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What is a Certificate of Deposit and What Are its Pros and Cons?

ASB April 13, 2023 | 4 MIN read Personal

Savings accounts aren’t the only option you have when saving for the future. A Certificate of Deposit (CD) can also help you reach your goals. CDs come with fixed interest rates, so you’ll know exactly how much you’ll earn on each deposit. You may even get a better interest rate than a regular savings account.

At American Savings Bank, we’re here to provide you with a safe and secure way to grow your savings. Read on to learn more about CDs and how to get started saving today.

budgeting

What is a certificate of deposit (CD)?

A certificate of deposit (CD) is a type of savings account with a set interest rate and a specific withdrawal date. This means you’ll earn a fixed amount of interest, compounded daily, over a set number of days, months or years. When your CD reaches the end of the set period, called the maturity date, you can withdraw your initial deposit and the interest you’ve earned.

ASB and other banks offer fixed interest rates on CDs because you agree to keep your money in the CD account until the scheduled date of withdrawal. Unlike a normal savings account, your CD interest rate does not fluctuate. Keeping your money in the account for a set term also makes it easier for banks to offer higher rates than regular accounts.

It’s important to be careful with CDs, as taking your money out before the maturity date could result in early withdrawal penalties. It’s best to plan ahead when opening a CD: consider using a separate savings account as a rainy day fund in addition to your CD, so you’ll still have access to cash in case of an emergency.

Common Certificate of Deposit (CD) Terms:

  • Rate: The fixed interest rate you’ll earn during the length of your CD.

  • Term: The set period of time you agree to keep money in your CD.

  • Maturity Date: The scheduled end of your CD term. You can withdraw your money without early withdrawal fees starting on this date.

  • Minimum Deposit: The minimum initial deposit to open a new CD.

  • Principal Deposit: This is the amount of your initial deposit into your CD. You can usually deposit any amount over the minimum required deposit.

  • Withdrawal Penalty: The fee you may incur for withdrawing money from your CD before its maturity date.

  • Jumbo CD: A special type of CD designed for large deposits.

  • Annual Percentage Yield (APY): The rate of return taking into account the effect of compounding interest.

mom and daughter

Pros and Cons of Certificates of Deposit (CD)

Like any type of financial account, CDs come with advantages and disadvantages. It’s a good idea to weigh the pros and cons of a CD before you open an account.

Pros:

  • Higher Returns: CDs generally have a higher rate of return than a regular savings account.

  • Fixed Interest Rate: The interest rate of a CD is fixed, meaning it won’t change over the course of the term.

  • Safe Investment: A CD is often one of the safest investments you can make. They provide a guaranteed return and are federally insured.

  • Range of Terms: Most CDs offer a wide range of terms.

Cons:

  • Limited Access to Cash: Your money will need to stay in the CD account until the maturity date to avoid paying an early withdrawal fee.

  • Risk Rising Interest Rates: You could end up with a below-average interest rate if rates increase during your CD term. However, having guaranteed earnings could outweigh the potential rise in interest rates.

When should you get a CD?

CDs are a low-risk savings option that can help most people save for the future. You might want to consider using a CD, instead of a traditional savings account if you:

  • Have a Specific Savings Goal: Are you saving for a new car, down payment on a home or just a new set of furniture? A CD is an easy way to save for the future while earning fixed interest on your savings.

  • Won’t Unexpectedly Need the Money: A CD is a good option for saving if you already have a separate savings account for emergencies.

  • Are Risk-Averse: You could potentially see higher returns by investing your money into stocks or bonds. However, those investments could be volatile and risky. Investing in a CD is a safe option for risk-averse investors.

Wondering how much you could earn from a CD? Try our CD calculator to get a better idea of the growth potential of your initial deposit.

Ready to open a CD? Apply online today or make an appointment with one of our helpful bankers to get started!

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ASB Is Proud to Celebrate National LGBTQ Pride Month

ASB June 01, 2021 | 5 min read Community

Happy National LGBTQ Pride Month! We’re proud to support the LGBTQ community all year long – including during National LGBTQ Pride Month every June and Honolulu Pride Month every October.

At ASB, individuals from all backgrounds, interests and sexual orientations are accepted and supported. And, it’s just as important to create a safe space and inclusive environment that encourages people to talk about and celebrate each other’s unique differences.

