interest rates http://www.wisebread.com/taxonomy/term/1797/all en-US 7 Warning Signs You're In Debt Denial http://www.wisebread.com/7-warning-signs-youre-in-debt-denial <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-warning-signs-youre-in-debt-denial" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young_couple_in_bad_financial_situation_0.jpg" alt="Young couple in bad financial situation" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Many people are in denial about the debt that they owe. When faced with the ugly truth, it's sometimes easier to or minimize the importance of it or flat-out reject the extent that we're in debt. The longer you stay in denial, the bigger the debt grows. Learn to know the warning signs before denial kicks your finances where it hurts.</p> <h2>1. Taking on debt to pay down other debts</h2> <p>This kind of strategy will dig you into a deep debt hole in the blink of an eye. If you get a credit card to pay off another credit card, your money woes can quickly multiply. Interest will keep on accruing. And eventually, the balance still needs to be paid.</p> <p>There can be certain exceptions to this. A low-interest loan to pay off high-interest debt can be a smart way to minimize interest payments, so long as it is paid back quickly. A classic example is using a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards" target="_blank">balance transfer credit card with a promotional 0% APR</a>, or consolidating debt through a home-equity loan or a refinance.</p> <p>However, even with these strategies, you must be very careful. Balance transfer credit cards should be paid off in full before the promotional 0% APR window closes and normal interest rates kick in. And your home is not a bottomless piggy bank, as many people found out in the 2008 housing crash. (See also: <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=seealso" target="_blank">When to Do a Balance Transfer to Pay Off Credit Card Debt</a>)</p> <h2>2. Not having any kind of monthly budget</h2> <p>One of the best ways to address your debts is to get a complete picture of your finances. You should know your monthly incomings and outgoings, and create a budget based on that information. If you ignore budgeting and just try and wing it month to month, you could be in serious debt denial. This is a shaky foundation for your financial future.</p> <p>It's important that you keep a record of every penny you spend, every penny you earn and save, and every cent you have in debt. That way, you can create a monthly budget to ensure that the bills all get paid on time, you spend only what you need to on food, entertainment, and clothing, and you have enough left over to start paying down your debts. (See also: <a href="http://www.wisebread.com/stop-using-these-5-excuses-not-to-budget?ref=seealso" target="_blank">Stop Using These 5 Excuses Not to Budget</a>)</p> <h2>3. There are stacks of unopened bills laying around</h2> <p>A big red flag that signals debt denial is refusing to even acknowledge what you owe, and how soon you owe it. By letting your bills pile up on the kitchen counter unopened, you are merely putting off the inevitable. Sooner or later, the bills have to get paid. If they don't, you can be cut off (which requires additional fees to reinstate service), you could have your car repossessed, and you could even lose the roof over your head.</p> <p>Attack that pile of unopened bills as soon as you can. If they are too big to handle, call your service or loan providers and see if they'll work out a payment plan with you. You never know until you ask. Oh, and if you are scared of looking at your bank or credit cards statements, that's another warning sign of debt denial. Bite the bullet and face the truth. (See also: <a href="http://www.wisebread.com/pay-these-6-bills-first-when-money-is-tight?ref=seealso" target="_blank">Pay These 6 Bills First When Money Is Tight</a>)</p> <h2>4. Making the minimum payments on everything</h2> <p>Financial institutions love people who only make minimum payments. There are two broad terms used for credit card customers &mdash; &quot;transactors&quot; and &quot;revolvers&quot; &mdash; and the latter are adored because they never pay off their balances.</p> <p>Transactors pay off their credit card bill in full at the end of each month, taking advantage of points and rewards without having to pay interest. Revolvers, on the other hand, regularly run balances. For those who only make minimum payments, interest makes it almost impossible to get a foothold on the original balance. (See also: <a href="http://www.wisebread.com/all-the-ways-minimum-payments-are-evil?ref=seealso" target="_blank">All the Ways Minimum Payments Are Evil</a>)</p> <p>If you find yourself making only minimum payments on everything, consider a debt snowball approach. Find the debt with the lowest balance, send as much money as you can to it, and continue making minimum payments on your other accounts. When that small debt is paid off, apply the extra amount you were paying to the next largest debt, and so on, until it all snowballs and your debts are paid in full.</p> <p>Paying off small debts first may cause you to pay more interest in the long run, but the psychological satisfaction of checking off a debt can be powerful motivation to keep going. (See also: <a href="http://www.wisebread.com/6-secrets-to-mastering-the-debt-snowball?ref=seealso" target="_blank">6 Secrets to Mastering the Debt Snowball</a>)</p> <h2>5. Maxing out every card and loan you have</h2> <p>When you get a new credit card, it comes with a spending limit. When you combine the credit limits of all your cards, and compare that number to the amount you have borrowed, you'll get a figure called a credit utilization ratio.</p> <p>Let's say you have $10,000 of available credit, and you currently owe $2,000 spread out across your combined credit cards. You have a 20 percent credit utilization ratio, and lenders like to see that. It means you're being careful with your money and not running up balances. Most experts recommend you try to keep this ratio below 30 percent. Even better if you can keep it below 10 percent. (See also: <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=seealso" target="_blank">This One Ratio Is the Key to a Good Credit Score</a>)</p> <p>If you're maxing out all of your credit cards, and you're hitting 80 to 90 percent of the credit you can borrow against, your credit utilization ratio is too high (especially if it's a six-figure credit limit). This tells any potential lender that you're a risk, and you likely won't be approved for any new lines of credit. If you are, it will come with sky-high interest rates.</p> <h2>6. Buying things you don't need while debts go unpaid</h2> <p>You should really be paying down the credit cards, or that electricity bill that's a few months overdue. But the jacket you've been eyeing is on sale right now, and you won't get another shot at a bargain like this. You put the bills off a little longer, and go for the jacket.</p> <p>This kind of mentality traps us all at some point, especially if we're feeling down and would rather spend the money on ourselves than give it to the bank or the utility company. Once again, the brutal truth has to be addressed. Spending money on stuff you don't need and cannot afford, while letting interest pile up on your debts, is a one-way ticket to bankruptcy.</p> <h2>7. Counting on a stroke of good fortune to solve your problems</h2> <p>We all do it. There's no harm in dreaming about winning the lottery, or finding a valuable piece of jewelry or artwork in the attic. But there's a big difference between dreaming of a windfall, and depending on one to get you out of debt.</p> <p>It can be dangerous to think this way when you have money woes. That last $20 in your pocket goes to Powerball tickets or scratch cards, rather than buying food or paying a bill. The odds are not in your favor, and you may as well throw the $20 in the trash. And yet, the fantasy of winning thousands, or even millions, is hard to ignore. For a while, you feel like you might get lucky &mdash; but when the dust settles, you now have $20 less to your name.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/7-warning-signs-youre-in-debt-denial">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-get-back-on-track-when-youre-behind-on-your-bills">How to Get Back on Track When You&#039;re Behind on Your Bills</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-retiring-with-debt-isnt-the-end-of-the-world">Why Retiring With Debt Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debunking-8-common-credit-score-myths">Debunking 8 Common Credit Score Myths</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/best-of-personal-finance-credit-where-credit-is-due-edition">Best of Personal Finance: Credit Where Credit Is Due Edition</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-reasons-taking-a-loan-for-your-wedding-is-a-bad-idea">3 Reasons Taking a Loan For Your Wedding Is a Bad Idea</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management bills budgeting credit utilization ratio debt denial ignoring interest rates loans minimum balances owing money Fri, 16 Feb 2018 10:00:06 +0000 Paul Michael 2104315 at http://www.wisebread.com 3 Reasons Taking a Loan For Your Wedding Is a Bad Idea http://www.wisebread.com/3-reasons-taking-a-loan-for-your-wedding-is-a-bad-idea <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-reasons-taking-a-loan-for-your-wedding-is-a-bad-idea" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/marriage_and_finances.jpg" alt="Marriage and finances" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Imagine standing at the altar on your wedding day. Staring deep into your beloved's eyes, suddenly, you are struck by the thought that this one &quot;priceless&quot; moment is costing you over $30,000. And that doesn't include the five-day, four-night honeymoon in Cancun. <em>What have you done?</em></p> <p>According to The Knot, the national average for the cost of a wedding in 2016 was a whopping $35,329. And since most couples don't have that kind of cash upfront, many turn to loans to finance all or some portion of it.</p> <p>Technically speaking, there's no such thing as a &quot;wedding loan.&quot; A wedding loan is just an unsecured personal loan where the interest rate is based on the creditworthiness of one or both potential spouses. But kicking your marriage off with debt is a recipe for unnecessary stress and hardship. It can set you back financially before you even gain any momentum in what should be a new, exciting chapter of life.</p> <p>If you are contemplating using a wedding loan to help you pay for your big day, here are three key things you should consider.</p> <h2>1. You squander your money's opportunity cost</h2> <p>Every dollar comes with an opportunity cost &mdash; meaning there are infinite ways that one dollar can be spent. Once you spend the dollar, you lose all of the other potential things you could have purchased with it.</p> <p>Taking out a loan for a wedding is financial double jeopardy. Not only do you lose the opportunity cost for each dollar you've spent, but you also limit what you could have strategically used your credit for &mdash; such as purchasing a home or starting a business.</p> <p>There are so many ways to spend money, and shelling out copious amounts of cash to pay for a one-day event is a bad investment. Starting your life together with a huge amount of unnecessary debt adds more stress to a naturally stressful endeavor. Marriage is tough. In lieu of investing in a single day that won't appreciate in value, take that money and invest in your life with your partner.</p> <h2>2. You drastically increase the cost of your wedding</h2> <p>We've already established that having an expensive wedding is a bad investment, but taking out a loan to pay for a wedding is asinine. Let's say you take out a $20,000 personal loan for your wedding at an annual percentage rate (APR) of 10 percent. And because you and your fiancé both have student loans, car payments, several thousand dollars in credit card debt, and are looking to purchase your first home, you opt for a 10-year repayment period.</p> <p>Your minimum monthly payment is going to be $264.30 per month for 10 years. During that time, you will pay over $11,000 in interest. Your $20,000 wedding just skyrocketed to $32,000. Think about that for a second. Ten years of your life and $32,000 spent paying for a five-hour event. That money could have been a down payment for a home.</p> <p>What's more, according to the U.S. Census Bureau, first marriages that end in divorce do so within an average of eight years. That means if happily-ever-after comes to an end before your loan is paid off, you'll be paying for your wedding and your divorce <em>simultaneously</em>. (See also: <a href="http://www.wisebread.com/how-to-save-big-on-everything-for-your-wedding?ref=seealso" target="_blank">How to Save Big on Everything for Your Wedding</a>)</p> <h2>3. Spending big leads to more big spending</h2> <p>Spending big on an extravagant wedding establishes spending expectations. This big spending attitude can quickly seep into all financial decisions and an attitude of entitlement can emerge &mdash; because you deserve &quot;the best,&quot; which is usually defined by people with extravagant tastes. Now the honeymoon has to be lavish with no expense spared. Your home has to be opulent and in the fanciest neighborhood. Your kids have to wear the trendiest clothes, attend the most prestigious private schools, and belong to all of the &quot;it&quot; clubs. The cycle can consume your marriage.</p> <p>If you and your spouse-to-be can find a way to be creative and have a wedding that is meaningful, intimate, and budget-friendly, you will establish a better foundation. You will be setting a tone of living within your means and valuing quality over size and quantity.</p> <p>The essence of marriage is appreciating the little things and making the daily grind adventurous. When you pressure yourself and your spouse to continuously &quot;go big,&quot; you add a mountain of undue stress &mdash; both emotionally and financially &mdash; on your marriage. (See also: <a href="http://www.wisebread.com/people-are-still-spending-too-much-on-their-weddings?ref=seealso" target="_blank">People Are Still Spending Too Much on Their Weddings</a>)</p> <h2>A $40 wedding story</h2> <p>I recently celebrated my 22nd wedding anniversary. As I look back and recall my wedding, a smile slowly creeps across my face. We spent $40 on the ceremony and had our reception at Applebee's. Our best friends were there and we had the time of our lives.