Am I Ready for My First Credit Card?

After being approved for your first credit card, it's completely normal to be cautious about your spending. If you're new to the world of credit, navigating scores, applications, interest, and terms can be confusing and may worry you when it comes to making a responsible decision. Use these tips to help you prepare for your next financial milestone.

Understanding Your Credit Score

Whether you're a college student, just started your first job, or simply have relied on the cash in your bank account until now, becoming familiar with your credit score and the factors that impact it is an important step in your journey to understanding how financial institutions and other lenders evaluate your credit application. Here's an overview of the details that will be carefully reviewed:

• Credit utilization
• Number of late payments
• Number of open accounts
• Length of credit history
• Hard inquiries on your credit score (simply put, a credit check)

There are tons of different models out there that identify ranges of "good" credit scores. According to Equifax, credit scores between 670 to 739 are considered good; 740 to 799 are considered very good; 800 and up are deemed excellent.

If You Can't Pay It, Don't Spend It

Yes, credit cards are a great tool for making large purchases and improving your credit score, but you shouldn't confuse credit with free money. You'll need to pay back every dollar you spend, often including interest. In the case of credit cards, interest is the amount you pay in addition to money charged to your card. Interest is calculated against the principal amount borrowed from the lender; consider it as paying the financial institution for loaning you money.

Make Payments on Time

To avoid a drop in your credit score that could prevent you from getting other credit cards, mortgages, and loans, you should keep track of when your payments are due and create a payment schedule—many mobile banking applications allow you to set up automatic payments.

Find a Credit Card That's Right for You

There are plenty of options for credit cards out there, and trying to figure out what the best option is can be overwhelming on your own. Take advantage of financial planning services from your bank to help reach your long- and short-term financial goals. Getting approved for your first credit card on your own, especially if you're under 21, can be especially difficult. It may be worth considering asking another adult in your life to add you as an authorized user on their credit card, or to co-sign on a student credit card.

The trusted financial advisors at Liberty National Bank can help you or your child navigate the complexities involved with applying for a credit card for the first time. We serve customers throughout central and northwest Ohio and offer a variety of resources to help them make informed financial decisions. Speak to a member of our team today to learn more about how we can provide support.

Tips for Teaching Your Teen How to Budget

Parents play a crucial role in teaching their teens about spending, saving, and earning money. As your kids get older and start considering college or living on their own, they may have questions about opening their own bank account and how to manage their finances. Use these tips to introduce budgeting to your teenager.

Set a Good Example

As your kids grow up, they are constantly observing and learning from your behavior to prepare for adulthood. Show your kids the importance of smart spending and how to make important financial decisions by serving as a role model. You can help your teen gain a better understanding of how to be responsible with their funds by including them in everyday financial decisions, such as running errands and finding better prices when you're out shopping. Share some of the mistakes you've made to highlight pivotal lessons on money management.

Give Them Financial Responsibility

Motivate your teen to be proactive about their finances by making them responsible for expenses like gas and going out with friends. Review their monthly expenses together, create a budget for your child to stick to, and provide advice for unexpected costs to help them learn along the way. If your child is considering a large purchase, like a new cell phone or paying for their car insurance, help them create a plan for managing monthly payments. The earlier you can introduce your child to handling their own expenses, the more experience they'll have when they finally live independently.

Nurture a Habit of Saving

Purchasing only the things you can afford is an important life lesson to pass on to your children. If you emphasize a habit of always saving some of their money, they'll certainly appreciate it in their adult life. Encourage your teen to put aside money in a bank account for large purchases and emergencies. Even if they haven't found something they'd like to purchase, continue to express the importance of having a healthy savings account.

At Liberty National Bank, residents in Northwest Ohio can get personalized financial planning support for important decisions, such as saving for your children's education, investing money for retirement, or purchasing a vacation property. Contact us to learn more about how we can help you plan for the future.