“I grew up on the mainland in California and my sexuality and race were always at the forefront of every conversation I had, whether with old friends or new acquaintances,” said Nicholas, a teller at the Kehalani Branch. “I now live on an island that has not only embraced my sexuality but has helped me to accept who I am. Ever since I became a part of ASB I have seen so much support for those of us in the LGBTQ+ community, which let me tell you, was surprising but also refreshing. Thank you, ASB, for accepting me for me!”

“Honestly, throughout my life, I’ve never really been proactive in my LGBTQ pride and always sat in the background - watching everyone else make strides forward,” says Ty, a digital marketing manager. “What’s great about ASB is that they give teammates an opportunity to grow and develop. These opportunities not only help me to grow professionally, but also helping me to step into who I’ve always wanted to be – a proactive LGBTQ member who has healed from past trauma, now ready to support those around him.”

ASB is proud to be a workplace where teammates feel welcome and empowered to be their most authentic selves. Stay tuned for more information on how we plan to celebrate Honolulu Pride Month in October.

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Comparing Mortgage Rates in Hawaii

ASB May 27, 2021 | 5 min read Personal

Shopping for a home in Hawaii? Comparing mortgage rates is an important step in the home buying process. A lower interest rate could potentially save you thousands over the life of the loan.

Interest rates aren’t the only thing to consider when shopping for a mortgage, however. In this article, we’ll take an in-depth look at what you need to apply for a mortgage and how to compare rates from different lenders or loan programs.

What is a mortgage rate?

Mortgage rates are simply the interest rate charged on a home loan. Your rate could be fixed, meaning it doesn’t change over the course of the loan. You can also choose an Adjustable Rate Mortgage (ARM), which has a fixed rate for a set number of years before switching to a variable rate that fluctuates based on a benchmark rate.

In addition to the interest rate, you need to be aware of the Annual Percentage Rate (APR). An APR is a broader measure of the cost of borrowing money than the interest rate. The APR reflects the interest rate, any points, mortgage broker fees and other charges that you pay to get the loan. For that reason, your APR is usually higher than your interest rate.

Mortgage lenders like American Savings Bank publish current rates to give you an idea of what type of mortgage rate is available. It’s important to remember these rates are not guaranteed. If you qualify for a home loan, your rate will likely be different based on personal factors such as your credit score.

couple buying home

Determine your preferred type of home loan

In addition to personal factors, the type of loan you use to purchase your home can affect your mortgage rate. Common types of home loans in Hawaii include:

  • Conforming Loans: This type of loan often has the most competitive interest rates and is best for Hawaii residents with established credit. The home you want to buy must meet certain eligibility requirements.

  • Jumbo Loans: Home prices in Hawaii are higher than elsewhere in the US. If you need financing over the maximum limit for conforming loans, a Jumbo Loan can help you purchase your dream home.

  • First Time Home Buyer Loans: Buying your first home is one of the biggest financial decisions you’ve probably ever made. Luckily, mortgage programs for first time buyers make it easy to get into your first home in Hawaii. Many first time home buyers can get a low down payment requirement, but you may have to pay for mortgage insurance.

  • VA Loans: Are you an active-duty military member or veteran? The US Department of Veterans Affairs (VA) provides a mortgage program to eligible service members and certain surviving family members. Benefits of a VA loan include no monthly mortgage insurance, financing for the VA funding fee, and low or no down payment requirements.

  • USDA Loans: The US Department of Agriculture offers home loans in eligible rural areas of Hawaii through the Rural Development loan program. These fixed-rate mortgages don’t require monthly mortgage insurance and can be used to finance the entire purchase price of your home.

Gather the right documents

Lenders will ask for documentation when you apply for a home loan. Even if you’re only looking for a pre-qualification offer, most lenders will want to see proof of income. Common documents you might need to get a quote for a mortgage include:

  • Recent tax returns

  • Two or more years of W-2s

  • Bank statements

  • Investment accounts statements, including brokerage accounts and retirement accounts like a 401(k)

  • Debt records if you have other loans, like a car loan or student loans

You’ll also need to check your credit score. Your credit score is one of the biggest factors in your ability to secure a home loan and can have a big effect on the rate you receive if you’re approved. If your credit score is lower than you hoped, consider trying to increase your credit score before you apply for a mortgage.

mortgage rate graphic

Shop for mortgage offers

You’ve decided on a loan type, collected the right financial documents, and know your credit score. It’s time to start applying for mortgage offers.

