Friday, May 23, 2014

Memorial Day - Honor the Fallen

Memorial Day is not just another 3-day holiday weekend. While people are grilling, traveling, having fun with friends and families, others are not so jovial. Family members of fallen soldiers see Memorial Day as what it should be, a respectful recognition of the ultimate sacrifice given. The politics of war will never be clear but what is clear is that honorable Americans serve their country and sometimes those Americans die during the course of that service. Twenty one service members have died so far this year. One hundred thirty two were killed during 2013. The families of these one hundred fifty three service members will have a very different experience this Memorial Day. These fallen soldiers along with the many more over the history of this country gave their lives in the most ultimate sacrifice anyone can give their country. Please consider taking some time this Memorial Day weekend to reflect on those who have fallen to protect the freedoms that we enjoy each and every day. 

Visit this web site to see the names and faces of those service members who have fallen just in the last few years. The ultimate sacrifice is still taking place for our fellow Americans. 

Tuesday, May 13, 2014

Together Magazine for NAECU

The credit union has developed a new magazine, "together", for our current and potential members to assist in financial and lifestyle events. Educational tools to help improve the financial literacy of consumers is a priority these days of credit unions across the country. North Alabama Educators Credit Union has seen first hand how credit union members can make bad financial decisions at times simply because the knowledge was not available at the time of an important financial transaction. Our "together" magazine is designed to provide useful tips and tools BEFORE a financial event takes place. The new magazine format has value throughout the year, not just during the season it is published. 

We encourage our current members and potential members throughout the Tennessee Valley to review the magazine and share with family and friends. Our objective is to prevent buyer's remorse and fraud when making financial decisions outside of the credit union. Unlike the credit union philosophy, most businesses and sellers are driven to maximize the most profit they can obtain from a unknowing consumer. Having good financial education tools available is beneficial for consumers in keeping more of their hard-earned dollars. 

Here is an e-version of the "together" magazine. We hope that you find it useful!! 

Tuesday, March 4, 2014

Grandparents Scam - Who is that Caller?

Everyone dreads the late night or early morning phone call that wakes you up from a deep sleep. Those calls usually end of being (1) bad news about a family member, or (2) a wrong number. A third reason for that untimely call is growing in popularity - a phone scam! Con artists are placing calls to elderly people in the middle of the night and claiming to be either a grandson or granddaughter in need of urgent financial help. The callers claim to have been in either an accident or some form of legal trouble where they need immediate access to funds to escape from their dire situation. These callers usually don't actually know the name of the grandchild but will rely on the grandparent to provide the name themselves in their confusion and concern. At times though the callers may have obtained names from a recent obituary notice or other public records search.

The caller will ask for either a credit card number to help them or request that a wire transfer be done as soon as their financial institution opens. The credit union recently had one of these attempts this past Friday where someone acting as a District Attorney placed a second call to the victim stating that the cash bond had been reduced if they could expedite the movement of the cash. Luckily the grandparent's real son in this scam attempt recognized the calls as fraudulent and contacted us about the fraud attempt. Unfortunately though there are hundreds of cases nationwide where thousands of dollars has been stolen in this manner from grandparents who thought they were helping out their loved ones.

When in doubt over any situation, verify the story and sources involved. A quick verification call to real family members would expose the scam. If a person is being held in a jail somewhere, obtain the police jurisdiction information and contact that police department independently with a telephone number that you obtain and verify on your own. A hospital story would work the same way. Find out the hospital name and location and verify a contact number either online or through directory assistance.

Be very cautious in any situation where you are being asked to transfer money, especially when urgency and privacy are highlighted by those requesting the transfer.

Wednesday, January 22, 2014

Guaranteed Auto Protection (GAP) - Less Expensive at the Credit Union

Members financing new and used automobiles are faced with multiple financial decisions that are connected with the vehicle purchase. One of these decisions is Guaranteed Auto Protection, known as GAP coverage. Will your insurance company payoff your outstanding loan balance if your vehicle is deemed a total loss? GAP coverage is designed to payoff any remaining balance that might exist after a total loss claim by an insurance company. Unfortunately, vehicles as a general rule are not very good investments. They decline in value rather quickly the first few years and more gradually with each additional year. Insurance companies have a wide array of resources in determining the current market value of a vehicle that has been deemed a total loss. The remaining loan balance is not one of those resources. If a member has a vehicle with a $15,000 payoff balance and the insurance total loss claim is only $12,000, that member now has a $3,000 deficiency balance that they are still responsible for. If GAP coverage had been purchased, that $3,000 balance would be paid for by the GAP provider.

