Should You Get Pet Insurance?

Let’s be real – this post is just an excuse for me to share adorable pics of my parents’ new puppy, Rudy.

Rudy 3

Tired out from 10 minutes of hardcore wrestling that stuffed animal.

Just kidding. Pet insurance is a real thing. And with the vet costs on the rise, it’s something a lot of pet owners consider purchasing. My mom requested that I write this blog because she was wondering if she should get pet insurance for her new puppy. FYI – he’s an eight week old yellow lab in case you’re wondering. He just went home with my parents yesterday! I might have to move back in with them just so he has a sibling . . .

As cuddly and cute as Rudy is, he’s expensive. Your wallet gets hit the first time when you purchase your new pal. Then you have to spend more money on every day expenses like food, training, and accessories (leashes, crates, toys). By the time you get to vet fees for stuff like shots, neutering, and check ups Rudy and his fury friends are running up a pretty high tab.

According to a survey done by the American Pet Products Association, cat owners spend an average of $219 a year on routine vet visits. That’s a per cat cost, too, so if you’re a crazy cat lady then you can multiply it by 12. For dog owners the cost is even higher at an average of $248 per year. And that’s only if your four-legged friend is healthy. Costs go up dramatically if your pet has a health scare. Foreign body ingestion, aka your dog ate something he wasn’t supposed to, costs an average of $1,629 to handle. Our old dog Bode suffered from Inter-vertebral Disc Disease. The average cost to treat that? $3,282. Not cheap! Plus the only repayment you’ll get from your dog for a lot of these medical expenses are the laughs that ensue while watching them live with one of those embarrassing cones on their head.

Our old puppy Bode and his Cone of Shame.

Bode and his Cone of Shame.

All joking aside, most of us want to do whatever we can to keep our pets healthy. They’re members of the family after all. But with the cost of care so high, footing the bill for veterinary visits is no easy feat. A recent survey by the Associated Press showed that 41% of pet owners are somewhat worried that they could not afford medical care for a sick cat or dog. So is pet insurance a good solution?

The answer is yes and no. You see, experts still don’t agree on whether or not the cost of pet insurance premiums is worth the coverage you get. Because even though it’s for pets, it’s still insurance so it has to be complicated.

Consumer Reports did an experiment in 2011 where they compared the cost vs. payout of nine pet policies for Roxy, a healthy beagle. In her ten years of life Roxy’s owners had spent about $7,000 on veterinary costs. For the same period of time, the total price of pet insurance premiums exceeded $7,000 for each of the nine insurance companies they researched. Based on this study, Consumer Reports concluded that the benefits of pet insurance are very rarely worth the cost.

Here's another pic of Rudy in case the insurance talk is boring you.

Here’s another pic of Rudy in case the insurance talk is boring you.

That Consumer Reports study was done four years ago, however, and medical costs for pets have only gone up since then. New treatments for pets are being created all the time. Bode even went to a doggy chiropractor a few times. With more and more options for treatments available, pets are living longer. Which means owners are encountering more medical costs. So the chances that vet costs might exceed those insurance premiums are increasing.

At this point you’re probably thinking, “Kelsey, this doesn’t help me at all! Should I get pet insurance or not?!”

My answer to that questions is yes, you should consider pet insurance IF:

  • You can afford the monthly premium, which is typically anywhere from $20 to $60.
  • Piece of mind is important to you. If you don’t ever want to have to choose between your pet’s health and your wallet’s, then pet insurance might be right for you.
  • You understand the terms of the insurance coverage you pay for. Pet insurance, like other types of insurance, comes with deductibles and co-pays. Make sure you understand what is covered for your pet so there are no surprises.
  • You’re fine with the possibility that you could pay for insurance each month and never use the coverage for a healthy dog or cat.

If you don’t think pet insurance is right for you, then here’s an easy alternative – make a pet savings account! Put $10 or $20 a month into a savings account specifically designated for potential pet-related expenses. At our credit union you could set up a club savings account in minutes, in person or on the phone, to start saving for your pet ASAP. You can even set up an automatic transfer each month into that account so the money gets saved without you having to think about it. The money in that pet savings account will help you pay for vet costs. And unlike with traditional insurance, you won’t be restricted to using the funds for medical expenses, so you could use it to pay for other stuff like going to the groomers or extra treats! Bonus – if your pet lives a long, happy life you might never use the money and this way it would be in your bank account instead of the insurance company’s pocket.

