Author Archive for Danielle Panchak

Escrow: What Is It And How Does It Work?

If you’re buying a home, you’ll probably hear the word “escrow” used in a few different contexts. Learn what escrow is, how it works and how it can benefit you as a home buyer, seller or homeowner.

What Is Escrow?

Escrow is a legal arrangement in which a third party temporarily holds money or property until a particular condition has been met (such as the fulfillment of a purchase agreement).

How Does Escrow Work?

It’s used in real estate transactions to protect both the buyer and the seller throughout the home buying process. Throughout the term of the mortgage, an escrow account will hold funds for taxes and homeowner’s insurance.

What Is An Escrow Account?

In real estate, escrow is typically used for two reasons:

  • To protect the buyer’s good faith deposit so the money goes to the right party according to the conditions of the sale.
  • To hold a homeowner’s funds for property taxes and homeowners insurance.

Escrow Accounts For Home Buying

When you’re buying a home, your purchase agreement will usually include a good faith deposit (also known as earnest money). This deposit shows that you’re serious about purchasing the home. If the contract falls through due to the fault of the buyer, the seller usually gets to keep the money. If the home purchase is successful, the deposit will be applied to the buyer’s down payment.

Escrow Accounts For Taxes And Insurance

After you purchase a home, your lender will establish an escrow account to pay for your taxes and insurance. After closing, your mortgage servicer takes a portion of your monthly mortgage payment and holds it in the escrow account until your tax and insurance payments are due.

The Benefits Of An Escrow Account

The biggest benefit of having an escrow account is that you’ll be protected during a real estate transaction – whether you’re the buyer or the seller. It can also protect you as a homeowner, ensuring you have the money to pay for property taxes and homeowners insurance when the bills arrive. You’ll find that there are a few other great benefits for home buyers, owners and lenders, too.

The Disadvantages Of An Escrow Account

When it comes to the disadvantages of an escrow account, it’s the homeowner who encounters most of the burden. Here are some examples:

  • Higher monthly mortgage payments: An escrow account is funded through your monthly mortgage payment, making your monthly bill higher than it would be without escrow.
  • Incorrect estimates: The amount needed for your escrow depends on your property taxes and homeowners insurance costs, which can change from year to year. 
  • Changes to your monthly payment: Escrow is reassessed each year and, depending on if you were short or had excess money, your servicer will come up with a new estimate for the year. 

Four Ways to Consolidate Your Debt

When it’s difficult to make all your payments on time, or interest rates on your current lines of credit are draining your checking account, consider debt consolidation. This smart financial move may help you get back on track with your monetary responsibilities, may boost your credit score and ease the mental stress of paying multiple bills every monthly.

What is Debt Consolidation?

Put simply, debt consolidation is when you get a loan to pay off various high-interest debts. You become responsible for one payment to the loaning institution, generally at a lower average interest rate than your previous commitments. Debt consolidation is often a good choice for people with high credit card balances and interest rates, student loan debt, unexpected home or car repair bills, medical expenses or other unsecured loans.

You have options when it comes to debt consolidation. AllCom Credit Union can help you discover the best method of consolidating your current debt to make paying bills more streamlined and affordable. Here are four options we often discuss with our members.

Home Equity Line of Credit (HELOC): If you are a homeowner, you can use up to 80% of the paid-off value of your home, or equity, to your advantage. A revolving line of credit uses your home as collateral. You can then withdraw funds as needed — once or multiple times — over a 10-year period to pay down debt.

Home Equity Loan: This option is for homeowners. A Home Equity Loan is similar to a HELOC in that it draws from the equity in your home. However, with a Home Equity Loan, you receive the loan funds in one lump sum payment. You can then use the money to pay off your debts.

Credit Card Balance Transfers: If you’re having trouble staying ahead of your credit card payments, consider transferring all of the balances to one new, lower-interest-rate card. This type of consolidation allows you to pay down your debt faster because less money is going to interest fees, card membership fees and late fees across several cards. AllCom Credit Union offers Visa credit cards with a great low rate, even on balance transfers.

