The pandemic has hastened the online move of services as well as goods.
Healthcare, therapy sessions and education are some of the services that have migrated online, voluntarily or involuntarily, due to the pandemic. What if you paid for an online service and either didn’t receive it or are not satisfied?
Reader Wanda finds herself in such a situation. She writes, “I have a pending charge of $200 on my credit card for a video consultation with a nurse practitioner who runs a medical marijuana spa and the fee is for a prescription for a medical marijuana card plus the video visit.
“I waited for over an hour online for the video visit, which I did not receive. The person finally called me and explained the process telling me an email would be sent to me that night with a link to get my medical marijuana card. I texted her the next day saying I received nothing and she texted back and said ‘give me about an hour’ and she would contact me. As of 9:30 p.m. today, no email or text from her. Can I get a reversal of that charge?”
See related: Filing credit card disputes in the coronavirus crisis
Chargeback for services
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It seems the situation involves getting a chargeback for a service that is not provided. If the chargeback involves merchandise that you didn’t receive, the situation is clearer; either you received the merchandise, or you didn’t. In case of services not received, there is more scope for ambiguity.
Chargebacks 911, a website that helps merchants deal with chargebacks, explains how a chargeback situation could come about for services that a consumer says they didn’t receive:
“The merchant failed to do something as promised. Or, the merchant’s policies and procedures weren’t clear, and there was confusion regarding what the consumer would actually receive. It’s also common that marketing causes chargebacks; unrealistic promises might be made.”
The firm advises merchants to adhere to the following procedures to avoid these situations:
Make sure that the way they describe the services is accurate. The description should provide detailed information but should also be easy to understand. Supplementary videos and images could help explain any confusing aspects.
Get consumers to sign off on the terms for providing the service and make sure they know what they will receive in return.
Provide excellent service, responding to all customer questions and grievances quickly. Give customers various ways to get in touch, such as live chat, phone and email. And check social media accounts regularly to respond to comments.
If it comes to that, Chargebacks 911 also advises merchants to issue credits promptly. If they sense that their relationship with the customer is strained and a chargeback situation could ensue, it advises them to cancel the service and issue a refund.
See related: What to do if your online order never arrives
Disputing a charge with a credit card company
It seems a service provider would be wise enough to recognize a potential chargeback situation and promptly take steps to issue a refund if that’s called for. However, that’s not always the case, and you could also take recourse to the Fair Credit Billing Act to dispute a charge with a credit card issuer if that becomes necessary.
You should put in a billing error dispute in writing with the credit card company within 60 days of receiving the bill with the charge for the service that was not provided. You could also call the company, but you should send something in writing first, the California Attorney General’s office advises. Send this letter to the company’s address for billing inquiries or errors, not to its address for payments.
The letter should provide all your details, an account of the dispute and any evidence you have about the matter. The card issuer should acknowledge receipt of your letter within 30 days. And it has 90 days to look into the matter.
Also, you should inform the credit card issuer if you are holding back on paying the disputed amount, which you can legally do while it investigates the matter without triggering a report to the credit bureaus. However, you should continue to pay the rest of your credit card bill. If the credit card company rules in your favor, it will credit you for the disputed charge and any interest associated with it.
See related: Can I get a chargeback credit on a canceled card?
What if a chargeback is not provided?
If the card issuer rules against you, it will provide you a written explanation of its findings, and you will have to pay the disputed amount and any interest charges on it.
If you disagree with the card issuer’s findings, you can get back to it within 10 days to present any other evidence you might have. You could also ask to see any input it used to reach its decision.
Another recourse is to put in a complaint with the Consumer Financial Protection Bureau. You could even sue the card issuer if you believe the investigation was not conducted fairly.
See related: What to do when your bank won’t refund fraudulent changes
Wanda, if you never received the services you ordered from the medical marijuana spa, after first making your best efforts to sort out the matter with the nurse practitioner, you should initiate a dispute with your card issuer, asking for a chargeback. Since this is all online, you should have a digital trail for evidence.
Good luck getting your money back!
Contact me at email@example.com with your credit card-related questions.
You probably know what a good credit score is – it’s a straightforward number that reflects how well you manage your credit.
But do you know what a good credit limit is?
According to Experian, Americans had an average of $30,365 in credit available to them across all their credit cards in 2020.
But the question of whether your credit limit is good is a bit more nuanced.
Read on to learn what experts have to say about what a good credit limit is and see how yours stacks up.
See related: My credit limit was (almost) cut without warning
What is a credit limit?
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Your credit card limit is simply the amount of credit a lender has extended to you, based on your credit scores and other barometers of your creditworthiness and ability to pay, such as your income.
Think of it as your total spending limit – and don’t exceed it or you might face a penalty.
Your credit score could take a hit and your issuer could close your account. Additionally, your transaction might be declined, your interest rates could rise, your credit limit could go down and you might have to pay a fee.
Stay within your credit card limits to avoid these headaches.
See related: Can I request a specific credit line when I apply for a card?
What is considered a good credit limit?
Paul Sundin. CPA and tax strategist at Emparion, said the answer depends on the credit card user.
The American Banking Association reported in May that super-prime consumers (with credit scores of 759 and above) are given an average of $9,329, while prime consumers (with credit scores between 680 and 759) are given $5,109 and subprime consumers (with credit scores of 680 and below) are given $2,541.
And some high-net-worth consumers are given even higher credit limits or don’t even have preset spending limits at all because of their exceptional credit history, Sundin said.
Ben Reynolds, CEO and founder of Sure Dividend, said a reasonable credit limit might mean a specific number to each person, so you shouldn’t base your credit limit on what’s considered “good.”
“People need to judge a good credit limit based on their income, spending habits and repayment strategies,” Reynolds said.
See related: Card issuers slashed billions in credit limits amid COVID
Credit utilization tops credit limit
Imani Francies, a finance expert at USInsuranceAgents, said your credit utilization is always more important than your credit limit.
And no credit limit, she said, measures up to the significance of keeping your utilization rate below 30%.
So, Francies said, if someone has a higher credit limit than you but they maxed out their $10,000 limit, you would be seen as more creditworthy if you pay off your $500 credit limit every month on time and never have your utilization rate exceed 30%.
How to get a credit limit increase
There are many ways to improve your odds of getting your credit limit raised – one good way is to raise your credit score since lenders usually give cardholders with great scores higher spending limits.
And once you improve your credit score – by paying on time, paying your balance in full and not opening a bunch of accounts at one time – you’ll get the added benefits of qualifying to the best interest rates and credit cards with the best rewards.
And keep in mind you can also use a secured credit card to build credit.
In addition, you can always ask for more credit after you get your card. As the economy improves and uncertainty fades, it should be easier to get.
But before you ask your lender for an increased credit limit, ask yourself if you’re doing it to lower your credit utilization ratio or if you’re just doing it so you have more money to spend. The latter would not make sense unless you have a plan to pay your balance in full every month.
The question, “What is a good credit limit?” varies among consumers and is based on your personal finance profile.