The easiest way to do this is to look for lenders who offer online mortgage applications, like ASB. Online applications make it easy to apply for multiple lenders without visiting each in person. You’ll likely get mortgage offers faster, making it easier to compare the rates offered by different lenders. If you get stuck or have questions, mortgage loan officers are often just a phone call away to help guide you through the application.

Does Shopping for a Mortgage Hurt my Credit Score?
Shopping for any type of loan — including mortgages — can potentially lower your credit score. The good news is this decrease is usually a temporary drop that corrects itself in a few months for most people.

The reason your score might drop is that lenders often request a hard inquiry, or pull, of your credit report. Hard pulls could drop your credit score, but most credit scoring models count multiple hard pulls for the same types of loan as one inquiry.

That means you should apply to multiple lenders at one time, instead of waiting a few months between applications. For example, you apply to three different lenders within one week. Your credit report will likely only have one hard inquiry reported. However, you should avoid applying for multiple types of loans — such as a car loan and mortgage — at the same time.

How to compare mortgage rates in Hawaii

Mortgage lenders are legally required to provide you with a Loan Estimate within three business days of your application. The Estimate is a three-page document that lists the loan amount, interest rate, and fees associated with the loan.

Loan Estimates are the easiest way to compare mortgage rates and costs in Hawaii. As a standardized form, the Loan Estimate from each lender will have the exact same information. This gives you a simple way to compare rates between lenders side-by-side.

While the Loan Estimate is just an estimate, lenders aren’t allowed to change certain information on it. This means you’re unlikely to see major differences between your Loan Estimate and the final mortgage terms.

Get Pre-Qualified for a mortgage in Hawaii

Ready to start shopping for the best mortgage rates in Hawaii? The home loan team from ASB is your expert resource on financing a home in Hawaii. We’ll help you compare loan programs to find the one that works for your unique financial situation. Learn more and connect with a loan officer by getting pre-qualified or applying for a home loan from ASB.

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Checking vs. Savings Accounts: Differences Explained

ASB July 17, 2024 | 5 min read Personal

Two of the most popular types of bank accounts are checking and savings accounts come with features that can benefit your financial health. Unsure what the difference between checking and savings accounts is, or what’s right for you? We’re here to help you learn more and show you how to get started with a new account.

What is a checking account?

A checking account is a bank account that allows you to access your money with a debit card, checks, online banking or an ATM. Checking accounts are designed for frequent transactions like paying bills and withdrawing cash. You can also set up direct deposit to your checking account from your employer.

What is a savings account?

A savings account is a bank account that is designed for saving money over time rather than frequent transactions like a savings account. Savings accounts typically have higher interest rates than checking accounts to encourage saving rather than spending.

Differences between checking and savings accounts

The main difference between a checking account and a savings account is that Checking accounts are often used for convenient access to funds via a debit card, ATM or check while savings accounts are primarily for saving money. Most money won’t stay in the checking account for long because you’re using it to pay your bills and other expenses or transferring it for savings. Savings accounts, on the other hand, are usually used to save money for financial goals. This could include both short-term and long-term goals, like a new pair of shoes or a down payment on a house. 

Checking and savings accounts usually have different restrictions and benefits based on the account type. For example, funds in most savings accounts are relatively harder to access for payment purposes compared to funds in most checking accounts. However, most checking accounts don’t earn interest, while almost all savings accounts earn interest on the money you deposit.

mother budgeting

Pros and cons of checking accounts

Exploring the pros and cons of each type of account can help you get a better idea of what’s best for you. Let’s explore the pros and cons of checking accounts first.

PROS:

  • Easy Access to Your Money: Want to use your funds right away? Most banks, like American Savings Bank, give you different ways to access your funds. At ASB, your account comes with a contactless debit card that can be used to make purchases at stores and online or withdraw money from an ATM. You also receive access to checks and mobile payment services via Online Banking to make it easy to use your account.

  • Track Your Spending: Online Banking makes it easy to keep an eye on your spending and manage your budget. Simply log into your account to see your expenses – you can even filter by time period!

