interest rates http://www.wisebread.com/taxonomy/term/1797/all en-US 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> <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-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-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-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/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-4 views-row-even"> <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> <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-earn-money-with-your-emergency-fund">How to Earn Money With Your Emergency Fund</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> <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-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/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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-new-reasons-you-need-an-emergency-fund">4 New Reasons You Need an Emergency Fund</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/should-you-buy-a-car-with-a-credit-card">Should You Buy a Car With a 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/why-the-age-of-your-credit-history-matters">Why the Age of Your Credit History Matters</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> <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-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-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> <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/money-a-mess-try-this-personal-finance-starter-kit">Money a Mess? Try This Personal Finance Starter Kit</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-personal-finance-resolutions-anyone-can-master">8 Personal Finance Resolutions Anyone Can Master</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-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-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/why-you-should-consider-an-adjustable-rate-mortgage">Why You Should Consider an Adjustable-Rate Mortgage</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/credit-challenged-how-alternative-credit-data-can-help-those-with-little-or-no-credit">Credit Challenged? How Alternative Credit Data Can Help Those With Little or No Credit</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 6 Ways to Tell If a Credit Card Offer Is a Good One http://www.wisebread.com/6-ways-to-tell-if-a-credit-card-offer-is-a-good-one <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-to-tell-if-a-credit-card-offer-is-a-good-one" 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_at_home.jpg" alt="Young woman at home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Credit cards can be a powerful tool for your finances if you use them wisely. In order to do that, though, you need to know exactly what you're getting into with each credit card. Here's what you should look for to determine if a credit card offer is good or not.</p> <h2>1. Look for the lowest interest rate</h2> <p>Saying &quot;low interest rate&quot; and &quot;credit card&quot; in the same sentence is almost paradoxical; credit cards are high-interest loans, which is why carrying a balance on them is such a bad idea. However, within the limited world of credit card interest rates, you want to go as low as possible.</p> <p>Credit card interest rates can range from 13 percent all the way up to 22 percent. You'll want to consider two interest rates when you look at a credit card offer: the introductory interest rate, and the annual percentage rate that kicks in once that introductory period is over. (See also: <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?ref=seealso" target="_blank">The Best Low Interest Rate Credit Cards</a>)</p> <h2>2. Consider the introductory interest rate</h2> <p>Sometimes it's worthwhile to take a card with a higher APR if it also provides a longer, lower introductory interest rate. It depends on how you plan to use the card. For instance, if you're going to make a big purchase on a card and pay it off within a few months, you might want to get the card with the 0 percent introductory interest rate for 15 months, even though its annual rate is higher than another offer.</p> <p>The key here, of course, is to be sure you stick to your plan and pay off the balance before the introductory term is up. Be aware, too, of factors that could cause that introductory rate to go away sooner than expected; one missed or late payment, for instance, might cause the 0 percent interest rate to turn into that 19 percent interest rate you really want to avoid. (See also: <a href="http://www.wisebread.com/6-things-you-might-miss-in-your-credit-cards-fine-print?ref=seealso" target="_blank">6 Things You Might Miss in Your Credit Card's Fine Print</a>)</p> <h2>3. Look into the points and perks</h2> <p>Some people use credit cards to their advantage by accumulating reward points or other perks. If you're smart with your credit card use and pay off your balance monthly, that can be a good plan.</p> <p>But it's only worth the trouble if the points or perks are things that have value for you in real life. If you travel frequently, for example, a credit card that gets you <a href="http://www.wisebread.com/the-best-credit-cards-for-hotel-deals-and-rewards" target="_blank">hotel room discounts</a> and <a href="http://www.wisebread.com/5-best-co-branded-airline-credit-cards" target="_blank">better airfare</a> can be a great deal. Shop around for the best points-per-purchase ratio so you get the most return for your dollars spent. (See also: <a href="http://www.wisebread.com/top-5-travel-reward-credit-cards?ref=seealso" target="_blank">The Best Travel Reward Credit Cards</a>)</p> <p>And, of course, you'll need to be aware of any fine print that might keep you from accumulating those points or perks. For example, are there particular types of purchases that don't count for credit card rewards? If so, can you still use your credit card enough on other, valid purchases to accumulate the rewards you want?