If you’re thinking about asking your issuer for a credit limit increase, make sure you have a compelling reason, such as your income has increased. And note that the issuer will also want to see your employment status and proof of your mortgage or rent payment.
If you decide to ask for an increase, make sure you’re asking for the right reason and consider how it will affect your credit utilization and your credit score.
And always keep in mind that using your card responsibly is key to your financial well-being.
You’ve been running a credit card balance for a few months, but finally, you have enough cash on hand to zero out the statement balance.
With great relief – and not a little pride – you pay it off. Thank goodness you’re done with that debt.
But wait: did you also pay the residual interest?
What is residual interest?
Residual interest is the interest that’s accrued on the unpaid credit card balance all this time that you’ve not been paying it. It’s also called trailing interest – because it trails into the next month.
The federal Consumer Financial Protection Bureau investigated residual interest charges on credit cards in 2015 as part of its biennial credit card report to Congress.
“We recognized, based on our research, that there is some confusion about this so-called ‘ghost charge,’ said Wei Zhang, the bureau’s credit card program manager. “People wanted to know, ‘What is this? Why is it happening?’”
The bureau did not find issuers doing anything illegal; however, they did discover that many details were buried in the fine print of credit card agreements. Card owners often were unaware of or did not fully understand what happened if they failed to pay their bill in full or how interest on the balance was calculated.
Before we get into those details any further, though, let’s start by explaining some terms:
Billing cycle – That’s the time between two bills. Many billing cycles are about a month long.
Closing date – That’s the date on which the billing cycle ends. When the closing date occurs, the card will post a statement balance. That’s the amount of purchases you charged during this billing cycle.
Grace period – This is the period of time between when the billing cycle closes and your payment is due. This can be a few weeks, or even up to a month.
Due date – This is the last possible day to make your payment without penalty. After this day, interest will start to accrue on the balance.
That interest that accrues? That’s residual interest.
See related: How to lower your credit card interest rate
How does residual interest work?
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Here’s an example of how residual interest comes into play:
You have a credit card with a billing cycle that closes on the 15th of every month. On March 15, your statement balance is $1,200.
Your due date on the bill is April 14th. But when the date arrives, you can only afford to pay $900 – meaning you leave a balance of $300 on the credit card.
That $300 starts accruing interest the very next day. How much interest? Depends on your particular credit card. Let’s say, for this example, your card charges an APR of 22%.
To figure out how much that will be, divide the APR by the number of days in the year. So 22 divided by 365 – 0.0602%.
Multiply this by your current $300 balance, and you get 18.06 cents. That’s the amount of residual interest you will get charged on the balance each day.
By the time the next month’s due date rolls around, 30 days later, you will owe $5.41 in residual interest.
This is where things get tricky. Maybe you decided to clean up your financial act. You’ve only charged $200 this month, and now you can afford to pay off both the new balance and the $300 from last month. Everything’s squared away, right? Nope, not so fast. You still owe that $5.41. And if you don’t notice it and neglect to pay it, it will continue to accrue interest.
Or, you do pay the entire bill by sending a check in the mail. Interest may continue to accrue on the balance between the time you mail the check and the time the bank receives it and cashes it. Remember, once you enter the land of accruing interest, there is no more grace period.
“Because it accrues after the billing period closes, [residual interest] won’t appear on your current statement – meaning that this could be a surprise amount you discover in your next statement,” said Megumi Smisson, who discusses personal finance on her podcast Ms. Money Moves and her website, Money With Megumi. “Or, worst case, you think you’ve paid off your card, don’t check your next statement to make a payment, and incur a late fee and potentially damage your credit.”
See related: What happens when you miss a credit card payment?
Do all cards charge residual interest?
Residual interest is a common credit card feature. Supposedly, there are banks that don’t charge it, though those are increasingly hard to find.
“I’m not saying it’s impossible, but … [scoring a credit card that doesn’t charge residual interest] is kind of like finding the pot of gold at the end of the rainbow with a unicorn standing next to it,” said Bruce McClary, spokesman for the National Foundation for Credit Counseling in Washington, D.C.
There are many credit cards that offer 0% APR on new and transferred balances for a number of months. To find out how your card deals with leftover balances, look at the back of the statement. It probably won’t say “residual interest” in those words.
Scan instead for writing like “finance charges may be assessed even if we receive payment in full in the current billing cycle.” Other ways to get this information, and discover what the APR is for your card, are to look at your card’s terms and conditions, go to the card issuer’s website or call the issuer.
How to avoid residual interest
There’s no reason you should have to pay months’ worth of residual interest on your credit card for a balance that’s quickly resolved. Here’s how to make sure this isn’t a problem for you.
Pay your card in full each month. “The No. 1 rule, the best advice for avoiding residual interest altogether, is to pay off your purchases immediately,” McClary said.
First timer? See if you can get a break. There’s no harm in calling your credit card issuer and asking if you can get an extension on your payment deadline, so you can avoid late fees, finance charges and any residual interest on this one cycle. “You never know what you’ll get until you ask,” McClary said.
If that’s not possible, check your balance and pay it online. The credit card issuer should post real-time information about your leftover balance and any accruing interest.
Get confirmation from the card issuer. This is particularly important if you are paying your balance by mail, either from a paper statement or from what you see online. Interest on the balance continues to accrue until the moment the bank cashes your check. If the check is insufficient because it doesn’t include those extra few days of interest, interest will accrue on the unpaid balance. Instead, before you write the check, pick up the phone and ask the credit card issuer for the payoff balance. “That is the best, the most foolproof way to accurately know the balance that would pay off the account,” McClary said. He advises overestimating the day the payment will arrive by a day or two; the company will repay you any overpayment but will charge more interest if you fall short again.
See related: Should I pay off my credit card all at once?
Remember, if you’ve let a balance carry from one statement to the next, you don’t just have to pay off the balance on your statement. You may also owe residual interest that is not included in your current statement. Check your total online. Call the card issuer to double-check. You can also check your credit card agreement to find out about residual interest or minimum finance charges.
And after you’ve paid what you believe you owe, check again, to be sure.
“Don’t just anticipate ‘I’m off the hook’ next month,” Zhang said. “In many cases, you are probably not off the hook. Make sure there are not any residual balances next month.”
Qualifying for a credit card can be a challenge if you have damaged credit. It can be difficult, too, if you have a short history of using credit or you haven’t established any credit history at all.
But there is an option if you can’t qualify for a traditional credit card: secured credit cards. These cards, which typically come with lower credit limits and few frills, can help you quickly build a credit history or steadily repair bad credit.
Amy Maliga, a financial educator at Take Charge America, a nonprofit credit counseling and debt management agency based in Phoenix, said secured cards are one of the most important tools for consumers who need to build or rebuild their credit.
“Secured credit cards can be a lifeline for consumers who may have a hard time obtaining credit through other channels,” Maliga said.
But what are secured cards, and how do they compare to unsecured credit cards?
How do secured credit cards work?
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There are some important similarities between unsecured and secured credit cards: You can use both types of credit cards to make purchases. You pay back these purchases each month. And if you don’t pay off everything you owe by your due date, you’ll be charged interest on your unpaid balance.