CONS:

  • Little to No Interest: The majority of checking accounts don’t earn interest. If you leave your money in the account and don’t touch it, the balance is unlikely to grow over time.

  • ATM Fees: You may have to pay a fee if you use your debit card to withdraw money from an ATM outside of your bank’s network. You can avoid this fee by using an in-network ATM or signing up for a checking account that reimburses your ATM fees.

Pros and cons of savings accounts

Savings accounts are great if you want to grow funds for a rainy day, or long-term savings.

PROS:

  • Earn Interest: Most savings accounts earn interest on the balance. Your money will grow over time — especially if you never touch it. The more you save, the more you’ll earn, getting you closer to your savings goals!

  • Good Money Management Habits: Having a savings account helps you to save more by giving you a safe place to deposit extra money, accessible in an emergency or for your next big purchase.

CONS:

  • Limited Access to Funds: Due to the nature of savings accounts, savings accounts usually have fewer ways of accessing the money in your account. Most savings accounts don’t come with a debit card or checkbook. You also probably won’t be able to make online purchases. The good news is that limited access to your money could help you save more in the long term.

mother budgeting

Are checking and savings account safe?

Both checking and savings accounts keep your money safe. Banks that are FDIC-insured have insurance backed by the federal government. That means your money is safe and insured up to a certain amount. Even if the bank closes or runs out of money, your money is safe in a checking or savings account. 

Other types of accounts don’t have FDIC insurance to protect your money. Stocks and other investments, for example, are not FDIC-insured. Your investment accounts could potentially lose money during a recession or other turbulent financial times.

Checking Accounts vs. Savings Accounts: Which is Best for Me?

The right account for you depends mostly on what you plan to use the account for. 

A checking account might be the best choice if you:

  • Plan to use your account for everyday expenses like groceries or gas.

  • Need a payment account for monthly bills like rent or car insurance.

  • Want convenient access to your money using checks or a debit card.

You might want to open a savings account if you:

  • Want to save for a future purchase, such as a new car or education costs.

  • Have regular deposits that you can earn interest on, such as from your paychecks.

  • Don’t want to be tempted to use money in the account.

Many individuals open both checking and savings accounts to get the benefits of both. Having both types of accounts lets you access your money when you need it while also earning interest on long-term savings. Consider opening a checking and savings account together if you:

  • Need easy access to your money but want a safe place for long-term growth.

  • Want to link your bank accounts for easy transfers between checking and savings.

Need help picking the right account?

It’s not always easy to find the right account for your financial situation. Make an appointment with an ASB banker to see which account fits your needs best and get started with opening one today.

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The Ins & Outs of Business Loans

ASB May 17, 2021 | 5 min read Business

Are you a business owner? A business loan can help you to cover unexpected expenses, explore a new market or grow your company. No matter what your dreams are for your business, we’re here to help make them possible. Read on to learn about the different types of loans available to help you finance your business’ needs.

business owner

Does your business need a loan?

Most businesses will need a loan at some point to help with a major financial milestone. Business loans can be used for just about anything. Here are a few common scenarios where these types of loans can help:

  • Starting Up: Starting a business is exciting, but it can also be expensive. A business loan can help you to set up your business licenses, secure a commercial lease and cover other start-up expenses.

  • Expansion and Growth: Is your business growing? Whether you’re considering opening a new location or want to move to a larger office space, a business loan can help you to manage the upfront costs, such as signing the lease on a new location.

  • Managing the Unexpected: Say your equipment breaks down due to a natural disaster such as a hurricane or major storm. It could take you weeks, or even months to get everything fixed and back to normal. This could cause your business to come to a standstill. Business loans make it easier for you to get the cash you need in emergency circumstances, such as covering a major repair or replacement of important equipment.

  • Get Up and Moving: Depending on the type of business you own, you may require a company car to complete your work. Even a used car can be a big expense for your business. Financing the purchase with a loan can help you to spread the cost of the vehicle over time so your cash flow isn’t disrupted.

Types of business loans

Now that you know when and why you might need a business loan, learn how to pick the right loan for you and your business. Different loans serves different purposes to help you meet your business needs.

