Same Day ACH Debits – What This Means For You

EFFECTIVE SEPTEMBER 15, 2017

When using your debit card or writing a check, have you gotten used to some lag-time between the transaction and the money clearing your account?

This will be going away – for example, if you pay your cable bill by telephone in the morning, the funds could be cleared from your account before 5:00 the same day.

On September 15, the Federal Reserve will start processing same-day ACH (Automated Clearing House) debits. These can originate from your credit union transactions or if you’re shopping at your local supermarket or other retailer. Whether you choose to use your debit card or a check won’t matter, as large retailers can opt to convert checks to ACH, the same system that clears your debit transactions.

3 Tips to be Prepared

  • Don’t Assume Funds Will Clear the Day After Purchase: Habits can be hard to break. Get in the habit now of planning for funds to clear at the time you swipe your card.
  • Check Your Share Draft Balance: Keeping a low balance can have a negative impact in the event a same-day ACH debit overdraws your account and incurs a fee. Even with overdraft protection, keeping your account balance at a level that supports your spending is the best way to keep your account in the green.
  • Ask Questions at WCU: We are here to help! Leading up to and after this change occurs, watch your statements for additional announcements. And as always, please contact us by phone, email, or stop into our branch to ask any questions that you may have!

More helpful tips for Debit Card holders

  • The credit union has no control over when transactions clear your account. It depends on when the company you scheduled the transaction with batches their transactions for the day. We also don’t control whether your direct deposit will go into your account before any transactions are processed that day.
  • When purchasing gas, if you process your card as debits, the company will often automatically hold $50-$75 even if you don’t purchase that much gas. To avoid this, run your card as credit, or pay at the register.
  • Always make sure that there is money in your account to cover the transaction before making a payment so you don’t overdraw your account. )
  • When reviewing your account balance online, please be sure to look at the “Availableamount, not the “Balance.”
  • Debits, or transactions that you make with a debit card will “hold” the money, but not fully debit it from your account.
  • However, the “*Available” will be the amount that you have to actually spend after the held money has been accounted for *after you have subtracted all other debit transactions you have authorized on your account that may not show as pending or cleared yet. (Example: Checks you have written but have not cleared yet, Debit Card swipes you have made but are not showing as pending yet, Online/Phone Orders or Payments you have made but are not showing as pending yet, ACH debits you have scheduled to come out on a certain date but are not showing as pending or cleared yet, etc.)

What is a debit card hold?

When you use a debit card, the store clerk usually contacts the financial institution that issued your card to get an authorization. When the approval is given, the balance in your checking account is reduced or “blocked” by the amount of the purchase. This is known as a pre-authorization hold. The merchant determines the amount of the hold. The Debit Card Processor establishes the length of time the hold remains in place. Typically the hold stays on your account until the funds are transferred to the merchant from your financial institution, often 3-4 days. If you look at your account online it may show as a pending transaction.

How can a debit card hold create problems?

In a few situations, the dollar amount of the transaction is unknown when an approval is given. This may happen when you check into a hotel room, rent a car*, pay for gas at the pump or use your debit card to pay for your meal at a restaurant. In each of these transactions, the merchant may get an approval for a higher (estimated) amount– allowing for a tip, room service, additional or higher purchase amounts. Let’s say you have $60 in your account when you use your debit card to pay for gas at the pump. Since the purchase amount is unknown when you insert your card, the merchant requests an authorization for $50. The authorization causes a hold to be placed on your account for $50 and your available balance is reduced to $10. If you only purchased $20 in gas you may believe you have $40 available in your account. Unless you understand how a hold affects your account, your debit card could be declined in future transactions. This can be embarrassing and inconvenient. It could also be costly. If checks or other transactions are processed before the hold is released you may overdraw your account and incur overdraft fees.

Example of a Debit Card Transaction Hold

If you have a balance of $100 in your account and use a debit card to make a purchase at a retail store for $30, your available balance will immediately decrease to $70. This is because the merchant has obtained an authorization hold from your credit union by swiping the card through its credit card terminal. The actual balance with the credit union is still $100, because the merchant has not actually collected the funds in question. Unless this authorization hold expires without being finalized, you cannot access the held amount.