But there’s one big difference between secured and unsecured credit cards, and it has to do with your credit limit.
With a secured credit card, you first make a deposit with the bank or financial institution issuing the card. That deposit becomes your credit limit. If you deposit $500, you can charge up to $500 on your secured card. If you deposit $1,000, your card’s credit limit is $1,000.
Traditional credit cards – which are also known as unsecured cards – don’t require any deposit from borrowers. These are the cards you are probably most familiar with: They’re the standard Visa, American Express, Discover and Mastercard credit cards issued by banks and credit unions.
Your past credit history determines your credit limit on an unsecured credit card. If you have a history of paying your bills on time and a strong credit score, your credit limit will be higher.
The pros of secured credit cards
There are several benefits to secured credit cards for consumers with weak or bad credit.
They’re easier to get
The deposit arrangement is what makes secured cards attractive to borrowers with little or bad credit. If you fail to make your card payments on time, the bank or financial institution issuing your card can take what it is owed from your deposit. Because you can’t charge more than you deposited, you can never owe more than what your bank can take.
This offers financial protection to banks and makes it less risky for them to pass out secured credit cards to consumers with a short credit history or ones with blemishes on their credit reports. It’s easier, then, for consumers to qualify for secured cards than it is for them to nab unsecured credit cards.
“Think of the monetary deposit with a secured credit card like the deposit for a rented property,” said Jim Pendergast, senior vice president of AltLINE Sobanco, a company partnered with Alabama’s Southern Bank Company. “It acts as an assurance that you’ll pay your balances. Just like for a renter’s deposit, you can earn your deposit back by using the card responsibly.”
To qualify for a traditional credit card, especially one with a strong rewards program and a lower interest rate, you’ll need a stronger credit score. With a secured card, though, your credit score isn’t as important because of that initial deposit.
You can use them to build better credit
Every time you make an on-time payment on your secured credit card, it is reported to the three national credit bureaus – Experian, Equifax and TransUnion. As these payments are recorded, your credit score will gradually build if you haven’t had enough credit to generate one or will slowly improve if you have a score that late or missed payments have damaged.
Once your credit score improves, you can then apply for a traditional credit card. At first, you might qualify only for basic credit cards with no rewards programs. But if you make your payments on these cards on time each month, too, your credit score will continue to improve until you can qualify for cards that offer cash back bonuses, miles or rewards points.
The cons of secured credit cards
Secured credit cards also have their drawbacks.
Limited spending power
Your credit limit will usually be lower if you’re using a secured card. That’s because this limit is typically based on your deposit. If your deposit is a low one – say $300 – your credit limit will be low, too.
Secured cards rarely come with rewards programs. You typically won’t qualify for cash back bonuses or free miles when using a secured card.
How long before a secured card becomes an unsecured one?
The good news? You can transition from a secured credit card to a traditional card if you make your payments on time each month. Doing this will boost your credit score over time. And soon, you’ll have a strong enough credit score to ditch your secured card and apply for an unsecured credit card. The provider that issued your unsecured card might even upgrade you automatically after, say, six months to a year of on-time payments with your secured credit card.
Wendy Terrill, a retirement counselor in Burlington, North Carolina, understands this. She had cancer in 1999, and the financial struggles brought about by this caused her FICO credit score to fall below 400. Terrill rebuilt her credit by taking out a secured card, putting down a security deposit of $200. She used that $200 of credit to slowly rebuild her credit score, making small purchases and paying them off on time.
In fewer than six months, Terrill had improved her score enough to qualify for a traditional unsecured card.
“Some don’t understand why you’d pay someone $200 to get $200 of credit,” Terrill said. “You want to build your credit, that’s why.”
Best secured credit cards
Ready to build your credit and looking for the right secured card? Maliga recommends that consumers look carefully at the fine print when choosing a secured credit card. Some secured cards come with annual fees or monthly maintenance fees.
Here is a look at three secured cards that might meet your needs.
Secured Mastercard® from Capital One
One of the benefits of this card is that it comes with no annual fee, so you won’t have to pay to use it. Capital One requires a security deposit of $49, $99 or $200. Once you make your deposit, you’ll get a credit line of $200. Capital One will automatically consider you for a higher credit line in as few as six months.
Discover it® Secured Credit Card
This is a rare secured card that offers a rewards program. You’ll earn 2% cash back at gas stations and restaurants on up to $1,000 in purchases each quarter. You’ll earn 1% cash back on all other purchases. There’s also no annual fee with this card.
Citi® Secured Mastercard®
Looking for a higher credit limit? The Citi Secured Mastercard might be a good option. You can get a credit limit of up to $2,500, with a deposit of that same amount. This card also charges no annual fee.
Best unsecured cards for people with limited credit history
But what happens after you’ve properly used your secured card, making charges and paying them off in full? Doing this will help you build a credit history, and your credit score should steadily grow stronger.
Eventually – it might take about six months of on-time payments with your secured card – you’ll be ready to apply for an unsecured credit card. You might not have enough credit to qualify for the top credit cards, the ones offering valuable rewards and cash back bonuses. But you might qualify for one of the cards listed below, all available to consumers with shorter credit histories or average to good credit scores.
Capital One Platinum Credit Card
This is a no-frills card – but it doesn’t charge an annual fee, which is always a positive. And Capital One will review your payment history regularly. You’ll be automatically considered for a higher credit line in as little as six months. You’ll also gain access to your free credit score and credit profile through CreditWise from Capital One.
Capital One Quicksilver Cash Rewards Credit Card
This card offers a basic rewards program. You’ll earn 1.5% cash back on every purchase you make with the card. You can also earn a $200 cash bonus if you spend $500 within three months of opening your account. This card also charges no annual fee.
Petal credit cards
The Petal credit card pitches itself to applicants with little to no credit. Instead of relying on a traditional credit score, Petal creates what it calls a Cash Score based on your income, spending and savings. Petal says this score could help you qualify for a better Petal card.
There are two versions – the Petal® 1 “No Annual Fee” Visa® Credit Card and the Petal® 2 “Cash Back, No Fees” Visa® Credit Card – that come with credit limits ranging from $500 to $10,000, depending on the card. You might also qualify for cash back bonuses of 1% to 1.5% of the purchases you make or 2% to 10% at select merchants.
Secured cards are an easy and accessible way to start building or rebuild your credit – and start earning cash back along the way, in some cases. Use them diligently, making sure to pay them in full, and in a few months, your credit will be strong enough to qualify for an unsecured credit card.
Change has to start somewhere, and for many people that change is easier to make if the starting point has some meaning. It can be a birthday, an anniversary, or any other date with some symbolic weight. Most commonly, people choose the beginning of the new year.
If you’re looking for some New Year’s resolutions that will truly change your life, consider adjusting your financial strategy. Here are five things you can do in 2021 to take your money game to the next level.
Interest rates are at near-historic lows, which makes this the perfect time to refinance your debt. Refinancing means switching your loans from your current lender to a new lender in order to take advantage of a lower interest rate. Refinancing can save you thousands of dollars, depending on the original interest rate and total balance.