</p> <p>Over these past 22 years, I've never looked back and wished we had done things differently. In fact, we have renewed our vows twice since then (we do it every 10 years) and each time it's been a quiet ceremony in our pastor's office. The only people who attend are the pastor and my husband and me. It's intimate, private, and special.</p> <p>I am not saying you should forgo a large wedding. You have found and are marrying the love of your life. That level of commitment should be honored. But before you pull out all the stops and plan the wedding of the century, pause and assess how you are spending that money. Do you really need to spend $2,000 on flowers? If something isn't important to you and your fiance, don't borrow money to pay for it.</p> <p>Marriage is a marathon, not a 100-yard dash. Try shifting your focus from having the perfect wedding day to building your life together. Chose to invest in <em>you</em>.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/denise-hill">Denise Hill</a> of <a href="http://www.wisebread.com/3-reasons-taking-a-loan-for-your-wedding-is-a-bad-idea">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-manage-your-money-during-a-spousal-separation">How to Manage Your Money During a Spousal Separation</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-things-i-learned-about-money-after-getting-married">8 Things I Learned About Money After Getting Married</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-money-fights-married-couples-have-and-how-to-avoid-them">4 Money Fights Married Couples Have (And How to Avoid Them)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-secrets-you-need-to-tell-your-financial-adviser">11 Secrets You Need to Tell Your Financial Adviser</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-myths-about-divorce-and-money-debunked">4 Myths About Divorce and Money, Debunked</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Lifestyle couples debt divorce interest rates loans marriage Opportunity Cost spouses weddings Wed, 14 Feb 2018 09:01:05 +0000 Denise Hill 2098585 at http://www.wisebread.com Are You Paying Off Credit Card Debt the Wrong Way? http://www.wisebread.com/are-you-paying-off-credit-card-debt-the-wrong-way <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/are-you-paying-off-credit-card-debt-the-wrong-way" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_with_credit_card_using_laptop_in_apartment.jpg" alt="Woman with credit card using laptop in apartment" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When you have more than one credit card to pay off, there are many ways to go about tackling your debt. You could pay off cards with highest interest rates first, or you could pay off cards with the smallest balances first. Or, you could make bigger payments toward cards with larger balances, and smaller payments toward cards with smaller balances.</p> <p>It matters which order you pay off credit cards if you want to get out of debt quickly. Unfortunately, most people are going about it the wrong way.</p> <h2>Going above the minimum</h2> <p>When you get your credit card bill, it will state the minimum monthly payment you are required to make, typically 2 to 5 percent of your account balance. This minimum payment amount will avoid you having to pay late fees and will keep your credit score stable, but that's about all it will help with. Depending on the interest rate, it could take you over 30 years to pay off a credit card making only minimum payments. If you want to pay off your credit cards in a reasonable amount of time, you will need to make more than the minimum payment every month. (See also: <a href="http://www.wisebread.com/all-the-ways-minimum-payments-are-evil?ref=seealso" target="_blank">All the Ways Minimum Payments Are Evil</a>)</p> <p>How should you distribute additional payment funds that are above the minimum payment amount? Which card (or cards) you pay down first can make a big difference in terms of how long it takes to get out of debt and how much it costs to pay off the debt. It turns out that most people are using a repayment strategy that takes longer and costs more than necessary.</p> <h2>The trouble with balance-matching</h2> <p>According to a recent study conducted in England, a majority of people who are making payments on multiple credit cards are using a repayment strategy that can be described as &quot;balance-matching.&quot; Credit card payments are allocated in proportion to the balance on each account &mdash; in other words, bigger payments go toward cards with bigger balances, and smaller payments go toward cards with smaller balances.</p> <p>The problem with the balance-matching repayment strategy is that it completely ignores the interest rate on credit accounts, which is a major driver of how long it takes to pay off debt. If credit card payments are allocated only based on the account balances, higher interest accounts can rack up interest and you can end up stuck in credit card debt longer and paying more before you finally get the debt paid off.</p> <p>Why do people use a repayment strategy that ends up costing more? The likely reason is that people are more familiar with their credit card balances than the interest rates on various cards. The balance is easy to find on the credit card bill in contrast with the interest rate, which can be buried in the small print. So when people decide how much to pay toward their credit cards, the balance tends to be the biggest factor &mdash; or the only factor &mdash; in deciding how to allocate payments. (See also: <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=seealso" target="_blank">5 Ways to Pay Off High Interest Credit Card Debt</a>)</p> <h2>The right way to pay off credit cards</h2> <p>If you want to pay off credit card debt in the shortest time for the lowest cost, the optimal payment strategy is to direct additional payments to the highest-interest rate card <em>first</em>, and continue making minimum payments on your other cards. When your highest-interest card is paid off, you'll direct extra payments to the next highest-interest card, and so on, until your debt is eliminated. This strategy is sometimes described as the <em>debt avalanche</em> method. The debt avalanche method ignores the balance of credit cards and uses only the interest rate to determine how to allocate payments. The result of following the debt avalanche strategy is that balances at the highest interest rate are paid off as quickly as possible, minimizing the cost of interest. (See also: <a href="http://www.wisebread.com/snowballs-or-avalanches-which-debt-reduction-strategy-is-best-for-you?ref=seealso" target="_blank">Snowballs or Avalanches: Which Debt Reduction Strategy Is Best for You?</a>)</p> <p>Another effective payment strategy for a lot of people is the <em>debt snowball</em> method. In this approach, you direct additional funds to the card with the smallest balance while making minimum payments on the others. Once you pay off your card with the smallest balance, you move on to direct extra payments toward the card with the next smallest balance, and so on. The debt snowball method provides psychological reinforcement as credit accounts are paid off. Even though this strategy ignores interest rates, seeing quick results of paying off credit accounts with lower balances can motivate people to stay focused on paying off debt. (See also: <a href="http://www.wisebread.com/6-secrets-to-mastering-the-debt-snowball?ref=seealso" target="_blank">6 Secrets to Mastering the Debt Snowball</a>)</p> <h2>Consider a balance transfer</h2> <p>If you are really committed to a debt payoff goal, a <a href="http://www.wisebread.com/your-comprehensive-checklist-for-a-successful-balance-transfer?ref=internal" target="_blank">balance transfer</a> can save you thousands in interest and help you meet your goal earlier. By transferring your balance to a credit card with a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">0% balance transfer offer</a>, you can buy time, interest-free, while paying off your debt. Now, this is assuming you would qualify for a new card with a high enough credit limit to make it worthwhile. But if your credit is solid (you just have a lot of debt), this could be the best option to getting your debt paid once and for all. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso" target="_blank">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/are-you-paying-off-credit-card-debt-the-wrong-way">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-easy-first-steps-to-paying-off-debt">7 Easy First Steps to Paying Off Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-prevent-a-debt-spiral">5 Ways to Prevent a Debt Spiral</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-better-less-debt-or-more-savings">What&#039;s Better: Less Debt or More Savings?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off">5-Day Debt Reduction Plan: Pay It Off</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management avalanche method balance matching credit card debt interest rates minimum payments snowball method Tue, 13 Feb 2018 10:00:06 +0000 Dr Penny Pincher 2097699 at http://www.wisebread.com The Millennials Guide to Avoiding Credit Card Debt http://www.wisebread.com/the-millennials-guide-to-avoiding-credit-card-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-millennials-guide-to-avoiding-credit-card-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_doing_online_shopping.jpg" alt="Woman doing online shopping" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Americans owe billions of dollars in credit card debt, and the high interest rates that come with it can lead to a debt spiral that is very challenging to overcome.</p> <p>Millennials, having lived through the financial crisis and other economic downturns, appear to be more wary of credit cards than other generations, according to several recent surveys from sources including Bankrate and TransUnion. This wariness is healthy, but it's important for this younger generation to know that credit cards by themselves can be harmless and perhaps even beneficial if used wisely. (See also: <a href="http://www.wisebread.com/why-millennials-should-embrace-credit-cards?ref=seealso" target="_blank">Why Millennials Should Embrace Credit Cards</a>)</p> <p>If you're a millennial, consider these tips on how to use credit cards while avoiding getting into dangerous debt.</p> <h2>Pay attention to interest rates</h2> <p>Sometimes when you're in a financial pinch, you may be relieved to see a new credit card application come in the mail. But it's a bad idea to apply without looking at the terms first. Not all credit cards are created equal, and some have very high interest rates that could cripple you financially. An annual percentage rate of about 15 percent is standard, but some can go well above 20 percent, and it's possible to find rates below 12 percent. Be sure to read the fine print on all cards, and compare rates to find the best card available for you. (See also: <a href="http://www.wisebread.com/best-credit-cards-for-millennials?ref=seealso" target="_blank">Best Credit Cards for Millennials</a>)</p> <p>Also, don't get too enamored with low introductory rates; remember that all introductory rates eventually aren't introductory anymore. If you're struggling to get out of debt, it may be helpful to transfer a balance to a card with a 0% introductory APR, but be aware that rate will jump after a certain amount of time. (See also: <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=seealso" target="_blank">The Best 0% Balance Transfer Credit Cards</a>)</p> <h2>Avoid fees</h2> <p>Some credit cards will charge you an annual fee just to have them. Sometimes, this annual fee allows you to receive special benefits, but the average person should never feel the need to pay money just to have access to credit. You may feel like you've &quot;arrived&quot; because you are spending $550 per year for that platinum card, but it's a silly expense if you're only using the card to pay for lunch and fill your gas tank. These <a href="http://www.wisebread.com/the-5-best-premium-credit-cards?ref=internal" target="_blank">premium credit cards</a> come with many perks and benefits that only benefit certain people. (See also: <a href="http://www.wisebread.com/how-to-decide-if-an-annual-fee-credit-card-is-worth-it-for-you?ref=seealso" target="_blank">How to Decide if an Annual Fee Credit Card Is Worth It for You</a>)</p> <h2>Pay on time</h2> <p>The nice thing about credit cards is that if you pay off the balance every month, on time, you're not charged any extra fees or interest. There's really no down side to using a credit card to buy items and paying the bill in full each month.</p> <p>Paying your bill on time is the number one factor in determining your credit history. Miss a payment, and you are subjecting yourself to late charges and a hefty amount of interest. Additionally, you could see your credit score suffer. (See also: <a href="http://www.wisebread.com/5-simple-ways-to-never-make-a-late-credit-card-payment?ref=seealso" target="_blank">5 Simple Ways to Never Make a Late Credit Card Payment</a>)</p> <h2>Watch the revolving balance</h2> <p>Even if you pay your bill on time every month, your credit score could be hurt if you have a high balance each month. Credit bureaus don't like it when you are bumping up against your credit limit on a regular basis. In fact, as much as one-third of your credit score is based on &quot;credit utilization,&quot; or the amount of debt you have versus the amount of credit you have available. In other words, you should still try to avoid racking up a large credit card bill, even if you're diligent about paying on time. (See also: <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=seealso" target="_blank">This One Ratio Is the Key to a Good Credit Score</a>)</p> <h2>Use them to build credit</h2> <p>When used responsibly, credit cards can help you build a credit history and make it easier to get favorable terms when borrowing money elsewhere. If you are applying for a mortgage, for example, a lender will review your credit score and payment history to determine the rate and size of the loan that you are eligible for. Without a lengthy credit history, lenders may find it hard to give you good terms, or you may be turned down altogether. (See also: <a href="http://www.wisebread.com/5-ways-to-improve-your-credit-score-fast?ref=seealso" target="_blank">5 Ways to Improve Your Credit Score Fast</a>)</p> <h2>Have multiple cards, but be careful</h2> <p>People with high credit scores tend to have more cards than those with lower scores. This is because your credit score is partially based on how much debt you have compared to your overall availability of credit. Since more cards will generally mean more available credit, there is an advantage to having multiple cards. The very, very big caveat to this is that if you have more cards, you have more ability to borrow and rack up debt.