Alternatives to Traditional, In-person Banking

With the outbreak of COVID-19, it's advisable to keep away from public places as much as possible, even if you aren't ill. Online banking provides convenient services for both business and personal customers that can be utilized without visiting a branch.

Online Banking

Liberty National Bank allows customers to open their bank accounts online. This is an easy way to reduce the need for in-person banking; you get to do it right from home and complete your transactions digitally, saving you the stress of venturing outside your home. You can complete our online banking application here.

Mobile Banking

The mobile banking option lets you complete transactions directly from your phone at any time. You can view your banking history and balances even when you are on the move. This banking option can be used from any smartphone or tablet, regardless of the service provider, model, or make.

Additionally, you can deposit checks into your accounts by using your mobile phone's camera. This feature saves time by allowing you to make deposits without taking a trip to the ATM.

Prepaid Cards

Prepaid cards are convenient banking options that are great for helping you stick to a monthly budget. They are similar to credit cards, but there's a maximum limit that allows you to access a certain amount of money in your account. You can get your prepaid card from Liberty National Bank and use it anywhere that MasterCard® or Visa® is accepted.

Debit Card

The debit card from Liberty National Bank can be used across Northwest and Central Ohio and in the rest of the country at any store that accepts MasterCard®. You can also safely use the debit card to withdraw cash from any ATM in the world that has a Visa® or MasterCard® logo.

Learning to stay away from crowded places is the surest way to stay healthy at this time. At Liberty National Bank, we want to make sure you have all the tools you need to manage your finances from home. We have implemented alternative banking options for all of our customers. If you have any questions at all about making transactions, bill payments, mortgage applications, or any other online banking matters, please call us at 419-634-5015.

Are You Ready for Homeownership?

Roommates and rent increases eventually get old, so it may be the right time to start thinking about homeownership. Owning a home builds equity, comes with tax advantages, and gives the homeowner control over their living space. Becoming a homeowner comes with great responsibility—financially, emotionally, and practically. Before becoming a homeowner, consider these three factors.

Think About the Motivations

Anyone finding themselves in a situation of buying a home should think about their lifestyle, budget, and long-term plans. For example, if the goal is to travel the world or move across the country, it would be better to work toward those goals instead. It's also wise to consider plans for the home in the event of unexpected life circumstances, such as a surprise job opportunity in another state. Coming up with a plan—such as turning it into a rental property—can help potential buyers feel prepared for homeownership. A loan officer is a great resource for first-time buyers who aren't sure whether to start shopping.

Consider Every Expense

While some people do pay more to rent than they would to own, consider all the costs associated with homeownership. Besides the mortgage payment, property taxes and homeowners insurance, for example, are expenses to owning a home, although they can be built into the monthly payment. Additional costs to consider include neighborhood fees, utility bills, and lawn care expenses. On top of that, homeownership means no more maintenance man to fix the broken A/C unit or repair the roof—those financial burdens are the sole responsibility of the homeowner. Preparing a budget including these costs will help determine if homeownership is the best choice.

Ensure Savings Are Healthy

Speaking of financial stability, a savings account is very important for any buyer. Homeowners should have extra money in case of unexpected situations that may occur. From job losses to illnesses, life happens. Homeowners should have enough in savings to cover the mortgage for several months in the event of an unfortunate circumstance. Failure to do so could lead to unfortunate financial consequences. Anyone not prepared for an interruption in income should meet with a financial planner or continue to pad their savings account until they're better equipped to handle such situations.

Start the Journey With Liberty National Bank

Whether it's your first home or downsizing for retirement, Liberty National Bank can help you prepare for whatever's next on your homeownership journey. As a community bank, we'll treat you as more than just an account in our system. We'll work to understand your specific situation to best help you accomplish your homeownership goals. Visit your local branch at one of our six locations in Central and Northwest Ohio to learn more.

