Credit Union vs. Bank: Which is Better?

Banks have nothing good to say about credit unions. Credit unions don’t have a lot of appreciation for banks. Their customers of one entity believe the customers of the other are delusional. Which is better? It depends on your location and your needs. Banks and credit unions each have advantages over the other.

      1. Credit unions are not-for-profit. While banks exist for the purpose of earning as much money as possible, credit unions exist to provide a service to their members. Excess income can be used to provide lower fees and lower interest rates on loans.

      2. Credit unions are technologically challenged. Credit unions are often a few years behind banks when it comes to online banking and other online tools. Depending on how you like to bank, this might be an issue.
            • Thoroughly evaluate the online banking tools before joining a credit union. If online banking is important, a traditional bank could be a better option.

      3. Credit unions can be harder to join. Some unions only service a particular population, such as teachers or employees of a particular company. There are credit unions open to the general population, but they’re less common. It might require a little work to find a local credit union that will accept you as a member.

      4. Credit unions pay higher interest rates on deposits. Sometimes as much as 10 times more. Online banks often provide rates that are competitive with credit unions.

      5. Banks spend much more on advertising. Many banking customers are slow to switch to credit unions because of the tremendous advertising reach of big banks. Keep in mind that the banking customers are ultimately paying for those advertising costs. You’ll have to find your local credit unions since they’re unlikely to find you.

      6. Banks offer more options. Credit unions offer many of the same products as banks, but with fewer options overall. A credit union might only offer a couple of checking accounts, one savings account, and a couple of credit cards. A bank often has many more options available and can potentially satisfy your need better.
            • Do you have simple or complex banking needs?

      7. Banks charge higher interest on credit cards and other loan products. The difference is usually 1-2%. This might not sound like much, but it can be significant when dealing with a large loan over many years.
      8. Credit unions are more focused on service. While banks want to maximize profit, even at the expense of customer satisfaction, credit unions are owned by the members and place a higher value on service. Members vote on how a credit union handles the day to day activities.
            • Credit union members consistently report a higher level of satisfaction than bank customers do.

      9. Banks typically have more locations. Some banks seem to have a branch on every corner. Credit unions often only have a few, or even just one, location. Depending on where you live relative to the local branch, this can be a deal-breaker.

Banks offer more locations, more ATMs, more products, and a higher level of technology. Credit unions pay more interest on deposits, charge less interest on loans, and charge lower fees at the expense of convenience. Which is more important to you? By answering that question, you’ll find the right answer for your situation.

You might be able to have the best of both worlds by having an account with both a bank and a credit union. You’re not limited to just one or the other.

7 Commonly Missed Tax Deductions That Can Save You Money

Is the IRS on your gift list? You might not think so, but if you don’t take all the tax deductions that you’re entitled to, then you’re just giving your money away. There are many tax deductions and credits that are not well known.

How much money are you giving to the IRS that could be happily filling your wallet instead?

Consider these commonly missed tax deductions:

      1. Non-cash donations to charities. We all know to deduct the checks we write to our favorite charity, but most of us forget to deduct other things. Items like automobiles, clothing, food, furniture, and more are all deductible.
            • You’ll need to show receipts if you get audited, so be sure to collect your receipts.

      2. Mortgage refinancing points. If you’ve refinanced your mortgage, you can deduct those points. In many cases, they have to be deducted over the life of the mortgage. So if the mortgage is for 15 years, you can deduct 1/15 per year. It’s not much each year, but it adds up.

      3. Medical insurance premiums. If you spent more than 7.5% of your income on medical expenses, you can likely deduct the cost of your medical insurance premiums.
            • If you’re self-employed, you can deduct 100% of your medical insurance premiums without meeting the 7.5% requirement.

      4. Energy savings home improvement. You can get a 30% credit for any energy saving improvements you make to your home. This is a credit, not a deduction. So you not only get to take 30% of the cost of the improvements directly off your tax bill, but you also get to save money on your utilities. You win both ways.

      5. Retirement tax credit. Contributions to retirement plans are typically untaxed at the time of the contribution. If your income falls below a certain level, you can also get up to a 50% tax credit to boot!

      6. Disaster. If your area was officially declared a disaster area, you can deduct your losses.

      7. Tax and investment expenses. The total cost of these expenses must exceed 2% of your adjusted gross income before taking this write-off. These include things like tax preparation, any legal advice on tax matters, and all your investing expenses. Investing expenses include:
            • Your fees and other costs for the investments
            • The mileage to drive and see your investment guru
            • The cost of publications and subscriptions for investment research, like investment-oriented magazines and The Wall Street Journal.

Taxes are likely your biggest expense each year, so spend some time to familiarize yourself with tax deductions. How many of these deductions apply to you? See your tax professional if you’re unsure if you qualify.

Keep as much of your money as possible. After all, you probably worked pretty hard to earn it.

If your financial situation is complicated, it would be wise to find a real expert. Don’t try to wade through all the tax changes every year by yourself. The extra money you save on taxes can be well worth your time.

Protect Your Finances from Inflation Before It’s Too Late

Inflation can eat up your savings and plans for the future. However, you can take steps to protect yourself from inflation.

Consider these tips to protect your finances:  

      1. Understand purchasing power. Purchasing power refers to your ability to buy items such as necessities and luxuries. One of the main issues with inflation is that your purchasing power goes down as inflation goes up.
            • For example, your $1 could buy an item yesterday, but today you’ll need $5 to buy the same item.
            • Unfortunately, interest rates and incomes can’t always keep up with inflation.

      2. Consider investing in the stock market. Do you have investments in the stock market? Instead of taking them out after every drop, plan a long-term strategy.
            • Long-term investments in stocks may protect you from inflation.
            • Commodities tend to increase in value during inflation. For example, coffee or grains may survive inflation well on the stock market because they’re commodities.

      3. Consider real estate investments. Real estate can be a powerful investment tool.
            • Real estate can fluctuate in value. If you’re considering an investment, then you may want to be careful.
            • Although real estate prices can go up during inflation, you have to consider your ability to handle all of the loans and mortgages. Even if you rent out the properties, how will you handle periods without renters?
            • Commercial real estate can be even more complicated than buying a home. If you want to invest in commercial real estate, then you also have to deal with zoning laws and extra fees.
            • Land is another possible investment option.

      4. Consider investing in your future. You have the power to survive inflation, and you can take steps to deal with it.
            • Have you considered investing in your future by going back to school? Additional degrees may help you earn more money and provide a bigger cushion during times of inflation.
            • However, going back to school isn’t the only choice. You can also take free classes online or from other organizations. You can build your skill set and discover new hobbies that can increase your income.

      5. Try to make your income sources grow. If you can make your sources of income increase, then inflation will have a lower impact on you.

      6. Get rid of debt. As inflation rises, the interest rates on your debts can also rise. If you pay off your debts, then you don’t have to worry about it. However, if you can’t pay off all of your debts, be prepared to make higher payments during times of inflation.

      7. Consider your Social Security benefits. During periods of inflation, benefits such as Social Security usually can’t keep up with the growing prices. Be prepared for this event. Have some savings that will cover you when prices go up.

Inflation isn’t always easy to predict or avoid. However, you can take action to make it have a smaller impact on your finances. Follow these strategies and protect yourself, your family, and your finances from inflation.