SafeAmerica Credit Union

Deal with Debt

• By Kevin Alvarez

The Impact of Stimulus Payments on Your Taxes

What a year 2020 has been! New Year’s celebrations were barely over when the coronavirus turned things topsy-turvy. But one bright spot for 159 million people was the $1,200 Economic Impact Payment that appeared in their mailbox or checking account.

If you didn’t receive a payment, you may be wondering, why? And if you did, you may be wondering, what’s the catch? We are here to help put your mind at ease, so let’s tackle your questions, one by one.

Do I owe tax on the money I received? That’s an easy one: No. The stimulus payment was designed to impact the economy, not your taxes, so it won’t reduce your 2020 refund or increase your tax due.

I didn’t get a payment – why? If your income for 2019 or 2018 was over $75,000 ($150,000 if you filed jointly, $112,500 if you were head of household), then your payment was reduced by $5 for every excess $100 you earned. And if you didn’t file a tax return for either year, you may not have gotten a payment. But don’t despair, you still may be entitled to payment.

Really? What can I do now? If you were supposed to file a 2019 tax return and didn’t, file right away. If your income was too low to file, at IRS.gov you can click on the tab marked “Non-filers” and fill in your basic information. If the IRS determines you are eligible for a payment, they will send it to you.

What if my income has gone down? If your 2019 income was too high for you to receive a payment, but your income this year is much lower, you are in luck. You can claim your stimulus payment on your 2020 income tax return, and it increase the refund you receive (or reduce any tax due).

My 2020 income is higher than in 2019 – will the government want the money back? No. If you received a stimulus payment based on lower income in 2019, that payment is yours to keep even if your income increased above the threshold in 2020.

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The information in this article is for general educational purposes only and not intended to provide specific advice or recommendations.Please discuss your particular circumstances with an appropriate professional before taking action.

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• By Kevin Alvarez

What is a balance transfer?

A balance transfer is a financial resource that doesn't get as much recognition as it deserves. Let's shed some light on balance transfers and go over how you could take advantage of paying down debt with a lower interest rate and get you on track for your next financial goal.

What is a balance transfer?

It's moving high interest debt (usually credit card debt) amount from one account to another account that has a significantly lower interest rate.

How does a balance transfer work?

Let's use an example; you have a credit card balance of $1,200 at 24.99% APR from your favorite retailer and transfer that total debt amount to another financial institution with an interest rate of 10%.

Think of the financial position you would be in with an interest rate of 10% or even 0%. Instead of paying $299.88 in interest with your 24.99% APR account, you'd now pay $120 with your new 10% APR account or even $0 with a 0% APR.

Does a balance transfer hurt my credit?

As long as your credit account from the previous financial institution is kept open, your credit will improve.

Is there a fee to transfer a balance?

Many big banks charge a balance transfer fee between 3% and 5% of the amount that would be transferred. Let’s continue to use the $1,200 at 24.99% APR scenario for another example. When you transfer over to a financial institution with a lower rate but charges a balance transfer fee of 5% be prepared to pay the additional $60. As situations vary from person to person, the fee itself may be the deciding factor for transferring over a balance. Of course, be aware of all fees in order to make sure a balance transfer is truly beneficial to your current financial situation. Remember as a member of our credit union, you receive a lower or no balance transfer fee, one of the many differences between your local credit union and the big banks.

Should I close my old credit card after a balance transfer?

You definitely should not close any of your credit cards. Since balance transfers are linked to a credit card, you would be increasing your credit utilization amount, which would then improve your credit score. As long as you have no balance and are not charged an annual fee, it won't cost you to keep the account.

Does a balance transfer count as a payment?

A balance transfer does not count as a form of payment. You transferred a balance in order to make lower payments.

What is a typical minimum payment on a balance transfer?

Minimum payments vary with financial institutions and its always good practice to clarify with your financial institution.

Do balance transfers earn reward points?

This would also vary between financial institutions. For the most part, financial institutions would not offer rewards points for balance transfers. This would be something to verify with the financial institution when applying for credit cards with the balance transfer feature.

How long does a balance transfer take?

Industry average is between 14 and 21 days to complete the process of paying off your previous lender.

Is a balance transfer the right financial resource for me?

A balance transfer can be very beneficial for those who have manageable debt with high interest rates. The objective is to take advantage of any promotional 0% periods to pay down as much debt as possible which in turn, is going towards paying down the principle rather than any interest.

SafeAmerica Credit Union can help. If you're interested in transferring a balance you have at another financial institution, we're currently offering 0% APR on purchase and balance transfers through September 30, 2021 when you open a new credit card through March 31, 2021.

How SafeAmerica Credit Union's balance transfers work:

  • Balance transfers often take 2-3 days compared to industry standard of 14 to 21 days.
  • We're currently offering 0% interest through September 30, 2021 on balance transfers done from January 1, 2021 to March 31, 2021
  • We charge no balance transfer fees on our balance transfers.

To learn more on how you can take advantage of balance transfers and start paying less interest on your debt, click below.

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• By Kevin Alvarez

New Year, New Money Habits!

The New Year is a time for powerful new beginnings. It also presents an opportunity to look at our everyday habits – whether those habits relate to our health and fitness or our money habits as we manage any financial challenges.

What is a habit? A good working definition is that a habit is a routine behavior that is repeated regularly and tends to occur without a lot of conscious thought.

Many of us already have healthy habits that we do by routine – like brushing our teeth or washing our hands.

We might also have healthy money habits. Carefully reviewing your credit card statements each month could be a habit you already have in place, for example.

As the year gets underway, there are opportunities to reinforce healthy money habits that already work for you. And it’s an opportunity to create new habits like
writing down financial goals or building savings.

Make It a Habit

Building positive money habits can affect your entire well being. Here are a few ideas to try as the New Year gets underway.

1. Make a Goal (and Write It Down)

Goal-setting gives you direction. You can decide on your destination and make a plan to get there. This action might seem small, but it’s not. Make it a habit to look at monthly finances and jot down one or two goals. The goal could be taking a bite out of your credit card balances or setting aside a small amount each month for a large purchase.

2. Set it and Forget It

You likely have many of your outgoing bills set to “automatic payment,” which is a positive money habit. Setting up “auto pay” on monthly utilities, cable, and other bills lets you be sure bills are paid on time. Consider setting up “auto save” as well. If you set a goal to save for a big purchase, like the down payment for a car, automate monthly savings to help you achieve your goal. Set up automatic transfers or use direct deposit from your paycheck to automatically place funds in your goal account.

3. Spend with Care

Mindful spending is a powerful financial habit to build. If you don’t already have one, build the habit of using a monthly spending or budgeting plan. You’ll learn how much money you have to work with, the amount that is going out each month for bills and expenses, what you need to set aside for other bills and living expenses, and how much you can devote to your goal from each paycheck.

4. Deal with Debt

Think about your habits when using your credit card and when considering your total debt situation. Are most of your purchases made with consumer credit cards? What are your current credit card balances and other debt balances? Listing out all your monthly debt payments helps you stay aware and act if needed. If you are in the habit of only making minimum payments on your credit card balances or experiencing collection calls, consider learning about how a Debt Management Plan can get help support healthy money habits.

5. Celebrate Your Progress

As we noted, you likely have many positive habits already. That’s something to be proud of, as you can apply those lessons to building new money habits. Make it simple. Tackle one habit at a time and celebrate your wins. The New Year is sure to be a success when you tackle one habit at a time and make it work for you.

Ready to build new money habits?

Our partner GreenPath specializes in helping people improve their financial wellness.

Learn more about building healthy financial habits here:

Redesign Your Financial Habits