Tuesday, December 27, 2011

Where Are Your Money Problems Really Coming From?

It's a new year, and many of us will make resolutions about handling our money in a better way.  In order to to do that, you have to get a handle on the root of your money problems.

How many times have you felt like you couldn't afford something you've wanted? How is it that, even when you get a raise, moonlight, and somehow increase your income, there's always more that you'd like to do or buy that's beyond your means? Why is it so difficult to get out of debt, and once there, stay that way?

Financial professionals and psychologists have weighed in on the issue, and to a certain degree, it's personal: everyone's got his or her own reasons. You may legitimately not be making enough money. You may have developed a comfort level with financial struggle, even an expectation for it. You may be addicted to shopping or living with someone else who is (and who has access to your accounts). But at the end of the day, whether or not you understand your own financial issues, there's only one person who can turn things around. And that person happens to be you.

It's not going to get better if the government steps in, no matter what political beliefs you hold. It may be your spouse, it may be that you need a different job, and it may be that you need additional income. It may be financial habits that are so much a part of you it's impossible to imagine life without them.

Whatever the problem is, there's often more to it than meets the eye. Spend a little time analyzing what's holding you back from the financial situation you'd really like, possibly with the help of someone who knows you well. Once you've figured out the root of the problem, resolving it will be a whole lot easier.

Wednesday, September 28, 2011

Clear Up the Paper Clutter

We've been hearing about a paperless society for years now.  I don't know about you, but I still have tons of it in my filing cabinets!  I'm never quite sure when I can get rid of things...every time I get ready to rid my filing cabinets of the old stuff, I start wavering  What if I need it later???

To answer my own question, I've scoured the internet for information about how long I should keep my records.  Now, I'm going to share what I learned with you.

Death and Taxes
Inevitable, right? One of the biggest questions I ask myself is how long to keep my tax returns. According to Government Services Agency, you should keep them 3 to 6 years.  The IRS has the right to audit you within 3 years, but can can start legal proceedings for up to 6 years if they believe you have under-reported your income.  And, there's no time limit on fraudulent returns or if you haven't filed a return at all.  So, bottom line - if you're honest you shouldn't need them for more than 6 years.

On the other hand, you should never throw out a death certificate or any other vital records, such as birth certificates and social security cards.  These need to be kept in a safe place.  Safe deposit boxes or fireproof files/safes are good choices.

Paper or Plastic?
You should keep most canceled (or duplicate) checks at least a year.  Credit card receipts can be pitched as soon as you verify your statements.  There are some exceptions:  if you have canceled checks or credit card receipts/statements that relate to your taxes or larger purchases, you should keep them. For my part, I usually put the tax items in my tax file, so it will get shredded when my tax file goes.  For large purchases, I try and keep these as long as I own the item.  MIStupid.com recommends this in case you ever need to prove the value of the items.

Show Me the Money
Pay stubs and the statements from your bank or credit union can be kept for a relatively short time.  Keep pay stubs until you verify that they agree with your W-2 earnings at the end of the year.  Keep your bank/credit union statements for at least 3 months and discard them only after you have balanced the statement and checked that all transactions are correct.  Again, there is an exception to this rule - keep your statements on IRA accounts and records of your contributions until you retire or close the account.  Keep brokerage statements until you sell the securities.  If each statement shows what you own, toss the old one when you get the new one, perhaps keeping the year-end statements indefinitely.

Bills, Bills, Bills
I know at my house, this is where the bulk of the paperwork comes from.  I'm always hesitant to throw out any bill and must admit that my files are stuffed with BGE and Verizon bills (among others) going back at least a couple of years.

As of this writing, I'm turning over a new leaf.  The advice I read is that you should only keep the bill until you receive proof of payment.  That can be a canceled check or the next statement which shows the payment has been received.  After all, the company can always reproduce your bill or statement and you can easily obtain a copy of the check from your bank or credit union.  Here at Destinations Credit Union, you can click on the check within online banking and print the image yourself!

Safety First!
As you clean out your files, make sure you dispose of personal and confidential information properly.  Invest in a small paper shredder and shred everything that you discard.  With identity theft on the rise, it's better to be safe than sorry!  Destinations Credit Union is offering a free community shred day on October 22 to help those in our neighborhood get rid of the clutter safely.  If you've missed this event by the time you read it and you have too much to shred on your own, you can hire a company like Incred-A-Shred (the company we use) to shred in bulk.

Carol Szaroleta is Director of Marketing and Business Development for Destinations Credit Union, a full-service, not-for-profit financial institution located in Baltimore, MD.

