1st Mariner Blog: Financial Advice, Updates & More

We built this blog for you! Subscribe today and stay informed. Get new blog posts via email or RSS feed.

1st Mariner Bloggers

The 1st Mariner Blog is written by 1st Mariner Bank employees and associates who provide financial advice and write about topics they know matter to you. Our branches send us blog topic ideas all the time based on your questions and interests, so we can be sure that the content we publish is relevant to you.

Submit a Blog Post Topic

Is there something specific you’d like to learn more about? Let us know. Email us with your blog topic ideas. We always want to hear from you.

Social Media

Be sure to connect with us on the 1st Mariner blog and all across the social webs, wherever you like to hang out most. Here’s where you can find us:

Facebook Twitter LinkedIn YouTube RSS pinterest

When You Should Consider a Certificate of Deposit

by Roberta Pescow 4. March 2015

Grow Your Money

Looking for safe investments that grow faster than traditional savings accounts? Take a look at certificates of deposit, or CDs, and find out when these accounts make sense and how to make the most of them.

What’s a CD?

CDs are deposits that offer guaranteed interest in return for keeping an amount of money in the certificate for a fixed time period. A CD is among the safest investments available at a bank insured by the Federal Deposit Insurance Corp., because that agency backs them just like other deposits, up to $250,000 per depositor. Financial institutions such as 1st Mariner Bank generally offer higher returns on CDs than on regular savings accounts. And typically, the longer the term of the CD, the higher the annual percentage yield, or APY. Be aware though, that most CDs have heavy penalties for withdrawing funds early.

Great uses for CDs

Although CD investors are typically higher-income earners, certificates can help people in almost any income bracket achieve their financial goals because you don’t need much cash to get started. Certificates of deposit function particularly well to prepare for:

  • Vacations: Invest six months to a year ahead.
  • Weddings: Purchase CDs a year or two in advance.
  • Home purchase: Begin buying CDs three to five years before you need the down payment.
  • College education: Parents and grandparents might want to start investing in CDs 10 to 15 years before a child’s high school graduation, or even right after birth.
  • Retirement: CDs can be used to invest retirement funds for added tax advantages.

Make your CDs work harder

A little planning and strategy on your part squeezes even more from an already sound investment. When rates are low but expected to rise, choose short-term CDs so your cash will be available again sooner to purchase new certificates at better rates. On the other hand, when rates peak, it makes sense to buy long-term certificates to lock in high interest for as long as possible.

A classic CD strategy that works well in all market conditions is called laddering. It involves buying multiple CDs with staggered maturity dates rather than a single certificate. Here’s how it works:

  • An initial investment of $5,000 could be divided into five CDs of $1,000 each that mature in one, two, three, four and five years.
  • When the first certificate matures at the end of the first year, reinvest the money in a new five-year CD.
  • Each time a certificate matures, reinvest in a new five-year CD. This creates an annual stream of available cash.

CD investing is easy. No matter what your goal, CDs can help you achieve it. With the odds so clearly in your favor, almost any time can be the right time to open a CD.

Roberta Pescow writes about personal finance, insurance and banking for NerdWallet. She previously was a home and garden writer for IdealHomeGarden.com and has articles syndicated on over 200 websites nationwide.

If you found this article useful, be sure to check out these related articles:

Individual Retirement Accounts: An Introduction

Bank Jargon 101

Health Savings Account: Is It Right for You?

Health Savings Account: Is It Right for You?

by Lorraine Ash 2. March 2015

HSA

When you’re choosing a health plan, there are many factors that may affect your decision. If you want an option with flexibility, a high level of choice, and tax-advantaged savings, a high deductible health plan with a Health Savings Account (HSA) might be the right choice for you.

What Are HSAs?

HSAs are tax-advantaged savings accounts that accompany high deductible health plans (HDHPs).

HSAs were created in 2003 to provide individuals who have HDHPs with a tax-preferred method of saving money for medical expenses. There are certain advantages to putting money into these accounts, including investment earnings and favorable tax treatment. The rationale behind the HSA/HDHP combination is that people will have a clearer idea of their medical costs and more control over their spending, enabling them to reduce their medical costs.

HSA money can be used tax-free when paying for qualified medical expenses, helping you pay your HDHP’s larger deductible. At the end of the year, you keep any unspent money in your HSA. This rolled over money can grow with tax-deferred investment earnings, and if it’s used to pay for qualified medical expenses, then the money will continue to be tax-free. Your HSA and the money in it belongs to you—not your employer or insurance company.

An HSA can be a tremendous asset as you save for and pay medical bills because it gives you tax advantages, more control over your own spending and the ability to save for future expenses.

Is an HSA Right for You?

HSAs are a growing trend in health care and offer many advantages, but whether it’s the right choice for you depends on several factors.