Does every vehicle financed need GAP coverage? No. Vehicles with a modest down payment and a good depreciation history would most likely not need GAP coverage. A "Visual GAP" report is available to predict any anticipated GAP balance over the amortized life of the loan. Loans where a trade-in has been involved or 100% retail financing provided are the best candidates for GAP coverage. Again, the "Visual Gap" report is the best tool to make an informed decision on whether to purchase the GAP coverage.

What does GAP cost? This is where financial education on this product is extremely valuable. North Alabama Educators Credit Union sells our GAP protection plan for a flat $195.00 fee per covered loan. Automobile dealers are routinely charging anywhere from $500.00 to $700.00 and higher for GAP plans and enjoying an incredible profit in the process. The credit union has refinanced automobile loans for members who have seen a refund of $400.00 or so by cancelling the GAP plan they purchased at the dealership. Keep in mind that most GAP plans are financed in with the vehicle loan so interest is also being paid on top of the cost of the GAP plan.

Anyone considering a vehicle to be financed is encouraged to check with the credit union first about our available loan rates and associated products like GAP protection. Remember that our objective is to provide a good financial value back to the member-owners of the credit union. Research into the costs of financing and protecting a vehicle purchase BEFORE negotiating a deal is the best advice for securing a good financial transaction.

Monday, December 23, 2013

Target Data Breach: Perspective of the Financial Institution

Yet another big data breach has been announced. This time the data breach is from Target, one of the largest retailers in the country. The number of credit and debit cards at risk are over 40 million per the retailer's estimates. The timeline for data theft was from November 29th through as late as December 15th at their retail stores across the country.

These data breaches are not good for consumers, but they really hurt the ultimate victim which is the financial institutions themselves who issue the credit or debit cards. Why? It is the financial institutions that must eat the costs of fraud losses, card replacements, and employee manpower in responding to these data breaches. If a $500 fraudulent transaction takes place on a North Alabama Educators Credit Union member's account that member will receive their $500 back into their account upon dispute of the unauthorized transaction. The credit union has to cover the $500 loss plus the cost of reissuing a new card. For a large exposure list like this Target breach you are talking about hundreds of member card accounts in our case that must be blocked and reissued. That takes valuable employee time and expense to correct a situation that was neither the fault of the member's or the credit union. A breach of another local retailer recently produced fraud losses in excess of $30,000 for the credit union. It is the financial institutions that are bearing the greatest costs associated with these data breach incidents. Most of these costs need to be shifted back to the merchants responsible for allowing the data theft. This can be done either through civil litigation or regulatory actions to hold merchants responsible for their loss of consumer data.

The tricky part about replacing compromised cards is that members are still using their old cards. The credit union tries to avoid the situation where we have to block a card first and then mail out a replacement card. Obviously if fraud is already taking place on a specific account we would have no choice but to block any and all activity using that particular card. The credit union recently had an area retailer that was identified by law enforcement as the source for stolen card data that was resulting in fraudulent transactions taking place very quickly. In cases like this, the credit union had no choice but to block any cards that had been used at the establishment. This can result in members receiving a card transaction denial for a transaction. We are working on a better notification system to notify members either by phone, email, or text when these type situations develop.

Something is going to have to change to reduce these fraud losses. Retailers need to be held accountable. More restrictions such as reduced daily card limits and requiring PIN based transactions for certain merchants/locations may become a reality also. VISA and MasterCard would like to have their cards treated like cash and do not want picture ID's and other verification steps utilized to validate a consumer. The business model for the card payment industry is going to have to change however for financial institutions since these large financial losses are hurting financial institutions. It is hurting North Alabama Educators Credit Union for certain. Be looking for debit card usage changes in 2014 as a result.

