The real story behind credit unions

By Justin Boyle

In August, I visited a professor I'd gotten to know back in college. Her son had turned 16 in February, and she had co-signed with him on an auto loan from a credit union. But now that the income from his summer job was about to slow down, he was balking on his promise to keep up the payments.

"I shouldn't even have to pay them!" he told his very patient mother. "It's not even a real bank!"

At the end of the conversation (inasmuch as that sort of conversation with a teenager ever ends), the boy did acquiesce to continuing his loan payments. But nobody explained to him what exactly a credit union was, so here's a little help. Matthew, this one's for you.

How credit unions work

According to the World Council of Credit Unions, credit unions go back almost 300 years, to mid-19th century Germany.

By Georgie Miller

When I was still a student, I was pretty much broke all the time. I didn't mind too much though. I knew that when I graduated and got a "real job," my money worries would be over. Right?

But even after I found a great job with a decent salary, I noticed something weird. At certain times of the month, my checking account was overflowing. There was a couple thousand dollars in there! Other times, I would have less than $100, prompting me to worry about what would happen if a check cleared my account a day earlier than I expected.

Feast or famine

Why was this happening? I had added up my monthly spending repeatedly and came out in the black. Then one day I was putting the due dates for my bills on my calendar, and I noticed something.

The first of my two student loan payments was deducted from my account on the 28th. The second was deducted on the first. My rent was also due on the first. And the credit card that I used for my monthly spending was due on the 29th.

In other words, more than 75 percent of my spending occurred during the same one-week period every month. No wonder I was broke around that time! If you are finding yourself in a monthly cycle of rich one minute, poor the next, here are some strategies to better manage your cash flow.

By Peter Andrew

Given that the story of my personal finances has been punctuated by small and not-so-small disasters, it's pretty amazing that I've never been flagged personally by ChexSystems. But for those who have been flagged by the company, is there any hope of clearing the record and regaining access to most checking accounts?

What is ChexSystems?

ChexSystems is like a credit bureau in that many financial institutions check with it before opening new accounts. Also like those bureaus, it's a "consumer-reporting agency" under the Fair Credit Reporting Act (FCRA) and some other federal laws.

However, there are some important differences between ChexSystems and a credit bureau. ChexSystems doesn't continually monitor a range of your accounts for late payments and other minor delinquencies. Nor does it deal in credit scores.

Instead, it maintains a register (some might call it a blacklist) of people who've fallen foul of their banks or credit unions.

By Holly Johnson

A couple of years ago, my husband and I worked together at a local funeral home. Unbeknownst to me, an unexceptional weekday turned out to be "Administrative Professionals Day." I had never heard of this "holiday," but when I arrived that morning I found a large vase of fresh-cut flowers at my desk. The card read "Happy Administrative Professionals Day" and was signed by a few co-workers, including my husband. "What a nice gesture," I thought as I started the day's work.

Then I got the bill.

Apparently, another co-worker had arranged the surprise for the three administrative workers in our office. And although my husband thought it was strange that he should have to buy his wife flowers for this seemingly contrived holiday, he agreed to participate. After all, he didn't want to be the only person who didn't take part.

But after realizing that I had effectively bought my own flowers, I no longer felt very appreciated at all. "Some people love to spend other people's money," I later said to my husband, shaking my head.

Resisting office spending

The pressure to spend on workplace functions is common in many offices. In these settings, well-meaning coworkers may appear to hunt for situations that separate you from your hard-earned cash.

By Jeffrey Steele

Though much of my life, I've had a reputation as a tight-fisted, penny-pinching pinchpenny. "The cheapest guy I ever met," is how one friend of 30 years refers to me, with just a hint of a smile crinkling her face.

Am I bothered by my reputation as an abstemious tightwad? Not a whit. I see it as evidence of my other reputation as a true rebel. In a society where the Great Marketing Machine informs us we are to spend every cent we have (and even some we don't) on items to help us keep up with the Joneses, I enjoy my standing as a non-conformist who marches to his own personal finance drummer.

Among ways I pinch pennies are three oft-overlooked approaches to economizing and building a savings account. I recommend them, having profited from each.

1. Coupon books

Thanks to Groupon and similar businesses, we've all become aware of deal-of-the-day coupons. For some of us, coupons have been a way of life for longer than many Groupon users have been alive.

By Justin Boyle

I was at the house of a songwriter friend of mine who recently came back from a tour of Texas and Oklahoma, and he showed me an unusual souvenir he picked up on the road: a bill for the credit card he used to buy gas for the trip.

While that might not be a strange souvenir for most people, for him it was practically unheard of. As long as I'd known him, he had never had a credit card. He had been careless with credit in his early 20s, and for years he had been unable to get a decent rate from a credit provider.

After years of collection-agency calls and a near-bankruptcy, he's far from careless now. But not everyone has had the opportunity to learn good borrowing behavior the hard way.

If you don't want to learn the hard way, here are six things you may want to avoid as you build your credit history.