Bottom line: whether you chose to use insurance or not, pets are expensive. Make sure you factor in all potential pet costs when creating your budget, including those pesky unexpected trips to the vet.

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What You Actually Need to Know about EMV Chip Cards

You might have seen them in the news. Or maybe you know someone who has one. Or maybe you even heard about the impending “liability shift” . . . dun dun dun . . . Or maybe you haven’t ever heard of EMV Chip Cards until now. Whatever you have or haven’t heard, chip cards are the next big thing in financial technology. And in the next year or so, everyone will have one, including you! So here are the basics you need to know about what they are and how they work.

  • What is an EMV chip card? 

EMV stands for Europay Mastercard Visa. That acronym is pretty unhelpful, though, in terms of figuring out what the card does. What you really need to know is that EMV is a type of chip that will soon be embedded in all debit and credit cards. The chip encrypts your card information, like your card number, cardholder name, CVV2 (that 3 digit number on the back), and expiration date. When you insert a chip card a merchant’s terminal, instead of getting all that info off your card like they do with an old fashioned magstripe card, all the terminal gets is an encrypted code. The terminal never captures your personal info. Plus those encrypted codes are good for one-time use only, so they can’t be stolen and used again. So basically an EMV card is just like the card you have now, except smarter and more secure.

  • What’s the benefit of having a chip card?

It’s safer than your old card! Fraud is greatly decreased by the chip because of how it encrypts your information. So when you have a chip card you are less vulnerable to fraudulent charges on your account. Plus, a lot of other countries have already been using EMV chip technology for years, so chip cards are handy for those who travel abroad frequently.
EMV Better

  • How do I use a chip card? Will I still be able to use my old card if I don’t have a chip card yet?

Using a chip card is super simple. When you’re at a chip terminal, you’ll stick your card into the bottom of it. The card will stay there while you process the transaction as usual. Then you remove your card and you’re on your way. Every chip card will still have a magstripe on it, so if you’re ever at a terminal that’s not chip-friendly, you’ll still be able to swipe your card the old fashioned way. Conversely, if you don’t have a chip card yet you can still swipe your magstripe card at a chip terminal. And best of all, if you have a shiny new chip card but you accidentally swipe it at a chip-enabled terminal, the terminal will remind you that you have a chip card and you need to insert it instead.

  • What’s this “liability shift” on October 1st all about?

This sounds a lot more ominous than it is, I promise. When it comes to debit and credit cards, liability is all about who is responsible for fraudulent transactions. The good news for consumers is that with or without a chip card, you’re never liable for transactions you didn’t do. So really, you can ignore the whole liability shift thing, and continue to use your card knowing you won’t be responsible for any fraudulent charges.

  • What about online transactions?

Chip cards only affect card-present transactions, or transactions where you are there in person to insert your chip card. Online transactions aren’t affected by chip cards, because you’re manually inputting your card info into the computer, not inserting a chip or swiping a magstripe. So you’ll process online transactions the same way you always do.

  • When will I get a chip card?

Probably soon! Again, there’s no rule stating that you have to have a chip card by a certain date. This means that financial institutions and credit card companies are issuing chip cards to their customers at their own pace. Chip cards and chip-enabled terminals are becoming more and more common around the US. You’ll see chip terminals at big chain stores like Wal-Mart, Target, and Hannaford. In response a lot of financial institutions are starting to issue chip cards to their customers. So be on the lookout for your new chip card soon, but in the meantime you can keep on swiping your old card with no worries.

Always Read the Fine Print*

*No seriously. Read it! It’s important.

fine-print

The other day I got this postcard in the mail from a financial institution that shall remain anonymous. Like any good American consumer, I read the “$500 cash back” and thought, “Ooooo I want $500! Forget the credit union that pays my salary, I could refi there and get some cash!” Because seriously, who doesn’t want $500? That’s a pretty sweet deal.