</p> <h2>4. Check out their protective policies</h2> <p>Identity theft is a very real issue, and you'll want to know that any credit card you use has good security measures in place to prevent it from happening. You should also look for a card that will protect you and your assets in the case of identity theft or fraudulent purchases. What are their terms for protecting your identity, and what action will they take if your card is lost, stolen, or used fraudulently? (See also: <a href="http://www.wisebread.com/10-awesome-credit-card-perks-you-didnt-know-about?ref=seealso" target="_blank">14 Awesome Credit Card Perks You Didn't Know About</a>)</p> <p>Most legitimate credit card companies offer fraud protection, but don't assume that's so. Read the fine print to be sure that the card you're considering will cover any fraudulent charges. Will they require you to provide proof of any kind in order to receive reimbursement?</p> <h2>5. Check out all possible fees</h2> <p>Are there hidden fees for every possible scenario? It's standard for a credit card to come with fees for late or missed payments, of course. How much are these fees, and when are they assessed? Do the fees increase if you accumulate more than one? Are there unexpected ways in which you could end up accruing fees? There may be fees for particular types of transactions (such as <a href="http://www.wisebread.com/how-a-credit-card-cash-advance-costs-you-more-than-a-purchase" target="_blank">cash advances</a> or <a href="http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards" target="_blank">balance transfers</a>). Look for a card offer that designates the fees it will assess and the amount for each one so you can be sure to avoid them. (See also: <a href="http://www.wisebread.com/5-best-credit-cards-with-no-balance-transfer-fees?ref=seealso" target="_blank">The Best Credit Cards With No Balance Transfer Fees</a>)</p> <h2>6. Consider all potential use limits</h2> <p>How you plan to use the card is a big factor in which the credit card offer can benefit you the most. For example, if you want a credit card to use while traveling, you'll need to make sure the card is accepted at most places where you are going, and has <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">no foreign transaction fees</a>. If, on the other hand, you want a credit card for your child to use at college, you might prefer a card with a lower credit limit and a more forgiving interest rate. (See also: <a href="http://www.wisebread.com/4-important-ways-college-students-should-use-credit-cards?ref=seealso" target="_blank">4 Important Ways College Students Should Use Credit Cards</a>)</p> <p>Consider how you'll use the card and search for an offer that gives you the maximum benefits for the precise use you have in mind. Knowing how you'll use a credit card is key to using one wisely, and remember: In all cases, paying off the balance as quickly as possible is key to keeping more money in your pocket. (See also: <a href="http://www.wisebread.com/travel-perks-you-didnt-know-your-credit-card-had?ref=seealso" target="_blank">12 Travel Perks You Didn't Know Your Credit Card Had</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%2F6-ways-to-tell-if-a-credit-card-offer-is-a-good-one&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Ways%2520to%2520Tell%2520If%2520a%2520Credit%2520Card%2520Offer%2520Is%2520a%2520Good%2520One.jpg&amp;description=6%20Ways%20to%20Tell%20If%20a%20Credit%20Card%20Offer%20Is%20a%20Good%20One"></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%20to%20Tell%20If%20a%20Credit%20Card%20Offer%20Is%20a%20Good%20One.jpg" alt="6 Ways to Tell If a Credit Card Offer Is a Good One" 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/annie-mueller">Annie Mueller</a> of <a href="http://www.wisebread.com/6-ways-to-tell-if-a-credit-card-offer-is-a-good-one">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-fix-your-finances-after-missing-a-payment">How to Fix Your Finances After Missing a Payment</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/is-a-balance-transfer-offer-a-good-deal">Is a Balance Transfer Offer a Good Deal?</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-smart-money-moves-to-make-in-the-new-year">8 Smart Money Moves to Make in the New Year</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/which-credit-card-should-you-use-to-get-free-hotel-stays">Which Credit Card Should You Use to Get Free Hotel Stays?</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-credit-card-transactions-that-dont-earn-rewards">4 Credit Card Transactions That Don&#039;t Earn Rewards</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance balance transfers credit card offers fees fine print interest rates introductory offers late payments perks points rewards Tue, 10 Oct 2017 08:30:10 +0000 Annie Mueller 2031628 at http://www.wisebread.com How to Use a Credit Card for an Emergency Without Drowning In Debt http://www.wisebread.com/how-to-use-a-credit-card-for-an-emergency-without-drowning-in-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-use-a-credit-card-for-an-emergency-without-drowning-in-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_with_financial_problems.jpg" alt="Man with financial problems" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You know you're supposed to have an emergency fund to help pay for big, unexpected expenses such as a leaky roof or a busted transmission. But what if you don't have an emergency fund? Or your emergency fund balance is too low? You may need to rely on a credit card instead.