</p> <p>Having multiple cards can give you flexibility, because not all cards are accepted everywhere. Additionally, it may be helpful to have credit cards with varying kinds of rewards. There is no universal rule of thumb regarding the optimal number of credit cards, but it's likely that you can get away with having two or three.</p> <h2>Track your spending</h2> <p>One nice advantage to using credit cards is that it will allow you to keep a real-time record of your purchases. If you use cash instead, recording your spending is more of a manual chore.</p> <p>Most credit card companies allow you to check your transactions online and will even categorize your purchases, thus helping with budgeting. If you use credit cards, don't just mindlessly pay your bill when it comes. Take the time to review what you spent during the previous month, and try to identify where you may be able to cut expenditures and boost your savings.</p> <h2>Use your rewards</h2> <p>There's a healthy competition among credit cards to offer rewards to cardholders when they make purchases. Some cards give you cash back. Many offer airline points or other travel rewards. There are cards offering cash back to be used at Disney theme parks, and some that allow you to direct money into retirement accounts.</p> <p>When used responsibly, these credit cards can save you a lot of money. Do some research to find the credit cards with the best rewards for you, and try to stay away from cards with an annual fee, if possible. (See also: <a href="http://www.wisebread.com/6-tricks-to-making-the-most-of-your-reward-miles?ref=seealso" target="_blank">5 Tricks to Making the Most of Your Reward Miles</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fthe-millennials-guide-to-avoiding-credit-card-debt&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThe%2520Millennials%2520Guide%2520to%2520Avoiding%2520Credit%2520Card%2520Debt.jpg&amp;description=The%20Millennials%20Guide%20to%20Avoiding%20Credit%20Card%20Debt"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/The%20Millennials%20Guide%20to%20Avoiding%20Credit%20Card%20Debt.jpg" alt="The Millennials Guide to Avoiding Credit Card Debt" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/the-millennials-guide-to-avoiding-credit-card-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-tell-if-a-credit-card-offer-is-a-good-one">6 Ways to Tell If a Credit Card Offer Is a Good One</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-boost-your-credit-with-a-balance-transfer">How to Boost Your Credit With a Balance Transfer</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-credit-card-mistakes-to-get-over-by-age-30">5 Credit Card Mistakes to Get Over by Age 30</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan">10 Things You Need to Know Before Taking Out a Personal Loan</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-good-credit-is-better-than-a-boyfriend">6 Ways Good Credit Is Better Than a Boyfriend</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Credit Cards balance transfers cash back credit card debt credit score credit utilization ratio fees interest rates millennials rewards Mon, 22 Jan 2018 10:00:06 +0000 Tim Lemke 2086607 at http://www.wisebread.com 6 Ways Good Credit Is Better Than a Boyfriend http://www.wisebread.com/6-ways-good-credit-is-better-than-a-boyfriend <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-good-credit-is-better-than-a-boyfriend" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/kissing_piggy_bank.jpg" alt="Kissing piggy bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Having good credit may not sound like much when compared to romance. After all, there aren&rsquo;t many candlelit dinners, vases overflowing with roses, or long walks on the beach with good credit.</p> <p>However, while having a significant other is a wonderful thing, a strong credit history can enhance your life in ways romance can't quite match. Here are some things that your love life can&rsquo;t always promise you &mdash; but good credit can.</p> <h2>1. Good credit is always there for you</h2> <p>No matter when you need it &mdash; whether it&rsquo;s the middle of the night, or the middle of the workday &mdash; good credit is always there for you. Even if you just want to check it again, one more time to feel more secure, good credit doesn&rsquo;t think you're being clingy.</p> <p>Good credit doesn&rsquo;t require anything special to keep it happy: Simply keep up with smart money habits, and it will show up wherever and whenever you need it, whether it&rsquo;s for a car loan, a home loan, or that new apartment you&rsquo;ve been wanting. (See also: <a href="http://www.wisebread.com/6-ways-life-is-better-with-good-credit?ref=seealso" target="_blank">6 Ways Life Is Better With Good Credit</a>)</p> <h2>2. Good credit comes through in an emergency</h2> <p>Do you need to move across town quickly? Good credit will help you land an awesome new apartment. It will also help get your utilities set up without any deposits or letters of guarantee, making the whole process quick and painless.</p> <p>Maybe your car got totaled and you need a loan for a new one, fast. Good credit will come through for you there, too, giving you a better chance of getting the best terms on the loan for your new ride. (See also: <a href="http://www.wisebread.com/5-ways-to-improve-your-credit-score-fast?ref=seealso" target="_blank">5 Ways to Improve Your Credit Score Fast</a>)</p> <h2>3. Good credit rewards you every day</h2> <p>When you have a solid credit score, you stand a much better chance of qualifying for the best rewards credit cards that fit your needs and lifestyle, and at a much lower rate. This means that every time you swipe, you&rsquo;ll earn bonuses, miles, or cash back that will make your life a little sweeter. And it&rsquo;s all thanks to good credit, who helped you land the cards in the first place.</p> <p>A romantic partner might reward you on occasion, but there will undoubtedly be some rocky times. That high credit score, however, is committed to making your life a little better every single day. (See also: <a href="http://www.wisebread.com/5-best-credit-cards-for-people-with-excellent-credit?ref=seealso" target="_blank">The Best Credit Cards for People With Excellent Credit</a>)</p> <h2>4. Good credit saves you money</h2> <p>Birthdays, holidays, anniversaries: Significant others can be expensive! Good credit, on the other hand, helps keep your money in your pockets. You&rsquo;ll pay less in deposits for things like utilities and mobile phone contracts. You&rsquo;ll pay less in interest on loans and credit cards. Your auto insurance rates will be lower, too. Every day, you&rsquo;ll have more money to spend on the things that make you happy, all courtesy of good credit.</p> <h2>5. Good credit helps you get a home</h2> <p>Buying a home with your significant other can be pretty scary. Buying a home with good credit, though, is easy. You'll get preapproved in a snap, and your mortgage payment will be lower thanks to a better rate. This will leave you with more room in the budget for things like decorating, dining out, and &mdash; most importantly &mdash; savings. (See also: <a href="http://www.wisebread.com/what-is-a-good-credit-score-range?ref=seealso" target="_blank">What Is a Good Credit Score and Why Is It Important?</a>)</p> <h2>6. Good credit helps you get your way</h2> <p>There&rsquo;s no partner on earth who will let you have your way all the time &mdash; but good credit will. Maybe you need a small loan to cover an unexpected home repair. If you harness the negotiation power of a sky-high credit score, you can ask for a lower interest rate or a more attractive repayment plan. You can also shop around for the best quotes from different lenders, and leverage them to get an even better deal.</p> <p>Romantic relationships make life worthwhile and so does having strong credit. Sometimes, romance is better &mdash; but other times, a good credit score is more comforting, reliable, supportive, and helpful than a boyfriend.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-ways-good-credit-is-better-than-a-boyfriend&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Ways%2520Good%2520Credit%2520Is%2520Better%2520Than%2520a%2520Boyfriend.jpg&amp;description=6%20Ways%20Good%20Credit%20Is%20Better%20Than%20a%20Boyfriend"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Ways%20Good%20Credit%20Is%20Better%20Than%20a%20Boyfriend.jpg" alt="6 Ways Good Credit Is Better Than a Boyfriend" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/6-ways-good-credit-is-better-than-a-boyfriend">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-surprising-ways-revolving-debt-helps-you">5 Surprising Ways Revolving Debt Helps You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-the-age-of-your-credit-history-matters">Why the Age of Your Credit History Matters</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-you-shouldnt-panic-if-your-credit-score-drops">Why You Shouldn&#039;t Panic If Your Credit Score Drops</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debunking-8-common-credit-score-myths">Debunking 8 Common Credit Score Myths</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance credit history credit score emergencies good credit humor interest rates loans love life mortgages rewards romance Thu, 18 Jan 2018 09:00:07 +0000 Sarah Winfrey 2086758 at http://www.wisebread.com 6 Important Things to Look for in a Savings Account http://www.wisebread.com/6-important-things-to-look-for-in-a-savings-account <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-important-things-to-look-for-in-a-savings-account" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/holding_piggy_bank_drawing_front_of_blackboard.jpg" alt="Holding piggy bank drawing front of blackboard" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Having a savings account is important. It's a good place to store your emergency fund, which you&rsquo;d tap if your car unexpectedly needed repairs or you had to weather months without a job.</p> <p>But all savings accounts are not created equal, and there are important factors you should consider before opening one. Here are six features to look for if you are searching for the best possible savings account.</p> <h2>1. Interest rates</h2> <p>The single most important attribute of a savings account is its interest rate, of course. The problem is, interest rates attached to most savings accounts are frustratingly low, with many banks offering a minuscule interest rate of 0.01 percent.</p> <p>You can&rsquo;t grow your money quickly with a rate like that. But the argument has always been that savings accounts aren&rsquo;t the place for stashing money if you want it to grow. Instead, it&rsquo;s a safe place to keep money that you might need to access quickly for an emergency. But if you can find a higher rate, you might as well take it. They&rsquo;re pretty rare. (See also: <a href="http://www.wisebread.com/5-best-online-savings-accounts?ref=seealso" target="_blank">5 Best Online Savings Accounts</a>)</p> <h2>2. No monthly fee</h2> <p>You&rsquo;d think that with such low interest rates, savings accounts wouldn&rsquo;t come with fees. But several banks do, indeed, charge monthly fees to keep a savings account there. Usually, you must maintain a certain minimum balance to avoid those fees.</p> <p>A bank might charge $5 per month if you don&rsquo;t keep at least $300 in your savings account at all times, for instance. Even if you're pretty good about keeping enough funds in your account, why take the chance of incurring a penalty if you ever dip too low?</p> <p>When you&rsquo;re shopping for a savings account, be sure to pick a bank that doesn&rsquo;t charge any monthly fees. These savings accounts are rarely worth the hassle. (See also: <a href="http://www.wisebread.com/are-you-paying-these-6-unfair-banking-fees?ref=seealso" target="_blank">Are You Paying These 6 Unfair Banking Fees?</a>)</p> <h2>3. No minimum opening deposit</h2> <p>Some banks require that you deposit a certain amount of money into your savings account when you open it. Usually, this is a small amount; say $25. This isn&rsquo;t too onerous, especially because you are opening a savings account to actually put money in it, after all.</p> <p>But if you want more freedom to start your savings account with an even lower amount, you&rsquo;ll have to search for accounts that don&rsquo;t require any minimum opening deposit. There are some out there, especially in the form of online-only banks. Just make sure that these accounts don&rsquo;t come with any other fees that might haunt you later.</p> <h2>4. Automatic transfers</h2> <p>Saving money isn't easy. But if you can automate regular deposits into your savings account, you're far more likely to save at least some money each month.</p> <p>You'll want a bank that offers automatic transfers from your checking to your savings account, and make sure that the bank doesn't charge a fee for this service. Even if you set up an automatic transfer of just $50 per month into savings, you'll have $600 after a year. That can add up. (See also: <a href="http://www.wisebread.com/5-ways-to-automate-your-finances?ref=seealso" target="_blank">5 Ways to Automate Your Finances</a>)</p> <h2>5. Mobile check deposits</h2> <p>You just received a check that you'd like to deposit into your savings account. It's a hassle to head to your nearest ATM or bank branch, but mobile deposit solves that. You simply use your bank's app to take a photo of your check &mdash; front and back &mdash; and tell your bank to deposit that check into your savings account.</p> <p>This was once a rare feature. Today, though, it's becoming expected, and it is awfully convenient. Whatever bank is behind your savings account, make sure it offers mobile deposits.