BUSINESS TERM LOAN
A Business Term Loan is an installment loan you can use for almost any business expense. Installment loans have a fixed interest rate, fixed payments, and predictable payments. This makes them perfect for fixed assets like new equipment, consolidating business debt, or getting more working capital to expand your business. At ASB, we offer loans starting at $10,000 with no annual fee and competitive rates.

SBA LOAN
The Small Business Administration (SBA) offers loan programs for small business owners to help you finance the things your business needs. ASB helps qualified business owners, who have an operating history for at least 1 year, apply for and secure SBA loans up to $50,000.

SAVINGS SECURED LOAN
Need a business loan, but worried you don’t have a strong enough business credit score to qualify for a loan? You can use the money in your business savings account as collateral to get a Savings Secured Loan. Depending on how much your business has in savings, you could get up to 90% of your savings balance as a business loan. You’ll enjoy a fixed interest rate and terms up to 60 months.

business owner

How to choose a business loan

There are many factors to consider when researching business loans, including:

  • Repayment Term: This is the length of time you’ll have to pay back your loan. Longer terms usually have lower payments, but you’ll likely pay more in interest over the life of the loan. Be sure to consider your future business plans, like goals for expansion, when deciding on the length of your loan.

  • Interest Rate: This is the amount of interest you’ll pay on your loan. Many business loans feature fixed interest rates, making it easier to calculate how much total interest you’ll pay for the loan.

  • Funding Timeline: How long will it take for your lender to deposit your loan funds? Some loans can be funded faster than others, so be sure to talk to your business banker about your funding timeline.

  • Loan Fees: Business loans often include fees to cover the costs of reviewing your application and funding the loan. Common loan fees include application fees, loan origination fees, and annual fees to cover administrative costs of the loan. Certain business checking accounts, like ASB’s Biz Plus and Biz Deluxe checking accounts, may waive certain fees if you meet eligibility requirements.

  • Loan Amount: How much money does your business need? To calculate an appropriate loan amount, consider how you plan to use the funds. For example, if you want to renovate your office space you should secure quotes from contractors or renovation companies before applying for a loan. This will give you a better idea of the cost of the renovation and how much money you’ll need to borrow.

  • Collateral: Collateral is a business asset you pledge to your lender in case you can’t pay for your loan. Common types of collateral include business vehicles, inventory, real estate, or cash in your business savings account. An unsecured loan is a loan without collateral. Secured loans, however, require collateral.

Take the next steps

When your business needs capital, finding and selecting the right business loan can be a challenge. Our Business Banking team is here to help, with the knowledge and experience you need to find the right loan for your business goals. Make an appointment and meet with one of our business bankers today!

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How to Save for Your Business

ASB May 14, 2021 | 5 min read Business

Owning your own business is exciting, but navigating the financial pieces can be challenging. Separating your business and personal expenses can help you manage your business finances and stay on track. Opening a business savings account can help you save for the future of your business.

What's the difference between a personal savings and business savings account?

Both accounts help you to save money for the future. From saving for a big purchase to covering unexpected emergency expenses, a savings account makes it easier to manage your money.

Personal savings accounts are designed for personal, family, or household purchases and expenses while business savings accounts are made to cover and save up for your business’ expenses. For example, say you need to set up a point-of-sale system at your storefront. You can tap into your business savings to make the purchase without needing to take out a business loan.

business owner

Why should you open a business savings account?

A business savings account can help you to play for future financial needs. Benefits include:

  • Work-Life Separation: Having a separate savings account for your business from your personal account will make it easier for you to track the money coming into and going out of your business. Keeping accounts combined could also complicate filing your taxes. You risk overlooking business expenses or misreporting business income. This can make the process a lot more difficult if your business is audited by the IRS.

  • Prepare for the Unexpected: Like a personal savings account, your business savings can serve as a rainy-day fund for your business. If you experience an unexpected emergency, you can use money from your business savings to cover the expense without disrupting cash flow. For example, say one of the vehicles owned by your business breaks down and needs repairs. You can cover the repairs with money from your savings account rather than relying on financing from options such as a business loan.

  • Save for the Future: As your business grows, your needs will change. You may find yourself needing a bigger space, more employees, or new equipment. A business savings account makes it easier to plan for future needs and expenses. You can set a savings goal and set aside money in your business savings, an account designated to keep you from spending money on other things.