You might have noticed that asterisk at the end of this enticing statement, however. If you flip this postcard over, that little star directs you to some information that might make that $500 a lot less exciting. The fine print to this advertisement let me know that if I bought or refinanced a car through this financial institution, I would get 1% cash back on the amount financed at a branch or via their online channel, not to exceed $500. What? In simpler terms, in order to get $500 I would have to buy a $50,000 car. If I were to refinance my vehicle I have now, I would only get $120. Whoomp whoomp.

Plus, the disclaimer goes on to say that if I were to finance my car through an indirect lender, I am only eligible for 0.5% cashback up to $250. So if the dealership helped me complete the financing process through this credit union or bank, I definitely can’t get the $500.

Don’t get me wrong, this still might be a great deal. I wouldn’t say no to $120. And potentially, the interest rate on this auto loan might be lower than the one I’m getting now. So it could save me money to look into refinancing with this financial institution. BUT, it is important to always read the disclaimer information. It might be in small, hard to find, and probably will be full of legal-ese, but it would be a let down to go to a branch thinking you’ll walk away with $500 cash and come out with a lot less.

Advertisements are designed to make what they’re selling as appealing as possible. The headlines, like this one, are designed to get your attention and make you buy the product. But reading the whole ad, including that disclaimer, will give you a better picture of what you’re really buying. It might make you say, “Nah this auto loan isn’t for me” or it could just give you enough info to say, “That still sounds good! I’ll do it!” So always take a look at that fine print.

I can’t finish this blog without also mentioning that if you also got this flier in the mail and are now getting an auto loan through this wonderful financial institution, you should use that cash back money towards your first payment! You spent $50,000. Don’t make it $50,500. Instead of cash you can use on pizza or clothes, think of that cash back as a $500 discount on your car.*

*Unless you use the $500 to buy me front row seats to One Direction. Then that would be money well-spent.

Can We Have Your Number?

What’s the most important number your credit union or bank can have on file for you? Your account number? Your social security number? Your date of birth?

It might actually be one you wouldn’t think of right away – your current phone number. Does your financial institution have the best phone number to reach you at on file? Because it could be super inconvenient for you if they don’t.

can i have your number

It’s not that your credit union or bank just wants to call you to say, “Hi!” And it’s not that they want to make solicitation calls to your number. Your financial institution needs your up-to-date contact information so they can reach you in the event that there’s an issue with your account. If we have your correct contact information on file, most likely we will reach you in time to deal with any problems that might arise promptly. If we have your grandmother’s phone number from when she opened your kiddie savings account in 1985, then things don’t go as smoothly.

Say, for example, that we’ve detected fraud on your debit card. The first two things we will do are freeze your card and give you a phone call. If you answer, we can determine whether or not the transaction is really fraudulent and then we can deal with it accordingly, right then and there. If you don’t answer or we leave a voice-mail at a number you don’t check any more or the number we have on file for you has been disconnected, you likely won’t find out what happened to your card until it gets declined. And, depending on how long it takes for you to notice that something is wrong, it might not be as easy to fix as it would have been in the early stages of fraud detection.

Lesson learned – always alert your financial institution(s) to any changes in your contact information. If you get a new number, give them a ring to make sure they update that information on your account. Your credit union and your wallet will thank you!

Debit or Credit?

“Debit or credit?” is kind of a trick question. It seems like it should only have two answers (I mean there’s two options in the question, right?). But really, you have three options when it comes to paying with a card at the register. If I just confused you, don’t worry, I can explain.

To start with, remember the basic differences between your debit card and credit card. Debit cards are linked directly to your checking account. They take the place of cash or a check and the money comes directly out of your checking account. Credit cards are a line-of-credit from your credit card company. They are basically lending you money to make purchases up to a certain credit limit, then you pay them back later with interest.

But “debit or credit?” isn’t just a question about which physical card you want to pay with, it’s asking you how you want your transaction to be processed. That’s where the three choices come in. They are:

DEBIT AS DEBIT

In this option you:

  • Swipe you debit card and enter your PIN number.
  • The transaction posts immediately from your checking account (meaning the money is withdrawn from your account in real time).