Â For example, letâs say you have a $200,000 30-year mortgage with a 5% interest rate, and you refinance to a 3% interest rate. Your monthly payment will be $244 lower, and youâll save $31,173 in total interest over the life of the loan.Â
You can refinance auto loans, personal loans, and even student loans. However, if you have federal student loans, you may want to hold off on refinancing. Refinancing a federal student loan converts it into a private student loan. This means youâll give up extra perks and benefits like income-driven repayment plans and deferment and forbearance options.
Transfer Credit Card Debt
If you have credit card debt, you can pay less interest by transferring the balance to a new card with 0% APR on balance transfers. These special discounts usually last between 12 to 18 months, during which time you wonât be charged interest on the credit card balance.
For instance, letâs say you have a $5,000 balance on a card with a 17% APR. If you only make the minimum payments, youâll pay $1,223.61 in total interest. If you transfer that balance to a card with 0% APR for 12 months and repay the balance in that time, you wonât pay any interest.
There is often a small fee associated with balance transfers, around 3% of balance transfers. For example, if you transfer $5,000, youâll pay a $150 fee. That still leaves a net savings of $1,073.61 in the scenario outlined above.
Decrease Your Fixed Expenses
One of the best things to do for your budget in 2021 is to decrease fixed expenses like your car insurance, internet, cable, and cell phone. Call those providers and try to negotiate a lower rate.
Â Go through your transactions for the past few months and write down all the recurring subscriptions like Netflix, Amazon Prime, and DoorDash. Then, group them into categories like âfrequently use,â âsporadically useâ and ârarely useâ. Consider canceling anything you rarely use.
Â See if you can get a better deal on your most popular subscriptions. For example, if you and your significant other both pay for Spotify Premium, get a Spotify Duo account instead, and save yourself $83.88 a year.
Open a Better Bank Account
Most people are missing out on an easy way to earn money through your bank account. You could be leaving hundreds of dollars on the table if you still have a traditional savings account.
According to the FDIC, the current average interest rate on a savings account is 0.05%. Many high-yield savings accounts offer rates between .40% and .60%.Â
Letâs say you have $10,000 in a savings account with .05% interest. After one year, youâll have earned $5.04 in interest. If you moved that amount to a high-yield savings account with .5% interest, you would earn $49.92 in interest over that same time period.
If you’re not investing for retirement yet, this might be the most important financial resolution you can make. Thanks to the power of compound interest, you can start investing now and see huge growth by the time youâre ready to retire.
IRAs and 401(k)s are the two main retirement accounts. Anyone can open an IRA, while only those who have access to an employer-sponsored 401(k) can open one.
Â If you’re not sure how to invest in your retirement account, consider hiring a qualified financial planner through the National Association of Personal Financial Advisors (NAPFA).
If youâre not ready to work with a financial planner, you can use a robo advisor like Betterment or Wealthfront, which will create a portfolio based on your age, income, and expected retirement age. Robo advisors have low fees and are designed to help beginner investors.
How to Keep Financial Resolutions
First, start small. Pick one habit to change at a time. If you try to accomplish five goals at once, you’ll burn out quickly and give up.Â
When you decide on a resolution, break it up into smaller, more manageable tasks. For example, if your goal is to talk to a financial planner about investing, break it down into the following steps:
1) Research financial planners through NAPFA
2) Send introductory emails to three financial planners
3) Choose the one that seems like the best fit
4) Schedule a consultation
Give yourself a deadline to accomplish each of these tasks, and ask a friend to hold you accountable.
Another tip is to tie your resolutions to a bigger goal. Like dieting or starting a new exercise plan, changing your financial habits is hard. If you’re used to grabbing lunch with your co-workers every day, bringing leftovers from home instead will seem like a huge change.
The key is to imagine the future version of yourself who will benefit from the changes you make today. If your goal is to open and contribute to a retirement account, imagine yourself as a senior citizen living comfortably.
When youâre tempted to skip this monthâs retirement contribution to buy concert tickets, think about your future self, what youâd want for them and how they would appreciate your sacrifice. It can also help to remember some of the financial mistakes you’ve made in the past, and how much easier your life would be right now if you had made a different choice.
The post The 5 Best Financial New Year’s Resolutions appeared first on MintLife Blog.
Annaâs email requesting help with her finances began with a unique confession.
âFarnoosh, my money problem garners little sympathy,â the 32-year-old wrote. âMy issue is that I make too much of it.â
Now, THIS is interesting, I thought. I immediately followed up with many questions.
Hereâs what I learned through our conversation:
The Denver-based Mint user earns $220,000 per year as an engineer. Annaâs also benefited from years of big bonuses and her net worth, not including her home equity, is close to a million dollars.
After paying taxes and health benefits and maxing out her 401(k), Anna takes home between $8,000 and $10,000 each month. Her expenses mainly consist of a $1,200 mortgage payment, car insurance, gas, food and utilities, amounting to maybe a few thousand dollars per month.
The rest either goes into savings where she stashes about $5,000 to $10,000 for unexpected expenses or into a brokerage account where she has roughly $800,000 invested. A wealth management firm manages that portfolio and charges, she says, an annual 1% fee.
Anna has no consumer debt, besides her mortgage, which amounts to about $338,000. Itâs a 30-year fixed rate loan with a 2.85% interest rate. The home has appreciated in recent years with about $100,000 in equity (including Annaâs initial 20% down payment).
So, what is the problem, exactly?
âMy big worry is that I don’t have the habits to manage money well,â Anna told me. Her sizeable bank balance has her feeling financially free, although she worries about getting carried away with spending sometimes.
âWhen I see money in my bank account I rationalize that âyea, that vacation is doable. I donât hold back on the things that may seem frivolous,ââ she says. But It seems she wants more financial grounding and to be able to evaluate expenditures and price tags more critically.
Annaâs situation may be unique, but I think relatable in the sense that we all would like to feel more thoughtful with how we spend, save and invest. And while some may do well with earning money, it should not be assumed that they can also manage that money well.
I applaud Anna for wanting to be sure that, even with an impressive net worth, she is actually making wise financial decisions.
Hereâs my advice.
Take a Deep Breath
No need to panic when spending on things and experiences that you enjoy. From what I can tell Annaâs prioritizing the serious financial stuff first like contributing the max to her 401(k) and saving all of her annual bonuses in a brokerage account. She has no credit card debt and pays all her bills on time. Thatâs terrific.
Sometimes we just want to hear that weâre on the right track with our money and I have a very simple way to measure this:
If you manage each paycheck by saving, investing and paying all your bills first, then by all means, youâre entitled to have fun with whatever is left without any fear or regret. Am I right?
If youâve done the good work of taking care of your future with your money, then donât hesitate treating yourself and others with the remaining funds today. Splurge away and enjoy your hard-earned money. And remember to enjoy the moment.
Ditch Your Money Managers
I do think Anna could find a better home for her investments.
Paying one percent of her managed assets to this firm may not seem that high of an annual fee. But when you think about Annaâs balance of $800,000, thatâs $8,000 this year. What about next year and the decades after that as she contributes more to the account? That fee, compounded over the next 30 years, will amount to – conservatively – over one million dollars. Ouch.