</p> <p>Using credit cards to handle financial emergencies isn't ideal. Credit cards come with high interest rates: If you can't pay back what you've spent on your emergency by the time the bill comes due, your debt will keep growing.</p> <p>But if you have no other option, here are some tips on lessening the pain when using credit cards to handle life's emergencies. (See also: <a href="http://www.wisebread.com/where-to-find-emergency-funds-when-you-dont-have-an-emergency-fund?ref=seealso" target="_blank">Where to Find Emergency Funds When You Don't Have an Emergency Fund</a>)</p> <h2>Pay back that emergency spending ASAP</h2> <p>Using a credit card for financial emergencies isn't necessarily a bad thing. Not paying your credit card balance in full each month, however, can really cost you. And you're more likely to not pay that balance off if you've just charged $1,000 or more to handle an unexpected financial crisis.</p> <p>Blame this on interest. Credit cards come with sky-high interest rates. The average interest rate on credit cards stood at 16.7 percent as of September, according to Bankrate. This means that if you don't pay your balance off in full each month, your credit card debt can grow quickly, especially if that balance is high.</p> <p>Don't think paying your minimum required monthly payment solves the problem, either. If you have $4,000 in credit card debt at an interest rate of 17 percent, it will take you 144 months to pay it off if you only pay the minimum each month. You will pay more than $3,000 in interest during this time. And that's only if you don't add any more money to your card's balance during this period.</p> <p>It's so important to do whatever you can to pay off your credit card debt &mdash; including debt generated because of financial emergencies &mdash; as quickly as you can.</p> <h2>Use the card with the lowest interest rates</h2> <p>If you must charge an emergency on a credit card, use the card with the <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?ref=internal" target="_blank">lowest interest rate</a>. This is especially important when you are charging a large amount that you know you won't be able to pay off in one payment. The math here is simple: The higher your card's interest rate, the faster your unpaid balance will grow. Always use your lowest-rate card for big emergencies.</p> <h2>Create a repayment plan</h2> <p>If you can't repay your emergency charge in one month, you need to come up with a game plan. Determine how much money you can spare each month to cut down on your credit card debt, and apply those extra dollars to it.</p> <p>Your goal is to <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=internal" target="_blank">pay off your credit card debt as quickly</a> as possible. Maybe you send an extra $100 each month to your mortgage payment. If you have outstanding credit card debt, shift that $100 to your credit card bill instead. Mortgage debt comes with far lower interest rates than debt associated with credit cards. You should always pay off your debt with the highest interest first; it is costing you more, after all. (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> <p>If you have to cut down on other unnecessary expenses &mdash; everything from eating out to going to the movies or taking a weekend road trip &mdash; do it until you eliminate that credit card debt.</p> <h2>Consider a Balance Transfer</h2> <p>If you've created your repayment plan and feel you can realistically adhere to it, you might be able to pay off the debt even faster and save some money by doing a balance transfer. If your credit is good, you can get approved for a card that offers a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">0% Intro APR on balance transfers</a> for up to 21 months. That gives you a good chunk of time to pay off your emergency expenses without paying interest. However, keep in mind that you'd need a card from a different bank than the one you're trying to transfer a balance from, and interest rates on these cards are typically very high, which means that if you don't pay off that balance during the intro period, you'll get stuck with a high interest rate debt and make you worse off than before. Finally, there is usually a balance transfer fee, though there are some cards that offer <a href="http://www.wisebread.com/5-best-credit-cards-with-no-balance-transfer-fees?ref=internal" target="_blank">$0 balance transfer fees</a>.</p> <h2>Build an emergency fund</h2> <p>It's time to <a href="http://www.wisebread.com/a-step-by-step-guide-to-creating-your-emergency-fund?ref=internal" target="_blank">build an emergency fund</a> that you can tap to cover unexpected expenses. If you have an emergency fund ready to go, you won't have to worry about putting these expenses on your credit cards again in the future.</p> <p>Building an emergency fund isn't complicated, it just takes discipline. Start small if you must: Put $100 a month into a savings account. If you can put in more, do it. Your goal is to build an emergency fund that can cover six to 12 months' worth of daily living expenses. That way, you'll be covered if your water heater bursts or your refrigerator conks out. (See also: <a href="http://www.wisebread.com/6-fast-ways-to-restock-an-emergency-fund-after-an-emergency?ref=seealso" target="_blank">6 Fast Ways to Restock an Emergency Fund After an Emergency</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%2Fhow-to-use-a-credit-card-for-an-emergency-without-drowning-in-debt&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Use%2520a%2520Credit%2520Card%2520for%2520an%2520Emergency%2520Without%2520Drowning%2520In%2520Debt.jpg&amp;description=How%20to%20Use%20a%20Credit%20Card%20for%20an%20Emergency%20Without%20Drowning%20In%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/How%20to%20Use%20a%20Credit%20Card%20for%20an%20Emergency%20Without%20Drowning%20In%20Debt.jpg" alt="How to Use a Credit