CREDIT AS CREDIT

In this option you:

  • Swipe your credit card and sign for the transaction.
  • Your credit card company pays for the transaction, you have not yet paid for this item.
  • Your credit card company charges you interest on the balance of your card. You must pay back your balance in monthly installments.

DEBIT AS CREDIT

In this option you:

  • Swipe you debit card and sign for the transaction.
  • The transaction typically takes 1 – 2 days to post in you checking account. The length of time it takes to post is dependent on the merchant, not on your bank or credit union.

This third option is the one people most commonly forget about. Just because you used your debit card does NOT mean that your transaction was processed as debit. The key thing to remember is, unless you entered a PIN, the transaction was done as credit.

So let’s say you went through the Dunkin’ Donuts drive-thru to get your morning coffee. They grabbed your debit card, swiped it, and passed it was to you. That was a credit transaction because you didn’t enter a PIN. You might not see that $2 being withdrawn from your account for a day or two, so don’t forget about that transaction when you check your available balance. What your mobile banking shows for your balance might not include transactions run as credit!

Next trick question – “Is one way of using a card better than the others?” The simple answer is – not really. There are benefits and drawbacks to all three options, so the best answer is to do whatever is most convenient for you. As a credit union member and employee however, I will point out that your credit union benefits more from debit as credit transactions than the other two options, so if you want to help out your financial institution I encourage you to swipe and sign with your debit card!

I hope this post helps you feel more confident about your answer the next time you’re at the register. 🙂

What Is a Payday Loan, Anyways?

“Need cash now? We can help!”

“$100 – $1,000 approved in just 2 minutes!”

“No credit? No problem!”

We all hear those commercials. They’re everywhere. On TV. On the radio. Online. You can’t escape them. Apparently these people really want to give you cash. And they want you to get it fast! But chances are, unless you’ve been in bad enough financial shape to need one of these loans, you might not know what they are, how they work, or how dangerous they can be.

Loans like the ones in these advertisements are called payday loans. A payday loan is a small consumer loan, usually for under $500, which uses your paycheck as collateral. They’re not offered by traditional banks or credit unions, but rather by Check Cashing Agencies or PayDay Lending Companies.

Here’s how it works. Say you need $400 to pay to get your car fixed. You don’t get paid for another week, you don’t have any money saved, you’ve maxed out your credit cards, and you know your credit is terrible. So you go to a payday lending company and apply for a loan for $400. They won’t check your credit. They won’t ask for references. All they need is your basic contact information, proof of employment, and your checking account number. Then, you write them a check for the $400 plus a loan fee, which is typically around $15 per $100 loaned. In this case, you would write the payday lender a check for $460. They hold on to that check as collateral and then give you $400 in cash. When you get your next paycheck, you use it to pay them back the $400 plus the $60 fee. Or at least that’s what’s supposed to happen . . .

The thing is, most people who use payday loans are doing it as a last resort. Fast cash won’t solve their financial problems, it will just get them through the next few days or the next few bills. That $400 might have paid to fix their car or for groceries for the week, but 2 weeks later they have more bills to pay. Now they need money to put gas in their tank. They need to pay the electric bill. They need to fill a prescription. Basically, they need that paycheck for new expenses when they’ve already spent it on old ones and suddenly they’re right back where they started before they got the loan.

So the payday lender gives them two options. Option 1: pay back the loan in full and end the transaction. Option 2: pay a small fee to extend the loan for another 2 weeks. In our example, that’s a choice been paying the lender $460 today or just $60. To a lot of the customers using this kind of loan, that’s not a choice at all. They need the $400 for other bills. So they pay to extend the loan instead. The paycheck after that isn’t enough to pay for bills and repay the loan either, so they extend the loan again. Unless they get a new job or a major expense magically disappears, they will never have enough money to pay off the loan completely so they just get caught in a cycle of endlessly paying the extension fee over and over again.

unbanked 2

 