That doesnât even factor in the expense ratios for each mutual fund thatâs in her portfolio.
If all Anna seeks is investment assistance, she may be better suited stationing her money with an automated wealth platform or robo-advisor where her money is largely invested in low-fee index funds or exchange-traded funds (ETF) and the portfolio management fee is typically 0.50% or less.
Of course, breaking up with your financial advisor is not always so simple. Itâs especially hard for Anna, as she equated her money managers to âfather figures.â
If I were Anna, I would just explain to my advisors over email something like, “I want be more conservativeâ¯withâ¯my money and that includes being extra mindful of the various fees that I’m paying. To that end, Iâve decided to manage my money more independently. Iâm sure you can understand. I appreciateâ¯yourâ¯help over the years. Please let me know next steps.”
Planners know the drill and are used to having clients end relationships.â¯ Stay strong. Nobody can really argue with the fact that saving money is a good thing!
Establish Short and Long Term Goals
Anna wants to spend and save with more conviction. I think having some concrete, tangible goals can help.
For example, she shared that sheâd like to get married, have a family and own two homes â one near her office downtown and another in the mountains as a getaway.
So, the next step is to understand what these goals cost. What are, say, the going prices on a vacation home in her state? How much might she want to stash in a separate account for the future down payment on this property? Knowing the underlying costs of her goals can better direct how much to spend elsewhere.
Next time sheâs planning a vacation, she may be more inclined to price compare or hunt down better deals, as opposed to just judge whether the trip is financially âdoableâ by the amount of money in her bank account. Now sheâll have the image of that second home and its costs and will make a more informed choice.
Contribute to a Cause
Last but not least, when you feel you make more than enough, like Anna does, this is a great opportunity to be extra charitable. If sheâs seeking a way to give her money more meaning and feel purposeful in her financial life, this is a truly wonderful way to go about it. Discover a cause that youâre passionate about and make an impact as a volunteer and donor.
Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at firstname.lastname@example.org (please note âMint Blogâ in the subject line).
Farnoosh Torabi is Americaâs leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, sheâs become our favorite go-to money expert and friend.
The post Mint Money Audit: Managing Money When You Make Enough appeared first on MintLife Blog.
If you have bad credit and need a car loan, there are some challenges when compared to obtaining a standard car loan. However, pick your head up because there are a handful of great lenders that specifically tailor their programs to people with bad credit. We researched the landscape of lenders that can help you get a car loan even if you have a below-average credit score.
Based on our study, OneMain Financial and LightStream are two of the top lenders offering bad credit card loans. This is due to factors including loan options, requirements to qualify, and interest rates offered. Of course, we offer in-depth reviews of all the top lenders who offer bad credit car loans further down in this piece.
Apply now with our top pick: OneMain Financial
In this guide we also help you understand the factors that go into selecting the right auto lender, and how to get the best rate you can.
Most Important Factors for Bad Credit Car Loans
If youâre in the market for a bad credit car loan, there are a plethora of factors to consider and compare. Here are the main loan details we looked at in our study, and the ones you should prioritize as you select the best car loan for your needs.
Check your credit score. And understand what is in your credit report.
FICO scores under 579 is considered ‘poor’. But you may need a bad credit loan with a score as high as 669.
Interest rates and fees matter. These can make a huge difference in how much you pay for an auto loan each month.
Compare loan terms. Consider your repayment timeline and compare lenders with this in mind.
Getting prequalified online can help. Some lenders, including ones that made our ranking, let you get prequalified for a loan online without a hard inquiry on your credit report.
Watch out for loan restrictions. Some lenders impose restrictions on what car you can purchase. Keep this in mind to avoid unpleasant surprises later.
The Best Bad Credit Car Loans of 2021
The best bad credit car loans make it easy for consumers to qualify for the financing they need. The following lenders made our list due to their superior loan offerings, excellent customer service, and reputation in this industry.
Car Loan Company
Best for Flexibility
Best Personal Loan Option
Best Loan for Bad Credit and No Credit
Best Loan Comparison Site
Best Big Bank Loan for Bad Credit
Best for Fast Funding
Why Some Lenders Didn’t Make the Cut
While the lenders we are profiling are the best of the best, there are plenty of bad credit car loans that didnât quite make the cut. We didnât include any lenders that only offer auto loan refinancing, for example, since we know many people need a car loan in order to purchase a new or used car or truck. We also stayed away from bad credit car loans that charge outrageous fees for consumers with the lowest credit scores.
Bad Credit Auto Loan Reviews
We listed the top companies we selected in our study above, but we also aim to provide readers with more insights and details on each. The reviews below highlight the highlights of each lender that made our list, plus our take on who they might be best for.
OneMain Financial: Best for Flexibility
OneMain Financial offers personal loans and auto loans with interest rates that range from 18.00% to 35.99%. You can repay your auto loan in 24, 36, 48, or 60 months, and you can use this lender to borrow up to $20,000 for a new or used car. You can apply for your auto loan online and from the comfort of your own home, and itâs possible to get approved within a matter of minutes.
While OneMain Financial doesnât list a minimum credit score requirement, itâs believed they will approve consumers with scores as low as 600. You should also note that auto loans from OneMain Financial come with an origination fee of up to 5% of your loan amount.
Sign Up With OneMain Financial Today
Why This Lender Made Our List: OneMain Financial offers a lot of flexibility in terms of your loan terms, including the option to repay your auto loan over five years. OneMain Financial also has pretty decent reviews from users for a bad credit lender, and they have an A+ rating with the Better Business Bureau.
Potential Downsides to Be Aware Of: OneMain Financial charges some pretty high rates for its bad credit loans, and donât forget that you may need to pay an origination fee that is up to 5% of your loan amount. Their loans are also capped at $20,000, which means this lender wonât work for everyone.
Who Itâs Best For: This lender is best for consumers with really poor credit who need auto financing but canât get approved for a better loan.
Upgrade: Best Personal Loan Option
Upgrade is an online lender that offers personal loans with fixed interest rates, fixed monthly payments, and a fixed repayment timeline. You can borrow up to $50,000 in an unsecured loan, which means you wonât actually use the car you purchase as collateral for the loan.
You can repay the money you borrow over 36 to 60 months, which makes it possible for you to tweak your loan offer to secure a monthly payment you can afford. Upgrade has a minimum credit score requirement of 620 to qualify, although theyâll consider additional factors such as your income and employment history.
Sign Up With Upgrade Today
Why This Lender Made Our List: Upgrade lets you âcheck your rateâ online without a hard inquiry on your credit report. This makes it easy to shop around and compare this loan offer to others without having to fill out a full loan application. Also note that Upgrade has an A+ rating with the BBB.
Potential Downsides to Be Aware Of: Upgrade charges APRs as high as 35.89% for consumers with the worst credit, and an origination fee of up to 6% of your loan amount might also apply.
Who Itâs Best For: Upgrade is best for consumers with decent credit who need to borrow a larger loan amount. This loan is also best for anyone who wants an auto loan that isnât secured by their vehicle.
