President’s Message November 2011

Interesting Times

We continue to endure what is being called the “worst recession of our lifetime.” Add to this the political and economic uncertainty here and around the world, we definitely are living in interesting and challenging times. Families, communities, and businesses are a little battle-worn. Stubborn high unemployment and a weak housing market continue to baffle policy makers and government officials – hinting that the solution lies elsewhere.

Recent legislation, aimed at helping to solve the financial challenges, appears to have actually made some things worse and prolonged the recovery.

Bad Legislation

Some months ago I told you about one such piece of legislation – The Durbin Amendment. (See Newsleter Article) This legislation was an amendment to the controversial Frank-Dodd Act. The Durbin Amendment took the power of competitive market forces to set debit card transaction fees and gave this power to the government. Heavily supported by large retail chains, the amendment barely passed Congress. Attempts to defeat it in the Senate received a majority of votes (including Senators Hatch and Lee from Utah) but fell short of the 60 votes needed to overcome a senate filibuster. The Durbin Amendment went into effect this year – and it is already costing consumers millions of dollars.

We warned then that the passage of the Durbin Amendment would take as much as $18 Billion from financial institutions and give it to the retail industry. Meanwhile, financial institutions would be left with the costs of providing debit cards and still be responsible for security, fraud investigation, and fraud losses – thus being forced to make up for that lost revenue by finding other fee income.  The retailers countered that consumers would benefit from the Durbin Amendment in the form of lower prices at their stores. We warned that rather than seeing lower prices, most consumers would pay for the retailers’ windfall by facing new or increased banking fees.

I wished I could tell you that I was wrong.

Since the Durbin Amendment passed and went into effect the following has happened:

  • The Fed cut the debit card interchange fee amount received by financial institutions by about half.
  • Financial institutions have begun seeing up to a 45% decrease in debit card transaction fee income.
  • Nearly all debit card reward programs for consumers have been cut since financial institutions can no longer afford to offer them.
  • Financial institutions have begun phasing out free checking and have begun instituting new minimum balance and other requirements to avoid monthly checking fees. (Debit and checking fees were used to subsidize and cover the costs of checking and debit card programs thus allowing them to be offered free. When the debit interchange fee income was reduced, monthly checking fees began to re-emerge to cover those costs.)
  • More and more of the major banking institutions have begun charging monthly fees to customers who use their debit card. (USA Today BofA Article) Since the income that used to come to financial institutions now flows to the retailers, debit card fees help replace that lost income. Unfortunately this fee is paid by the consumer now instead of the retailer.
  • Consumers are outraged at the new fees and threaten to move their accounts to credit unions and smaller community banks to avoid the fees. (Washington Post Article)
  • More and more smaller institutions, including community banks and credit unions have begun implementing or considering checking and debit card fees. (Watch Video)
  • Even not-for-profit credit unions are forced to consider alternatives for replacing the lost income. Some have begun to limit rewards, add balance requirements, or charge fees. Now only 70% of credit unions offer free checking – and the number is falling.)

Consumers Lose, Again

I have nothing against Home Depot – they are a great company – but consider the response of Home Depot’s Executive VP of Corporate Services and CFO, Carol Tome’ when she responded that based on initial draft regulations of the Durbin Amendment, “the benefit to the Home Depot could be $35 million a year.” Consumers will be now be paying for that $35 million in the form of debit card and checking account fees.

Or, listen to the response of Senator Durbin himself, when he recently told a group of reporters in Nashville, “The retailer will be more profitable. That’s what’s behind this.”

It is estimated that as much as $18 Billion a year will move from financial institutions to retailers as a result of this misguided legislation.

UCCU is doing all it can to keep checking and debit cards free for members.

Rest assured, we are doing everything we can to maintain free checking and debit card programs at UCCU. We currently have no plans to implement checking or debit card fees. However, we are expecting to see a sharp decrease in debit interchange fee income from the retailers as a result of the Durbin Amendment.