The actual balance will not be reduced until the merchant submits their batch of transactions to transfer the funds, which may take up to three business days. The best way to avoid any difficulties with debit card holds is to closely and constantly monitor your account and to read any mail from your credit union that might change the rules and regulations of card use.

How can you avoid these problems?

  • When you use your debit card in a situation where the merchant may estimate the charge (hotels, car rental*, paying for gas at the pump, restaurants), the following tips may help you avoid some frustration:
  • When a business asks for your card in advance of service – ask if the company will request a pre-authorization hold, the amount of the hold, and how the amount is determined. Be sure the hold won’t exceed your account balance.
  • Pay the charges with the same card you used at the beginning of the transaction. Ask the clerk when the hold will be removed.
  • Prior to making a purchase that will involve a payment with a different card, by cash, or by check, inform the clerk of the different form of payment and inquire about their policy on reversing holds.
  • Ask your financial institution if they offer an overdraft line of credit or another product that will cover overdrafts. Learn how it would work and how much it costs. Look for a plan that automatically covers the overdraft and does not involve a separate decision by the financial institution as to whether or not to pay the overdraft each time. There may be a fee or interest charged on this plan. However, the cost is usually less than an overdraft charge and the item would be paid.
  • Pay inside not at the pump.
  • Consider using another method of payment (cash, check or credit card).

Tips for Debit Card Safety

  • Immediately sign the back of your card when you receive it.
  • Treat your card like cash, keep it in a safe place.
  • Thoroughly review and balance your account statements.
  • If you have been given a PIN (personal identification number), memorize it — never write it down.
  • When choosing a PIN, avoid obvious choices such as your date of birth or telephone number.
  • Never carry your PIN with your card.
  • Do not tell anyone your PIN.
  • When entering a PIN, position yourself to shield the keypad so that others cannot observe your numbers.
  • When you no longer need your receipts or statements, don’t simply discard them– shred them.

*Many car rental agencies will not accept debit cards.

3 Types of Retirement Accounts

Saving for retirement is a very smart financial decision to make.  It may seem like a long way off to younger people, but it is very important to plan for your future.  It becomes even clearer to people nearing the age of retirement just how important retirement accounts are.  

There are three popular types of retirement accounts to consider when thinking about where to put your money for your future:  401k, Traditional IRA and Roth IRAs.  Let’s take a look at each type with a little more detail.

401k

Perhaps the most straightforward of the three is the 401k.  The 401k is a retirement plan that allows eligible employees of a company to save for their retirement on a tax deferred basis. The contributions that the employees make towards their account are deducted from their salary pre-tax.  Only employers can sponsor a 401k account, an individual can’t open one up on their own.

Traditional IRA

A Traditional IRA account is for anyone with an earned income that is under the age of 70 ½ .  With this kind of account your contributions are tax-deductible on your state and federal tax returns the year you make the contributions.  You can only contribute $5,500 ($6,500 if you’re age 50 or older) per year with this kind of account.  When you withdraw your money, it is taxed at normal rates.  When you get to the age of 70 ½ , you must take at least a minimum mandatory withdrawal from your account whether you need the money or not.

Roth IRA

A Roth IRA is a retirement account that allows a person to save for retirement as long as they are under certain income brackets.  If you are single and make under $133,000 per year, you can open a Roth IRA.  For married couples, your earned income must be under $196,000 per year.  Like the traditional IRA, you can only contribute $5,500 ($6,500 if you’re age 50 or older) per year. With Roth IRA accounts, both the earnings on the account and the withdrawals after age 59 ½ are tax-free.  You don’t ever have to withdraw your money from a Roth IRA account if you don’t want to.  If you have enough income from other places, you could let your Roth IRA grow tax-free for most of your life, making the account an ideal wealth transfer tool.

There is a lot to consider when thinking about saving for retirement.  Different accounts hold different pros and cons that depend on your individual needs.  Always research and be knowledgeable about how you are going to save for your future.

Leasing Vs. Buying A Car

Getting a new vehicle is a big decision.  Not only do you have to figure out what type of car is best for you and your household and if you are going to buy used or new, but you have to decide how you are going to pay for it.  