  • Strong Banking Relationships: By opening a business savings account at a local bank, you’ll establish or further strengthen your relationship with a business banker. Your banker can help you navigate the financial needs of your business both now and in the future. When you need additional financing or services, such as a business loan or merchant services, you’ll already have a relationship with your business banker and your bank.

business owner

Compare Business Savings Accounts*

Similar to a personal savings account, a business account can help you earn interest on your money. That means that the more your business puts into savings, the more the money will grow. As your savings increase, your business earns more cash that will help you reach your goals and allow you to have money for the things you need, such as broken equipment or a new product line.

Where business checking accounts help you manage business transactions, a business savings account helps you plan for future money needs. At ASB, we offer three types of savings accounts for local businesses. All of our accounts feature low opening balance requirements — meaning you can start saving for the future of your business, even if cash flow is tight.

Biz Statement Savings
Are you looking for a basic business savings account that can earn interest with little to no fees? Our Biz Statement account might be right for you. This simple business savings account lets you open your account with only a $100 minimum opening deposit. The monthly service fee is a low $4.50. You can waive this service fee by maintaining a daily balance of $300 or more. You’ll get access to your account anytime, anywhere with phone and online banking included at no extra charge. You can even earn more on the money you deposit through interest earnings. If your account balance is $100 or more, you’ll earn interest on the balance that’s compounded daily.

Biz Tiered Savings
Want to get a little more out of your business savings? Our Biz Tiered account rewards you with a higher interest rate when you have a balance above a certain amount. You can waive the $5 monthly service fee with a monthly average balance of $500 or more. Like our Biz Statement account, the Biz Tiered account gives you access to phone and online banking for easy, fast access to your account when you need it.

Biz Money Market
Do you need fast access to the funds in your business savings? With our Biz Money Market account, you earn interest on your balance and get access to your savings with checks. You can open a Biz Money Market account with a small $1,000 minimum opening balance. Like our Biz Tiered savings, you’ll earn higher interest rates on higher balances. The $10 monthly service fee can be waived by maintaining a $1,000 minimum daily balance or a $2,500 average monthly balance.

How to open a business savings account

There are a lot of options out there when it comes to business savings accounts. Consider choosing local and working with a bank that truly understands your business needs and your community. At ASB, any one of our business bankers can walk you through the process of setting up accounts, applying for financing and managing business funds in Hawaii. They know and understand our local business requirements, and will ensure that your application is submitted smoothly.

Contact a business banker to make an appointment and open a business savings account today.

 

*Regulatory limits on withdrawals apply.

David Oyadomari

David Oyadomari

Executive Vice President &
Operations

David Oyadomari is Executive Vice President of Operations. In his role, he is responsible for delivering integrated operations solutions and improving the bank's operational efficiency.

David has more than 12 years of diverse experience in banking. His work includes working on ATMs, digital banking solutions, new product development, and retail and consumer lending. He previously served as founder and managing director of Ekklesia Capital, an innovation and strategy firm focused on developing small businesses.

David holds a Bachelor of Arts in Economics and Philosophy from Claremont McKenna College and a Master of Business Administration in Strategic Management from the Wharton School at the University of Pennsylvania.

He serves as President of the Claremont McKenna Alumni Association – Hawaii Chapter, strategic advisor for FTV Capital, advisory board member of Chaminade University Business School, network member of Family Business Center of Hawaii and board member of Hoea Foundation. David is a founding member of Kakaako Christian Fellowship and a member of the Omidyar Fellows, Cohort IV.

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Managing Debt in College and Beyond

ASB May 10, 2021 | 5 min read Personal

The cost of higher education continues to be on the rise, with student loan debt becoming increasingly common among younger generations. Learning how to manage your debt and establishing good money habits as soon as possible can help to ensure you have a financially healthy and stable future that allows you to pay back your debts.

Read on to learn more about managing debt in college, and beyond.

college budgeting

Good Debt vs. Bad Debt

A lot of students start college believing that all debt is a bad thing. This common misconception sometimes holds people back financially. In reality, some types of debt are considered “good debt” while others are considered “bad debt.”

