AllCom has the BEST members and we LOVE to celebrate you!

Join us for Member Appreciation Day!

Hot Dogs | Fun | Friends | Popcorn

WHEN:
Thursday, October 5, 2023
10 am – 3 pm

WHERE:
AllCom Credit Union
36 Park Ave, Worcester

No purchase necessary to enter. Must be 18 years or older to enter, open to US entries only. AllCom staff, board members and affiliates are not eligible to enter. One entry per person. Entries must be submitted in-person 10/5/2023 by 2:30 pm. Winner will be announced 10/5/2023 at 3:00 pm and contacted via phone if no longer present at the event. Odds of winning is dependent upon number of completed entries received. AllCom Credit Union is not responsible for misdirected or incomplete entries. This giveaway is sponsored by AllCom Credit Union. For a full set of rules, please contact AllCom Credit Union at 36 Park Avenue, Worcester, MA 01609. VOID WHERE PROHIBITED BY LAW.

A line of credit and a credit card can both be great options for short-term financing. However, they’re not created equal. Check out a few key differences to help you decide which is best for your needs. 

A line of credit allows you to borrow money repeatedly. While all credit cards are connected to a line of credit, you can have a line of credit that is not associated with a credit card.

A credit card comes with a predetermined credit limit and requires minimum monthly payments on the money borrowed. If you carry a balance month to month, you may be subject to higher interest rates.   

A line of credit allows you to borrow up to a certain limit and repay with interest only on the amount you borrow. It usually offers a higher credit limit and a lower interest rate than a credit card. If you secure your line of credit against your home, with a HELOC (Home Equity Line of Credit), you will typically get a lower rate than a personal line of credit.

Below are basic differences between the two:

Line of Credit:

• Provides a revolving credit limit 
• Borrow up to the approved limit and repay  

• Gives you the freedom to borrow and repay on your own terms, providing greater flexibility in managing your finances 
• Generally offers higher credit limit compared to credit cards, providing greater access to funds for larger expenses or ongoing capital needs 

Credit Card:

• Comes with a predetermined credit limit. 
• Requires minimum monthly payments, and if you carry a balance, you may be subject to higher interest rates 

• Can be used for day-to-day expenses, such as office supplies, travel expenses, and online purchases. 

To put it simply, a line of credit may make more sense for ongoing or larger expenses, while credit cards are convenient for day-to-day expenses or regular purchases, and offer many perks, including points you can use for cash back. 

Inflation is an economic concept that is often discussed, yet frequently misunderstood. It is the sustained increase in the general price level of goods and services in an economy over a period of time. Inflation can have a significant impact on your financial goals, as it reduces the purchasing power of your money.  It is important to understand inflation and how it affects your financial goals.

Inflation basics

Inflation is the price increase of goods and services: more money is needed to buy the same goods (like a cheeseburger or a car) and services (like a haircut). Over time, the same amount of money—say $10—buys less and less. You’ve already experienced this in your lifetime—instead of paying $15 for a book like you did last year (or even a few months) ago, it costs $15.50 now. That’s inflation at work. Inflation affects the prices of pretty much everything in your budget.

There are four types of inflation that are named and categorized by their speed: creeping, walking, galloping, and hyperinflation. Beyond that, there are specific types of asset inflation and wage inflation, but we’ll stick to looking at the first four general types.

Creeping inflation is prices rising three percent or less a year. This mild inflation boosts demand and results in economic expansion as consumers expect a steady increase in costs and buy more now to avoid paying more later. Walking inflation is prices rising between three and ten percent in a year. This can be bad for the economy as consumers enter a buying frenzy where supply and wages can’t keep up. Common goods and services can become priced out of reach for most people. Galloping inflation is prices rising more than 10 percent. Money loses value so fast that the economy destabilizes. Finally, hyperinflation is prices rising 50 percent or more a month. This is rare and usually the result of government turmoil, war, etc.

The annual inflation rate for the United States was 4.0% for the 12 months ended May, according to U.S. Labor Department data published on June 13, 2023. 

How/why inflation happens

The Federal Reserve System (or just “the Fed”) is America’s central banking system. As dictated by Congress, the Fed has three main tasks: stabilize prices for Americans, create conditions that maximize employment rates, and moderate long-term interest rates. While the Fed has several tools and mechanisms to achieve these objectives, the one you probably hear about most is the fed funds rate.

The Fed requires that financial institutions hold a certain amount of capital in reserve at the end of every day, determined as a percentage of the total loans the bank or credit union has made. This reserve requirement prevents banks and credit unions from lending out every single dollar and not having enough cash on hand to start the next day.