</p> <h2>6. Easy withdrawal</h2> <p>What if you need quick access to your savings account to cover a financial emergency in the middle of the night? If your bank has a large network of ATMs in your area, you'll be able to get the money quickly. (See also: <a href="http://www.wisebread.com/6-big-ways-atms-are-changing?ref=seealso" target="_blank">6 Big Ways ATMs Are Changing</a>)</p> <p>Be careful, though, not to use your savings account as if it's actually a checking account. Federal regulations say that you can't make more than six withdrawals from your savings account a month. If you withdraw more, your bank will charge you fees for each withdrawal.</p> <p>Some banks might allow even fewer withdrawals every month. Look into a bank's withdrawal policies before you take out a savings account with it.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-important-things-to-look-for-in-a-savings-account&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Important%2520Things%2520to%2520Look%2520for%2520in%2520a%2520Savings%2520Account.jpg&amp;description=6%20Important%20Things%20to%20Look%20for%20in%20a%20Savings%20Account"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Important%20Things%20to%20Look%20for%20in%20a%20Savings%20Account.jpg" alt="6 Important Things to Look for in a Savings Account" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/6-important-things-to-look-for-in-a-savings-account">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan">10 Things You Need to Know Before Taking Out a Personal Loan</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-signs-its-time-to-find-a-new-bank">5 Signs It&#039;s Time to Find a New Bank</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-make-sure-you-never-pay-an-atm-fee">8 Ways to Make Sure You Never Pay an ATM Fee</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-your-savings-account-may-be-costing-you">8 Ways Your Savings Account May Be Costing You</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-signs-its-time-to-find-a-new-savings-account">4 Signs It&#039;s Time to Find a New Savings Account</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking emergency funds fees interest rates minimum dollar amount mobile deposit savings accounts withdrawals Tue, 19 Dec 2017 09:30:09 +0000 Dan Rafter 2072579 at http://www.wisebread.com 8 Money Moves for the Newly Independent http://www.wisebread.com/8-money-moves-for-the-newly-independent <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-money-moves-for-the-newly-independent" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/singing_in_the_living_room.jpg" alt="Singing in the living room" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You're done with college. You have a job. Your mom is hinting that she wants to turn your bedroom into a space for scrapbooking. It's time to set out on your own.</p> <p>This is an exciting but scary time: You'll have a rent payment and other bills to pay now, and you need to start saving for the future. Now that you've fled the nest, there are some key money tasks that you should tackle. Do these, and you'll be well on your way to financial independence.</p> <h2>1. Start building that emergency fund</h2> <p>Young people living at home aren't too concerned with emergencies wiping out their savings. But once you are out on your own, you are more vulnerable to events that can throw you for a financial loop. Your car might break down and require thousands of dollars in repairs. You may have a medical emergency that's not entirely covered by insurance. You may even find yourself without a job but with bills to pay. This is why it's hugely important to begin putting money aside to cover unexpected events.</p> <p>Start by working to accumulate three months' worth of living expenses, and then shoot for six. Don't invest this money; you need to be able to access it quickly if there's an emergency. Having this cash on hand could be the difference between continuing to live on your own and crawling back to the Parental Chateau. (See also: <a href="http://www.wisebread.com/7-easy-ways-to-build-an-emergency-fund-from-0?ref=seealso" target="_blank">7 Easy Ways to Build an Emergency Fund From $0</a>)</p> <h2>2. Shop around for bank interest rates</h2> <p>Before you went out on your own, you probably didn't think much about banks. You may have put your money in the same place as your parents, or the bank closest to your house. Now it's time to do a little homework to make sure your savings account is doing more than just holding your money.</p> <p>Interest rates are still low these days, but you can bump up your passive income by shopping around for the best rate. If you are willing to have some money tied up for a while, consider putting some money into certificates of deposit, which offer higher rates.</p> <h2>3. Learn to budget</h2> <p>Being on your own means you have to actually pay attention to your income and spending. This is especially true for young people who may have student loans and aren't earning a lot (yet). It's imperative that you spend less than you earn, and this means paying close attention to your expenses.</p> <p>You should begin by tracking your expenses each month so you have a good idea of where your money is going. Then, create small budgets for various key categories like groceries, gas, and rent. Your budgets for entertainment and frivolous expenses should be as small as possible. You may be free from Mom and Dad, but you aren't truly financially independent until you're avoiding debt and saving money at a good clip. (See also: <a href="http://www.wisebread.com/build-your-first-budget-in-5-easy-steps?ref=seealso" target="_blank">Build Your First Budget in 5 Easy Steps</a>)</p> <h2>4. Examine your credit card situation</h2> <p>You may have opened a credit card or two when in college, and perhaps you accumulated some debt. You never stressed about it when you were living at home, and Mom and Dad may have even helped you pay the bills. But now you are on your own, so it's time to get a handle on things. Take a look at how many credit cards you have and their interest rates. If you have piled up some debt, assess which cards carry the largest balances.</p> <p>You don't necessarily want to close out cards, since that can hurt your credit score. But stop using ones with high interest rates and little other benefit. Come up with a plan to reduce your debt by tackling the highest interest cards first.</p> <p>Moving forward, you'll want to get in the habit of using credit cards responsibly, avoiding debt, and hopefully earning some rewards along the way. Once you are in the habit of paying off your bill in full every month, examine which cards offer the best benefits, such as cash back or points you can redeem for merchandise retailers or air travel. (See also: <a href="http://www.wisebread.com/avoid-these-6-mistakes-newbies-make-with-their-first-credit-cards?ref=seealso" target="_blank">Avoid These 6 Mistakes Newbies Make With Their First Credit Cards</a>)</p> <h2>5. Make sure you are properly insured</h2> <p>It's common for young people to remain on their parents' health care plans, but at a certain point you need to get insurance of your own. You also need to obtain things like auto insurance, plus renter's or homeowners insurance. If you have a spouse or dependents, you should look into life insurance as well. This requires some research and discipline so you can find plans that are reasonably priced but also provide an appropriate level of coverage.</p> <p>If you are employed, you may be able to get subsidized health insurance from your employer. (Be sure to pay attention to the open enrollment dates.) Those without insurance through their job can get it through the marketplace exchanges set up in accordance with the Affordable Care Act.</p> <p>Choosing to go without health or auto insurance could subject you to penalties from the federal or state government. But more importantly, you place yourself at risk of financial disaster if a bad event takes place. Purchasing proper insurance plans is a key component of sound financial planning.</p> <h2>6. Take advantage of your employer's retirement plan</h2> <p>If you have a full-time job, there's a good chance your company will help you save for retirement by offering a 401(k) or similar plan. These plans allow you to place a portion of your salary into a wide range of mutual funds and other investments, and your employer may match a certain portion of those contributions. Plus, any money you contribute is deducted from your taxable income, so you save money. There is very little downside to opening an account right away, and you should do your best to at least get the full amount of the company match. The earlier you start, the more time your money has to grow.</p> <h2>7. Open a Roth IRA</h2> <p>Even if you take advantage of your employer's retirement plan, it's a good idea to open a separate individual retirement account that offers different tax advantages. With a Roth IRA, you can invest up to $5,500 annually in just about anything you want, and the gains on those investments can be withdrawn tax-free when you retire. A Roth IRA is available to anyone with earned income, so it's a great way to save for retirement if you are self-employed or don't get an employer-sponsored retirement plan. (See also: <a href="http://www.wisebread.com/5-retirement-accounts-you-dont-need-a-ton-of-money-to-open?ref=seealso" target="_blank">5 Retirement Accounts You Don't Need a Ton of Money to Open</a>)</p> <h2>8. Educate yourself about taxes</h2> <p>Guess what? Being financially independent also means you get to do your taxes! The IRS will always get a cut of your money, and it's important to understand how that will impact your take-home pay.</p> <p>If you are employed full-time, you will likely have taxes taken out of your paycheck, but you need to adjust your withholding so that you're not stuck with a large tax bill or refund. If you are self-employed, you will need to plan to pay taxes on your income, and it may require you to pay taxes quarterly. Perhaps most importantly, you must learn all about the various tax deductions and credits that may be available to you.</p> <p>If your taxes get too complicated, you can always pay someone to do them for you. But remember that there's a cost to going that route, and handing off your taxes to a professional doesn't mean you should remain ignorant as to what's going on. (See also: <a href="http://www.wisebread.com/8-tax-return-mistakes-even-smart-people-make?ref=seealso" target="_blank">8 Tax Return Mistakes Even Smart People Make</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F8-money-moves-for-the-newly-independent&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Money%2520Moves%2520for%2520the%2520Newly%2520Independent%2520%25281%2529.jpg&amp;description=8%20Money%20Moves%20for%20the%20Newly%20Independent"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/8%20Money%20Moves%20for%20the%20Newly%20Independent%20%281%29.jpg" alt="8 Money Moves for the Newly Independent" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-money-moves-for-the-newly-independent">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-money-moves-to-make-before-moving-out-on-your-own">5 Money Moves to Make Before Moving Out on Your Own</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-financial-mistakes-you-need-to-stop-making-by-30">5 Financial Mistakes You Need to Stop Making by 30</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-reasons-to-cut-millennials-some-slack-about-their-money">10 Reasons to Cut Millennials Some Slack About Their Money</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-help-your-adult-children-become-financially-independent">How to Help Your Adult Children Become Financially Independent</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-things-millennials-can-do-right-now-for-an-early-retirement">8 Things Millennials Can Do Right Now for an Early Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance banks budgeting emergency funds financial independence insurance interest rates investing millennials retirement young adults Fri, 15 Dec 2017 10:00:06 +0000 Tim Lemke 2068610 at http://www.wisebread.com 3 Easy Ways to Improve Your Credit Score During the Holidays http://www.wisebread.com/3-easy-ways-to-improve-your-credit-score-during-the-holidays <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-easy-ways-to-improve-your-credit-score-during-the-holidays" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/beautiful_woman_shopping_online_for_christmas.jpg" alt="Beautiful woman shopping online for Christmas" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Whether you're stuffing yourself with delicious turkey, putting up decorations, or just enjoying a well-deserved break, you're probably not thinking about your credit score much during the holidays. But even though it may not be fun, monitoring your credit score this time of year can help bring you closer to your financial New Year's resolutions or goals. Here are a few ways to give your credit score a much-needed boost during this holiday season.</p> <h2>Plan to make more purchases with cash</h2> <p>It's a myth that most people do their holiday shopping with credit cards. In 2016, Experian's Holiday Spending Survey found that 55 percent of respondents selected cash as their planned method of payment for holiday gifts. Spending with cash instead of credit cards is a smart move to prevent the potential debt cycle that the holidays can bring. Paying with cash instead of plastic will help keep your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal" target="_blank">credit utilization ratio</a> low. This ratio compares total credit available to you with the amount of credit you have used. A low ratio means you do not use very much of your credit. Remember that your credit utilization ratio accounts for 30 percent of your credit score.</p> <h2>Apply for a credit card with a low APR</h2> <p>While cash is king, 47 percent of respondents were still planning to use credit cards for their holiday shopping last year. If you're planning on pulling out plastic for this holiday shopping season, you may want to pay a visit to your local credit union before you start swiping.