Consumer Tips

Support Your Community
During Community Banking Month

April is Community Banking Month and as such, it’s an ideal time to show support and patronage of your local community. Shopping and banking locally have personal and economic benefits. In many towns throughout the country, once-thriving main streets have been replaced by strip malls and retail outlets. The quaint subtleties of shopping “in town” have been exchanged for trips to behemoth shopping centers that clutter the sides of nearby interstate highways. However, the movement of the past decade towards a “bigger is better” mindset in doing business has been challenged by the recent economic downturn. Now, more and more consumers are looking to ditch the big guys and go back to local businesses that more directly impact their community. So, what are the benefits of buying and banking locally?

Invest Here, Multiply Here

Every dollar spent locally has a multiplier effect on your local community. According to The 3/50 Project, a small business group, $68 dollars of every $100 spent at local businesses return to the community versus $43 at national chains. Generally, none of what is spent online stays at home, providing no benefit to your community.

When you spend money at your local community businesses, you generate tax revenue for your city and county. Furthermore, you support the local business person who puts money into the community through civic activity. You also help these business people pay back their loans to the local community bank, which make the majority of small business loans and also reinvest in a variety of ways. Simply put—the little decisions we all make can amount to a great deal of prosperity in our communities.

Bank Local

Lost in our desire for the bigger and supposedly better, is the banking relationship.  This has resulted in less financially literate citizens who, too often, pass along their bad financial habits to the next generation of consumers. By finding a local community bank, you have the opportunity to begin a banking relationship with someone whose livelihood depends on connecting to the financial health of the community. Additionally, local community banks in your neighborhood exist and thrive because of relationships with consumers just like you. They want to create lifelong customers who share a stake in the community. They can be your best asset in helping to teach your children about establishing savings goals, balancing their bank accounts and using credit and debit wisely. These bankers want to help you and all you need to do is walk in their bank.

There are endless ways to support your community and Community Banking Month is a perfect time to shop, bank and do everything else you can local.

Know the facts
before you transfer Credit Cards

When you see five or six credit cards every time you open your wallet, you may consider one of those credit card transfer advertisements you receive on a weekly basis. You know the ads—the ones that offer a zero- or low-interest rate for a period ranging from three months to a year if you transfer your credit card balance to a new card.

It is not unusual for the average American family to carry a credit card balance of $10,000 or more. However, this could affect your credit score, which is determined by your credit card utilization rate. While there is no ideal utilization rate, it is generally recommended that your credit card debt be no more than 25 percent of your total available credit on all of your credit cards combined. This means if you have four credit cards with a combined credit limit of $20,000, your combined debt should not exceed $5,000.

For savvy consumers, taking advantage of a credit card balance transfer may help credit scores, but be sure to first consider the risks and pitfalls. Balance transfers allow consumers to pay down or eliminate debt without paying additional interest for the time period described in the offer. Once approved for a transfer, it takes about six weeks to transfer the old balance to the new card. For the next six months or the length of zero-percent financing, 100 percent of payments will go directly to paying down credit card debt.

The credit card company may choose to pay off the balance from the old card in several ways:

  • Send money to the consumer's bank account so that he or she can pay off the balance
  • Wire the money directly to the old credit card to pay off the balance
  • Send the consumer a balance transfer check to pay off the old debt

Be sure to read the fine print before accepting any of these offers. Just because the large print promises a zero-percent interest rate, you may not qualify to receive it. Once you receive your new card, you may find a different interest rate. Also, look for both zero-percent interest for transfer balances and purchases during the introductory period. The company may not charge interest on the transfer, but that may not equate to zero-percent interest on purchases during that time. The company may also charge a $50 or $75 fee for a balance transfer.

Shop for cards with low-interest rates, cash-back perks and fraud liability in addition to no hidden fees, annual fee or new membership fee. It is also advisable to always pay more than the minimum payment each month to lower your overall credit card debt.

Keep in mind that credit card companies do not make these offers out of the goodness of their hearts. They are businesses and their job is to make money, and they make a fortune from interest rates and fees. These companies are taking the risk that the consumer will either fail to pay the full balance during the introductory period, pay late or miss a payment. At that point, a company can automatically increase the interest from zero percent to 15 percent or even higher.

Once you make the transfer, be sure to put away your old card so you will not be tempted to use it and return to the debt cycle. Remember that balance transfer offers can be a good thing in helping to eliminate debt. Just be sure you know all of the facts first.

These Consumer Tips are provided as a public service by 1ST Advantage Bank with the understanding that the bank is not engaged in rendering specific legal, accounting, or other professional services. If specific expert assistance is required, the services of a competent, professional person should be sought.