Personal Loan: This option is great for paying down other types of debt, such as an unexpected car repair bill, medical expenses or a loan you need to repay to a friend. A personal loan is set up with a fixed interest rate, fixed monthly payments and a payment schedule so you know exactly how much you will pay each month and when your loan will be paid back in full.

Are you ready to improve your financial situation? AllCom would love to assist you with your next steps. Check out available options and contact us with your questions about debt consolidation today.

Fraudsters Change Tactics in Zelle /P2P Fraud Scam

The Zelle / P2P fraud scam is widespread and has been making local and national news as the social engineering tactics used by fraudsters in this scam continue to evolve. A newer version of the scam has fraudsters, impersonating a Zelle user’s financial institution, conning the user into using Zelle to transfer funds to themselves using their mobile phone number under the guise that it will replace funds stolen from their account. However, the Zelle transfers go to the fraudsters.

AllCom continues to urge you to be wary of texts or calls appearing to come from the credit union. Never use Zelle, or any other P2P service, to transfer funds to yourself and to call the credit union using a reliable phone number to question any text message or phone call that seems to be received from the credit union.

Here’s a reminder of ways to protect yourself:

  1. Pay it safe: Many P2P apps don’t let you cancel a transaction once you’ve sent it to another user. With that in mind, avoid sending or requesting money from anyone you don’t know and trust.
  2. Take your time: Try not to rush when you’re using a P2P app to send money. If someone is pushing you to act quickly, it could be a red flag.
  3. Treat payments like cash: Money moves quickly when you use P2P apps. Once you hit send, money doesn’t take long to reach its destination. It’s a good idea to double check you have the correct info to make sure your money goes where you intended.
  4. Use your security settings: P2P apps have measures in place to help keep your account secure. Two-factor authentication requires you to provide multiple pieces of information to access your account. The first is typically your username and password. The second step might require you to enter a numeric code you’re given in an email or text. Or you might use fingerprint or facial recognition.
  5. Be aware of phishing: One way fraudsters might try to access your account is by posing as your bank or a P2P company. They may try to contact you through emails, calls or texts. Avoid clicking links and sharing personal information. They may also claim you need to download another app or give them remote access to transfer money. Never give remote access to a third party.
  6. Keep your personal information private: If you use social media, avoid sharing things like your address, phone number and other personal details. And ignore friend requests from people you don’t know.
  7. Protect your passwords: Use different passwords for P2P apps and other sites. If you’re worried about remembering them all, there are tools available that might be able to help. And like the tip about your personal information, don’t share your passwords with others.

How to Prevent Peer-to-Peer Payment Fraud

Image courtesy of CO-OP Financial Services

It has never been easier to transfer money quickly than with peer-to-peer (P2P) payment platforms. The increased convenience has made it easier to order services, shop online and support friends and family members with little to no lag time. Still, there is always someone looking to de-fraud your hard-earned money through fraud, a scam or a security attack. COVID-19 has created new opportunities for fraud and scam attempts, including those related to P2P payments. Taking time to understand potential threats and how to navigate them will give you an added layer of protection from fraud.

An increase in peer-to-peer payments

As P2P payments increase in popularity, it’s become important to know how they work. P2P payments are instant digital transfers that make it simple and secure to send money to friends, family, trusted businesses and professionals without a card, check or traditional multi-step wire transfer process. Similar to a debit card, they eliminate the need to have cash on hand by initiating a payment directly from an associated bank account. In real-time, money can be pulled from your bank account and sent to another P2P account. It’s a secure way to send money and digitize day-to-day transactions—unfortunately, if you’re unprepared, this added speed and convenience can open an opportunity for fraudsters. Some of the most used P2P options include:

  • Zelle
  • PayPal
  • Venmo
  • Cash app
  • Square
  • Apple Pay
  • Google Pay

While these platforms are technologically secure, there are still many scams centered on using P2P services. Of particular concern are confidence schemes targeting P2P services. Confidence scams prey on a person’s emotions, wants and needs to gain sensitive personal information or convince the victim to send money to the scammer willingly. You should always be sure that you know and trust any person you are paying.

How do fraudsters commit P2P fraud? 