Saturday, October 19, 2013

Health Insurance Rate Increase

The Credit Union recently received our annual group health insurance renewal information from Blue Cross Blue Shield of Alabama. There had been some anxiety over this renewal due to the implementation of the Affordable Care Act. Our management staff had heard about possible rate increases but nobody was prepared for the reality of the actual increases reflected in our annual renewal package.

To begin with, our prior health insurance plan (a very good health plan) through Blue Cross Blue Shield of Alabama was no longer available. It was not a "qualified" plan under the Affordable Care Act which basically means it did not match any of the tiered plans now available as a result of the law's implementation. So much for being able to keep our current health plan if we wanted to. The most similar plan that Blue Cross Blue Shield of Alabama has now to our previous group health care plan would see a 42.5% increase across our entire group of employees. The next lower benefit group health plan, with reduced benefits to our employees, would still reflect a healthy increase of 19.2% over the cost of our prior plan. These figures of course were shocking numbers for an employer who pays 100% of the employee's individual health care plan as a benefit of employment. The additional annual costs to the Credit Union would range from $19,000 to $40,000+ depending on which plan is selected. Obviously the Credit Union will have to review our benefits package as a result of these enormous cost increases.We value our employees very much but cannot bear these type of increases overnight.

Nothing about the Affordable Care Act is proving to be affordable so far. Older workers (from age 50 to 65) will find it very difficult to retire or pay for health insurance on their own since monthly insurance premiums would range from $700 to $1,000+ PER MONTH for this age group. People who could not afford health insurance before will find the costs higher, at least for now. Blue Cross Blue Shield and the other insurance companies will say that rates are now higher because of Affordable Care Act taxes included in all plans, no underwriting for individual approvals, and no exclusions for preexisting conditions. It could also be debated though that more people paying for insurance should in theory lesson the costs.

Employers will be forced to make changes to employee benefits, reduce staff, or utilize more part-time employees to reduce the costs of benefits. Other employers throughout Alabama are seeing similar rate increases from Blue Cross Blue Shield of Alabama which has roughly 88% of the state health insurance market. There has been considerable discussion about the merits of the Affordable Care Act over the past few years. Everyone does need health care which is why North Alabama Educators Credit Union has provided this necessary benefit to our employees. The issue now however is the cost of health care. Again, right now there is nothing affordable about the Affordable Care Act. We are hopeful that changes and other health care options can improve the rather dismal picture that we have before us now.

Tuesday, October 8, 2013

Debt Ceiling of United States

Congress has been kicking the can down the road on debt ceilings for many years now. A deadline date is looming that requires another increase in the allowable debt ceiling to insure that government obligations get paid as promised. Really? It is one thing to borrow money for long term projects that can be seen as an investment in the country's future, but to continually raise the nation's credit line to fund check disbursements for monthly obligations is troubling to say the least. Financial literacy resources for consumers has been a hot topic for credit unions over the past few years. It seems as if financial literacy education is necessary by our leaders in Congress as well. The current debt situation of the United States is not a political party issue as both major political parties have greatly contributed to the excess spending habit in Washington. Expenses need to fall closer in line with revenues.We can't continue to borrow money to fund basic operations of government. Like consumers, our government needs to live within its means.

Our nation's economy and business community need leadership and financial stability out of Washington, DC. A further reduction of the nation's credit rating is at risk because the credit rating services all said how and why it would be lowered possibly in the future. Inaction and unsatisfactory attention to the debt problem would result in a further lowering of the credit rating. That pretty much sums up what has occurred in Washington. Why would it matter if the credit rating were lowered? Financial markets and retirement accounts could take a hit. Most investment policies require a minimum investment grade for investments held within a portfolio. When owned investments fall below the minimum investment grade level they must be sold and removed from the portfolio. When the volume of selling goes up, what generally happens to the price?? Demand would also be lowered because there would be less investment buyers available. A large supply combined with low demand  would translate to greatly reduced values for investments backed by the United States government. This scenario possibility is not good at all.

Our nation's debt is not going away. It increases in size every day. The level of debt held by the United States is not a political party issue. It is an American issue. The message to Congress should be clear - address the debt problem and begin a plan to reduce the nation's debt. Any action would be better than no action. Hopefully Congress will recognize the financial stakes at play here and formulate an effective debt reduction plan.