Wednesday, September 21, 2011

Saving to Succeed

Brought to you by Accel Members Financial Counseling – through financial knowledge and expertise we enable people to enjoy a better quality of life.

Whether you are looking for immediate financial security or plan to build a retirement nest egg, anytime is an excellent time to focus on savings.

Here are 10 ways you can get started building your emergency fund.
  1. Find money to save. Devote any windfalls to savings, including raises, bonuses, birthday checks and tax rebate checks issued by the government. 
  2. "Walk the Talk." Commit to putting 10 percent of your take-home pay into an interest-bearing account each month and forget it's there. 
  3. Treat it like a bill. Give yourself a due date and a minimum payment and include this critical payment to yourself in your monthly budget. 
  4. Pretend it was never yours. Set up an automatic deposit to your emergency fund from your weekly paycheck.  If you don't see it, you won't spend it! 
  5. Pay yourself for dinner. Skip lunch or dinner out and save what you would have spent instead. 
  6. Leave yourself a tip. Every time you tip a server, pay yourself the same amount.  It may seem small, but it adds up quickly! 
  7. Get cash back. Round up to the nearest ten when you cash out at a grocery, pharmacy or retail register and slip the small amount into your savings jar when you get home. 
  8. Keep paying it off. If you recently paid off a big loan, like a student or auto loan, keep paying it, but to yourself.  You've lived without it this long; you won't even miss it. 
  9. Invest in CDs. You'll earn higher interest and keep your emergency savings just beyond reach, in case you are tempted.  
  10. Start today. It doesn't have to be a large sum, as long as it's something. Small amounts really do add up fast.

Wednesday, September 14, 2011

Trimming your credit cards: how to decide what to close and what to keep

If you've reached a point where you know you have too many cards and want to trim them to simplify your life or to get your finances under control, think carefully before you act. Some of your credit cards are better than others, so careful consideration is in order.

Decide how many credit cards you really need. You may have applied for a card to earn a bonus or gift, but do you really need as many as you have? More than one or two shouldn't be necessary. On the other hand, you don't want to close too many accounts too quickly, since that could lower your capacity-the amount of credit you have compared with the amount you've actually borrowed. If you have a card you don't need but don't want to close the account, don't carry the card with you.
  1. Pay off and close high-interest credit cards.  Of course, the first thing to pay off is the high-interest cards because they can eat you alive. Take out all your credit cards, and list them (use a code name, not the account numbers, so your list is of no value if it gets into the wrong hands), the balance, credit limit, interest rate, and fees for each card. This will show you, at a glance, what your credit card situation is. Keep an eye on credit cards that have teaser rates coming due because they will go up soon too.
  2. Look for high fees. This can be tricky, but read the fine print. The cards you keep should be the best ones with the lowest fees. Depending on your balance, a large fee may have even more of an impact on your bottom line than the interest rate. Though you don't plan on being late, it does happen sometimes, so check out the late fees, too.
  3. Close unused accounts. If they have high rates, you want to close them anyway. But even if they don't, there's no reason for inactive accounts to show up on your credit report.
  4. Keep your credit union credit card. Because you do all your banking with the credit union, you'll want to hold onto this card. Chances are, the rates are better and the fees are lower on this card anyway.

Friday, September 2, 2011

Have More Money Without Changing Your Lifestyle

Short of winning the lottery or landing a Wall Street-sized bonus, can you end up with more money every month (to save or to spend) without giving up the small luxuries that make life so much more enjoyable?

Sure you can. It'll take some time and effort, but there's money to be found if you look for it.

1. Shop around for services. Home insurance, auto insurance, gym membership, Internet, cable, cell phone. . . anything you use on a regular basis, pay for monthly or where there are options. Chances are, you can shop around and find a better deal.

2. Look at what you're using--and what you're not using. If you have a monthly gym membership but only go twice a month, would you be better off paying an entrance fee, which some gyms allow? Find out what options exist. The same goes for cable, unlimited talk cell phones, Internet access, and anything you can be paying for but not using much.

3. When it really doesn't matter, go generic. Staples, such as sugar, flour, rice, and even poultry may be just as good when you buy the store brand. Find out by taste-testing. Once you've decided which brands to bypass, keep a little envelope in your wallet where you can stash the amount you saved during each shopping trip.

4. Shop Savvy. If you enjoy shopping, you can get the same thrill shopping a flea market or yard sale as you would the mall. Enjoy online shopping? Try Craig's List! You'll save money and have more fun.