</p> <p>According to data from the National Credit Union Administration, the average interest rate of a regular credit card from a credit union was 11.61 percent as of September 2017. At the same time, cards from banks came with an average rate of 12.96 percent. (See also: <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?ref=seealso" target="_blank">Best Low Interest Rate Credit Cards</a>)</p> <p>Let's assume that you were to spend $1,000 with a credit card and pay it all back in three months. With a 12.96 percent APR, you would have to make three monthly payments of $341. That's $23 in interest payments for that $1000. Another way to avoid interest charges on your holiday spending is to get a <a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases?ref=internal" target="_blank">card that offers 0% APR on purchases</a> for a promotional period.</p> <p>By paying less interest, you're more likely to make payments on time (which accounts for 35 percent of your credit score) and owe less to credit card lenders overall (which accounts for 30 percent of your credit score).</p> <p>However, the most important thing is you make a commit to pay off your holiday purchases, so that you're not still paying for it when the holidays roll around again.</p> <h2>Consolidate high-interest credit cards</h2> <p>Trying to reach the recommended 30 percent credit utilization ratio can feel like an overwhelming task when the majority of your monthly payment goes to cover high interest. One way to overcome this is to explore your options of consolidating balances of other cards with a personal line of credit or other type of financing.</p> <p>Credit unions also beat national banks with lower rates for personal lines of credit. As of September 2017, a 36-month unsecured fixed rate loan came with an average interest rate of 9.20 percent at credit unions and 10.04 percent at banks. And during the holiday season, credit unions tend to offer even lower rates.</p> <p>You could also do a <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=internal" target="_blank">balance transfer to consolidate high-interest credit card debt</a>. To make this work, you'd need to open a new credit card offering a promotional introductory rate on balance transfers. You may have to pay a fee to transfer your balance (typically around 3 percent), and you'll want to repay your debt before the promotional APR window closes (typically between six and 21 months) and the rate increases. However, having a year or so to tackle credit card debt at a much lower interest rate can save you a great deal of money if you're diligent. (See also: <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=seealso?ref=seealso" target="_blank">The Best 0% Balance Transfer Credit Cards</a>)</p> <p>Being able to consolidate your balances allows you slay your debt monsters faster, which will certainly make your holidays a little brighter &mdash; and improve your credit score. Remember that the longer you carry a balance on high-interest credit cards and loans, the more interest you'll rack up on your debt, and the longer that your credit score will remain low. (See also: <a href="http://www.wisebread.com/5-tricks-to-consolidating-your-debt-and-saving-money?ref=seealso" target="_blank">5 Tricks to Consolidating Your Debt and Saving Money</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F3-easy-ways-to-improve-your-credit-score-during-the-holidays&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F3%2520Easy%2520Ways%2520to%2520Improve%2520Your%2520Credit%2520Score%2520During%2520the%2520Holidays.jpg&amp;description=5%20Affordable%20Vacations%20to%20Please%20Every%20Age%20Group"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/3%20Easy%20Ways%20to%20Improve%20Your%20Credit%20Score%20During%20the%20Holidays.jpg" alt="3 Easy Ways to Improve Your Credit Score During the Holidays" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/3-easy-ways-to-improve-your-credit-score-during-the-holidays">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-millennials-guide-to-avoiding-credit-card-debt">The Millennials Guide to Avoiding Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan">10 Things You Need to Know Before Taking Out a Personal Loan</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-money-goals-you-should-set-for-the-holidays">10 Money Goals You Should Set for the Holidays</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards">7 Important Things You Should Know About Balance Transfer Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/has-cash-become-more-trouble-than-its-worth">Has Cash Become More Trouble Than It&#039;s Worth?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance APR balance transfers cash consolidating debt credit score credit unions Holidays interest rates personal line of credit repayment shopping Fri, 17 Nov 2017 10:00:06 +0000 Damian Davila 2055198 at http://www.wisebread.com How a Surprise Credit Limit Increase Can Harm You http://www.wisebread.com/how-a-surprise-credit-limit-increase-can-harm-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-a-surprise-credit-limit-increase-can-harm-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_credit_card_637329676.jpg" alt="Learning how a surprise credit limit increase can harm you" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The email can catch you by surprise: You get a message from a bank telling you that your credit limit has increased. Banks routinely check the financial health of their credit card customers. When these customers have a good credit score and a history of paying their bills on time, they might decide to raise their credit limit by $5,000, $10,000, or more.</p> <p>You might welcome a surprise boost in your credit limit, but you should also be wary of this: An increase in your credit limit can cause problems if you're not careful.</p> <h2>Don't add to your debt</h2> <p>Do you spend more with your credit cards than you can technically afford? Are you unable to pay off your balance in full each month? If so, an increase in your credit limit has potential to make things worse.</p> <p>Credit card debt is some of the worst debt to carry because it comes with such high interest rates &mdash; sometimes as high as 20 percent or more. If you carry a balance on such cards from month to month, the amount you owe can soar solely because of this interest.</p> <p>Here's an example: Say you are carrying a balance of $8,000 on your credit card at an interest rate of 17 percent. Now, say that your minimum monthly payment is 4 percent of that balance. If you only make this minimum payment each month, it will take you over 12 years to pay off your balance. The total interest you will pay during this time is a bit more than $4,272 &mdash; and that assumes that you won't be using that credit card to make any additional purchases.</p> <p>If a credit limit increase inspires you to spend even further beyond what you can't pay off each month, you'll simply be increasing the time it takes to pay off your credit card debt. The smart move after receiving a limit increase is to set your own personal charging limit. Even if your card's credit limit is $20,000, resolve not to charge more than $500 a month if that's all you can afford to pay off when your card's payment date arrives. Don't add to the mountain of high-interest credit card debt you're already struggling to pay off. (See also: <a href="http://www.wisebread.com/how-to-pay-less-interest-on-your-credit-card-debt?ref=seealso" target="_blank">How to Pay Less Interest on Your Credit Card Debt</a>)</p> <h2>Monitor your credit utilization ratio</h2> <p>If a higher credit limit encourages you to spend more, you might also be hurting your credit score, even if you pay your credit card bill on time each month. This has to do with your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal" target="_blank">credit utilization ratio</a>. Your credit score will fall if you use up too much of the credit available to you. It will rise if you are using less of it.</p> <p>Getting a credit limit increase would seem to help your credit utilization ratio. After all, if you have more credit available to you, you will automatically be using less of it the day that credit limit increase kicks in. But if that credit limit increase inspires to you to go on a charging binge, you could quickly use up your credit increase in new purchases. That, in turn, will hurt your credit utilization ratio and your credit score.</p> <p>Again, the key is to set personal limits and stick to them. Determine a reasonable amount of money you can charge each month and don't charge more than that.</p> <h2>Don't cancel that card</h2> <p>If you're worried that you can't handle a credit limit increase, don't cancel your credit card. This will automatically increase your credit utilization ratio and damage your credit score. Once you close a card, the amount of credit available to you will automatically drop without you even charging another cent.</p> <p>You can call your credit card issuer to request that your credit limit be reduced, but that might be a risky strategy. Remember, having a higher credit limit is good for your credit score, as long as you don't swallow it up by charging too much. By removing that increase, you won't get the credit score boost that can come with higher credit limit.</p> <p>Instead, stick to that personal charging limit you've set, no matter how much available credit you have. Maxing out your credit cards is a bad financial strategy, no matter how high your credit limits.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-a-surprise-credit-limit-increase-can-harm-you&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520a%2520Surprise%2520Credit%2520Limit%2520Increase%2520Can%2520Harm%2520You.jpg&amp;description=How%20a%20Surprise%20Credit%20Limit%20Increase%20Can%20Harm%20You"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20a%20Surprise%20Credit%20Limit%20Increase%20Can%20Harm%20You.jpg" alt="How a Surprise Credit Limit Increase Can Harm You" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/how-a-surprise-credit-limit-increase-can-harm-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debunking-8-common-credit-score-myths">Debunking 8 Common Credit Score Myths</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-millennials-guide-to-avoiding-credit-card-debt">The Millennials Guide to Avoiding Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-actions-to-take-when-youre-denied-a-credit-limit-increase">9 Actions to Take When You&#039;re Denied a Credit Limit Increase</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-7-debt-payoffs-that-boost-your-credit-score-the-most">The 7 Debt Payoffs That Boost Your Credit Score the Most</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-10-biggest-lies-we-tell-ourselves-about-money">The 10 Biggest Lies We Tell Ourselves About Money</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance credit limit credit score credit utilization ratio debt interest rates limit increase overspending Thu, 16 Nov 2017 10:00:06 +0000 Dan Rafter 2055071 at http://www.wisebread.com 8 Signs You Desperately Need a New Credit Card http://www.wisebread.com/8-signs-you-desperately-need-a-new-credit-card <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-signs-you-desperately-need-a-new-credit-card" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/beautiful_young_businesswoman_shopping_online_in_office.jpg" alt="Beautiful young businesswoman shopping online in office" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There's something to be said for loyalty. But when it comes to credit cards, if you haven't updated your preferred card in years, you could be missing out on benefits, or paying too much in fees. Here are eight signs it's time to go shopping for a new credit card.</p> <h2>1. You aren't earning any rewards</h2> <p>If you're debt-free and using a credit card for convenience but not earning rewards, you are leaving real money on the table. Even a simple, no-annual-fee cash-back card that offers 1.5% back on every purchase could help you rack up free money over months of regular use. But you can do better than that. Some of the <a href="http://www.wisebread.com/5-best-cash-back-credit-cards?ref=internal" target="_blank">best cash-back credit cards</a> offer 2%-6% cash back on bonus categories (supermarkets, gas, dining &mdash; everyday spending stuff).</p> <p>If you're not earning any rewards, you should be, because 1.5% back is absolutely better than nothing.</p> <h2>2. You're earning the wrong type of rewards</h2> <p>Another sign you're not optimizing your credit card use is if you're earning rewards points that you can't really use. A common example of this is when someone clings to their old airline credit card and the idea of earning miles when they haven't flown for years. If this is you, it may be time to switch to a simple cash-back card or even a <a href="http://www.wisebread.com/best-credit-cards-with-easy-travel-redemption?ref=internal" target="_blank">flexible travel rewards credit card</a>, which lets you earn points you can redeem for travel expenses, cash back, or gift cards. With this strategy (and a new card in your wallet), you'll never be stuck with points you can't use. (See also: <a href="http://www.wisebread.com/choose-the-best-travel-rewards-credit-card-with-this-guide?ref=seealso" target="_blank">Choose the Best Travel Rewards Credit Card with this Guide</a>)</p> <h2>3. The card you use is lacking consumer protections</h2> <p>If you're using credit for convenience but your credit card is strictly bare bones in terms of the benefits it offers, you should definitely shop around. While all cards are different, many of the top rewards credit cards offer special insurance products and shopping protections that can help you save money or protect yourself financially.