AutoCreditExpress.com: Best Loan for Bad Credit and No Credit
AutoCreditExpress.com is an online platform that lets consumers with bad credit and even no credit get the financing they need. Once you fill out some basic loan information, youâll be connected with a lender who can offer you financing as well as a dealership in your area. From there, youâll head to the local dealership and pull the pieces of your auto loan together, including the purchase price of the car you want.
Sign Up With Autocreditexpress.com Today
Why This Lender Made Our List: AutoCreditExpress.com has an A+ rating with the Better Business Bureau. This platform also makes it possible for consumers with no credit at all to finance a car, which is a welcome relief for people who are building credit for the first time.
Potential Downsides to Be Aware Of: This website is a loan platform but they donât offer loans directly to consumers. This means you wonât have any idea on rates and terms until you fill out an application and get connected with a lender.
Who Itâs Best For: This loan is best for consumers with no credit or minimal credit history who cannot get approved for a loan elsewhere.
MyAutoLoan.com: Best Loan Comparison Site
MyAutoLoan.com is a loan comparison site that makes it easy to compare up to four auto loan offers in a matter of minutes. You can use this website to apply for a new auto loan, but you can also utilize it to consider refinancing offers for an auto loan you already have. You can also use funds from this platform to purchase a car from a dealer or from a private seller.
Sign Up With MyAutoLoan.com Today
Why This Lender Made Our List: Comparing auto loans in terms of their terms, rates, and fees is the best way to save money and wind up with the best deal. Since MyAutoLoan.com is a loan comparison site, they make it easy to shop around and compare competing offers.
Potential Downsides to Be Aware Of: Loan comparison sites connect you with other lenders who have their own loan terms and minimum requirements for approval. Make sure you know and understand all the details of loans youâre considering before you sign on the dotted line.
Who Itâs Best For: MyAutoLoan.com is best for consumers who want to do all their auto loan shopping with a single website.
Capital One: Best Big Bank Loan for Bad Credit
Capital One offers online auto loan financing in conjunction with a program called Auto NavigatorÂ®. This program lets you get prequalified for an auto loan online, then work with a participating dealer to coordinate a loan for the car you want. Capital One also lets you search available vehicles at participating dealerships before you apply for financing, making it easy to figure out how much you might need to borrow ahead of time.
Sign Up With Capital One Today
Why This Lender Made Our List: Capital One offers the huge benefit of letting you get prequalified online without a hard inquiry to your credit report. Capital One is also a reputable bank with a long history, which should give borrowers some comfort. They have an A+ rating with the BBB and plenty of decent reviews from consumers.
Potential Downsides to Be Aware Of: You should be aware that Capital One auto loans only work at participating dealers, so you may be limited in terms of available cars to choose from.
Who Itâs Best For: Capital One auto loans are best for consumers who find a car they want to buy at one of the participating lenders that works with this program.
LightStream: Best for Fast Funding
LightStream offers online loans for a variety of purposes, including auto financing. Their auto loans for consumers with excellent credit start at just 3.99% with autopay, and even their loans for consumers with lower credit scores only run as high as 16.79% with autopay.
You can apply for your LightStream loan online and get approved in a matter of minutes. This lender can also send your funds as soon as the same business day you apply.
A minimum credit score of 660 is required for loan approval, although other factors like your work history and income are considered.
Sign Up With LightStream Today
Why This Lender Made Our List: LightStream offers auto loans with exceptional terms, and thatâs even true for consumers with less than perfect credit. You can also get your loan funded as soon as the same business day you apply, which is crucial if you need auto financing so you can get back on the road.
Potential Downsides to Be Aware Of: With a minimum credit score requirement of 660, these loans wonât work for consumers with the lowest credit scores.
Who Itâs Best For: LightStream is best for people with decent credit who need to get auto loan financing as quickly as possible.
What You Need To Know When Applying For A Car Loan With Bad Credit
Interest rates and fees matter.
If you think your interest rate and loan fees wonât make a big difference in your monthly payment, think again. The reality is that rates and fees can make a huge difference in how much you pay for an auto loan each month. Consider this: A $10,000 loan with an APR of 35.89% will require you to pay $361 per month for five years. The same loan amount at 21.99% APR will only set you back $276 per month. At 9.99%, you would pay only $212 per month for five years. The bottom line: Make sure to compare auto loans for bad credit so you wind up with the lowest possible APR you can qualify for.
Take steps to improve your credit score before you apply.
Itâs not always possible to wait to apply for a car loan, but you may be able to secure a lower interest rate and better loan terms if you can improve your credit score before you borrow money. The most important steps you can take to improve your score include paying all your bills early or on time, as well as paying down debt in order to decrease your credit utilization. You should also refrain from opening or closing too many credit card accounts in order to avoid new inquiries on your credit report and maintain the longest average length of your credit history possible.
Compare loan terms.
Some lenders let you borrow money for up to 84 months, while others let you repay your loan over 36 or 60 months at most. If you need to repay your loan over a longer timeline in order to secure an affordable monthly payment, make sure to compare lenders based on this factor. If youâre having trouble figuring out how much can you can afford, gauging affordability based on the monthly payments you can handle can also help in that effort.
Getting prequalified online can help.
Some lenders, including ones that made our ranking, let you get prequalified for a loan online without a hard inquiry on your credit report. This makes it considerably easier to compare rates and shop around without formally applying for an auto loan. Getting prequalified with more than one lender can also help you determine which one might offer the lowest rate without having to fill out a full loan application.
Watch out for loan restrictions.
As you compare the lenders on this list, keep in mind that not all lenders extend loans for any car you want. Some only let you finance cars with participating lenders in their network, which can drastically limit your options and make it impossible to purchase a car from a private seller. If you hope to purchase a car from someone you know or a website like craigslist.org, you may want to consider reaching out to your personal bank or a credit union you have a relationship with.
Bad credit car loans donât have to be forever.
Finally, you should know that a car loan for bad credit doesnât have to last forever. You may need to borrow money for a car right now regardless of the interest rate and terms you can qualify for, but it may be possible to refinance your loan into a better loan product later on. This is especially true if you focus on improving your credit score right away, and if you use your auto loan as an opportunity to prove your creditworthiness.
How to Get the Best Rate
1. Check your credit score.
Your credit score is one of the most important defining factors that dictate loan costs. Before you apply for an auto loan, it can help you check your credit score to see where you stand. Your score may not be as bad as you realize, but it could also be worse than you ever imagined. Either way, it helps to know this important information before you start shopping for an auto loan.
2. Improve your credit over time.
If your credit score needs work, youâll want to take steps to start improving it right away. The most important steps you can take to boost your credit score include paying all your bills early or on time and paying down debt to decrease your credit utilization. Also, make sure youâre not opening or closing too many credit accounts within a short amount of time.
3. Check your credit reports.
Use the website AnnualCreditReport.com to get a free copy of your credit reports from all three credit bureaus. Once you have this information, check over your credit reports for errors. If you find false information that might be hurting your score, take the steps to have the incorrect information removed.