5. Trade lower value for higher value. If you're paying more for a home, car, clothes, anything that's not making you happy, consider trading down so you have more money for what you really want it for, whatever that may be.

6. Join the credit union's holiday/vacation club. You won't feel the difference every month, but when you get a chunk of change deposited into your account, you'll have it for something that's important to you.

It's easy to feel stuck in your lifestyle, and our consumer culture makes other people's lives seem so attractive. But take a minute to ask yourself what you really want, and see if you don't already have the means to make at least some of it happen.

Thursday, July 21, 2011

Electronic Banking Safety

Many people have found that the convenience of online and electronic channels can save them a lot of time.  Others remain skeptical and fearful of the security issues surrounding these channels.  We believe that online and electronic channels provide a high level of security, but you have to do your part to keep your accounts secure.

First and foremost, you have to keep your passwords strong, secure and up-to-date.  A strong password does not include any personal information that might be easy to guess, like birth dates, children's names, street address, etc.  A really good password will include upper and lower case letters, numbers and special characters such as ! or *.  The stronger your password, the better your personal security.  You may also want to change your password periodically.  Some sites force you to change your password at least every quarter.

Another issue to consider is how you receive your statements.  You should really consider signing up for eStatements for all of your financial service providers (banks, credit unions, brokers and lenders).  Some people are still afraid of getting eStatements, but it's actually more secure than getting paper statements in the mail! 

First, the statements are not actually sent through your e-mail.  You simply receive a notification to log on to your account (using that oh-so-strong-password you've now set up) to view or download your statement. 

Second, raiding mailboxes is an increasingly popular method for identity thieves to get personal information about you.  In fact, your mailbox is the riskiest non-technological point for identity theft, according to a study released in 2007.

Though financial institutions and the media have warned against these time and time again, they bear repeating:
  • NEVER give personal information to anyone who calls you or e-mails you.  Instead, let them know that you will call back (and find the phone number yourself) if what they have to offer interests you.  Only call, e-mail or click on links that you have verified to be legitimate.
  • NEVER keep your personal identification number with your ATM or debit card - anyone finding that has the "keys to the kingdom" - or at least to your account!!
Do you have other tips to share?  We'd love to hear them.  On the flip-side, we'd also like to hear about your experiences if you have had your identity stolen or been the victim of fraud.

Thursday, July 14, 2011

Creating Your Own Debt Ceiling

Controlling debt will help you take charge of your financial future 

There is a lot of talk right now about allowing for a higher debt ceiling for the United States’ spending needs. Because the creation of debt should never be limitless, Congress set a cap on the amount of debt that the U.S. could comfortably have. Since we’ve reached that limit, we can no longer create more debt unless the ceiling is raised.
 
Your Debt Ceiling
You may not realize it, but you and your family have your own debt ceiling too. By default, your debt ceiling is the amount that creditors are willing to lend you. Creditors determine what your ceiling (or limit) is by looking at your credit report, FICO score and income. They look at your payment history with other creditors, your likelihood of default as estimated by your FICO score,  how much untapped credit you have in your other accounts, and then they decide — based on these factors and others — what they are willing to risk on you.
But relying on a creditor’s assessment of your finances is not the best way to create your debt ceiling. Instead, you should determine what amount and kind of debt you and your family are willing to take on based on your future financial goals, current financial situation and your attitude toward debt.
Creating Your Own Debt Ceiling
Your debt ceiling should never put you in a position to have to choose between paying credit card payments on time and saving money. Instead, your debt ceiling should create harmony between the purchase of big ticket items and investments, paying bills, and saving.
1. Budget debt repayment: Your debt ceiling should never be so far removed from your income that it is an amount you could never pay off with your current salary. When creating a debt ceiling, it’s not a good idea to anticipate salary increases that you don’t know will happen. Instead, choose a number that could conceivably be paid off with your current income and still allows you to set aside money for emergency and retirement savings.
2. Assess potential debts and assign quality ratings: Now that you know how much your personal debt ceiling is, it’s time to decide how to allocate it. Going into debt to buy a new home makes sense. This is the kind of debt that is expected, since few can pay for homes with cash, and is often a sound investment. This would be considered a high quality debt and one that you could accept in a large dollar amount. But credit card debt, used to buy morning coffees and impulse items, is high interest with low return making it a low quality debt. Break your debt ceiling into segments to allow for a limited portion of the total debt to be allocated to high, medium and low quality debts.
3. Set review dates: as your income grows, you may want to increase your debt ceiling. The time to increase it is not when you have reached the ceiling amount and are standing in the store desperate to buy some new toy, however. Instead, have annual family meetings to discuss your savings, earnings and debt ceiling.
It’s never a good idea to let another person or business set limits for you. If you want to retain the maximum control over your financial life, don’t trust what others think you are capable of. Take the time to set your own limits based on your priorities and what you know you can handle responsibly.
When you create a debt ceiling, you decide how much money you are willing to owe and pay interest on while helping to control your financial future.