Criminals are using several methods to commit P2P fraud. Some use “friendly fraud” social engineering tactics, like messaging a user requesting that they deposit the fraudster’s check in their account and then send the funds back to the requester via a P2P app. The fraudster then promises to send the victim $500 as “payment” for the transaction. Of course, the fraudster never sends the payment and the original check bounces, leaving the member (and the credit union) on the hook for the funds. 

Another popular scam is where a fraudster advertises items for sale, like concert or sporting event tickets, and requests payment to be made via a P2P app. Once the funds are received, the fraudster disappears without ever delivering the requested item to the unwitting consumer. 

Unfortunately, with P2P fraud, fraudsters no longer need to obtain a user’s card number to steal funds. If they are able to hack into a member’s smartphone or mobile device, they can easily gain access to the user’s digital wallet app and transfer funds in their name. 

How can you protect yourself?

  1. Pay it safe: Many P2P apps don’t let you cancel a transaction once you’ve sent it to another user. With that in mind, avoid sending or requesting money from anyone you don’t know and trust.
  2. Take your time: Try not to rush when you’re using a P2P app to send money. If someone is pushing you to act quickly, it could be a red flag.
  3. Treat payments like cash: Money moves quickly when you use P2P apps. Once you hit send, money doesn’t take long to reach its destination. It’s a good idea to double check you have the correct info to make sure your money goes where you intended.
  4. Use your security settings: P2P apps have measures in place to help keep your account secure. Two-factor authentication requires you to provide multiple pieces of information to access your account. The first is typically your username and password. The second step might require you to enter a numeric code you’re given in an email or text. Or you might use fingerprint or facial recognition.
  5. Be aware of phishing: One way fraudsters might try to access your account is by posing as your bank or a P2P company. They may try to contact you through emails, calls or texts. Avoid clicking links and sharing personal information. They may also claim you need to download another app or give them remote access to transfer money. Never give remote access to a third party.
  6. Keep your personal information private: If you use social media, avoid sharing things like your address, phone number and other personal details. And ignore friend requests from people you don’t know.
  7. Protect your passwords: Use different passwords for P2P apps and other sites. If you’re worried about remembering them all, there are tools available that might be able to help. And like the tip about your personal information, don’t share your passwords with others.

 

Good News for Retirees!

For the first time since 2002, the Internal Revenue Service has updated its Uniform Lifetime Table and lowered the size of RMDs. The new tables, which now project longer lifespans, are used to calculate RMDs from individual retirement accounts, 401(k)s and other retirement savings vehicles each year. This means that starting in 2022, retirees can keep more money in a tax-deferred retirement account.

What Are RMDs and How Are They Calculated?

Traditional IRAs and 401(k)s allow retirement savers to defer taxes until they withdraw money from their accounts. This allows the money to continue to grow at a faster rate over time. The IRS does, however, require you to withdraw a specific amount each year once you reach a certain age. This limits you from keeping the funds in a retirement account forever.

The following accounts are subject to RMDs: Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, 457(b) plans, profit sharing plans, other defined contribution plans. Roth IRAs are not subject to RMDs.

To calculate your RMD, first, look up the market value of your retirement account as of Dec. 31 from the previous year. Then, divide that value by the distribution period figure that corresponds with your age on the IRS Uniform Lifetime Table. For example, a 72-year-old retiree with $500,000 in her IRA would divide $500,000 by her distribution period figure, which is 27.4. As a result, she would be required to withdraw at least $18,248 from her IRA in 2022.

Why The New RMD Formula Is Good For Retirees

The IRS has raised the average life expectancy from 82.4 to 84.6. With a higher life expectancy, retirees will likely need to spread their assets over more years. Due to the need to cover additional years, RMDs that begin in 2022 will be less than they were under the previous formula.

Since smaller withdrawals will be required each year, more of your retirement assets can remain in an IRA, 401(k) or tax-deferred account. Smaller RMDs will lessen your tax liability and could potentially drop you into a lower tax bracket – good news for retirees or those subject to RMDs.