(Read More: My response to Blog Question from “Janice”)

I believe that market forces and competition are the best way for prices to be set and services to be offered. It just seems that whenever the government gets involved, it is the consumers and citizens who end up paying the bill.

What’s Next? How Can You Help?

Thank You, Representative Jason Chaffetz!

We applaud the tenacity, courage and foresight of our Congressman, Jason Chaffetz, who recently introduced H.R.. 3156 to REPEAL the Durbin Amendment. There is growing support to get rid of this bad legislation and allow the market to set prices instead of the government. The result of repealing the Durbin Amendment will be the restoration of the debit interchange income and with it the ability to continue offering checking and debit programs free to consumers. We ask you to support H.R. 3156 and send your support to Congressman Chafetz (Article on Chaffetz). Thank you, Jason!

Your Credit Union is Strong and Healthy

Meanwhile, we remain grateful to you and are pleased to be your financial partner. We strive to offer you, our member, the best value in financial services and the highest levels of convenience and security in managing your financial affairs. We know that the credit union model is the best way to serve you. Despite the economic challenges of the day, your credit union remains financially healthy. And despite the growing regulatory and legislative challenges, we remain committed to providing you with friendly professional service and great value in financial services.

Jeff Sermon

President/CEO

Utah Community Credit Union

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Thinking About Opening the Door to a New Home?

Here are some steps to take first

So you have made the decision to buy a home – congratulations! This can be one of the most important and exciting decisions you will ever make. But the decision to buy a home is just one in a series of choices you will have to make throughout the process of getting the home you want. So where should you begin?

Get pre-approved with UCCU

The first decision you will have to make is how much you can afford. An easy way to do that is to get pre-approved by UCCU. With a pre-approval, you’ll learn how much you can qualify to borrow for a home. That way, you will not waste time looking at houses that are outside your price range. To pre-approve you, we will look at your income and your credit history and give you a conditional approval that will tell you and prospective sellers how much you are able to borrow. A pre-approval offers another great benefit – it shows sellers that you are a serious and qualified buyer, giving you a powerful negotiating advantage.

Choose a real estate professional

Before you begin looking at homes, you will need to work with a real estate professional. You can begin by asking for referrals from friends or family members. Your real estate professional should be familiar with the area you are considering. He or she can help you make other important decisions, including the style of house, number of rooms, etc., and can supply information about the neighborhoods you are considering, such as school districts and local property taxes.

Coming up with the down payment

Most mortgages require you to come up with down payment funds. Consider your savings and determine how much you will be able to put toward the down payment. Here are some suggestions for managing the down payment:

  • Ask us about FHA, VA, and other mortgage programs that offer down payments as low as 2%, 4%, or 0%.
  • Obtain gift funds from a family member.
  • Borrow from your 401(k) plan.
  • Start an automatic savings plan – arrange to have funds automatically transferred from your checking account to your savings account each month.

Understand the types of loans available

Once you have chosen the type of loan, you will need to consider the type of mortgage you want. We will help you decide on the mortgage that best meets your goals and your budget. The types of mortgages include the following:

Adjustable-rate mortgages (ARMs). In general, if you plan to live in your home for only a few years or expect your income to rise, an adjustable-rate mortgage (ARM) could be  ideal. ARMs offer lower fixed interest rates initially, which then may go up or down during the adjustment period, depending on rate conditions.

  • Fixed-rate mortgages. If you plan to stay in your home for several years and prefer the predictability of fixed principal and interest payments, a fixed-rate mortgage is a smart choice.
  • First-time homebuyer program. If you have never owned a home, you may be able to qualify for a first-time homebuyer program. These programs generally offer lower down payment requirements and reduced closing costs.
  • FHA and other types of alternative mortgages. Depending on your income, you also may be able to qualify for these more affordable mortgages, which offer flexible underwriting requirements and reduced down payments and closing costs.
  • Construction loans. If you plan to build a new home, UCCU offers construction loans that allow you to combine the construction and permanent financing in one mortgage.