4. Compare loan offers from at least three lenders.
A crucial step to get the best rate involves shopping around and comparing loan offers from at least three different lenders. This is important since lenders with different criteria might offer a lower APR or better terms than others.
5. Be flexible with repayment terms.
Also consider a few different loan terms provided you can afford the monthly payment with each. Some auto lenders offer better rates for shorter terms, which can help you save money if you can afford to repay your loan over 24 or 36 months instead of 60+.
How We Chose the Best Auto Loans
The lenders on our list werenât plucked out of thin air. In fact, the team behind this guide spent hours comparing auto lenders based on a wide range of criteria. Hereâs everything we considered when comparing the best bad credit car loans of 2021:
Interest Rates and Loan Terms: Our team looked for loans that offer reasonable rates and terms for consumers with poor credit. While higher APRs are typically charged to consumers with a low credit score, we only considered lenders that offer sensible rates that donât seem out of line for the auto loan market.
Ratings and Reviews: We gave preference to lenders who have decent reviews online, either through Consumer Affairs, Trustpilot, or another third party website. We also gave higher marks to lenders who have a positive rating with the Better Business Bureau (BBB).
Online Availability: Lenders who offer full loan details online were definitely given top priority in our ranking, and lenders who let you get prequalified online without a hard inquiry on your credit report were given the most points in this category. But since not everyone wants to apply for a loan online, we also included some lenders that let you apply over the phone.
Approval Requirements: Finally, we looked for lenders that extend credit to consumers with low credit scores in the first place. Not all lenders offer specific information on approval requirements, but we did our best to sort out lenders that only accept borrowers with good or excellent credit.
Summary: Best Bad Credit Card Loans of 2021
Best for Flexibility: OneMain Financial
Best Personal Loan Option: Upgrade
Best Loan for Bad Credit and No credit: AutoCreditExpress.com
Best Loan Comparison Site: MyAutoLoan.com
Best Big Bank Loan for Bad Credit: CapitalOne
Best for Fast Funding: LightStream
The post What Are the Best Car Loans When You Have Bad Credit? appeared first on Good Financial CentsÂ®.
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Chances are, youâve played your fair share of Solitaire. And why wouldnât you? Itâs a great time-killer, itâs fun and itâs a nice little mental challenge. The only thing that could make it better? Winning money for it.
The Solitaire Cube app lets you do just that. This free app lets you play the classic card game you already know and love, plus it matches you with players in your skill level, so you can go head-to-head in tournaments where you can win real money. Plus, the games are quick â just two to five minutes each, and you can play them anywhere.
How to Win Real Money Just for Playing Solitaire on Your Phone
You might be thinking this sounds too good to be true. But hereâs the thing: Itâs really not. One Solitaire Cube player, Amanda, even won about $6,000 and was able to use her winnings to recarpet her house.
âWhen I actually started winning money and earning prizes, I was blown away,â she says.
Interested? Hereâs how it works: Download the free Solitaire Cube app and create an account. Then you can play some free practice matches to get the hang of things. If you donât already know how to play, itâs easy to learn. Then, when youâre ready, Solitaire Cube will match you with players at your same skill level. Beginners play beginners; experts play other experts. Yep, you wonât get outplayed by some Solitaire grandmaster â youâll both have the same deck, so winning is all about skill.
The app itself is free to download, but if you want to play for money, youâll need to deposit some money first. You can deposit as little as $2 to start, using PayPal, credit card or Apple Pay. Itâs super easy. Then you can play head-to-head, in large pools and live tournaments â some of these tournaments have paid out prizes as big as $350,000. When itâs time to cash out, thereâs no waiting period, like with some other apps. You can get your money almost instantly.
Solitaire Cube has an App Store rating of 4.6 out of 5 from more than 70,000 usersâ rankings.
As for Skillz, the platform that hosts the game, it operates hundreds of games and has paid out more than $2 billion in prizes so far. The company has invested years into its player-matching technology, ensuring you only compete with players of the same skill level.
Win or lose, you always receive âticketzâ that you can redeem in Skillzâ Ticketz store for cash or prizes, like Amazon gift cards, a 65-inch TV â even a BMW or a Porsche. The higher stakes you play for, the more ticketz you receive.
For Solitaire players, hereâs the most important part: The game is well designed, a classic Solitaire experience. To get started, just download the free app and start playing your first game immediately.
Mike Brassfield (email@example.com) is a senior writer at The Penny Hoarder. He loves him some Solitaire.
Unfortunately, you canât play for money in the following states: Arkansas, Arizona, Connecticut, Delaware, Indiana, Louisiana, Maine, Montana, South Carolina, South Dakota or Tennessee. However, in those states, you can still play for fun with the gameâs virtual currency.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
In the age of paperless transactions, identify theft is something that virtually all of us are susceptible to. If your identity is stolen, the consequences can be severe, and in some cases, can take years to recover from. One way to be proactive against fraud and defend yourself from identity theft, is to freeze your credit report with each of the three major credit bureausâExperian, TransUnion, and Equifax.Â
Placing a credit freeze on your credit report will stop identity thieves from being able to open new accounts, lines of credit, or make any large purchases in your name, regardless of whether or not they have your Social Security number or any other sensitive information.Â
What a credit freeze means
A credit freeze is a process that shuts off access to your credit reports at your request. Without your verified consent, your delicate information cannot be acquired. This means that if someone were to attempt to apply for credit in your name, your report would come up as âfrozen,â and therefore the creditor would not be able to see the information needed for the application to be approved.
You can unfreeze your credit at any time by using a PIN or a password.Â
Reasons to freeze your credit
It might be a good idea to freeze your credit if youâre experiencing any of the following situations:
Your data has been compromised in a data breach: It happens. If youâve been a victim of a data breach and personal information related to your identity has been leaked or made vulnerable to cyber criminals, a credit freeze can offer you some extra protection.Â
You have reason to think youâve been a victim of identity theft: Perhaps youâve checked your credit recently and noticed open accounts that you donât recognize. Maybe youâve been getting phone calls from collections agencies requesting payments from accounts you know you didnât open. While a credit freeze wonât be able to stop them from using accounts a thief has already opened, it can stop them from opening any more.Â
You want to protect your child from identity theft: According to the Economic Growth, Regulatory Relief and Consumer Protection Act, parents and legally guardians of children 16 years old and younger have the right to open a credit account for their child with the sole purpose of putting a freeze on it to protect them from identity theft.Â
How to freeze your creditÂ
The process of freezing your credit is simple but does require a few steps. You will need to get in touch with each of the three major credit bureaus one by one and request a credit freeze:
Experian: Contact by phone at 800-349-9960 or go to their website.
Equifax: Contact by phone at 888-397-3742 or go to their website.
TransUnion: Contact by phone at 888-909-8872 or go to their website.Â Â
The credit bureaus will ask you for your Social Security number, your date of birth and other information to verify your identity.
