The page has been set up as a resource for you, our customer.  We will continue to add more information regarding banking terms and how they work so you can be a more informed consumer. 

What is Credit and how does it work?

You probably use credit on a daily basis.  But, even if you use credit every day, you might still have questions about credit and how it affects you.

What is a Credit Report?

A consumer credit report is a document that contains a factual record of an individual’s credit payment history.  Banks, retailers, credit card issuers, and other lenders are permitted by law to review your credit report to objectively determine whether to grant your credit. 

Credit reporting agencies provide your credit report to lenders when you apply for credit, they do not make actual lending decisions.  It is up to individual lenders to evaluate your credit report and any other factors they consider important and then decide whether or not to offer you credit. 

How long does information stay on my credit report? 

Positive credit information remains on you report indefinitely, although information about an account will cycle off your report if no new information is reported about it for seven years. 

Most negative information remains for up to 7 years.  Bankruptcies can remain on your credit report for up to 10 years.  Other public record information can remain for up to 7 years.  Most inquiries stay on your credit report for up to 2 years.

What is the difference between a Traditional IRA and a Roth IRA?

The Traditional IRA (Individual Retirement Account) is designed as a way to reduce taxable income and earn money tax-deferred.  The principle benefit of a Traditional IRA is deferral of taxes on the investment (and investment income) until withdrawals are made.  Assuming you have at least $2,000 in taxable compensation or earned income or meet other eligibility requirements, you can contribute to a Traditional IRA up to a limit of $3,000 annually, and the contribution may be tax deductible.  Your taxable income for the year may be reduced by the same amount as your total yearly contribution, and you may then have a lower tax bill. 

When you retire, and start withdrawing money from the Traditional IRA, the withdrawals will count as ordinary taxable income at that time.  So you can possibly save money by reducing your tax bill now, you accumulate money in the account tax-deferred, and it may be that, when you do pay tax on the withdrawals, your tax rate will be lower than it is currently.

If you take withdrawals before the age of 59 ½, you’ll owe taxes on the amount withdrawn and be assessed an additional 10% penalty.  You will also be penalized if you don’t start withdrawing money by the age of 70 ½.

A Roth IRA allows only nondeductible contributions, but features tax-free withdrawals for certain distribution reasons after a five-year holding period.  There are two requirements for eligibility to contribute to a Roth IRA: You may contribute any amount earned income (or a spouse) and your modified adjusted gross income (MAGI) cannot exceed certain limits. You may contribute any amount up to 100% of your earned income or the maximum contribution amount, if your MAGI are within prescribed limits.

You do not pay taxes on your earnings provided you take the earnings as part of a qualified distribution.  That’s the best part of the Roth IRA.  Unlike a traditional IRA, you cannot take a tax deduction for any of the contributions that you make to a Roth IRA.  However, when you are ready to make a withdrawal, you pay no taxes on any of the earnings that your contributions have generated.

A helpful feature of the Roth IRA is that for nonqualified distributions, original contribution amounts are returned first.  Contributions are not subjected to taxation or the 10% premature distribution penalty tax when distributed.  In other words, you can always withdraw your principal income tax free and penalty tax free for any reason.

What is a Rollover IRA?

Direct Rollover IRAs (Individual Retirement Account) are of your interest mainly if you are retiring or changing jobs.  For Example, if you have $25,000 in a 401(k) and leave the employer who sponsored it, you might choose to take a cash distribution.  But rolling the 401k directly into a Direct Rollover IRA may enable you to avoid the substantial taxes and penalties that could go along with the distribution, and it can also enable you to go right on enjoying tax deferred earnings. 

How Do I Move Funds From One IRA to Another?

There are two methods you can use to move funds from one IRA to another, rollover and transfer. For a rollover, you have 60 calendar days following the date of receipt to roll over the distribution to another IRA. Rollovers from IRAs may not occur more than once during a 12-month period (this rule applies to each separate IRA you own). A transfer occurs when the funds are moved from one IRA to another without you having control or custody of the funds. There are no time or frequency limits on the number of transfers permitted.

An eligible QP, TSA, or 457-plan distribution may be a direct rollover or a rollover into an IRA. Generally, an eligible rollover distribution is any distribution except one that is (1) part of a series of substantially equal periodic payments over your single life expectancy or joint life expectancy of you and your beneficiary or for a specified period of ten years or more, (2) a required minimum distribution of an employee, age 70 ½ or older, or (3) any hardship distribution.

Debit Card Info

For the first time, more consumers are now using debit and credit cards (52 % combined) for in-store purchases than cash and checks (47 percent), according to the American Bankers Association and the Dove Consulting firm. Cash, while still the payment of choice of 32 percent of Americans, is only slightly ahead of debit card use (31 percent) and down from its 1999 level of 39 percent, according to the study. Checks account for 15 percent of all in-store purchases.