Adulting with American
Whether you're heading off to college or are jumping right into the working world, American is here to help you every step of the way. From planning your budget and buying your first car to protecting your belongings and building credit, we're here to be the steady, sure guide leading you forward. When you bank with us, you get a financial partner for life. Oh, and did we mention free ATMs? We have those, too.
Did we say free ATMS?
We understand you want to get the most from your checking account, whether that means getting cash from an ATM without fees or getting cash back on your purchases. With Community Rewards Checking1, you get both.
Of course, we also offer all the other benefits you'd expect from your bank account including free online and mobile banking, mobile deposit, transfers, a debit card and more.
Speaking of mobile banking...
If you're heading off to college, rest assured you can still bank with American. With our digital banking services, you have the flexibility to bank anywhere, anytime.
One thing that is bound to happen as soon as you turn 21 is credit card companies lining up to offer you a credit card. But there’s a catch: you need credit to get credit!
Credit card companies look at your credit history to see if you’re eligible for a credit card. They are not the only ones; your credit history is used by phone service providers, landlords and money lenders. Your credit plays a big role in all money-related activities, so it may be a good idea to start building credit while you are in college.
What It Means to Build Credit
Credit card companies, banks, lenders and others measure your income against your debt. They also keep track of how timely you are with making payments. Late payments or extreme spending can cause your credit score to go down. You can build credit by paying your bills on time and using your credit card wisely.
Why Building Credit Matters
Your credit history tells lenders about your financial history. A good credit score can affect your interest rates on loans and insurance rates. It can also help with getting a job or securing a loan. If you pay all of your bills and expenses with cash, you won’t have a credit score.
How to Build Credit While You’re in College
Building a credit score early in life can be a smart move. These are some tips for building your credit score:
- Get A Credit Card. If you don’t have a credit card or a loan, then you don’t have any credit history. Be sure to pay your credit card bills on time to improve your credit score.
- Build Credit Responsibly. Use a slow and careful approach. If you have little income, don’t max out your credit cards in an attempt to build credit. It can be very difficult to get out of debt once you start accruing it. The best way to build credit is to spend responsibly, pay bills on time and stay out of debt.
- Joint Credit Card Holders. One of the best ways to get yourself a credit history is to ask your parents to make you an authorized user on their credit cards. Their history may be factored into your history without you even needing to use the card.
- Don’t Apply for Multiple Credit Cards. Having many credit cards is more difficult to manage. The risk is that you could unintentionally take on more debt than you are able to pay when each bill comes due.
- Pay Bills on Time. A good way to keep your credit score high is to pay your bills on time every month. In addition to your credit card bill, pay utility and phone bills on time.
While there are many other ways to build credit, a good starting point is to pay all your bills on time and avoid debt. A good credit score can do a lot for you, and starting as early as possible can give you a boost in life.
Julie Jeske, Private Banking Officer with American, shares tips to maximize your budget, manage debt and avoid income creep. Whether you're just starting out or are well established, these tips can help keep you on track.
Getting your first car can be one of your life’s most memorable moments. The road map below can help you navigate the process of making this exciting purchasing.
- Determine Your Budget. Set a realistic budget that is centered on what you can afford as a monthly payment. To determine this amount, consider all your other expenses throughout the month.
- Know Your Affordability for Each Month. Although this may seem similar to determining your budget, the matter of indebtedness is different than that of monthly commitments. Try to keep your total amount of debt balanced with the value of your assets. By choosing a less expensive car, you can have some leeway within your budget for other monthly expenses.
- Wants vs. Needs. Prioritizing your needs and wants can help you pick the right car.
- Do Your Research. Spend time digging into everything from the suggested retail prices and the invoice prices to the consumer reviews regarding a particular model. This can help you determine which one can best meet your needs and budget. Car dealerships can also be helpful when doing research. However, they are trying to sell their vehicles and they may lure you into purchasing a car that may not fit all of your requirements.
- Finding A Dealership. Going through a local dealership can be beneficial, especially if they hold a good reputation and you can easily take advantage of the car care services they may have to offer.
- Test Drive. Although you might think you have found the perfect car, taking a test drive can change your perspective beyond what you have learned from other customers’ reviews. You will want to take the car for a test drive in the conditions that are similar to your daily routine to determine whether or not to purchase the vehicle.
- Secure Financing. Before you speak to a financial representative from a dealership, work with a financial institution or insurance provider to line up your financing. This gives you more control over the situation.