Under the previous Uniform Lifetime Table, a 72-year-old with $500,000 in her 401(k) would have been required to withdraw $19,531 ($500,000/25.6) during her first year of taking RMDs. That’s $1,283 more that would have been subject to income taxes compared to the smaller minimum withdrawal required under the revised table.

Meanwhile, a 72-year-old with $2 million in his retirement account would have been required to withdraw $78,125 under the older formula ($2 million/25.6). However, the updated formula results in an initial RMD of just $72,992 ($2 million/27.4), meaning this retiree would keep an extra $5,133 growing tax-deferred in his retirement account.

In summary, for the first time since 2002, the IRS updated the actuarial tables that determine the amount of money a person must withdraw from their IRA or 401(k) at a certain age. The SECURE Act changed the RMD age from 70.5 to 72 and the updated Uniform Lifetime Table has lowered the size of RMDs. This allows you to keep more of your assets in a tax-deferred account. Remember, RMDs are only the minimum amount that must be withdrawn each year. You can always withdraw more from an IRA or 401(k), but keep in mind: the larger the distribution, the larger your tax bill.

Massachusetts Credit Unions 2022 College Scholarship Program

If you or someone you know plans to attend college this year after graduating from high school, you’ll be happy to know that AllCom Credit Union is offering eligible members a chance to win a $1,500 scholarship to help cover the expanding costs associated with your college education.

The Credit Union College Scholarship Program, supported by Massachusetts Credit Unions and our statewide campaign, Better Values – Better Banking, is funding six (6) $1,500 scholarships that will be awarded to six (6) high school graduates chosen as winners from across the state. 

2022 College Scholarship Application

Application deadline: April 8, 2022

Scholarship Eligibility
1. Eligibility is limited to high school seniors who will be enrolled in an undergraduate college degree program during the 2022-2023 academic year.

2. Applicant or parent/guardian must be a member of the sponsoring credit union.

3. The credit union must be a member in good standing with the Cooperative Credit Union Association.

4. Each applicant must complete a current scholarship application form and submit it with the other required material to the sponsoring credit union.

5. Each credit union will select its top 3 applications and forward them to their chapter president. They must be accompanied by a cover letter from the sponsoring credit union CEO verifying that each applicant and/or parent/guardian is a credit union member.

Each chapter will select its scholarship winner evaluating each applicant on the same criteria the credit unions will be using grades, essay and extracurricular/community activities.

Students must submit the following items with their completed applications. All items requested must be received in order for the application to qualify for consideration.

1. Completed printed application.

2. An academic transcript of grades.

3. A typewritten essay of at least 250 words describing what you career you wish to pursue when you complete your education and why.

4. A detailed list of extracurricular/community activities and/or volunteer activities.

If you have any questions, please call Erin Harvey, Branch Manager at 508.754.9980.

Preparing Your Finances For The New Year

If you’re someone who likes to make resolutions on New Year’s Day, you know how hard it is to stick to them. Here are a few resolutions that can help increase your financial fitness and hopefully inspire you to stay committed to them in the new year.

Resolution 1: Create a budget 
Saving and investing during your working years, if you are consistent, should lead to a rising net worth over time, enabling you to achieve many of life’s most important goals. Creating your own budget can help you build your road map and stay on track. At a minimum, be sure to have a high-level budget with three things: how much you’re taking in after taxes, how much you’re spending and how much you’re saving.

Resolution 2: Manage your debt
Debt, depending on how you use it, isn’t always good or bad—it’s simply a tool. For most people, some level of debt is a practical necessity, especially to purchase an expensive long-term asset to pay back over time, such as a home or car. Problems may arise when debt becomes more of a burden than a tool.

Resolution 3: Prepare for the unexpected
Risk is a part of life, particularly in finances. Your financial life can be affected by all sorts of surprises: an illness, job loss, disability, death, natural disasters or lawsuits. If you don’t have enough assets to protect against major risks, make a resolution to get your insurance needs covered. Insurance helps protect against unforeseen events that don’t happen often, but are expensive to manage yourself when they do.