Comparing HSA/HDHPs to traditional health plans can be difficult, as each has pros and cons. For example, traditional health plans typically have higher monthly premiums, a smaller deductible and fixed co-pays. You pay fewer out-of-pocket costs due to the lower deductible, but you will pay more each month in premiums.

HDHPs with HSAs generally have lower monthly premiums and a higher deductible. You may pay more out-of-pocket medical expenses, but you can use your HSA to cover those costs, and you pay less each month for your premium.

The decision is different for each individual. If you are generally healthy and/or have a reasonable idea of your annual health care expenses, then you could save a lot of money from the lower premiums and valuable tax-advantaged account with an HSA/HDHP plan. For example, even someone with a chronic condition could take advantage of an HSA/HDHP plan if he or she has a good idea of his/her annual expenses and then budgets enough money to cover cost of care.

However, if you are older, more prone to illness or unexpected medical conditions, or prefer certainty in medical costs over the possible risk of unexpected out-of-pocket expenses, you may want to stick with a traditional plan. You’ll pay more in monthly premiums, but you will have a lower deductible and fixed co-pay.

How Do HSAs Work?

To have an HSA and make contributions to the account, you must meet several basic qualifications. Here’s what you need to know to start saving with an HSA.

HSA Eligibility

In order to qualify for an HSA, you must be an adult who meets the following qualifications:

  • Have coverage under an HSA-qualified, high deductible health plan (HDHP).
  • Have no other health insurance plan (this exclusion does not apply to certain other types of insurance, such as dental, vision, disability or long-term care coverage).
  • Are not enrolled in Medicare.
  • Cannot be claimed as a dependent on someone else’s tax return.

HSAs must be used with an HDHP. To qualify as an HDHP, a health plan must satisfy requirements for the minimum annual deductible and the maximum out-of-pocket expenses.

In 2014, the minimum annual deductible for a qualifying HDHP was $1,250 for an individual and $2,500 for a family. For 2015, the HDHP minimum deductible is $1,300 for an individual and $2,600 for a family.

In addition, annual out-of-pocket expenses under the plan (including deductibles, co-pays and co-insurance) cannot exceed $6,350 in 2014 and $6,450 in 2015 for single coverage, and $12,700 in 2014 and $12,900 in 2015 for family coverage.

Who Can Contribute?

Contributions to your HSA can be made by anyone, including you, your employer or a family member; the combined contributions of you and your employer (and anyone else making contributions to your HSA) cannot exceed the HSA maximum contribution limit.

Contributions to the account must stop once you are enrolled in Medicare. However, you can still use your HSA funds to pay for medical expenses tax-free.

Using Your HSA

An HSA is managed by the account holder, giving you the choice of when to use your HSA dollars. You can begin using your HSA money as soon as your account is activated and contributions have been made. You can use your HSA account for any purpose, including paying expenses that are not qualified medical expenses. However, you only get the tax benefits of an HSA when you use the account for qualified medical expenses. If you use it for another purpose, you will be required to pay income tax on the withdrawal, and you may also be required to pay another 20 percent tax unless you make the withdrawal after you reach age 65, become disabled or after your death.

If you found this article useful, be sure to check out these related articles:

The Finances of Eating and Living Healthy

Spring Clean Your Finances in 6 Days - Part 2

How Your Credit Score Affects Your Health

The Lesson I Learned from "The Associate" Week 2

by Robert Kunisch 26. February 2015

The Associate Presentations

Do you want to win in business? Then listen to what the client wants and deliver a clear and concise proposal to meet their needs. It’s a simple concept, but it’s often forgotten. Too frequently we want to tell the client what their needs are and how we are going to resolve them our way. This week, the Towson University Associate program reminded me to look at how 1st Mariner is responding to our customer and prospect needs.

In week two of the competition, team Synergy and team Eminence locked horns in an epic battle to increase the brand awareness of Baltimore-based B’more Organic. B’more Organic has a great product with enormous benefits for the consumer. Their challenges are typical of a young growing company.

The rules of the game state that the presenting company, B’more Organic, reveals the issue that the teams must resolve. B’more Organic selects the winner. We (1st Mariner) have to fire a person on the losing team.

Here comes the lesson learned. The 1st Mariner judges believed that team Eminence had the better presentation. B’more Organic, the client, thought otherwise and selected team Synergy as the winner. B’more Organic explained that team Synergy met their needs better than the other team. We fell into the trap of liking a presentation despite what the client wanted.

The winners from the night were B’more Organic and team Synergy, but also 1st Mariner Bank for being reminded of a valuable lesson: ideas may be great, but if they fall short of client expectations then you won’t walk away as the winner.

Next up is Merritt Athletic Clubs, a well-known and respected Maryland company. Their case is materially different than that of B’more Organic. I hope team Synergy and team Eminence take note.



© 2008- 1st Mariner Bank