At the end of every day, some financial institutions don’t have enough in reserve to meet the requirement, while others have much more than they need. To solve this problem, those with more than enough money in reserve will lend their extra Federal Reserve funds overnight to those that need it. The fed funds rate is the interest rate the banks and credit unions charge each other for this type of loan.

Raising the fed fund rate means the price of other goods like food and gasoline will stay low, and each paycheck should stretch further as inflation is slowed. Rising rates will also benefit those who have money in high-yield savings accounts.

When the Fed lowers the rate, the opposite occurs: banking institutions are more likely to borrow from one another, businesses expand, salaries increase, credit card rates drop, larger mortgages are lent out, and consumers spend more. The economy is stimulated and allowed to grow until the balance is tipped once more with overspending and inflation, which will prompt the Fed to once again raise rates.

What inflation means for retirees

As you can see, inflation is expected, and all retirement plans should take it into account to help you set and reach an appropriate goal. However, other events and policies can affect inflation rates outside of the fed fund rate, which can’t always be planned for. When prices for common goods and services that retirees depend on—food, medications, transportation—jump too high too fast, Social Security benefits might fall short. This is another reason why Americans should have a retirement plan in addition to their Social Security benefit.

Stay informed and proactive, and you can prepare for a more secure financial future.

The equity in your home can provide a cost-effective way to borrow money for just about anything. A home equity line of credit (HELOC) works similar to a credit card, but is better suited for large expenses and generally has a lower interest rate. With a HELOC, you borrow against the equity in your home that is used as collateral. Here are some of the best HELOC borrowing strategies and smart ways to use your HELOC:

Debt Consolidation
A home equity line of credit usually has a better interest rate than other types of loans. Financial obligations such as auto loans, personal loans, and credit card balances with high interest rates could be consolidated with a HELOC. This form of debt consolidation can provide lower interest rates and eliminate multiple payment due dates. The downside of a HELOC is that it uses your home as collateral, so if you fail to repay it, you could put your home in jeopardy.

Higher Education
College is expensive and if you or your child don’t qualify for low-rate, flexible federal student loans, borrowing against your home’s equity may be one of your better borrowing options. Before committing to any type of loan, compare the interest rates, repayment flexibility, and potential borrower benefits, to choose a financing option that best suits your needs.

Home Improvements
One of the most common reasons for taking out a HELOC is home improvements. Upgrades such as a new deck or kitchen renovation may increase the value of your home and be well worth the investment down the road. Even if you plan to keep your home, upgrades or renovations can make it a better place to live.

Emergency Expenses
Unexpected expenses may arise that deplete your emergency savings fund. Your HELOC can supplement emergency savings if life events such as loss of employment, medical expenses or expensive auto repair bills happen.

What About Other Expenses?
You could use a HELOC to pay wedding expenses or get a business off the ground. If your other borrowing options have high interest rates, a HELOC might be a good loan option.

Apply or contact us to learn more.

Is now the perfect time for you to buy a home? Or maybe next month will be more perfect. What about next year?

Many hopeful homebuyers try to predict when home values will rise or fall while also tracking the latest mortgage rates. This can add to the overall stress of the homebuying process and lead to poor decisions because predicting markets is very difficult. The best time to buy a home is when you can afford to.

Buy a home when…

Knowing that your financial health is the best indicator of when you’re ready to buy a home, you can focus your energy into the clear step-by-step process of getting your finances in order (no guessing necessary!).

• Save up for a down payment, 10–20% of expected home cost
• Save up for closing costs, 2–5% of mortgage
• Improve your credit score
• Shop for best mortgage terms between lenders (hint: start at your local credit union)

You can also follow these money-saving tips:

• Know about property taxes, utility costs, and any home-owners association fees so you can account for them in your home buying budget
• Hire your own inspector prior to purchasing
• If you plan to resell the home in the near future, consider the appreciation or depreciation potential of a home
• Remember that if you sell the house within two years of purchasing and living in it, you could incur capital gains tax on its sale

Seasons

In general, the seasons will factor into the supply, demand, and cost of housing—whenever there is more extreme weather (hot or cold), that’s when the supply is likely to be low and buyers will have more negotiating power. However, in general:

• Winter — Inventory and demand tend to be low in cold months in the north. Fewer people want to move in the middle of snow or rain—or in the middle of the school year for families, regardless of climate.
• Spring — More houses will enter the market in spring. This means more buying options but also more competition.
• Summer — This is the season with the highest inventory on the market. Competition can still be fierce, but you’re more likely to find the house that fits your must-have list now.
• Fall — This is often quoted as the best time of year to buy a home: sellers with houses that have been on the market since summer are motivated to sell and there’s still a good selection.