Resolution 4: Protect your estate
An estate plan may seem like something only for the wealthy. But there are simple steps everyone should take. Without proper beneficiary designations, a will and other basic steps, the fate of your assets or minor children may be decided by attorneys and tax agencies. Taxes and attorneys’ fees can quickly diminish these assets and delay their distribution when those who are entitled to them need them most.

A Thank You to Our Members from Debbie Guiney, President/CEO

I started working at Central Massachusetts Telephone Workers’ Credit Union on June 7, 1977, which was located within the New England Telephone Building at 15 Chestnut Street in Worcester. Our members then were all employees of New England Telephone.  I was one of three part time employees and the Credit Union only offered savings accounts, small personal loans and auto loans.

We posted everything by hand and didn’t own a computer.  It’s hard for me to believe that more than 44 years have passed and it’s amazing to see what AllCom Credit Union has become.

One thing remains the same and that is my commitment to you, our members and our owners.  Every day my one driving thought was “the member comes first”.

Over the years we have been supported by a wonderful volunteer Board of Directors who have given their time freely and generously to set the policy direction of the Credit Union, always keeping our members and staff at the forefront of their decisions.

We have had wonderful staff that have worked incredibly hard and along with our Board of Directors and our committed members we have built an extremely strong and viable financial institution.  We are just as relevant today as we were 100 years ago, as we continue to serve a purpose in our members’ lives and in our community.

Laura Ybarra, our Executive Vice President will take my place on January 1, 2022.  Her intelligence, dedication, work ethic and commitment will continue to contribute to the overall success of AllCom. She embodies the true spirit of what a Credit Union is and I know she will successfully lead AllCom into the future.

We are approaching our 100th anniversary in 2022 and although these economic times are uncertain, AllCom is positioned to weather the storm and continue to thrive. I will miss helping generations of families meet their financial goals and making friendships that have lasted decades.

My last day in the office will be December 10th but I will be continuing to work remotely through the end of the year.

Thank you for turning what I thought would be just a part time job into a rewarding and fulfilling, 44 year career.

2022 Massachusetts Student Essay Contest for 7th & 8th Grade Students

AllCom Credit Union is pleased to announce the 2022 Student Essay Contest for seventh and eighth grade students which is organized by the Cooperative Credit Union Association.

Students in seventh and eighth grade are asked to write an essay in 250 words or less on the following topic:

“Your community, your country and the entire world continues to battle the effects of the Covid-19 virus pandemic.  Everyone has experienced changes in how we work, how we learn, how we socialize and credit unions have worked hard to continue to serve their members’ varied financial needs under very challenging circumstances – remote workers, sick or caregiving staff, covid restrictions such as masks, social distancing, and protective barriers, etc.  Please share the three biggest covid impacts in your own life and how you have challenged yourself to overcome them”  

Eight winning essays from across the state will be chosen. The first prize winner will receive $500. The seven finalists will each receive $250. In addition to the eight winning essays, there will be several honorable mention winners who will each receive $50. There will be an awards ceremony to honor the contest winners scheduled for May 20, 2022.

Application deadline: January 24, 2022

Essay Form
Contest Rules

If you have any questions, please call Erin Harvey, Branch Manager at 508.754.9980.

 

Help Us, Help You. Confirm Your Contact Information

Anytime you move or get a new phone number, it comes with a seemingly endless list of organizations that you need to inform. Whenever you change addresses, phone numbers, name, etc., it is essential to make sure you also update your information with your financial institution in particular. You may think as long as your debit card and Online Banking  works, having an updated phone number or street address isn’t important, but that couldn’t be further from the truth!

Fraud Protection: Visiting websites and making online purchases with your debit and/or credit card open an opportunity for fraudsters to exploit on. Give us the tools to protect you! 

Current Address for Confidential Information: A change of address with USPS does not mean Bank Statements and other confidential information will be forwarded. USPS does not forward bank mail. AllCom needs to be notified. Keeping your contact information and your online banking profile updated are the best ways to do this.

Important Reminders and Updates: Not updating your contact info means missing out on important reminders, and other time-sensitive prompts. Updated contact info is vital for those who don’t receive a paper statement of account.

Please contact us here or call 888-754-9980 to update your contact information.