Why the P.S.A. about the dangers of payday lending, you ask? Because the biggest misconception about payday loans is that only people who regularly struggle with money need them. You might be reading this post from the comfort of your office at your well-paying job. If so, you’re probably thinking that you wouldn’t ever be so strapped for cash that you would actually respond to those cheesy commercials offering “$500 in just 5 minutes!” But the truth is, a growing majority of payday borrowers are middle class. They were financially stable adults, until one or two things went wrong and threw their financial world into turmoil. As Jonathan Mintz, CEO of the Cities for Financial Empowerment Fund put it, “The picture of the financially unstable is the picture of you and me but for a couple of breaks.” Often people fall into the payday lending trap because like me, they ignored those ads. They didn’t know what payday lending was or how financially harmful it could be, so when they suddenly became strapped for cash the product payday lenders pedal seems appealing, even life-saving.

The good news is, there are alternatives to payday loans available. Many credit unions and small banks offer short-term “emergency” loans, that provide a small amount of cash to a borrower based on their income. For example, here at Casco FCU we offer a Safety Net Loan. Members can borrow up to $1,000 for 6 months. Like a payday loan, your credit score doesn’t matter, approval is based on proof of employment. Unlike a payday loan, however, a Safety Net Loan is repaid in fixed monthly installments over a short period of time. Making payments also allows you to build a relationship with a reputable financial institution and to improve your credit score so you increase your access to traditional loans in the future. And perhaps most importantly, a loan officer will help you go over your monthly budget and give you advice on how to better manage your bills; the Safety Net Loan isn’t just a temporary fix like a payday loan, it’s a solution to help you build a better financial future.

Long story short – stay away from payday loans! They’re never a good idea.

 

Pay Less at the Pump!

If you live near a Cumberland Farms gas station and you do not have their Smart Pay App . . . YOU NEED TO GET IT NOW! We all hate paying for gas. It’s so expensive. And the price keeps creeping higher and higher all the time. But as a Smart Pay customer, you pay 10 cents less per gallon than the posted price. 10 cents might not seem like a lot, but if you’re filling your 15 gallon tank it adds up to about $1.50. And if you’re stopping for gas once a week, you would save around $78 a year. Think of what you could buy with an extra $78. That’s a month’s cell phone bill. Or a night out with friends. Or a mani-pedi.

Here’s how it all works:

1. You sign up for a Smart Pay account here: https://www.cumberlandfarms.com/smartpay/

2. You download the Smart Pay app on your phone (or you can pick up a free Smart Pay Card at your local Cumbies if you don’t have a smart phone).

3. The next time you need to fill up, you pull the app up on your phone. It will locate which store you’re at, then you type in which pump. Once you confirm your location, you’re ready to fuel up for 10 cents less a gallon.

Here's the home screen of the Smart Pay App. You have a PIN so it's secure to log-in.

Here’s the home screen of the Smart Pay App. You have a PIN so it’s secure to log-in.

Want to know the best part? Your Smart Pay is connected directly to your checking account, so you don’t need to swipe a card or pay cash! So if you’re like me and you frequently forget your wallet at home, you won’t ever be caught in a pinch where you need gas but have no money. Which has happened to me before . . . maybe more than once . . . The app even has this little savings calculator that tells you how much money you saved at the pump for your current purchase as well as your lifetime savings (aka how much you’ve saved since you started using Smart Pay).

Smart Pay also lets you save on purchases in the store. I’m not a big convenience store shopper so I’ve never used that part of the app, but I have friends who love it. Right now for example just from the gas I’ve bought, I’ve earned a free 16 oz. Coke. Pretty sweet.

Just to prove this is not a paid promotion by Cumberland Farms (although if they’d like to pay me for this post they are more than welcome to 🙂 ), there might be a downside to Smart Pay. I’ve had a sneaking suspicion for a while now that the gas at Cumberland Farms doesn’t get me as far as gas I purchase from other places. I swear if I fill up at Irving or Mobile I get way more miles per gallon than when I fill up at Cumbies. So I have decided to do an experiment. I will buy gas at Cumberland Farms, Irving, and Mobile over the next few weeks and compare price per gallon as well as miles per gallon I get after I fill up. We will see if there is really a significant difference. Only time will tell . . .