Good debt refers to money that you can borrow to invest in your future. Common examples include student loans and mortgages. Your student loan(s) may be costly, but you can view them as an investment towards your higher education. By using a loan to pay for college, you’re able to get a degree, which hopefully will lead you to a career that allows you to make more money. Similarly, a home loan like a mortgage can help you to afford a house – a real estate investment that will grow in value over time, vs. losing money while renting.

Bad debt, on the other hand, usually refers to money that is borrowed to buy something you can’t afford, or to cover expenses that aren’t considered an investment. Examples include unnecessary credit card debt, or a payday loan to pay for a new outfit. Generally, if you can’t afford something and don’t need it, taking out a loan to purchase it will result in bad debt.

friends graduating

Managing Debt in College

When it comes to debt in college, student loans is probably the first type of debt that comes to mind. However, many student loan programs, such as federal student loans, don’t require you to start repaying your debt right away. In fact, depending on the loan you have, you may not need to pay off your loan until you graduate, leave school, or switch to part-time enrollment. This gives you some time to focus on your studies and find a good job after graduation.

If you do have extra money available, you can start paying off your student loan debt while you’re still in school. Getting a head start on repaying your loans can make room for more money in your budget to move out on your own or plan a big life event.

Credit Card Debt During College

Another common form of debt while in college is credit card debt. You might be thinking of applying for a credit card while in school to start building your credit and help you pay for emergencies and regular expenses. You’ll want to be sure you’re responsible enough to handle a credit card before you apply. Can you make your payments each month, by your credit card’s deadline? Do you have a rainy day or emergency savings, in case you spend more on your credit card than expected and need to dip into extra funds?

A good way to get started building credit is to look for a secured credit card. Secured cards give students a better chance of approval because they use a security deposit. The credit card issuer can use the security deposit to cover purchases on the card if you suddenly can’t pay your bill. Pay your bill on time each month and your deposit should be automatically refunded to you.

Once you have a credit card, you can reduce your risk of falling into credit card debt by following these tips:

  • Use your card like a debit card. This means you only buy things on the card if you already have the money to cover the cost in your bank account.

  • Only put regular expenses, like gas or groceries, on the card. By only making normal purchases with your credit card, you’re less likely to overspend.

college classroom

Managing Debt After Graduation

Post-graduation is a great time to consider paying off any student loans you might have. Contact your student loan lender to see if you can create a repayment plan that includes a set monthly payment and timeline to pay off the loans.

Student loan repayment could take decades, depending on how much you borrowed for school and your income. In the time it takes to repay student loans, you might want to borrow money for other things as well. For instance, you could be looking to upgrade your vehicle with a new car or want to buy your first house.

Making smart choices with your money can help you with managing debt in college and after graduation.

Here are a few tips to help you with managing your debt:

  • Create a budget for your monthly payments.

  • Set up automatic payments so your bills are paid on time each month.

  • Use extra money, such as a bonus at work, to help pay down high-interest debt.

  • Build an emergency fund to cover living expenses if you lose your job or have an unexpected expense.

Need help in figuring out how to save toward paying off and managing your debt? Discuss your options with American Savings Bank today.

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Why Every Business Owner Needs a Business Checking Account

ASB August 05, 2024 | 5 min read Business

Are you starting up a new business? We’re here to help! One of the ways we help businesses manage their finances is by offering different types of business bank accounts. Whether you’re running your business by yourself or have a team of employees, a business checking account can help you to better manage your money on a daily and long-term basis.

Women in a flower shop

What is a business checking account and how does a business account work?

A business checking account is a bank account designed to manage the financial transactions of a business. It allows businesses to deposit funds, write checks and includes features for business needs like wire transfers, higher transaction limits, administer debit cards to employees and more. Businesses can access their account in a branch or through online banking.

What's the difference between a personal checking and business checking account?

You might think a checking account is a checking account, but business and personal checking accounts aren’t quite the same. The most notable difference is that you’ll need a business to open a business checking account. The account will be in the name of your business instead of your name, which is the case with personal checking accounts. Personal checking accounts are usually used for personal, family, or household use. You also need business documentation to open a business account. While personal accounts are usually easier to open and may incur fewer fees, business checking accounts offer important advantages to business owners. See the the benefits of a business checking account below.

