April is National Financial Literacy Month

by Spencer Tierney 16. April 2014

Financial Literacy

Every April for the past 10 years, we have celebrated National Financial Literacy Month – and for good reason. A person’s financial literacy level can always be improved. In a study conducted by the FINRA Investor Education Foundation, participants were asked five questions about personal finance, and 61% of them couldn’t answer more than three questions correctly.

1. Why is financial literacy important?

As the financial landscape changes, it is becoming increasingly important for individuals to know how to plan and manage their finances. More companies are moving away from pension plans and toward retirement plans that require employee participation, like 401(k) plans, leaving it up to the employees to determine how much to put into retirement. Additionally, college tuition is steadily increasing, making it even more important for families to save.

Add to that the constantly changing markets and interest rates – and the myriad options for credit cards, bank accounts, mortgages, IRAs, and investment options –and it might start to seem overwhelming.

But the more you know about financial matters, the easier it becomes to navigate through your options, and the better you are able to plan. A 2011 TIAA-CREF study also shows that higher financial literacy leads to higher pension contributions and higher household wealth.

2. How can you improve your financial literacy?

Don't be embarrassed if your financial literacy isn’t stellar. According to the 2013 Consumer Financial Literacy Survey, 41% of U.S. adults give themselves a grade of C, D or F on their knowledge of personal finance. That leaves plenty of room for improvement.

Start by getting to know your finances. Be aware of your household income and your household debt including credit card debt, mortgage, auto loans, student loans, etc. Once you know your finances, you can make yourself a budget. This will serve as the blueprint for your everyday finances to help get them on track.

That's the easy part. Once you have the basics in place, you’ll want to arm yourself with the knowledge to make the best financial decisions moving forward. Some things you’ll want to learn about are:

  • Interest rates. That means on both earned and owed interest. Learn how earned interest will affect the amount in your savings account over time and how the owed interest on your credit card will affect your monthly payments.
  • Investing. Learn what the difference is between a stock and a bond, and how to invest your money to make it work the hardest for you.
  • Retirement. If you don’t have a retirement plan in place, find out what your options are. If you do, make sure you’re contributing enough each month to make your retirement years financially stable.

3. How can your bank help you improve your financial literacy?

Many banks have programs in place to help their customers increase their financial literacy. Some offer seminars, literature in their branch lobbies and/or consumer education modules on their websites, including glossaries of banking terms. In addition, many banks offer online tools for financial planning, like budgeting tools or tools to help diminish debt. Banks may also offer financial education programs for kids and teenagers. Check with your bank to see what resources they can offer you.

There's no better time to start, so take advantage of Financial Literacy Month to get a jump-start on increasing your financial knowledge.

Spencer Tierney is a staff writer for NerdWallet, where he covers all aspects of personal finance.

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5 Actions that Hurt Your Credit Score

by Sara Seeger 8. April 2014

Good Credit, Bad Credit

Establishing a healthy credit history is a responsible action of mature adult and very important to ensure a financially bright future. With the escalating costs of goods and services, it is critical you work towards this goal. In a previous blog, I wrote about five actions that help your credit score, but what about behaviors that hurt your credit score? Ask yourself if any of the following five situations pertain to you.

1. Missing a Creditor Payment

This may sound like a no brainer, but missing a credit card payment could be detrimental to both your current and future credit. Missing just one payment can make your credit score drop. If you make a habit of missing payments because you don’t see an immediate effect, think again. While you’re feeling comfortable, your credit score is plummeting, making it more challenging for you to obtain credit in the future. To add salt to the wound, delaying or missing payments will typically result in a late payment penalty, making it more challenging for you to obtain credit in the future.

2. Closing Old Credit Card Accounts

You have paid off your credit card; congratulations! Some people who are tired of debt immediately choose to close a credit card they have just paid off. You might want to think twice before you close out those old accounts as about 30% of your credit score is based on the amount of debt you have charged. The lower the amount of credit card debt you carry, the better it is for your credit rating due to your “credit utilization rate.” By closing old credit card accounts, you could throw off your credit utilization rate and unintentionally lower your credit score.

3. Accepting Too Many Retail Incentive Card Offers

I know it can be tempting to say yes to the smiling sales associate at your favorite retail store who offers you a 15% discount for opening a credit card, but just say no. Retail credit cards carry much higher interest rates than national brand cards, and applying for that new credit card triggers a hard inquiry on your credit report. Each inquiry of credit may cause a “ding” on your credit score. These inquiries add up fast, and may have a detrimental impact on your credit score.

4. Opening Too Many New Credit Card Accounts

If you open too many new accounts in a short period of time, you may be risking your credit score. Each time your credit is “run” by a creditor to determine your eligibility, your credit score takes a hit. Hard inquiries, as mentioned above, can deduct about 5 points from your score. A familiar example of this happening is someone who purchases a house and opens multiple credit cards at the same time to buy furnishings and other items for their new home. Restrain yourself and buy a little at a time.

5. Shopping Too Long for a Loan

When shopping for a large loan, like a home mortgage, it is important to shop around for a low interest rate. In fact, interest rates can change daily, and could be much lower a month from your first credit inquiry. However, shopping too long for a loan could actually hurt your credit score. Although mortgages and auto loan inquiries will appear on your credit report, they will only count once as long as they are done within a short period of time, typically within 45 days. So, when you make the decision to shop, make sure you’re ready.

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Orange You Glad O's Opening Day Is Just around the Corner?

by Stacy Tharp 27. March 2014

Have you found yourself dreaming about the smell of Esskay hot dogs, the crunch of empty peanut shells beneath your feet, the perfect balance of a cold beer on a hot day, the eruption of cheers surrounding you? If you have experienced these symptoms, then you, my friend, have a bad case of Orioles Fever. Yes, it is contagious, and it has been spreading like wildfire over these past couple weeks.

Before you find yourself getting into trouble at work trying to start the wave in Conference Room B, we have just the place for you to channel your O's energy!

Join us TOMORROW in celebrating the start to the O’s season with WBAL Radio. They’ll be bringing their “Orange You Glad It’s Friday” caravan to our Canton Tower location (3301 Boston St, Baltimore, MD) on Friday, March 28th from 9:30 – 10:00 a.m.

What can you expect at the Orange You Glad It's Friday party?

  • Get your car decked out with the Orioles/WBAL car stencil
  • Pick up a pair of orange and black sunglasses
  • Get in on the chance to win Orioles game tickets

We're on the edge of our seats with excitement for Opening Day - the official start to summer in Baltimore (says me, that's who). We look forward to seeing YOU tomorrow! Go O's!



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