When it comes to vehicles, you really have two options:  buying or leasing.  Your decision will come down to what you want from the car.  If you are looking short term, leasing might be for you.  However, if you are in this vehicle for the long term, it might be time to buy a car.  Let’s take a look at each option and break down the pros and cons.

Leasing

When you lease a car, you are essentially involved in a long-term renting situation.  There are definite pros to leasing.  One of the biggest attractions of leasing is that the monthly payment is usually significantly lower than purchasing a car.  Not only that, but you get the excitement of getting a brand new vehicle every two or three years.  When you get ready to trade in your car, you won’t have the worry or hassle of having to sell your old one.  Another benefit of leasing is that your car is always protected under a warranty, so you don’t have to worry about unexpected costs if something happens to your car.

As with most things in life, there are cons to leasing a vehicle as well.  First of all, you will always have a car payment.  There will never be a time when your car will be “paid off”.  You will need a stable income to know that you can make the payment every month.  Another issue some people have with leases is that you can only drive a certain number of miles while you have the car.  Anytime you go over a certain mileage rule they have set, you will have to pay fees.  Also, there are fees if you don’t properly maintain your car while you have it.  You must consistently take care of everything in a timely manner to avoid those fees.  If for some reason you have to get out of your contract, it is extremely hard–much harder than having to sell a car if you owned it.

Buying

Probably the biggest pro to buying a car would be that it is yours.  You own it, so you can essentially do whatever you like to it.  Customize it, drive as many miles in it as you wish and maintain it however you like because it is yours!  Another good thing about buying a car is that you can keep it however long you like, so you can get more for your money.  Also, with car financing plans, you will eventually pay the vehicle off, which means you will get to a point where you are no longer making monthly payments unlike leasing.  Then there is the perk of being able to resell it or trade it in if you ever needed to.  It’s all up to you because you own it!

There are some negatives to buying when comparing it to leasing though.  One being that your monthly payments in a financing plan can be significantly higher than if you were to lease a car.  Another con would be that your warranty will run out eventually and when it does, if your vehicle breaks the cost is on you completely.  Also, it can be hard to sell a used car in some markets, so if you needed to sell it and couldn’t, you would be stuck.  

As you can see, buying or leasing a car completely depends upon your lifestyle.  What do you want from the car?  How long do you want to keep it?  Those are some questions you need to ask yourself before you get a new car.  Weigh out the pros and cons of buying vs. leasing first, and then make the decision that seems best for your situation.

Credit Cards: The Good and The Bad


For many people, credit cards are just a part of normal life.  Most people have one or even several and it’s something that they don’t even really think about.  Other people avoid them at all costs and preach the dangers and pitfalls of being in debt.  So who is right?  Well, that totally depends on your own personal situation.  As with most things in life, there are pros and cons to owning credit cards.  You simply have to weigh them out and figure out which way best applies to your life.  To help you out, we’ve made a list of good and bad points when it comes to credit cards.  

The Good

When used the right way and handled responsibly, credit cards can help you in your financial journey.  

  1. Most credit cards come with a rewards system.  These rewards can be anything from a certain percentage of cash back to free airline tickets to a free cruise.  It just depends on which credit card you choose.  Many people who play the “rewards game” correctly will pick the card with the rewards they deem most enticing and will use that card for every purchase they make–even bills.  They will use it like a debit card and then pay the balance off in full every month, thereby ensuring that they rack up the most points to get to their reward faster.  If you are an incredibly responsible person, this method could work for you.
  2. Using a credit card the right way will help you have a good credit score.  Good credit scores are usually needed if you want to purchase a house or finance a car.  The higher the score, the better.  You only get great credit scores if you handle your credit cards responsibly. 
  3. Credit cards can be useful in emergencies.  While the best way to plan for an emergency is to have an emergency savings fund set up, sometimes that just isn’t a reality for a lot of people.  If a true emergency does arise and you don’t have enough cash to cover it, credit cards can come in handy to cover the difference.

As you can see, there are some benefits to using credit cards the right way.  But what does it mean to use cards responsibly?  Here are a few tips:

  1. Pay off the balance in full every month. 
  2. Pay all your bills on time–never late. 
  3. Only apply for credit cards that are needed.  Here’s a hint:  You probably don’t need 10 different cards.