Saving for emergency expenses

Owning a home is a big financial responsibility, which is why you will want to have cash reserves to protect you from unexpected repair or maintenance expenses. Setting up a separate savings account or suffix within your account is a good way to begin saving for the unexpected.  Automatic transfers to your emergency fund will also help the account to grow. The better prepared you are, the better you will sleep at night in your new home.

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Click Your Way to Savings

How banking online can actually save you money.

Round the clock access to your finances, the convenience of managing your money anywhere, and even the option to do your banking from the comfort of home in your pajamas. There is little doubt that online banking has made banking easier and more convenient than ever before. But what may not be as well known is that banking online can actually save you money. It’s true.

Here are some of the ways you can connect through savings with online banking:

  • Reduce account fees. UCCU offers free checking accounts without any conditions. It is 100% FREE! Checking with no maintenance fees can add up to significant savings in a year. Banking online will not only save you money; it will save you valuable time, too. And for many of us, our time is money.
  • Build savings automatically. Do you want to put aside more money and build your savings? Online Banking offers a valuable feature that makes it easy – automatic transfers from your checking account to your savings account. You can set up these transfers to occur weekly, monthly, or during any other frequency. Automatic transfers with online banking are the easiest, most convenient way to save.
  • Avoid insufficient funds fees. With 24-hour access to your account, you can view and reconcile your accounts anytime, helping you avoid the embarrassment, hassle, and expense of overdrawing your account.
  • Save on stamps. The price of stamps is constantly rising. With online bill payment, available with most online banking services, there are no postage fees or fuel wasted driving to the post office. You can even schedule your payments to occur automatically, so you will not have to worry about missing a payment and incurring late fees.
  • Eliminate check costs. If you pay bills online, there is no need to order checks. Banking online does not just save you money; it helps save the environment with less paper.
  • Reduce mortgage interest. With online bill payment, you may be able to arrange to have your mortgage payments made bi-weekly rather than monthly, thereby reducing interest costs over the life of your loan.
  • Eliminate late fees. When you bank online, you can make loan payments or transfer funds automatically, helping you avoid late fees that not only cost you money, but also affect your credit score – critical to help you get the best rates.

Understand spending patterns. Do you know how you are spending your money? With online banking, you can view all your purchases at a glance, helping you uncover new ways to save money.

At UCCU, we encourage you to take advantage of all the benefits and savings of UCCU’s Online Banking. For more information or questions on UCCU’s Online Banking. Visit any of our eighteen convenient branches to speak with one of our Member Service Representatives.

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Shady Loan Scams

How to avoid getting hooked

At some time or another, you may have received a questionable letter in the mail or an email offering you a debt consolidation loan, mortgage, small business or student loan, or an over-the-top credit card offer. Common solicitations include statements like “Turned down by a bank because of bad credit?” and “Need a loan or credit card? No one ever turned down.” Offers that request an up-front fee on the loan are generally scams called advance-fee frauds. The promise of easy cash can sometimes overshadow sound judgment, so it is important to know how to protect yourself from loan scams:

  • Never pay up-front fees for a loan. It is illegal for companies conducting business by phone in the United States to ask you to pay for a loan before the transaction has been processed.
  • Never wire money or allow electronic access to your bank account as part of a loan application process. Loan scammers might ask you to send fees via wire transfer made payable to an individual instead of a business. They will request that you (the applicant) use a “password code” with the wire transfer payment. This allows scammers to hide their identities. After your money reaches its destination, you cannot get it back.
  • Advance-fee loans are frequently advertised in many media outlets, such as magazine and newspaper classified sections, cable television spots, radio, and direct mail. Just because the media outlet is known and trusted does not mean that the business placing this type of ad is legitimate.
  • A real lender will not guarantee that you will get a loan even before you apply or before your information has been checked. This is especially true if you have not established a credit history or if you have bad credit.
  • It may sound obvious, but never send a payment to an individual for a loan – only deal with and send money to companies and businesses, and then only after you have confirmed their legitimacy. Always verify the lender and its history with the Better Business Bureau, www.bbb.org.