</p> <p>These include trip cancellation/interruption insurance, guaranteed product returns, damage and theft coverage for purchases, travel accident insurance, and auto rental coverage. If your card isn't offering these protections and you want one that does, you're probably ripe for an upgrade. (See also: <a href="http://www.wisebread.com/10-awesome-credit-card-perks-you-didnt-know-about?ref=seealso" target="_blank">Awesome Credit Card Perks You Didn't Know You Had</a>)</p> <h2>4. You want amazing travel perks</h2> <p>If you haven't traveled a lot in the past but plan to ramp things up in the future, having a <a href="http://www.wisebread.com/travel-perks-you-didnt-know-your-credit-card-had?ref=internal" target="_blank">credit card that offers travel perks</a> can lead to a more pleasant, convenient experience. Some of the top travel credit cards offer perks like a Global Entry credit, airport lounge access, and annual travel credits to cover splurges like seat upgrades and in-flight meals. (See also: <a href="http://www.wisebread.com/5-best-credit-cards-with-free-airport-lounge-access?ref=seealso" target="_blank">5 Best Credit Cards with Free Airport Lounge Access</a>)</p> <p>Most of the time it's best to keep your options open and choose a credit card that allows you to redeem points with a variety of travel partners. But if you have a preference for one particular airline, it's beneficial to get their <a href="http://www.wisebread.com/5-best-co-branded-airline-credit-cards?ref=internal" target="_blank">co-branded credit card</a>. These cards generally offer perks like priority boarding, discounts on in-flight purchases, and free check-in baggage, along with big bonuses for purchasing airfare directly from them. But many of the <a href="http://www.wisebread.com/top-5-travel-reward-credit-cards?ref=internal" target="_blank">top travel credit cards</a> charge annual fees, so you should make sure the benefits will outweigh your out-of-pocket costs before you sign up. (See also: <a href="http://www.wisebread.com/which-credit-cards-have-the-best-travel-redemption-value?ref=seealso" target="_blank">Which Credit Cards Have the Best Travel Redemption Value?</a>)</p> <h2>5. Your interest rate is too high</h2> <p>If you carry a balance on your credit card each month, earning rewards should be the last thing on your mind. Any rewards you earn will be wiped out by the interest you'll pay. Instead, your biggest concern should be your interest rate. You should be looking for a card with the lowest interest rate you can find. Not only do some <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?ref=internal" target="_blank">credit cards offer low long-term rates</a> that can save you money, but <a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases?ref=internal" target="_blank">some cards offer 0% APR on new purchases</a> for up to 21 months.</p> <h2>6. You want to transfer a balance</h2> <p>Besides cards that charge zero interest on new purchases, numerous cards let you transfer balances and pay them off with zero interest for a promotional period. This period may last anywhere from 12 to 21 months.</p> <p>When you're not paying interest, you can pay more toward the principal of your credit card balance every month, which will help you save money and pay down debt faster. If you have a huge credit card balance with big interest payments, it's definitely worth exploring the upsides of <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">0% balance transfer credit cards</a>.</p> <p>Before you do, just make sure to check out any balance transfer fees that will be charged so you can determine whether it's worth it. While a handful of cards let you transfer balances with <a href="http://www.wisebread.com/5-best-credit-cards-with-no-balance-transfer-fees?ref=internal" target="_blank">no balance transfer fees</a>, some charge 3%-5% of your balance for the privilege. (See also: <a href="http://www.wisebread.com/which-balance-transfer-credit-card-is-the-best-for-you?ref=seealso" target="_blank">Which Balance Transfer Credit Card Is The Best For You?</a>)</p> <h2>7. You are paying foreign transaction fees.</h2> <p>Whether you're purchasing products and services from foreign countries or you're using your credit card abroad on your travels, you shouldn't be paying a fee to do so. Most cards with annual fees will have zero foreign fees, but there are also no-annual fee <a href="http://www.wisebread.com/smarter-security-and-no-foreign-transaction-fees-the-best-credit-cards-to-use-while-on-vacation?ref=internal" target="_blank">credit cards that offer zero foreign transaction fees</a>.</p> <h2>8. You are paying annual fees but not using the benefits</h2> <p>No doubt holding a <a href="http://www.wisebread.com/the-5-best-premium-credit-cards?ref=internal" target="_blank">premium credit card</a> can make you feel like a VIP, and certainly these cards offer a wide variety of exclusive and valuable benefits. Most of the time the value of these benefits far exceed the price of the annual fee, if you add up the face value of all of them, but if you're not actually using them, then you're just paying for the potential access. Far better than chasing rewards is holding onto cold hard cash that you would have shelled out for an annual fee. Check out other outstanding <a href="http://www.wisebread.com/the-5-best-credit-cards-with-no-annual-fees?ref=internal" target="_blank">credit cards with no annual fees</a>.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F8-signs-you-desperately-need-a-new-credit-card&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Signs%2520You%2520Desperately%2520Need%2520a%2520New%2520Credit%2520Card.jpg&amp;description=8%20Signs%20You%20Desperately%20Need%20a%20New%20Credit%20Card"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/8%20Signs%20You%20Desperately%20Need%20a%20New%20Credit%20Card.jpg" alt="8 Signs You Desperately Need a New Credit Card" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/holly-johnson">Holly Johnson</a> of <a href="http://www.wisebread.com/8-signs-you-desperately-need-a-new-credit-card">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt">5 Ways to Pay Off High Interest Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/credit-card-fees-hidden-and-otherwise">Credit Card Fees: Hidden and Otherwise</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-5-travel-reward-credit-cards">The Best Travel Reward Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-best-cash-back-credit-cards">The Best Cash Back Credit Cards</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards balance transfer credit card perks credit card rewards interest rates new credit card signs Thu, 16 Nov 2017 09:30:05 +0000 Holly Johnson 2053946 at http://www.wisebread.com Cutting Your Car Payment Is Easier Than You Think http://www.wisebread.com/cutting-your-car-payment-is-easier-than-you-think <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/cutting-your-car-payment-is-easier-than-you-think" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/businesswoman_a_toy_car_and_a_stack_of_coins.jpg" alt="Businesswoman a toy car and a stack of coins" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Buying a car can be one of the most expensive purchases you'll ever make. Because most people don't have enough cash saved to buy a new vehicle, they often turn to auto loans to finance the purchase. But, the interest rates and monthly payments on a car loan can eat up a lot of your budget. In fact, Experian reported the national average payment for a new-car loan is $509.</p> <p>If you have not-so-great credit, that payment can be even higher. And, you'll pay hundreds or even thousands more in interest.</p> <p>However, you don't have to remain stuck with a bad loan. There's a way to reduce payments and save money on a car loan: refinancing. Best of all, it only takes about 10 minutes. (See also: <a href="http://www.wisebread.com/6-smart-auto-finance-options?ref=seealso" target="_blank">6 Smart Auto Finance Options</a>)</p> <h2>What is car loan refinancing?</h2> <p>When you purchased your car, you took out a loan through the dealership or bank for the amount you paid. At that time, you agreed on the loan amount, interest rate, repayment term, and monthly payment.</p> <p>By refinancing, you change all of those terms. When you refinance a car loan, you apply for a new loan with a bank or credit union. Depending on your credit, you could get a new loan with a lower interest rate or smaller monthly payments.</p> <p>Refinancing makes sense when you are struggling to keep up with your payments. By taking out a new loan with a longer repayment term, you can dramatically reduce your monthly bill. You'll pay more in interest over time, but extending the loan's payment period can give you necessary breathing room in your budget.</p> <p>Or, if your goal is to become as debt-free as possible, refinancing can also help you save money and pay off debt sooner. With a lower rate, more of your payments go toward the principal rather than interest.</p> <h2>How much you can save</h2> <p>The average interest rate for a used car loan is 8.88 percent, according to Experian. However, if you have bad credit, rates have been reported as high as 29.99 percent.</p> <p>When you need a car <em>right now</em>, such as when you need transportation for a new job, you might not give much thought to the interest rate. But that high rate can cost you.</p> <p>Let's say you have poor credit and you buy a used car with a $10,000, 72-month loan at 15 percent interest. Your monthly payment would be $211. However, that high interest rate would cause you to pay back $15,224 in total &mdash; more than $5,000 over what you originally borrowed.</p> <p>If you improved your credit and were approved for a refinance at just 8 percent interest, the savings would be significant. If you kept a 72-month term, your monthly payments would be reduced to $175 a month. But, even better, you'd pay back just $12,624 over the length of your repayment. Refinancing your loan would save you $2,600.</p> <h2>How to refinance your auto loan</h2> <p>If you're interested in refinancing, it's a simple process. Many banks and credit unions offer refinancing options for car loans. And, many allow you to get an estimate and apply for a loan online in just a few minutes. Some banks also allow you to get a rate quote with just a soft credit pull, so your credit score is not affected. (See also: <a href="http://www.wisebread.com/how-credit-inquiries-affect-your-credit-score?ref=seealso" target="_blank">How Credit Inquiries Affect Your Credit Score</a>)</p> <p>Each bank has its own eligibility requirements, but in general, lenders require your car to be relatively new. Many will only work with you if your car is less than 10 years old. There's usually a minimum amount you can refinance, so if you only owe a few thousand dollars on your car loan, it might not be the right option for you.</p> <p>Most lenders also require you to be current on your payments. If you're behind, you'll have to get back on track before you are able to refinance.</p> <h2>Compare offers, too</h2> <p>If you got stuck with a high-interest loan due to poor credit earlier on, refinancing your car loan can be a smart way to save money, cut your payments, or pay off your debt faster. Make sure to compare offers from multiple banks or credit unions to get the best possible loan terms.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fcutting-your-car-payment-is-easier-than-you-think&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FCutting%2520Your%2520Car%2520Payment%2520Is%2520Easier%2520Than%2520You%2520Think.jpg&amp;description=Cutting%20Your%20Car%20Payment%20Is%20Easier%20Than%20You%20Think"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Cutting%20Your%20Car%20Payment%20Is%20Easier%20Than%20You%20Think.jpg" alt="Cutting Your Car Payment Is Easier Than You Think" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kat-tretina">Kat Tretina</a> of <a href="http://www.wisebread.com/cutting-your-car-payment-is-easier-than-you-think">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/could-you-put-away-a-million-dollars-by-driving-a-used-car">Could You Put Away a Million Dollars by Driving a Used Car?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-hire-a-broker-to-buy-a-car">Should You Hire a Broker to Buy a Car?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-if-youve-signed-up-for-a-terrible-loan-or-credit-card">What to Do if You&#039;ve Signed Up for a Terrible Loan or Credit Card</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/refinance-these-4-common-debts-before-year-ends">Refinance These 4 Common Debts Before Year Ends</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/buying-a-rental-car-heres-what-you-need-to-know">Buying a Rental Car? Here&#039;s What You Need to Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Cars and Transportation auto loans buying a car car loans car payments interest rates refinancing saving money vehicles Fri, 03 Nov 2017 08:30:10 +0000 Kat Tretina 2045996 at http://www.wisebread.com 4 Signs It's Time to Find a New Savings Account http://www.wisebread.com/4-signs-its-time-to-find-a-new-savings-account <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-signs-its-time-to-find-a-new-savings-account" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/the_monthly_finances.jpg" alt="The monthly finances" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're putting any money into a savings account, congratulations: You're ahead of most U.S. adults. A survey published in 2016 by GOBankingRates found that 69 percent of American adults had less than $1,000 in their savings accounts.</p> <p>But just because you're saving money doesn't mean that you're putting it in the best savings account. And sometimes, there are signs that you should move your dollars to a new account. (See also: <a href="http://www.wisebread.com/the-types-of-savings-accounts-which-is-right-for-you?ref=seealso" target="_blank">The Types of Savings Accounts: Which Is Right For You?</a>)</p> <h2>Your bank is charging you fees</h2> <p>Because banks don't pay you much interest on savings accounts, they shouldn't charge you any fees, either. Still, there are plenty of savings accounts that do come with fees.</p> <p>The most common is the maintenance fee, usually ranging from $5 to $35 a month. Most banks will waive this fee if you keep a minimum amount of money in your savings account at all times. This minimum can range from $100 to more than $1,000, depending on your bank.</p> <p>Other banks limit the number of free transfers or withdrawals from a savings account to a certain number every month; usually about six. If you go past that number, you'll be hit with a fee for every additional transfer or withdrawal you make. That fee could be as much as $10 for each of these additional moves.</p> <p>If your balance doesn't get too low and you don't plan on making many withdrawals each month, you might never be hit with these fees. But why take the chance? There are plenty of savings accounts that come with no fees. Search for one of those instead. (See also: <a href="http://www.wisebread.com/are-you-paying-these-6-unfair-banking-fees?ref-seealso" target="_blank">Are You Paying These 6 Unfair Banking Fees?</a>)</p> <h2>You're not making enough in interest</h2> <p>You won't get rich off your savings account. Banks are stingy when it comes to earning interest, often offering as little as 0.06 percent or less. Don't expect to grow your savings much with such a paltry rate.