Tuesday, June 28, 2011

Financial Advice for Newlyweds

Important things to consider when combining your finances 
After you get married, there’s more that you have to worry about than which kitchen appliances you’d like to keep and which you’d like to give away. When you combine households, you combine finances too, and this isn’t limited to your savings and checking.

Debt 
As a married couple, you join together in debt, but how you join together is dependent on where you live. If you reside in a community property state, all of your debt is shared equally. Essentially, this means that if the two of you split up, each of you is responsible for half of it.

If you live in a common law state, the debt belongs to the person who accrued it. The only case in which you really share the responsibility is if you buy property together, such as a house or a piece of furniture, which can be considered a necessity for the family. Either way, you need to be careful with your credit. To find out more about how debt is divided, contact a tax advisor or legal counsel.

You want to preserve the person with the better credit ratings’ history if at all possible. If one of you is not responsible enough to repay debts on time for whatever reason, you may wish to keep that person’s name off of your loans. If that’s not possible because you need the dual income to be eligible for the loan, use automatic payments so you don’t have to worry about missing one.

Insurance Coverage
Another thing to think about is whether or not you want to combine your insurance coverage. If you merge to a single insurance plan under one of your employers, it’s likely you can pay a lower rate. Many employers offer a family plan, which can be ideal if you hope to have children in the near future. This could save you hundreds of dollars a year.

If, instead, you decide to each keep your own existing health plan, which is perfectly okay, you can still claim one another on each other’s plans and receive what is called double coverage. With double coverage, your primary insurance (the one you’re your employer) covers most of your expenses, but your secondary insurance (your spouse’s plan) can pay some of the leftover charges; for example, possibly your copay. If you opt for double coverage, keep in mind that some doctors do not accept it as a form of payment. Also, it may not be worth the extra money you’ll have to pay in premiums.

Another way you can potentially save money is by combining your car insurance. Most companies offer some kind of multiple vehicle discount. Getting married sometimes makes you eligible for policies that you wouldn’t have been able to get before even if you were living in the same household.

Filing Your Taxes
There are two ways to file taxes when you’re married, either married filing jointly or married filing separately. It’s smart to file jointly if one spouse makes significantly more money than the other one. When you combine the income of both, you could end up in a lower tax bracket since the brackets are higher for married people than they are for singletons.

When you file separately, it’s essentially the same as both of you filing as if you were single. You may want to go with married filing separately if one spouse has a lot of deductions – enough that they are considerably more than what the standard deduction would be. This sometimes happens if one spouse has a significant amount of medical expenses. If this is the case, you could get more money back come April 15th or pay less in during the year by adjusting your withholding accordingly. It’s also a good idea to file separately if one of you is having some trouble with the IRS. That way the spouse that is in good standing is not responsible for the other’s mistakes. To find out more about your tax options, talk to your tax advisor or visit irs.gov.

Now that you’re married, it’s time for the more fiscally responsible spouse to start holding the other one accountable. If you want to have a financially healthy marriage, the time to start doing so is today. 


This post is from our On Your Way site for young adults. Visit the site for more articles and video to increase your financial literacy!

Tuesday, June 21, 2011

Keeping Track of Your Money

Knowing where your money is going is the first step in setting up a budget.  Most people have only a vague idea of how their money is spent.  Sure, you know roughly how much you pay for the big things - mortgage, car, utilities, etc. But do you really know how much you spend on the rest?


Up until recently, the most precise way to keep track of your money was through the use of financial management software like Quicken or Microsoft Money.  These programs have long had the ability to accept downloads from your online banking providers and allow you to easily categorize all of your income and expenses.


The new generation of financial management products are available online.  Destinations Credit Union now offers MoneyDesktop as part of its online banking platform.  MoneyDesktop allows you to "aggregate" or collect information from all of your accounts at various financial institutions and investment houses.  Other programs, such as Mint.com, can do the same type of thing.  One drawback with Mint is that they don't affiliate with all financial institutions - especially smaller banks and credit unions.