Other commonsense fraud prevention tips:

  • Do not give out your personal information, such as your Social Security number, credit card, or credit union account details, to any businesses unfamiliar to you that contact you via email, phone, fax, or via Internet advertising, such as pop-up ads.
  • Beware of phony email links to bogus, look-alike websites that may appear legitimate. Generally, if you click on a link sent to you via email, you will be taken to a phony business website posing as a reputable organization. Then, you will be prompted to give personal information, such as your bank account number, Social Security number, name, and contact information. Do not take the bait. In the future, always type a website address directly into your browser. It is safer than clicking a link.

UCCU provides a safe/trusted place for anyone to get a good loan. Before looking elsewhere, discuss your needs with one of our Member Service Representative and learn the loan amount you qualify for and the loan’s terms. Remember, if an offer seems too good to be true, it probably is, and it could even be a scam. Visit us at any of our convenient eighteen UCCU branches to see what is the best type of loan for you.

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Consolidate Your IRA

It’s easy to get confused by all the paperwork you receive regarding your IRA accounts. Do you know where your IRAs are?  Or how well your IRA accounts are performing? Or whether it is time to make some changes?  If you are like most investors, you have a variety of accounts that you opened at tax time – some bank CDs, different mutual funds, and maybe even an individual stock or two.  Utah Community Investment Services can show you several ways that you can benefit from IRA consolidation:

  • Maximize Retirement Assets – They can recommend investment options that are appropriate for your financial objectives, age, and risk tolerance.
  • Simplify Your Life – You can receive a single statement showing your entire portfolio instead of several different statements.
  • Hold down Maintenance Costs – Investors typically pay an annual maintenance charge for each IRA.  Over the long-term, this can mean paying out money that should be working for you, not against you.

Call Lori Pine today to schedule an appointment with Curt Willardson, David Palmer, or Dan Palmer, so together you can talk about how consolidating your IRAs can benefit you. They are committed to helping you pursue your goals and make your financial future easier. You can reach Lori at (801) 223-7502.

Lori M. Pine
Office Manager
Utah Community Investment Services

Curtis Willardson, CFP, CLU and Dan Palmer are registered representatives offering securities and investment advisory services through Financial Network Investment Corporation, member SIPC. David Palmer is a registered representative offering securities through Financial Network Investment Corporation, member SIPC.  Utah Community Investment Services, Utah Community Credit Union and Financial Network are independent companies.  Registered address: 188 W. River Park Drive, Provo, UT 84604.

Investments are not deposits; not NCUSIF insured; and not insured by any federal government agency.  No credit union guarantee.  May lose value.

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UCCU's 2011/2012 Utah Valley Calendar

UCCU’s 2011/2012 Utah Valley Calendar

UCCU releases the first annual Utah Valley Calendar. The calendar contains images and events throughout our great community taken by local photographers. Stop by any of our 18 branches today to get your FREE calendar. While Supplies last.

Below are some of the images featured in this year’s calendar.

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UCCU’s 2011/2012 Utah Valley Calendar

UCCU’s 2011/2012 Utah Valley Calendar

UCCU releases the first annual Utah Valley Calendar. The calendar contains images and events throughout our great community taken by local photographers. Stop by any of our 18 branches today to get your FREE calendar. While Supplies last.

Below are some of the images featured in this year’s calendar.

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President’s Message October 2011

Credit Union Members Top Five

1. Mobile Banking

Members love the convenience and security of doing credit union business with their smart phones and iPads or tablets.  This popular and quickly growing service gives members 24/7 access to their credit union accounts wherever they may be. It’s like carrying your credit union account with you. Whether traveling, at the department store or restaurant, or at home, you can transfer money, get account balances, and transact other business. No wonder this is one of the credit union’s fastest growing member services. Visit uccu.com/mobile for more details.