</p> <p>But there are some banks that pay higher rates with their savings accounts, some in the range of 1 percent. Again, an interest rate of 1 percent won't make you a fortune. But if you can find a savings account that pays higher interest while not charging you any fees, why not take it? (See also: <a href="http://www.wisebread.com/5-best-online-savings-accounts?ref=seealso" target="_blank">5 Best Online Savings Accounts</a>)</p> <h2>The online banking options are too limited</h2> <p>In addition to low fees and higher interest rates, you should also be hunting for a savings account that is convenient. This means one that offers a robust online banking platform. You want to be able to log onto your account from your laptop, phone, or tablet and quickly transfer money from a checking account into your savings account. You'll want the option of mobile deposit, too, in which you can snap a photo of a check with your phone to deposit it in your savings account.</p> <p>What you don't want is to have to travel to your bank every time you want to make a deposit in your savings account. That's too much work, and now that online banking is so common, unnecessary. (See also: <a href="http://www.wisebread.com/4-things-to-consider-before-you-open-an-online-savings-account?ref=seealso" target="_blank">4 Things to Consider Before You Open an Online Savings Account</a>)</p> <h2>Your bank is closing its most convenient locations</h2> <p>Yes, online banking is easy and simple. But there might still be times when you actually want to visit your bank in person. If your bank is shedding branches, and the branches that it's closing are those closest to you, it might be time to consider moving your dollars to a new savings account.</p> <p>Because savings accounts generate so little financial reward, it's important that they also cause you as little inconvenience as possible. If you have to drive miles to get to your bank's nearest branch, it might be time to hunt for a replacement bank that's just a short walk or drive from your home. (See also: <a href="http://www.wisebread.com/8-ways-your-savings-account-may-be-costing-you?ref=seealso" target="_blank">8 Ways Your Savings Account May Be Costing You</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-signs-its-time-to-find-a-new-savings-account&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520Signs%2520Its%2520Time%2520to%2520Find%2520a%2520New%2520Savings%2520Account.jpg&amp;description=4%20Signs%20Its%20Time%20to%20Find%20a%20New%20Savings%20Account"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/4%20Signs%20Its%20Time%20to%20Find%20a%20New%20Savings%20Account.jpg" alt="4 Signs It's Time to Find a New Savings Account" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/4-signs-its-time-to-find-a-new-savings-account">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-important-things-to-look-for-in-a-savings-account">6 Important Things to Look for in a Savings Account</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-signs-its-time-to-find-a-new-bank">5 Signs It&#039;s Time to Find a New Bank</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-earn-a-good-interest-rate-in-a-low-rate-environment">How to Earn a Good Interest Rate in a Low-Rate Environment</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-sales-strategies-your-bank-uses-to-make-money">5 Sales Strategies Your Bank Uses to Make Money</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/switch-to-a-better-bank-in-5-easy-steps">Switch to a Better Bank in 5 Easy Steps</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking Hidden fees interest rates maintenance fees mobile banking savings accounts Fri, 20 Oct 2017 09:00:06 +0000 Dan Rafter 2038886 at http://www.wisebread.com 10 Things You Need to Know Before Taking Out a Personal Loan http://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/10-things-you-need-to-know-before-taking-out-a-personal-loan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/hand_giving_and_hand_receiving_money.jpg" alt="Hand giving and hand receiving money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I recently called my bank to ask about fees for using my debit card on an upcoming international trip. I laughed when the banker followed up by asking, &quot;Are you interested in taking out a personal loan for spending money on your vacation?&quot;</p> <p>There are plenty of good reasons to take out a personal loan, but going on vacation isn't one of them. A personal loan is, in essence, an unsecured loan that you get on the basis of your credit and income &mdash; unlike a mortgage loan or home equity line of credit, which uses your home as collateral. Personal loans have advantages and disadvantages compared to secured loans, so whether you go for one of these when you're in need of cash depends on your individual situation.</p> <p>Here's what you should consider before getting a personal loan.</p> <h2>1. The interest rate may be higher than you expect</h2> <p>When you hear about interest rates in the media, they're often talking about the 30-year fixed rate for a standard mortgage, which has been around 4 percent or lower for a long time now. But a personal loan's interest rate will probably be at least twice that. The reason for the difference: When you refinance your home or take out a home equity line of credit, you're promising to relinquish your home if you can't pay back the debt. That's a bigger risk for you, and less of a risk for the bank, compared to a personal loan. In return, banks give you a low interest rate on secured loans. (See also: <a href="http://www.wisebread.com/the-different-types-of-loans-a-primer?ref=seealso" target="_blank">The Different Types of Loans: A Primer</a>)</p> <h2>2. Your credit score matters more for personal loans</h2> <p>With no collateral, all the lender has to go on is your personal creditworthiness. You can expect the available interest rates to increase steeply if your credit is average or poor, going up as high as 36 percent APR.</p> <h2>3. A personal loan is not a long-term solution</h2> <p>While the typical mortgage is paid off over decades, personal loan terms are typically limited to seven years or less. This can be a good thing, because you should never borrow money for longer than you really need to. But it also means that if you are trying to borrow a lot of money, like for a major home remodel, the payments might be too high for you to keep up with on a personal loan.</p> <h2>4. Banks aren't the only option</h2> <p>As nonprofits, credit unions often offer lower rates and fees than banks for the same personal loan products. Then there are the crop of new &quot;marketplace lenders,&quot; such as SoFi and Prosper, which promise easy, quick online loan approval and good rates, especially to folks with the best credit. This nascent industry has had some bumps in the road, but it's still an avenue worth looking into. (See also: <a href="http://www.wisebread.com/best-lenders-for-personal-loans?ref=seealso" target="_blank">Best Lenders for Personal Loans</a>)</p> <h2>5. Personal loans can be a lifesaver when you need cash quickly</h2> <p>When an urgent financial need rears its head &mdash; a leaky roof, an emergency medical bill, or, heaven forbid, an unexpected funeral &mdash; many people turn to credit cards or payday lenders for help. These lenders can be punishingly expensive, but they may seem attractive because in such situations you just don't have time to sit down and apply for a home equity line of credit or look at refinancing your mortgage.</p> <p>You can get the funds from a personal loan within two weeks of applying online, making it just a little slower than the alternatives and potentially much more affordable. (See also: <a href="http://www.wisebread.com/5-times-personal-loans-may-be-better-than-credit-cards?ref=seealso" target="_blank">5 Times Personal Loans May Be Better Than Credit Cards</a>)</p> <h2>6. Personal loans can save you a lot on debt you already have</h2> <p>One of the most common uses for a personal loan is to <a href="http://www.wisebread.com/5-tricks-to-consolidating-your-debt-and-saving-money?ref=iternal" target="_blank">consolidate existing debt</a>, like credit card balances, student loans, and car loans. You may be able to get a lower interest rate than you were paying on your other debts, and you also have the organizational benefit of having only one bill to pay each month. However, when transferring one kind of loan to another, you should ...</p> <h2>7. &hellip; Be aware of what you may be giving up</h2> <p>Some marketplace lenders heavily market the idea of refinancing student loan debt into personal loans. But before you make a decision like that, you should compare your old loan and new loan carefully, the Consumer Financial Protection Bureau warned in a 2016 release.</p> <p>&quot;[I]n some cases consumers could lose important loan-specific protections by refinancing an existing debt. Specifically, consumers should know that they may sign away certain federal benefits, such as income-driven repayment for federal student loans or service member benefits,&quot; the CFPB said. (See also: <a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans?ref=seealso" target="_blank">8 Valuable Rights You Might Lose When You Refinance Student Loans</a>)</p> <h2>8. You might be better off with a different type of loan</h2> <p>If you're trying to get a better rate on credit card debt while you pay it off, before you commit to a personal loan, shop around to see what else is out there. You may be able to transfer your balance to a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">card with a promotional 0 percent interest rate</a>. Another potentially better deal could be <a href="http://www.wisebread.com/this-is-when-you-should-borrow-from-your-retirement-account?ref=internal" target="_blank">taking money out of your retirement account</a> for a short time, especially if you have a Roth IRA. Just make sure to pay back whatever you borrow.</p> <h2>9. Watch out for fees and extras</h2> <p>Some lenders will try to throw in an insurance policy or other extra expenses as you close the loan. You may or may not want an insurance policy to make sure that your survivors aren't stuck with your loan if tragedy strikes, but that's a separate financial decision that you should undertake with research, not just because you're under the impression that it's required for your loan. (If the lender says it is, walk away.)</p> <p>Also, ask the lender if they use the &quot;pre-compute&quot; method to calculate interest, or if they have prepayment penalties &mdash; you should avoid these, because both will punish you if you're able to pay the loan back ahead of schedule.</p> <h2>10. Never get a personal loan to fund certain expenses</h2> <p>One of the nice things about a personal loan is that unlike a car loan or mortgage, you don't have to justify your purchase to the lender. However, there are things you should know better than to borrow for &mdash; whether it's with a credit card, a home equity line of credit, or a personal loan.</p> <p>Don't take out a personal loan to buy an engagement ring; why would you want to start out your relationship with a pile of debt? While some lenders may advertise a personal loan as a &quot;travel loan,&quot; that's another bad idea; once the vacation is over, you have nothing that you could sell to pay off the loan if you need to. Do I need to tell you that you shouldn't take out a personal loan for gambling money? I didn't think so. (See also: <a href="http://www.wisebread.com/never-borrow-money-for-these-5-buys?ref=seealso" target="_blank">Never Borrow Money for These 5 Buys</a>)</p> <p>A more complex question is whether it's OK to use a personal loan for a down payment on a home. The whole point of requiring a buyer to make a down payment is to show that they can afford the home and to help them feel invested in the purchase. So your mortgage lender may not like it if you try to fund the down payment with a personal loan. At the very least, with this method, you'll need to get the loan several months in advance of the purchase. But even then, proceed with caution; adding debt in the form of a personal loan could affect your chances of getting approved for the mortgage at all. (See also: <a href="http://www.wisebread.com/5-money-moves-that-will-ruin-your-mortgage-application?ref=seealso" target="_blank">5 Money Moves That Will Ruin Your Mortgage Application</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F10-things-you-need-to-know-before-taking-out-a-personal-loan&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F10%2520Things%2520You%2520Need%2520to%2520Know%2520Before%2520Taking%2520Out%2520a%2520Personal%2520Loan.jpg&amp;description=10%20Things%20You%20Need%20to%20Know%20Before%20Taking%20Out%20a%20Personal%20Loan"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/10%20Things%20You%20Need%20to%20Know%20Before%20Taking%20Out%20a%20Personal%20Loan.jpg" alt="10 Things You Need to Know Before Taking Out a Personal Loan" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-millennials-guide-to-avoiding-credit-card-debt">The Millennials Guide to Avoiding Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-easy-ways-to-improve-your-credit-score-during-the-holidays">3 Easy Ways to Improve Your Credit Score During the Holidays</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards">7 Important Things You Should Know About Balance Transfer Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-surprising-ways-revolving-debt-helps-you">5 Surprising Ways Revolving Debt Helps You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Banking APR balance transfer credit score fees interest rates lenders personal loans unsecured loan Fri, 20 Oct 2017 08:30:10 +0000 Carrie Kirby 2037745 at http://www.wisebread.com How to Earn Money With Your Emergency Fund http://www.wisebread.com/how-to-earn-money-with-your-emergency-fund <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-earn-money-with-your-emergency-fund" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young_woman_with_a_piggy_bank_0.jpg" alt="Young woman with a piggy bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Life is full of unexpected and often unpleasant financial surprises. That's why it's so important to have an emergency fund. An emergency fund provides you the cash to cover everything from a blown water heater to a leaky roof to a bout of unemployment. Ideally, you should have enough dollars in your emergency fund to cover three to six months' worth of daily living expenses. (See also: <a href="http://www.wisebread.com/4-new-reasons-you-need-an-emergency-fund?ref=seealso" target="_blank">4 New Reasons You Need an Emergency Fund</a>)</p> <p>There's one problem with an emergency fund, though: You need your funds to be liquid so you can quickly get at your dollars when you need them. You also need your fund to be safe and stable. You don't want a blip in the stock market to drain those emergency funds.