Once you set up your accounts in the programs, you can easily categorize your spending and set up a budget.  There are tools to help you prioritize and pay down your debt faster.  You can even get notifications when you go over your budget.  


Set a goal for yourself to get started on accounting for your spending and setting up a budget.  Be specific about your goal - "I will log on to MoneyDesktop and set up my accounts by next week." or "I will have my budget in place by the end of next month."


Of course most of us would rather be doing something else (unless you're one of those accounting types who love their numbers!), but this is important.  For more information, read my blog post on Patch.com, "Where Has All My Money Gone?"

Friday, June 10, 2011

Debt: The Good, The Bad and The Ugly

Few of us have the luxury of living without any debt these days.  While my father-in-law paid cash for his house many years ago, and more recently paid cash for his car, I can't imagine having the ability to do that.

The Good

Some debt can be good.  It helps build your credit rating if you are responsible about your borrowing.  Your credit score is used by employers, lenders, insurance companies and more.  A good credit score goes a long way in helping you throughout your life -- lower rates on loans, lower deposits on purchases, lower insurance premiums, etc.

Debt can be considered "good debt" if it helps you achieve your goals (provided your goals are sound in the first place).  Borrowing to buy a house is normally good debt (barring the recent real estate "bubble").  Homes generally appreciate over time and you build equity through your mortgage payments. Equity in your home can be used to improve and update it, making the value go up.  Eventually, chances are you can sell for more than you paid and get a decent return on your investment.  This is a long-term strategy, though, and probably won't materialize if you buy and sell too quickly.

Debt can also be good if it helps you further your long-term goals in some other way.  For example, you may need a car to commute to your job, or you may need to borrow to fund your college education.  If the debt will pay off in the long run (such as a higher paying job), then it is good.

The Bad

Bad debt is when you accumulate debt to live beyond your means.  One example of bad debt might be buying a Mercedes when your budget can really only afford a Chevy.  Another might be running up credit cards for a new wardrobe when you don't really need the clothes.  Even student loans can be bad debt if you don't consider the risks/rewards of borrowing:  What are the job prospects in your chosen field? Are the salary levels for graduates in your field enough to pay for your loans (you're probably not going to go to Harvard to be a kindergarten teacher!)?

The Ugly

Too many people rack up bad debt (or maybe a combination of good and bad) until they are drowning in payments.  The long-term consequences of this may be that you ruin your credit rating and you'll pay more in the future (late fees, higher rates, etc.). 

If you find yourself getting into too much bad debt or getting into a really ugly financial corner, Destinations Credit Union can help.  We offer members unlimited free financial counseling with our partner Accel Member's Financial Counseling. Don't wait to start digging out - make your future financial security a top priority.

Monday, June 6, 2011

All The World's a Stage

Though Shakespeare didn't intend his famous words to be used in an article about personal finance, we're going to use them for our purposes.  When we talk about a stage in the world of finances, we are generally talking about a life stage.  Your financial needs are different at different phases of your life, and there are new things to consider as you enter a new one. 

Starting a Career

You're young and smart and have a world of choices ahead of you.  Financially, some of the biggest things you'll be looking at are:
  • Learning to budget your starting salary
  • Learning to save consistently (pay yourself first)
  • Building your credit rating
  • Borrowing for a new car
  • Starting a retirement account (especially if your employer has a matching program)
  • Student loan consolidation
Getting Married

There are a whole new set of financial issues to deal with when you get married. Blending your styles of managing money along with your savings and checking accounts can be daunting.  Money disputes continue to be a leading cause of divorce.  Before you get married, make sure you talk about some of these issues.  Aside from coming to agreement on your spending/saving strategies, there are other needs to consider:
  • Setting up joint accounts (all together or yours, mine and ours?)
  • Changing insurance
  • Buying your first home
  • Paying down debt 

Friday, April 29, 2011

Money Matters…Seven Steps to a Successful Budget

Brought to you by Accel Members Financial Counseling – through financial knowledge and expertise we enable people to enjoy a better quality of life.

Budgeting can be a simple and straightforward process.  It can also be a rewarding experience for all family members.  But, it takes interest and commitment.  Here are seven steps to help you create a successful budget.

Discuss Values – Determine what is most important to the people involved in your budget.  By understanding these values, you can make decisions that will provide you with the most satisfaction.

Set Goals – Begin setting goals by discussing with family members what each one may want to do with their money.  Have each member list the goal and a deadline.  Work on the most important goals first.  Put money aside in your budget for your priority goals.