2. SMS/Text Banking

If you don’t have a smart phone or iPad, text banking offers you the same convenience and access to your account – day or night. With this service you can set up customized, automatic alert notifications when certain activity occurs on your accounts. You can be notified with a text when account balances reach certain levels or other specified activity happens on your account. You can quickly get updated balances and history and can even review your most recent account transaction history – all at the touch of your finger. Visit uccu.com/mobile for more details.

3. Fast, low rate Mortgage Loans

Many members are taking advantage of historic low mortgage rates by refinancing their current mortgages – saving money and lowering payments. Members can apply online and receive rapid preapproval and payment estimates. Members looking to purchase a home can use the online application process to determine their price range. Qualified, professional mortgage officers take it from there and can help you complete the loan and save you time and money. UCCU also offers a wide variety of home equity loans including a no-fee, low rate mortgage refinance loan for members who would like to refinance their mortgages to a lower rate and pay it off in 5-10 years. For more information, visit us online at uccu.com/mortgages or call 801.223.7640.

4. Personal Branch Online Banking

Our popular Personal Branch online banking service continues to be a top pick for UCCU members. UCCU partners with the top online banking platform in the country, offering members the convenience and security of day and night account access. In addition, Personal Branch offers members access to valuable financial information, financial tools and calculators, member education, and financial management resources to help you manage all your financial affairs. Add to this our free Bill Payer service and you have a complete financial management system all at your fingertips. Visit uccu.com/personal branch for more details.

5. Utah Community Investment Services (UCIS)

While borrowers enjoy historic low loan rates, savers are dealing with savings rates that have never been lower. For those members who need higher returns on investments to help prepare for retirement, we suggest that you visit with one of our licensed professional investment advisers to see if there are other investment products besides savings and certificate accounts that might better help you reach your financial and retirement goals. With prevailing uncertainties in the market and depressed real estate values, many members are finding the help they need by meeting with our UCIS professionals. Call 801.223.7502 for a no-obligation appointment or visit uccu.com/investments for more details.

Jeff Sermon

President/CEO

Utah Community Credit Union

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Trick-or-Treating Safety Tips: Have a Fun and Safe Halloween

Get ready to have a safe and fun Halloween this year with your kids by following these important safety tips below.

  • Never go trick-or-treating alone – Always go with either a responsible adult or in groups of about 4 or more. Make sure to keep a close eye on everyone. It may be a good idea to develop a buddy system to make sure everyone is always accounted for.
  • Check Costumes before leaving – Once your children are ready to go trick-or-treating, make sure that they have on enough layers to stay warm and that nothing is dragging on the ground that will cause them to trip. Dress your kids in a bright costume so others can see them. If their costume is dark, have your kids wear reflective strips or carry a glow stick or flashlight. Instead of masks, have your kids wear make-up so they can see better.
  • Map out your plan. Designate a route before your kids begin trick-or-treating, and make sure they stick to it. Have your kids trick-or-treat in areas where there are a lot of people around. They should also avoid taking short cuts through alleys and parking lots.
  • Stay in well-lit areas – Ensure your children only visit houses with lights on. And, you might also suggest the houses they visit have some sort of Halloween decoration on the porch. Make sure your kids do not go inside someone’s house. They can get their candy from the porch.
  • Stay on sidewalks – Dark costumes can make it hard for drivers to see little trick-or-treaters. If there are no sidewalks, walk on the left side of the street facing cars.
  • Obey the law. Encourage your kids to follow all the regular rules for walking around. That includes looking both ways before crossing, obeying all traffic laws and using cross walks and crossing lights where available.
  • Bring flashlights – Not only so you can see where you are walking, but also so that you can properly check any candy that your little ones just cannot wait to eat.
  • Use manners – Halloween should be fun for everyone; teach your kids to say “thank you” and to not take more than they are offered
  • Check all Candy – Check your kids’ candy before they eat it. Throw out any candy that is not in its original wrapper or looks like it has been tampered with.
  • HAVE FUN! – Finally, make sure your kids have tons of fun and get lots and lots of candy.

Utah Community Credit Union would like to wish everyone a happy and safe Halloween.  Visit us at any of our 18 branches for some yummy treats.

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