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How Credit Card Utilization Affects Your Credit Score

It’s a well-known fact that paying your credit card bill on-time is one way to achieve a higher credit score. But did you know that you can actually see a decrease in your score even if you pay your bill in full and on time every month?

Credit card utilization is the percentage of your credit line that is being used. Lenders look at it as a key factor in a consumer’s overall financial health. If you’re using more than 30% of your approved credit at any given time, it may signal to lenders that you may be experiencing financial difficulty or possibly living beyond your means.

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Budget: The “B” Word to Some, the Ticket to Financial Freedom for Others

Many people have a less-than-enthusiastic reaction to the word “budget,” associating it with a restrictive plan that reins in their spending and denies them things they may want. While a budget might tell you that you can’t immediately afford a new TV, it can also enable you to plan for a family dream vacation and prepare for retirement. So, instead of thinking of a budget as a constraint, it can be helpful to envision the financial freedom it can bring you. Here are just a few examples of the benefits that can be attained from budgeting your spending.

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Know the Facts Before Opening — or Closing — a Credit Card Account

A well-meaning choice on your part could do more harm than good

Most consumers understand that one more obvious way to earn a good credit score is to pay bills on time. However, there are other actions that are less intuitive. It’s important to know how doing something as simple as closing an old account can affect your credit score.

That old credit card may actually be helping your credit score

In all likelihood, your oldest account may have been opened when you had little to no credit history. It may have a lower credit limit and/or a higher interest rate, and probably offers no rewards — and for those reasons you may not be using it. Intuition might tell you to close that account if you’re trying to boost your credit score, but the reverse may actually be true for several reasons.

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Saving for College? Learn More About the 529 Qualified Tuition Program

Saving for College? Learn More About the 529 Qualified Tuition Program

Paying for a college education requires forethought, research and planning. While there are numerous investment options to choose from, a clear favorite for many seems to be the 529 plan.1 Named for section 529 of the Internal Revenue code, a 529 is a state-sponsored savings plan designed to encourage saving for future college costs.

When you open a 529 plan, you’ll designate a beneficiary — your child, grandchild or any other person, including yourself. You’ll make contributions into the plan until the beneficiary is ready to use the money. Funds can be withdrawn as needed to pay for tuition, room and board, fees, books and certain supplies at virtually any accredited college or university in the United States and even at some foreign schools.

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The shelf life of bad credit

The Shelf Life of Bad Credit

When a credit card bill, loan payment or other financial obligation is not paid as agreed, lenders may send a negative report to credit reporting agencies such as Equifax, Experian, and TransUnion, known in the U.S. as “the big three.” According to Equifax, consumers inquire most often about how long negative information will remain on their credit report.1 Considering the importance of a good credit profile and credit scores, it’s not surprising that this is a topic of great concern among consumers. As you might know, a bad credit score can affect your ability to qualify for a loan, rent an apartment or even get a job.

According to the Fair Credit Reporting Act (“FCRA”)2, negative information can remain on your credit report for up to seven years.3 Additionally, bankruptcies will follow you for 10 years, and unpaid tax liens stay in your credit history indefinitely. Those kinds of scenarios can be very daunting. For example, in the next seven to ten years you may need a new loan, such as a car loan or credit card. A low credit score can cause you to be denied for a loan, or may mean a higher interest rate, or larger down payment requirement.

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Best practices for your tax refund

How Will You Spend Your Tax Refund?

If you’re waiting for a tax refund, chances are you already have some ideas of your own. For the past few years, the average tax refund in the U.S. has been around $3,0001. That’s a sizeable amount for most of us, but before you spend it all in one place (like a dream vacation), you might consider other options that could be better for your finances in the long run. After all, your refund is not free money from the IRS. It’s your money being given back to you.

A recent Edward Jones survey2 found the following about how respondents planned to use their tax refunds this year:

- 52% — Necessary items like groceries or credit card bills

- 30% — Save

- 8% — Something fun

- 8% — Investments

- 2% — Not sure

 

Though we don’t really know what people actually do with their refunds, maybe their stated intentions are a good place to start with suggestions.

 

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Debt problems and solutions

Need Help Managing Your Debt? Choose the Right Solution for You.

This is our second post in a series on managing debt challenges. As covered in our first post, Debt Problems? Work With Your Creditors First, your best bet, should you find yourself in this situation, can be in working directly with your creditors. If that doesn’t alleviate your particular challenge, there are other options you can pursue.

As one example, there are a staggering number of companies in today’s marketplace offering to help consumers get out of debt with a variety of services. However, according to the Consumer Financial Protection Bureau and other consumer organizations, dishonest debt-relief providers have made consumers wary1,even as they seek solutions. But, what should the average consumer look for in solutions to aid them in addressing their debt relief dilemma?

Credit counseling? Debt settlement? Is there a difference?

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Calculate debt solutions with Merrick Bank

Debt Problems? Work With Your Creditors First.

If you’re currently struggling to manage your monthly debt payments, you’re not alone. Financial challenges have continued to plague U.S. households since the financial crisis of 2008. Here are just a few sobering statistics that define the situations facing many of us:

  • An estimated 1.7 million people will file for bankruptcy protection this year.
  • Both in and out of bankruptcy, about 56 million adults will be set back by health care-related bills this year.
  • American student loan debt totals almost $1 trillion and affects more than 38 million Americans.
  • According to Bankrate.com, 45 percent of Americans have more credit card debt than emergency savings.
  • While unemployment has come down to about 7%, it was a staggering 10% between 2009 and 2010. And underemployment numbers are estimated to be in the neighborhood of 14.3% currently.

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