. But is that really doing to their credit life thinking that way?”
Aimee, “So with that, because the credit cards are being reported to the bureau so when you’re looking at your credit score, for example, where does that score come from? That score is actually based on a few different categories. The biggest categories are how you pay and payment history, that’s 35% of your score, so as long as you’re making payments on time, nothing showing up as past due or nothing showing up in collection, that’s really good, but the next category the people don’t realize it’s about 30% of your score is something called capacity what that is it is your revolving debt which is a credit card or a line of credit they can have a different balance so it’s the balance versus the limit so if you don’t have much available on your credit card or your revolving line that actually hurts your score traditionally you think credit card used to be used as for emergencies right if something happened That you had that emergency so when they see the credit bureau, see that you don’t have anything “available for emergencies and your Maxed on those cards it actually lowers your score it makes you more risky to loan to.”
Fred, “What would be a suggestion that you might have for people? I see in some of the statistics here that which is 50% of credit card holders carry a balance from month to month and 36% of us adults carry more debt than we have for emergency savings.
Can you give some simple, I mean, it’s hard these days, like you said, we’re living from check to check. Can you give some simple ideas that might help people get out of this little circular drain that we get caught in?”
Aimee, “Yeah, it’s a really difficult situation when you’re living paycheck to paycheck and you really can’t afford to necessarily just pay off a credit card, so there’s a couple different tactics that can help get you out of major credit card debt, one of them. I call it the snowball theory; as you take one particular card, the smallest balance, you make extra payments, double payments. Once that’s paid off, whatever you were paying on that card, you’re gonna take and apply to the next card, so what you’re doing is you’re used to paying that’s just double one of them. Take that extra money now and put it on another card to get that, so it’s a snowball. You’re getting rid of credit cards from the smallest to the biggest balance but not changing your monthly payment of what you’re paying out, so that’s one way to do that.
Another way to do that is to consolidate. You can take a look at consolidating all your credit cards into a signature loan or, if you have the availability on your home, into a home equity loan. What that does is it gets rid of all that credit card debt and gets into a fixed lower rate and, in most cases, lower rate loan for them.”
Fred, “OK, that sounds good. What other things should people be aware of regarding certain credit cards? That people might not want to go near because it’s too good to be true?”
Aimee, “Yeah, for sure, so things that people want to be aware of when it comes to credit cards is number one. Look at interest rates; a lot of credit cards nowadays are above 25%, and some of them are above 30%. Those ones will charge you insane amounts of interest you might think this is great. I’ve been approved for a credit card, especially if you’re credit challenge; however, those rates are a really big indicator. A lot of store cards have really, really high interest rates, so before you dive into those credit cards, take a look at their terms take a look at the actual rate. Another one they’ll get it, especially if you’re trying to build credit, is going to charge you a fee even to have that card, so you’re going to automatically start where you are paying to actually try to build credit or repair credit with an annual fee or a monthly fee even those are really dangerous. You shouldn’t really have to pay for credit. There are ways out there for you to actually build credit and repair credit. You don’t have to pay to do those.”
Fred, “Does Oswego County Federal Credit Union offer a Credit Card that can help people get out of this situation and start repairing bad credit scores?”
Aimee, “Yes, so we have just launched with our secured credit card. It’s a way for people to build credit or repair credit. Remember 30% of your score is that capacity, but 35% is how you pay. Our credit card requires a deposit into a share account or savings account. If a member has a certain amount of money, they can put it in the account, and we can give you a credit card. We keep that share on hold; however, we’re at 12.99 %, way less than the over 25% that you would get in some other places. And there’s no annual fee there’s no transfer fee. There’s no cash advance fees. We’ve even offer a one percent discount if you shop local, so any Oswego County ZIP Code you use the card at, would get a percent discount. At Oswego County Federal Credit Union, we want to support our community. For at least six months, you want to make good on-time payments or not even use the card. In most cases, maybe put gas on it and make a payment on it, but try and keep that balance low compared to the limit to help your score. What that does that gives you capacity, it gives you payment history, And with a good credit history and good history on that card, we can look to increase the credit or give you one of our traditional cards as well. This is actually a good lead into the card that we do offer a credit builder loan itself where we loan you $500 for six months. We put that 500 on hold, but we’re going to start your credit history with payment. Once that’s done, you have the 500 there. The natural way is to then switch to a secured credit card. Using that 500 to get the credit card, you’re getting payment history, and you’re getting that capacity you desperately need with these. They’re automatically approved as long as you have income, even if you have really poor credit, we’re gonna look to help you rebuild the credit, or actually, if you have no credit, we’re looking to help build your credit history by educating you as well on what a credit score is what exactly it’s about.”
Fred, “Excellent I want to ask a specific question here, one being the 1% discount purchases within Oswego County now that’s any store. Say, they want to go to Walmart now that’s, you know, 13126, But Walmart is not owned in Oswego County. How does that work if it’s not a locally owned business locally?”
Aimee, “The discount goes to where the terminal actually swipe comes from.”
Fred, “Does the 1% discount only apply to this type of card or to your other credit card offers as well?”
Aimee, “Oh no, all of our car cards have the one percent discount. Pretty cool, right? We love our community. We want to give back to our community and really encourage people to shop locally. That’s why we offer a 1% discount on any of our credit card products.”
Aimee also mentioned that Oswego County Credit Union is hosting the “Gloves with Love” campaign. The credit union collects gloves and scarves at its branches. The items will be distributed to community members in need and donated to local nonprofits to help keep people warm. Specific distribution dates are not yet confirmed.
How your credit is scored:
35% Payment History, 30% Capacity, 15% Length of credit, 10% an accumulation of debt, 10% Mix of type of accounts (Revolving credit accounts, installment loans, fixed rate or a fixed term)
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