Benefits of a business checking account

Business bank accounts are vital to managing your business’ revenue and expenses. With a business checking account, you can keep your money separate from your personal funds. Your account may also give you access to discounts on business loans or merchant services. Benefits of a business checking account include:

  • Keeping You Organized: When you keep your personal and business funds in one account, you’re left struggling to differentiate between your personal and business spending. A separate business account eliminates this issue. You’ll be able to easily evaluate business income and expenses without sorting through personal transactions. When it’s time to analyze your business financials, your records will be organized.

  • Making Taxes Easier: Organized documents don’t just help when you’re looking through records on your own. They also make it easier for you to prepare your documents when filing your taxes. This makes things easier for your accountant, while also reducing stress if you ever face an audit from the IRS. If your business is audited, you can pull up your business checking records to show all of your business transactions over the year.

  • Look Professional: Using a business checking account to pay vendors looks more polished and professional. This increases the legitimacy of your business when working with other professionals. Having checks and a debit card in the name of your business can also help you feel more confident in your business. You’ll feel empowered to keep growing and improving your business.

  • Strong Banking Relationships: By opening a business savings account at a local bank, you’ll establish or further strengthen your relationship with a business banker. Your banker can help you navigate the financial needs of your business both now and in the future. When you need additional financing or services, such as a business loan or merchant services, you’ll already have a relationship with your business banker and your bank.

Business owner with a customer

Find the right business checking account

Once you find a bank that offers the features and benefits you want, you’ll need to narrow down the type of business checking account that’s right for your business. Most banks offer a range of checking options to fit a variety of needs. At ASB, we offer three business checking account options. Whatever type of account you choose, you’ll get the friendly help and expertise of our local business banking team. 

All of our business checking accounts include these helpful features:

  • Online banking with no monthly service fee.

  • No fee for Bill Pay services.

  • Receive a debit card for purchases and ATM withdrawals.

  • Overdraft solutions linked to your business savings account.

  • Access to resources to help you start, grow, and manage your business.

BIZ ESSENTIALS CHECKING 
If you run a small business or are just starting out, you may not need access to the same features as a large business. Our Biz Essentials checking makes it easy for small businesses to manage their money and day-to-day transactions. The best part is there’s no monthly service fee. This makes it easy for you to deposit money and pay bills without worrying if your bank account is costing you money. You’ll get 50 transactions per month, including checks processed or deposited, with a low fee per transaction afterward. Deposit your checks from almost anywhere with Mobile Deposit. You can also deposit up to $10,000 in cash at a branch per month at no extra charge. With plenty of options to deposit funds for little to no fees, it’s easy to manage cash flow for your business.

BIZ PLUS CHECKING 
As businesses grow, they often need more out of their business checking account. That’s why ASB offers Biz Plus checking for growing businesses. You’ll get the same convenience of a Biz Essentials account along with added exclusive discounts on other business banking products. Save on application and annual fees if you need a ProTecLine revolving credit line to protect your business checking from overdrafts. You’ll also get fee discounts on business lines of credit and business loans that can help your business continue to grow. Use funds from a loan of line of credit to increase production, launch a new marketing campaign, or consolidate business debt.

BIZ DELUXE CHECKING 
Does your business have a high volume of transactions per month? Do you maintain a large balance and need a business checking account that meets your financial needs? A Biz Deluxe account gives you the most access to account perks from ASB. Save on outgoing wires with discounts only for Biz Deluxe account holders. Get overdraft protection with no fees for savings overdraft transfers. Businesses that accept credit and debit cards can take advantage of discounts on merchant services. You can also access fee discounts for business loans and lines of credit. When you do apply for a business loan or credit line, enjoy special rate discounts for ongoing interest savings.

Male on a computer

How to open a business checking account

There are a lot of options out there when it comes to business checking accounts. Consider choosing local and working with a bank that truly understands your business needs and your community. At ASB, any one of our business bankers can walk you through the process of setting up accounts, applying for financing and managing business funds in Hawaii. They know and understand our local business requirements, and will ensure that your application is submitted smoothly. 

Opening a business checking account is a little different than opening a personal account. We’ll need to collect some extra information to confirm the business and who is authorized to access the account. Start by going over our handy Business Account Opening Checklist to get a better idea of what you’ll need to open your new account. 

Contact a business banker to make an appointment and open a business checking account today.

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