- Enjoy the Process. Buying your first car may be one of the largest investments you’ll make, and it only happens once. Taking your time and understanding the process can make your first car-buying experience an enjoyable one.
A student loan assists you with the expenses of your academic careers. These expenses may include tuition, housing, the cost of books and more. The types of student loans and the terms at which these loans are given differ with respect to the location and lending organization. Student loans are offered with comparatively low interest rates and repayment terms are flexible during the time when you’re still enrolled in college.
A student loan might be one of your first formal financial agreements. Considering that, it is not something to take lightly as there are resulting payments with specific due dates. You should understand all the details of the loan before signing the agreement.
Types of Student Loans
Loan packages differ with respect to region and lender. Student loans are broadly divided into two types: federal loans and private loans.
Federal loans are offered by the government. Such student loans offer a low-interest rate and adjustable repayment conditions. The terms of the loan might also differ with respect to your financial needs. For instance, students showing financial need might get a subsidized student loan. The U.S. government offers the following types of Federal loans to facilitate students:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS loans for parents
- Direct PLUS loans for graduates
- Direct Consolidation Loans
Rejections are rare in the case of federal student loan applications that meet basic criteria.
Private loans are offered by independent banks, credit unions, insurance companies and other financial organizations. Private loans have their own set of conditions that may differ from the conditions of federal loans. Moreover, the interest rate is usually variable and considerably higher when compared to federal student loans.
Approval for private loans may be more difficult to attain. A credit review and other considerations inform the private institutions’ decision to issue the loan or not.
Types of Loans in Terms of Repayment
The main types of loan are subsidized and unsubsidized. With subsidized loans, it is the responsibility of the government to pay the interest when the borrower has a deferment, such as being enrolled in school or facing financial hardship. With unsubsidized loans, the responsibility of the repayment lies exclusively with the person who acquired the loan.
General Guidelines for Student Loans
- It is your responsibility to provide the lender organization with authentic personal and academic information during the loan application process. An inauthentic piece of information can be considered fraud.
- Take into account all of your financial circumstances along with the options available to you. Compare loans using online loan calculators to determine your best option. Then select the loan type that best suits your situation.
- Understand that having a loan can result in overburdening payments if the decision is not made wisely.
- A detailed discussion with someone who is well versed in the structuring of student loans can be a good option.
- If you decide to pursue further education, share your plan with your lending institution.
- Payment estimators are available online to choose a suitable repayment plan.
- To avoid any inconvenience, read all of the terms and conditions that you are required to follow during the repayment period. Then plan payments accordingly.
Student loans can help alleviate your financial stress so that you can focus on your studies for a successful academic career.
Although the escalating costs of colleges may seem overwhelming, planning for this expense ahead of time can help ease your concerns and financial burden. Here are a few ways to save and manage finances for your child’s educational expenses:
Saving from Day One
The most effective way of building up a budget for a child’s college fund is to begin saving from the time your child is born. You can start by budgeting during your child’s early years and managing their finances accordingly. Don’t get discouraged if you think you are making a limited contribution towards saving. Small amounts can add up and make a difference.
To estimate the total cost of college, consider whether your child is going to attend a state college or private institution. Shortlisting a few colleges can give insights into the approximate amount you and your child needs to save for college expenses. There are online tools available to help estimate costs.
Pre-Paying Tuition Fees
There are many colleges that offer prepaid packages to encourage you to start a fund for your child’s college education. Such packages may allow you to beat rising tuition costs before a child begins college. A few such prepaid plans allow you to save and pay according to their current rates even if your student starts a few years later. Another benefit is the exemption of tax payment on savings specified for the higher education of your child. Tax exemptions may vary depending on state laws.
Use Home Equity
You can choose to wait and use home equity to pay for college expenses as the value of real estate tends to rise with time. This may be a better option than letting your child deal with student loans, because home equity loans come with certain benefits, such as tax exemptions.
Cutting Unnecessary Expenses
There are an infinite number of ways to spend the money you earn, but your spending should not compromise your child’s future education. Closely observe your spending habits and adjust accordingly in order to contribute to a college savings fund.
Scholarships and Financial Aid
Teach children practical life lessons about savings and finance. Motivate them to work hard in their academic years. Academic success is also an indirect investment as it may lead to scholarships. If your child pursues and earns scholarships, funding college can become much more feasible.
By being responsible with how you spend and save money throughout your child’s early years, you can help ensure that your child’s college expenses are manageable.