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Study: Young credit card users racking up debt

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COLUMBUS, Ohio (1/17/13)--Younger Americans not only take on more credit card debt than their elders, but they are also pay it off at a slower rate, reported a recent study from Ohio State University.

Younger generations may continue to add credit card debt into their 70s, and die still owing money on their cards, said the study. This is an opportunity for credit unions to educate Gen X and Y about money management and using credit cards wisely, according to the Credit Union National Association.

"When individuals rack up high amounts of debt at a young age, they get themselves into a vicious cycle that often is very hard to get out of," Michelle Dosher, managing editor in CUNA's business and consumer publishing area, told News Now.

"Credit unions can help young adult members by educating them about the consequences of poor money management and by giving them advice about the smart use of credit," Dosher added. "Teaching members strong money management skills at a young age will help them as they become mature adults. By providing this initial education, credit unions are instilling in members that the credit union is there to provide guidance throughout different stages of their lives."

Lucia Dunn, co-author of the study and professor of economics at OSU, noted, "If what we found continues to hold true, we may have more elderly people with substantial financial problems in the future.Our projections are that the typical credit card holder among younger Americans who keeps a balance will die still in debt to credit card companies."

Persons born between 1980 and 1984 have credit card debt substantially higher than do the previous two generations, the study found. On average, they hold $5,689 more debt than their parents born during 1950-1954 at the same stage of life and $8,156 more than their grandparents born during 1920-1924. Children's payoff rate is 24 percentage points lower than their parents' and about 77 percentage points lower than their grandparents' rate.

The study also uncovered good news: Increasing the minimum monthly payment spurs borrowers to not only meet the minimum, but to pay off substantially more, possibly eliminating their debt years earlier.

Researchers combined data from 1997 to 2009 for consumers ages 18 to 85 years for a final sample size of 32,542.

Jersey Shore FCU issues community savings challenge

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NORTHFIELD, N.J. (1/17/13)--Jersey Shore FCU is challenging its membership to save  $500,000 in loan interest and fees to help the credit union celebrate its 50th anniversary.

If members reach the $500,000 milestone, the Northfield, N.J., credit union will donate $5,000 to four local charities (The Daily Journal Jan. 16).

Members can take a free five-minute financial checkup to see if they qualify for a lower interest-rate personal or home loan. If they do, they can select a partner charity to receive a donation.

Charities included in the challenge are Atlantic City Rescue Mission, Humane Society of Ocean City, Family Promise of Cape May County and Shore Medical Center Foundation.

Donations will be awarded in three increments: $2,500, $1,000 and $750, with two charities receiving $750.

Agility to CUs: Protect business, have employees get flu shots

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MADISON, Wis. (1/17/13)--Credit unions should strongly urge their employees to be vaccinated against influenza and consider offering flu vaccination clinics at their offices, experts advised during a free webinar hosted by Agility Recovery Wednesday.

Agility Recovery is a CUNA Strategic Services Provider that specializes in business continuity for credit unions in disaster situations.

The influenza outbreak has reached epidemic proportions in the U.S., the Centers for Disease Control and Prevention, reported. The number of states reporting widespread activity rose to 47 from one week ago.

That activity is likely to remain high for the next several weeks, Dr. Michael Jhung, lead medical officer in the CDC's Influenza Division, said during the webinar.

"Flu season started earlier than normal this year, and outbreak levels are likely to remain elevated," Jhung told webinar participants.

The good news is that the current vaccine is about 62% effective, Jhung said. This year's flu vaccine protects against an influenza A H3N2 virus, an influenza B virus and the H1N1 virus.

"The vaccine doesn't guarantee you won't contract influenza, but it does greatly reduce the risk and that is good public health policy," Jhung said.

To prevent a widespread outbreak of flu at the credit union, Mark Norton, Agility Recovery, senior continuity planner, offered these tips:

  • Provide a flu vaccination clinic at the workplace;
  • Provide hand sanitizer to employees;
  • Have a culture that supports the health and well-being of employees;
  • Beware of common items like the refrigerator and microwave;
  • Wash hands, cover sneezes and coughs with sleeves or facial tissue;
  • Stay hydrated;
  • Take a multi-vitamin; and
  • Limit touching.
"If anyone is feeling ill, have them stay at home," Norton said. "We are trying to prevent having those ill people in the office because that is where the virus comes from."

Social engineering scam fooling service reps

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MOUNTAIN VIEW, Calif. (1/17/13)--Member service representatives trying to be helpful to credit union members may fall for a scam that requires taking over a member's online account and tricking the rep via a chat session into helping out with the scam.

Mountain View, Calif.-based Guardian Analytics, an online security vendor that specializes in detecting anomalies, says the scam targets both small and large financial institutions and has migrated to call centers, using older tactics in new ways  ( FraudBlogger Jan. 15).