Once you freeze your credit, your file will be unattainable even if a thief has sensitive information such as your social security number or date of birth. If you need to use your credit file, you can unfreeze your credit report at any time.Â
How to unfreeze your credit
Once youâve frozen your credit file, it will be remain blocked until you decide that you would like to unfreeze it. You will need to unfreeze your credit report in order to open a new line of credit or make a major purchase.Â
Unfreezing your credit file is simple. All you will need to do is go online to each credit bureau website and use the personal identification number (PIN) that you used to place the freeze on the account. If you donât want to complete this task online, you can also unfreeze your credit file over the phone or through postal mail.Â
When the unfreezing process is done online or by phone, it is completed within minutes of submitting the request. However, if you send your request via mail, it will take much longer.Â
Keep in mind that you donât necessarily need to unfreeze your credit through all three of the major credit bureaus if you donât want to. For instance, letâs say you plan to apply for credit somewhere. You can ask the creditor which credit bureau it will go through to pull up your report, and only unfreeze that one credit bureau.Â
You may also have the option to unfreeze for a specific amount of time. Once the time is up, your credit file will automatically freeze again.Â
Credit freeze pros and cons
There are a few reasons why you might want to freeze your credit in this day and age, but just like with anything else, there are pros and cons to credit freezing. Here is a general breakdown of the benefits and downfalls of putting a freeze on your credit report:
It prevents thieves from opening new lines of credit: With a credit freeze placed on your account, no one will be able to open a new line of credit or any other type of account requiring a credit check using your personal data. Anyone trying to commit fraud will be stopped in their tracks as soon as lenders notice that the report is frozen.Â
It wonât affect your credit score: Freezing your credit report will not damage your credit score. Additionally, if youâve been a victim of identity theft, freezing your credit report could actually protect your credit score from being damaged due to fraud.Â
Itâs free: It used to be the case that some credit freezes would cost a fee, but that is no longer the way it works.Â
It requires some effort: Putting a credit freeze on your credit report takes some effort. You will need to get in touch with all three credit bureaus.Â
You will need to remember your PINs: A PIN is required to lift or freeze your credit report. If you lose it, you will need to jump through extra hoops to create a new one.
It canât stop thieves from accessing your existing accounts: Credit freezes can only stopfraudstersfrom opening new accounts using your information.If youâve already been a victim of identity theft, a credit freeze canât block thieves from committing fraud with your current accounts. This means that thieves can still make a purchase using a credit card they stole from you.
Freezing Your Credit is a post from Pocket Your Dollars.
Foreign transaction fees are irritating little charges that every traveler has faced, and most credit card users have questioned. They are the bane of a frequent flyerâs life and if not managed carefully, could result in some serious charges. But what are these charges, why do they exist, whatâs the average fee, and how can you avoid them?
What is a Foreign Transaction Fee?
A foreign transaction fee is a surcharge levied every time you make a payment in a foreign currency or transfer money through a foreign bank. These fees are charged by credit card networks and issuers, often totaling around 3%.
For example, imagine that youâre on holiday in the United Kingdom, where all transactions occur in Pound Sterling. You go out for a meal and use your credit card to pay a bill of Â£150. Your credit card issuer first converts this sum into US Dollars and then charges a foreign transaction fee, after which the network (Visa, MasterCard, American Express) will do the same.
If we assume that Â£150 equates to exactly $200, this will show on your credit card statement first followed by a separate foreign transaction fee of $6.
When Will You Pay Foreign Transaction Fees?
If youâre moving money from a US bank account to an international account in a different currency, thereâs a good chance you will be hit with foreign transaction fees and may also be charged additional transfer fees. More commonly, these fees are charged every time you make a payment in a foreign currency.
Many years ago, foreign transaction fees were limited to purchases made in other currencies, but they are now charged for online purchases as well. If the site youâre using is based in another country, thereâs a good chance youâll face these charges.
It isnât always easy to know in advance whether these fees will be charged or not. Many foreign based sites use software that automatically detects your location and changes the currency as soon as you visit. To you, it seems like everything is listed in dollars, but you may actually be paying in a foreign currency.
Other Issues that American Travelers FaceÂ
Foreign transaction fees arenât the only issue you will encounter when trying to use American reward credit cards abroad. If we return to the previous example of a holiday in the UK, you may discover that the restaurant doesnât accept your credit card at all.
In the UK, as in the US, Visa and MasterCard are the two most common credit card networks and are accepted anywhere you can use a credit or debit card. However, while Discover is the third most common network in the US, itâs all but non-existent in the UK.Â
Discover has claimed that the card has âmoderateâ acceptance in the UK, but this is a generous description and unless youâre shopping in locations that tailor for many tourists and American tourists in particular, it likely wonât be accepted.
There are similar issues with American Express, albeit to a lesser extent. AMEX is the third most common provider in the UK, but finding a retailer that actually accepts this card is very hit and miss.
Do Foreign Transaction Fees Count Towards Credit Card Rewards?
Foreign transaction fees, and all other bank and credit card fees, do not count towards your rewards total but the initial charge does. If we return to the previous example of a $200 restaurant payment, you will earn reward points on that $200 but not on the additional $6 that you pay in fees.
How to Avoid Foreign Transaction Fees
The easiest way to avoid foreign transaction fees is to use a credit card that doesnât charge them. Some premium cards and reward cards will absorb the fee charged for these transactions, which means you can take your credit card with you when you travel and donât have to worry about extra charges.
This is key, because simply converting your dollars to your target currency isnât the best way to avoid foreign transaction fees. A currency conversion will come with its own fees and itâs also very risky to carry large sums of cash with you when youâre on vacation.Â
Credit Cards Without Foreign Transaction Fees
All credit card offers are required to clearly state a host of basic features, including interest rates, reward schemes, and annual fees. However, you may need to do a little digging to learn about foreign transaction fees. These fees can be found in the credit cardâs terms and conditions, which should be listed in full on the providerâs website.
To get you started, here are a few credit cards that donât charge foreign transaction fees:
Bank of America Travel Rewards Card: A high-reward and low-fee credit card backed by the Bank of America.
Capital One: All Capital One cards are free of foreign transaction fees, including their reward cards, such as the Venture card.
Chase Sapphire Preferred: A premium rewards card aimed at big spenders. There is an annual fee, but not foreign transaction fees.
Citi Prestige: One of several Citi cards that donât charge foreign transaction fees, and the best one in terms of rewards.Â
Discover It: A solid all-round credit card with no foreign transaction fees. However, as noted above, the Discover network is rare outside of the United States.
Wells Fargo Propel World: An American Express credit card with good rewards and low fees, including no foreign transaction fees.
Summary: One of Many Fees
Foreign transaction fees are just some of the many fees you could be paying every month. Credit cards work on a system of rewards and penalties; youâre rewarded when you make qualifying purchases and penalized when you make payments in foreign currencies and in casinos, and when you use your card to withdraw cash.
Many of these fees are fixed as a percentage of your total spend, but some also charge interest and you will pay this even if you clear your balance in full every month. To avoid being hit with these fees, pay attention to the terms and conditions and look for cards that wonât punish you for the things you do regularly.
What is a Foreign Transaction Fee and How Can You Avoid It? is a post from Pocket Your Dollars.