Determine Income – Figure out your take-home pay.  The money that makes up your income can come from sources such as salary, allowances, social security or child support.  Do not include overtime pay.

Determine Expenses – Consider fixed, variable and periodic expenses.  Fixed expenses consistently stay the same every month, variable expenses change from month to month and periodic expenses are not due every month.

Create a Plan – Design a spending plan so that your income will allow you and your family to have what you want and need.  If you find that your income does not cover your expenses, re-evaluate your plan and decide what categories can be changed.

Keep Track of Expenses – Keep a record of expenses to see where your money is being spent.  By comparing your estimated expenses with what you are actually spending, you can evaluate whether or not your plan is working.

Evaluate Your Plan – Periodically evaluate your spending plan.  Is the plan still helping you meet your needs and achieve your goals?

A budget is the cornerstone of your family’s financial plan and a guide to help you achieve your goals.

Thursday, April 14, 2011

Energy Choices


There is a lot of confusion in the market about choosing an energy supplier other than BGE.  You may have even seen the recent television commercials put out by BGE encouraging consumers to look on their web site for your energy choices

No matter who you choose to provide your gas and/or electricity, BGE will still service you.  Your bill still comes from them and they still maintain the gas lines and electric lines.

We strongly urge you to look at these alternative suppliers and try to save yourself a little bit of money.  Destinations Credit Union has formed an alliance with Viridian Energy to offer service to our members.  I recently switched my personal BGE account and saved $34 the first month.






Why would the Credit Union do something like this?

Destinations is always looking for ways to help our members financially.  We offer many discount services through these alliances.  In most cases, it's a win-win situation.  You get to save a little money through these services and we earn a small revenue stream when you use the services (which ultimately benefits you since we are not-for-profit and owned by you, our members!).

Thursday, April 7, 2011

Store Branded Debit Cards

There is a new trend out there for stores to offer their own debit cards.  There are some important differences in the way these cards work. You should understand those differences before getting one.

You Can't Dispute a Transaction Through YOUR Financial Institution

When you sign up for one of these cards, the card is issued by the retailer's financial institution, not your financial institution.  The purchases with these cards are sent as an electronic debit to your checking account at your financial institution.  

Therefore, if an unauthorized debit comes through to your checking account, you must go back to the retailer and deal with their financial institution to straighten out the problem.  Since you have no relationship with that financial institution, this may be a difficult and complex process.

Protect Yourself
  • Be aware that the cards do not function in the same way as the debit cards from your financial institution
  • Make sure to read and understand the contract - know your responsibilities
  • Understand how you will need to dispute unauthorized transactions and the complexities involved in that
  • Notify your financial institution when there is an unauthorized debit
Please comment if you have had experience with these types of cards, or let us know if you find the information useful.  We appreciate your feedback!

    Monday, February 14, 2011

    When is 3.25% Lower Than 0%?

    As counter-intuitive as it may seem, when you're buying a car, sometimes 3.25% APR CAN be a better deal than the 0% financing offered by the dealer.  How you ask?  Let's take a look at a real life example.

    Last month, my son's girlfriend bought a car at a local dealership. She was putting $2,000 down on the car and had the option to take the 0% financing or a $1,500 cash-back rebate.  Not being sure which she should do, the dealer "ran the numbers" for her and told her it would be a better deal to take the 0% financing.  Of course, what he didn't tell her was he used a car loan rate that was on the very highest end of the financing spectrum to compare.  That seriously skewed the numbers.  

    So, let's run the real numbers.  Her car cost $16,500 and was a new 2011 model.  After the $2,000 she put down, she was financing $14,500. She wanted to finance it for 60 months to keep her payments as low as possible.

    Dealer Financing for 60 months at 0%
    Amount financed:  $14,500
    Monthly payment: $241.67
    Total paid on loan: $14,500

    Credit Union Financing for 60 months at 3.25%
    Amount financed:  $14,500
    Less cash rebate (applied to loan):  $1,500
    Final amount financed: $13,000
    Monthly payment: $235.04
    Total paid on loan: $14,102.40

    Savings by using the Credit Union:  $397.60 over the life of the loan!

    Her savings would have been even greater if she could have lowered her rate by financing for a shorter term (Destinations is offering rates as low as 2.99% APR).

    Another surprise was in store for her when she tried to go back and change the financing, taking the rebate.  She thought she had 3 days in which to change her mind.  The dealer would not change the deal for her.  Turns out that in Maryland, there is no 3 day right of recission on auto purchases.