</p> <p>Because of this, you'll most likely stow your emergency fund in a savings account that pays out a tiny amount of interest. This is unfortunate; it'd be nice if the cash sitting in your emergency account was actually earning some money of its own.</p> <p>Here's a bit of good news: There are two good options for people who want to earn money from their emergency funds. The key, though, is to remember that the primary goal of your emergency fund is to act as a financial safety net. Earning a higher amount of interest is a secondary goal.</p> <h2>The problem with traditional savings accounts</h2> <p>If your emergency fund dollars are sitting in a traditional savings account, they're probably not earning much interest at all. Most banks today pay about .05 percent interest on their savings accounts. This is tiny.</p> <p>To put it in perspective: If you have $20,000 in your emergency fund, at 0.05 percent interest, that amount would grow to just $20,010. That's right, that .05 percent interest rate would earn you $10 in one year. Hardly inspiring.</p> <h2>Try a high-yield savings account</h2> <p>A better option might be to hunt for a bank offering what is known as a <a href="http://www.wisebread.com/5-best-online-savings-accounts?ref=internal" target="_blank">high-yield savings account</a>. As the name suggests, such accounts offer higher interest rates.</p> <p>The rates with these accounts still aren't particularly impressive. Most high-yield savings accounts come with interest rates of about 1 percent. That won't make you rich, but it is better than .05 percent. A high-yield savings account also meets the main requirement of an emergency fund &mdash; it's not volatile.</p> <p>Just be careful to read the rules of your high-yield savings account. Some might require a minimum balance. If your balance drops below this figure, you might get hit with a fee, cutting into your savings. Make sure, too, that the money in your high-yield account is truly liquid. You want to be able to access it quickly whenever you need it.</p> <h2>Short-term bond funds</h2> <p>Another option is to invest your emergency fund in a short-term bond fund. The benefit of these funds is that they are far less risky than traditional mutual funds or stocks. At the same time, they enjoy much better annual returns than you'd be able to get by leaving your emergency fund in a savings account. You can find short-term bond funds offered by investment companies such as Fidelity and Vanguard.</p> <p>These funds are also liquid. You can withdraw dollars from them whenever you'd like, which is ideal for an emergency fund.</p> <p>Annualized returns will vary, but you can expect your money to earn from 1.7 percent to 3.6 percent every year, according to a recent analysis from Investopedia. Again, this is a much better return than what you'd get from that interest rate of .05 percent with a traditional savings account.</p> <p>There is some risk, though, even with short-term bond funds. Again, your annual returns might fluctuate. If you want more certainty with your emergency fund, stashing your dollars in a savings account might be a better choice for you.</p> <p>No matter where you invest your emergency fund money, remember that stability and quick access remain the keys. Safety matters the most with an emergency fund. Sure, you'd have the potential to earn much more on your emergency fund if this money were invested in a mutual fund, but you'd also have the potential to lose this money. Don't let your quest for more earned interest lead you to investment options that are too risky for an emergency fund.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-earn-money-with-your-emergency-fund&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Earn%2520Money%2520With%2520Your%2520Emergency%2520Fund.jpg&amp;description=How%20to%20Earn%20Money%20With%20Your%20Emergency%20Fund"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Earn%20Money%20With%20Your%20Emergency%20Fund.jpg" alt="How to Earn Money With Your Emergency Fund" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/how-to-earn-money-with-your-emergency-fund">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-important-things-to-look-for-in-a-savings-account">6 Important Things to Look for in a Savings Account</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-long-can-you-really-live-on-unemployment">How Long Can You Really Live on Unemployment?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-common-excuses-for-not-saving-money">6 Common Excuses for Not Saving Money</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-personal-finance-resolutions-anyone-can-master">8 Personal Finance Resolutions Anyone Can Master</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-use-a-credit-card-for-an-emergency-without-drowning-in-debt">How to Use a Credit Card for an Emergency Without Drowning In Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance banking emergency funds interest rates liquidity savings accounts short term bond funds yields Thu, 19 Oct 2017 09:00:06 +0000 Dan Rafter 2038280 at http://www.wisebread.com Should You Take Out a Loan Backed by Your Investments? http://www.wisebread.com/should-you-take-out-a-loan-backed-by-your-investments <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/should-you-take-out-a-loan-backed-by-your-investments" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/hands_giving_and_receiving_money_usd.jpg" alt="Hands giving and receiving money USD" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you have a taxable investment account, you may have heard from your bank or brokerage lately about the opportunity to <em>borrow </em>against your stock holdings. There are many attractive aspects to securities-based loans, which have gained popularity thanks to marketing campaigns. But there are also reasons to be cautious about this kind of borrowing.</p> <p>Financial firms tout these loans as a convenient and affordable way to access quick cash for anything from a kitchen remodel to bridge financing for a home purchase. What they might not mention is that they have a strong incentive to get you to take out the loans; lending is seen as a good source of reliable income for brokerage firms looking to reduce their reliance on commissions.</p> <p>Securities-based loans (also known in the industry as non-purpose loans and securities-based lines of credit or SBLOCs) have risks, which led the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) to issue a consumer warning about them.</p> <h2>The benefits of securities-based loans</h2> <p>It's not as if your broker is lying if they tell you that taking out a securities-based loan can be a good way to get liquidity when you need it. There are real benefits.</p> <h3>1. Low rates</h3> <p>Brokerage firms have been issuing securities-based loans at rates lower than what you'd pay on a personal loan or credit card balance, and competitive with or better than what you'd pay for a home equity line of credit.</p> <h3>2. Lenient application process</h3> <p>In a 2015 investor alert, the Securities and Exchange Commission noted that &quot;some SBLOC lenders might not run a credit check or conduct an analysis of your liabilities before setting and extending the credit line.&quot; Since the lender has your stock as collateral, they don't need to worry too much about whether you can pay back the loan.</p> <h3>3. Fast turnaround</h3> <p>Funds are typically available less than a week after applying. This speed can be clutch if, say, you are in a competitive bidding situation for a house and want to have a down payment and earnest money ready at the drop of a hat.</p> <h3>4. Keeping your stock (and avoiding taxes)</h3> <p>Of course, if you have stock and you need cash, you could simply sell the stock to pay for what you want to buy. One reason some investors prefer to borrow against their portfolio value is the potential tax advantage: By keeping the stock, they avoid registering a capital gain, which they'd have to pay tax on that year. This benefit may be particularly valued by retired people who hope to hold onto their stock for life and pass it on to their heirs, since the cost basis will be stepped up to the market value at the time of death. This means that any new capital gains will be based on the price of the stocks when they were transferred to an heir, and not the price when they were first purchased.</p> <p>Another situation when avoiding selling stock might really come in handy: If you bought the stock within the past year and want to wait a year before selling it to qualify for the long-term capital gains rate, which is lower than the short-term rate. (The short-term rate is the exact same rate as your ordinary income.)</p> <p>Finally, keeping your stock means retaining the benefits of ownership, including any dividends, voting rights, and potential future gains.</p> <h2>The risks of securities-based loans</h2> <p>With all those pluses, why did the SEC and FINRA warn us about this kind of loan? Because they come with risks that may not be immediately apparent to the borrower.</p> <h3>1. The maintenance call</h3> <p>If you buy a house and the housing market crashes, you may end up owing more than the house is worth; but at least you can keep your home as long as you can make the payments. Not so with securities-based loans.</p> <p>&quot;SBLOCs are classified as <em>demand </em>loans, which means lenders may call the loan at any time,&quot; the SEC warns. Typically, this would happen if the market goes down and the value of the securities you're borrowing against decreases sharply; the lender would make what's known as a &quot;maintenance call,&quot; demanding that you pay all or part of the loan. If you can't, the lender will sell your stock at the current price. If this happens, you'd basically be forced to sell at the worst possible time.</p> <p>What are the odds of this happening? No one can see the future, but the current bull market is considered downright elderly at eight years old, leading many experts to predict a correction or recession sometime soonish. It would be foolish to expect the value of your portfolio to always rise and never fall.</p> <h3>2. Variable interest rates</h3> <p>As with any loan, read the fine print before signing on the dotted line. Many securities-based loans charge variable interest rates, meaning that you will never know how much your interest expenses will be each month.</p> <h3>3. Unexpected tax bill</h3> <p>If you bought a stock at a low price, borrow against it at a higher price, and it dips to a price between those two prices, it could spell tax trouble. If the lender forces a sale to pay the loan, you'll owe capital gains tax on the difference between your purchase price and the sale price &mdash; which could really sting if the sale proceeds went to pay off the loan, leaving you with no cash.</p> <h3>4. Lost freedom</h3> <p>The SEC warns that you will likely have to pay off any securities-backed loans before moving your assets to another brokerage firm &mdash; which could be another reason that brokerages are pushing these loans.</p> <h2>So should you get a securities-based loan?</h2> <p>While your broker's suggestion that you get a securities-based loan might be laden with self-interest, that doesn't mean you have to say no. Weigh the pros and cons before deciding, and consider taking these measures to safeguard the process if you go ahead.</p> <h3>1. Borrow less than you qualify for</h3> <p>Lenders are offering clients loans worth as much as 95 percent of an investment portfolio. The lower the percentage of leverage, the safer you are against the risks of securities-based borrowing.</p> <h3>2. Borrow only against a diverse portfolio</h3> <p>If you only own stocks in the energy sector, it won't take an overall downturn to cause a securities-based loan disaster; a sharp downturn to that one sector could do it. Investing in diverse sectors is always a good idea, but even more so if you're borrowing against your holdings.</p> <h3>3. Have a maintenance call plan</h3> <p>If you can put up the additional funds the lender demands in a maintenance call, you won't be forced to liquidate your shares at an inopportune time. So figure out in advance other ways to meet that maintenance call, whether it's tapping an emergency fund, borrowing from family, or liquidating other assets.</p> <h3>4. Don't borrow to pay for something without resale value</h3> <p>The marketing materials brokerages use to encourage securities-based loans mention vacations. But if your loan gets called in, you can't sell your vacation memories to raise the necessary cash.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fshould-you-take-out-a-loan-backed-by-your-investments&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FShould%2520You%2520Take%2520Out%2520a%2520Loan%2520Backed%2520by%2520Your%2520Investments-.jpg&amp;description=Should%20You%20Take%20Out%20a%20Loan%20Backed%20by%20Your%20Investments%3F"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Should%20You%20Take%20Out%20a%20Loan%20Backed%20by%20Your%20Investments-.jpg" alt="Should You Take Out a Loan Backed by Your Investments?" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/should-you-take-out-a-loan-backed-by-your-investments">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-investment-accounts-all-30-somethings-should-have">7 Investment Accounts All 30-Somethings Should Have</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-earn-a-good-interest-rate-in-a-low-rate-environment">How to Earn a Good Interest Rate in a Low-Rate Environment</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-three-interest-rates">The Three Interest Rates</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-countries-where-banks-pay-crazy-interest-rates">10 Countries Where Banks Pay Crazy Interest Rates</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking Investment capital gains interest rates lending maintenance call sbloc securities based loans securities-based lines of credit stock holdings Thu, 12 Oct 2017 08:30:10 +0000 Carrie Kirby 2034471 at http://www.wisebread.com