The scams involve four steps. Cybercriminals:

  • Log onto an account using login and password credentials stolen through a Trojan  attack or another socially engineered scam;
  • Test the account by checking balances and initiating internal funds transfers, but do not initiate an external transaction;
  • Initiate a live chat session with the member service representative; and
  • Ask the representative for help in scheduling a wire transfer.
The member service rep, believing the chat session is with the accountholder because the session takes place through an already online authenticated process, helps complete the wire transfer.

Guardian also found that many compromised accountholders are also victims of work-at-home scams that involve one-time deposits to online accounts. Later the cybercrooks remove funds from the accounts. It is not clear whether the credentials are provided voluntarily or stolen.

The company advises financial institutions to:

  • Educate members and staff. When the credit union discovers suspicious activity, communicate with other departments, including the frontline call center and member service staff so they know an account is flagged for suspicious activity.
  • Look for anomalies in behavior.  Most transactions were less than $8,000, not enough to raise suspicion, but the way the wires were scheduled was atypical behavior.
  • Review the process for accepting wire requests. Set transaction limits and add more authentication methods.

Securities group files brief in NCUA's big banks suit

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DENVER (1/17/13)--Another securities industry group plans to file an amicus brief supporting Wall Street banks in lawsuits brought by the National Credit Union Administration's against them over their sale of residential mortgage backed securities to corporate credit unions.

The Securities Industry and Financial Markets Association, which represents securities firms, banks and asset managers, filed a motion Tuesday in the U.S. Court of Appeals for the Tenth Circuit in Denver seeking more time to prepare and file its brief. SIFMA seeks a four-week deadline extension--to Feb. 15.

So far those seeking appeal include RBS Securities Inc., Wachovia Capital Markets LLC and Wachovia Mortgage Loan and Trust LL. Also involved are Nomura Home Equity Loan Inc., Novastar Mortgage Funding Corp., Financial Asset Securities Corp., and RBS Acceptance Inc.

They oppose a July 25 decision from the U.S. District Court for the District of Kansas. They also allege that NCUA did not file its lawsuits within the time limits allowed by law.

NCUA's lawsuits against the banks alleged they misrepresented and omitted material facts in the documents offered to U.S. Central FCU and Western Corporate FCU, and had systemic disregard of underwriting guidelines. The misrepresentations caused the corporates to believe the investment risk was minimal, when it was substantial, said NCUA. The corporates collapsed in 2009 and NCUA is suing as the liquidating agent.

The lower court ruled NCUA's lawsuit could proceed and that certified certain controlling legal questions in the suit.  They include whether the Federal Credit Union Act's "extender" statute--which allows additional time in certain circumstances to file a claim in court--applied to the three-year statutes of repose for filing a case in court, including the three-year statute of repose in the federal Securities Act of 1933; and whether the extender statute applies to federal statutory claims.

Minnesota's CUs boost lending in 3Q

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MINNEAPOLIS (1/17/13)--Members of Minnesota's credit unions borrowed more during the third quarter, a reflection of the state economy's gradual improvement, according  to the  Minnesota Credit Union Network's quarterly report.   

Minnesota credit unions' loan balances increased 1.5% in the third quarter from the prior quarter, and were 4.5% higher than a year earlier (Dolan Media Newswires Jan. 16).

Also, the MnCUN report indicated:

  • Borrowing to finance new autos helped propel the quarterly rise, with volumes increasing 5.7% above June 30 levels.
  • Credit union memberships in the state also expanded by 3.9%, compared with third quarter 2011.
  • Minnesota members' savings continued to grow, with savings balances increasing 8.9 % from a year ago.

Special CU license plates popular with Delaware members

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NEW CASTLE, Del. (1/17/13)--Credit union members in Delaware can proudly display their membership on the backs of their vehicles, according to the Delaware Credit Union League. The league worked with the state's Division of Motor Vehicles to develop license plates available only for vehicles owned by credit union members.

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The CU Tag project was the brainstorm of Robert Walls, former league president. Initiated in 2000, the program required 200 drivers to sign up for the tags. That was accomplished Nov. 1, 2001.

"It was a long process, but we finally have the requisite number of tags to go forward with the printing of these motor vehicle tags that will define the driver as a credit union member," Walls said at the time.

In the past 11 years, the DMV has processed 366 credit union license plate number requests. Proceeds from the CU Tag project go to the league's scholarship fund. The fund provides scholarships for credit union staff training, especially for small credit unions, Alice Smith, the league's communications/governmental affairs director, told News Now. So far, the plates have garnered $4,150 for the fund.

Unlike "vanity" plates offered by the DMV, the credit union license plate does not cost extra when the vehicle owner re-registers the plate every year. To get the credit union plate, the member pays $20 as a one-time fee. The specialty tag is valid as long as the tag holder continues to be a member of a credit union.

Credit union plate numbers can go up to CU 9999, said the league. The numbers are valid registration numbers for motor vehicles and the plate can be used in addition to a member's current license plate. Either plate, or both, can be displayed on the vehicle.