Real Estate Loans 101: Home Equity Loans

If there's one thing every adult knows, it's this: life is expensive. But that doesn't mean that going to college, starting a business, or renovating a home is out of reach without a padded savings account. For many people who own a home, a home equity loan can be a viable solution to cover some of life's major expenses.

What Is a Home Equity Loan?

Often referred to as a second mortgage, a home equity loan offers homeowners a way to borrow against the value of their home in order to remodel, pay for repairs, consolidate bills, or cover other major expenses. To qualify for a home equity loan, a homeowner must have built equity into the house. Equity is the difference between the home's appraised value and the balance owed on the mortgage. For example, if a home is valued at $150,000, and the homeowner owes $50,000 on the mortgage, they have built up $100,000 in equity. The home equity loan allows the homeowner to borrow up to the amount of equity—in this case, $100,000—using the home as collateral. With this type of loan, a homeowner receives a large lump sum of cash upfront and repays it over time through fixed monthly payments.

Isn't That a Home Equity Line of Credit?

Home equity loans and lines of credit (HELOC) are both types of real estate loans, but they aren't the same. While a home equity loan offers a lump sum of cash, a HELOC can be thought of more like a credit card. Instead of a lump sum, it comes with an approved maximum amount the homeowner can borrow against at any time.

Benefits of a Home Equity Loan

The biggest benefit of a home equity loan is that it provides homeowners with one lump sum of cash to cover major expenses, as long as they've built equity into the home. They come with fixed rates, which means payments are predictable from month-to-month. Interest is tax-deductible if the cash was used for home renovations. And good news for homeowners without stellar credit: it's often easier to qualify for these loans than other types of consumer loans since the home itself serves as collateral, according to Discover.

Apply for a Home Equity Loan Today

Whether your kitchen looks outdated or you need a new roof, borrowing against your home's value can be a smart financial decision for many homeowners. Liberty National Bank is a community bank offering home equity loans at a low fixed rate to help local homeowners cover nearly any major expense. Our loan specialists will attempt to help you secure a loan based on your unique circumstances. Call Liberty National Bank at 419-634-5015 and apply for a loan today.

What Banks Look for in Small Business Loan Applications

It takes money to make money, but many entrepreneurs lack the capital to get their business off the ground. Many lenders offer solutions to give small business owners the funds they need to get started, operate, and expand. Not everyone will be approved for a small business loan, but understanding what banks look for when making their decision can help improve an applicant’s chance of approval.

The Game Plan

 Lenders want to be repaid, so they want in on the game plan, including exactly where the funds will go. Applicants should develop a detailed business plan that includes a description of the business and its leadership team, products and services, and short- and long-term goals, plus financial projections backed by a strategy for growth. Supplying the lender with as much information as possible may help build their confidence in granting the applicant a business loan. 

Creditworthiness 

Credit history doesn’t always make or break lending decisions, but most lenders will take the applicant’s creditworthiness into consideration. A solid credit history conveys that a business owner has maintained good relationships with other creditors. Other debt obligations will also be evaluated to assess the applicant’s ability to pay. Those with poor credit histories might consider paying down debt and raising their credit score before applying to improve their chances of 

approval. 

Collateral 

Lenders will also take an applicant’s collateral into consideration when evaluating their loan application. Collateral can be real estate, vehicles, equipment, inventory, accounts, or anything else of value the applicant is willing to lose should they be unable to repay the lender. If the applicant fails to repay the loan, the lender will have the right to seize any of these agreed-upon assets to recoup its losses.

Apply for a Loan Today 

This is not an exhaustive list of everything lenders consider when making a lending decision. However, establishing a game plan, building a solid credit history, and coming to the table with collateral can improve a business owner’s chances of securing a small business loan. If you’re considering starting a new business or expanding your existing one, apply for a loan with Liberty National Bank. As a small community bank with six locations in Central and Northwest Ohio, we take more than just a credit score into consideration. We may be able to help fund your small business and provide you with other business checking services. Call Liberty National Bank at 419-634-5015 or visit a branch near you to learn more.