If you feel like you can do those three things, then using a credit card for the benefits might be a good option for you.

The Bad

Now let’s talk about the downside of having credit cards.  As much as some people go into owning credit cards with good intentions, a lot of them just can’t handle the temptation of them and it gets out of hand very quickly.  Here’s a list of what can happen when having a credit card goes wrong:

  1. It can have a negative effect on your credit score.  If you are late on your payments or have too many cards with high balances, it negatively affects your credit score.  A lower credit score can disqualify you from future loans for cars or homes.  Oftentimes, if your score is really low, you won’t even be able to rent. 
  2. It makes your interest payment even higher.  If you are ever late on a payment, your interest rate can skyrocket on some cards.  If they don’t trust you to pay them, you will suffer the consequences. 
  3. Having access to credit tempts you to overcharge.  Some people possess a lot of self-discipline and some don’t.  Those who don’t are the ones who fall prey to overcharging on their credit cards.  They get to a point where they can’t pay the balance off every month, which leads to extra interest charges and can start a very dangerous slippery slope into massive debt. 
  4. It puts you in unnecessary financial distress.  If you consistently overcharge, you will become financially distressed at some point.  If you have 5 cards and you can only make the minimum payment on each, it can get overwhelming.  Some people may be so far over their heads in debt that they can’t even make the minimum payments.  That’s when panic can start to set in.

To make sure these pitfalls do not happen to you, it would be wise to avoid the following credit card traps:

  1. Not paying your bill on time. 
  2. Only paying the minimum amount on each monthly bill. 
  3. Having too many cards open at the same time. 
  4. Overcharging and spending money you can’t pay off in full every month. 
  5. Exceeding your credit limit on your card.

It’s extremely important that you weigh the pros and cons to credit cards before you start opening accounts.  When used well, it can be a nice tool in your journey towards financial success, but it can go wrong very fast.  It’s wise to think about how self-disciplined you are before delving into the world of credit cards.  It’s up to you to choose wisely.

3 Easy Ways to Save Money


Saving money can sometimes seem like an impossible task.  It seems that no matter how much money you make, there are always those months where none of it ends up in savings.  Saving money is important for a secure financial future, and even if you live paycheck to paycheck, there are still ways you can work saving a little into your budget.  Keep reading for three no-brainer ways to save a little bit of money.

1.) Automate When Possible
When you get your paycheck, set up your direct deposit in a way that some of your check automatically goes towards your savings account–even if it is as little as $5.  That way, you don’t even see the money to contemplate spending it.  You’ll have a peace of mind knowing that your money is building up in your savings account without you having to think about it.  It also helps with budgeting, because you know exactly how much of your income is going towards savings every month.

2.) Keep Your Change
Whenever you use cash, don’t just throw your change in your car cupholders or the bottom of a purse…put it in a specific location.  If you were to put every little bit of change into a jar for a few months, you would be amazed at how much extra money you can accumulate.  Instead of it being strewn about all over your house, you have it in a central location and can see that it is building up, which motivates you to save even more!  While this method won’t exactly make you rich, it certainly can’t hurt to put away every extra cent possible.

3.)  Cut Your Costs
Sometimes saving money is as simple as not spending as much money on certain things.  Think about all that you consume in a typical month.  Can you cut back on anything?  Maybe you could get rid of your cable and just rely on streaming services like Netflix and Hulu.  You could start meal planning everything you eat so you won’t buy extra items at the grocery store.  If you subscribe to any magazines or online subscriptions, you could cut those out for a little while.  Whatever you do, the point is to save the money you’ve just freed up.  Take that $10 from your magazine subscription and put it in savings.  Did you spend $50 less on groceries this week?  Great!  Put it in savings.  You got rid of that $100 cable bill?  Awesome, now go put that in your savings.  This method only works if you put the money you have saved into your savings account.  Otherwise, you will just end up spending it on something else frivolous.

As you can see, saving money doesn’t have to be some daunting task.  You can find little ways to save money everyday if you look for them.  Doing something little each day to work toward your savings goals will compound into big savings over time, and before you know it, you will be reaching your financial goals!