Card for an Emergency Without Drowning In 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/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/how-to-use-a-credit-card-for-an-emergency-without-drowning-in-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/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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-earn-money-with-your-emergency-fund">How to Earn Money With Your Emergency Fund</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/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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</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/heres-how-debt-settlement-can-make-your-debt-worse">Here&#039;s How Debt Settlement Can Make Your Debt Worse</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Debt Management emergency funds financial emergency high interest debt interest rates repayment plans Mon, 09 Oct 2017 09:00:05 +0000 Dan Rafter 2031626 at http://www.wisebread.com Weak Credit? You Can Still Get a Mortgage Despite Tough Lending Standards http://www.wisebread.com/weak-credit-you-can-still-get-a-mortgage-despite-tough-lending-standards <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/weak-credit-you-can-still-get-a-mortgage-despite-tough-lending-standards" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/happy_young_family_0.jpg" alt="Happy young family" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Talk to anyone who bought a house in the mid-2000s and they'll probably relate a painless, smooth process. It was a period of easy lending. Whether a borrower had bad credit, good credit, or no credit (am I starting to sound like a used-car salesman?), mortgage lenders handed out no-money down mortgages like they were going out of style &mdash; even qualifying some borrowers without verifying their income and assets. As we know, these loose lending standards helped cause the housing bubble to burst which led to the financial crisis.</p> <p>More than a decade later, mortgage lending standards have tightened, with lenders putting a lot of emphasis on creditworthiness. This isn't an issue for borrowers with good credit. But if your credit score isn't up to snuff, you may have to delay your homeownership dreams.</p> <p><a href="http://www.wisebread.com/5-ways-to-improve-your-credit-score-fast" target="_blank">Repairing a low credit score</a> is obvious fix in this situation. This involves paying your bills on time, correcting errors on your credit report, and keeping your debt to a minimum. But what if you're in the process of repairing your credit? It takes time to build a low credit score back up. So while your payment history for the past six to 12 months might be excellent, your credit score could still struggle.</p> <p>No worries. If your recent credit activity demonstrates a pattern of responsibility, it is possible to get a mortgage with weak credit &mdash; even with strict lending requirements.</p> <h2>Learn about FHA home loans</h2> <p>Conventional home loans are a popular choice because they require as little as 5 percent down and include temporary mortgage insurance. Lenders charge private mortgage insurance (PMI) when conventional borrowers put down less than 20 percent (and then cancel premiums once the property has 20 percent equity). The downside of a conventional loan is that lenders typically require a minimum 620 credit score.</p> <p>A 620 credit score is lower than the loan's previous minimum of 680. Even so, you could find yourself several points shy of the minimum guideline. If that's the case, check out FHA home loans insured by the Federal Housing Administration.</p> <p>This is an affordable alternative to a conventional loan, particularly if you have a weak credit score. Whereas a conventional loan requires a 620 credit score, an FHA loan allows for much lower credit scores &mdash; as low as 500 to 580. This is ideal if you've made a few credit mistakes in the past, yet you're on track to improve your credit score.</p> <p>Anyone can apply for an FHA loan, but it's certainly a fitting solution if you've filed for bankruptcy or experienced a past foreclosure. Currently, borrowers are eligible for an FHA home loan one year after a Chapter 13 bankruptcy, two years after a Chapter 7 bankruptcy, three years after a foreclosure, and three years after a short sale (one year in cases of extenuating circumstances, such as a job loss or illness). (See also: <a href="http://www.wisebread.com/is-an-fha-home-loan-right-for-you?Ref=seealso" target="_blank">Is an FHA Home Loan Right for You?</a>)</p> <h2>Prepare for a higher down payment</h2> <p>Be prepared to fork over a larger down payment if you're buying with weak credit. Even though 20 percent down payments are no longer required by lenders, an FHA home loan does require a minimum 3.5 percent down &mdash; but only if your credit score is 580 or higher. If you apply for an FHA loan with a credit score between 500 and 579, your mortgage lender will require a minimum 10 percent down.</p> <h2>Choose a portfolio lender</h2> <p>Using a portfolio lender is another option with a low credit score. Because many banks sell their mortgages to investors, they have to ensure these loans meet the requirements set forth by Fannie Mae and Freddie Mac, the government-sponsored entities that buy most of the home mortgages in the U.S. This limits the number of bad credit score loans approved by mortgage lenders.</p> <p>But if a mortgage lender or bank doesn't sell a percentage of its loans, they have the freedom and flexibility to approve riskier loan applicants &mdash; but only if the borrower has compensating factors to offset weak credit like a higher down payment, high income, or substantial assets. These loans are known as portfolio loans because the lender retains the loan as part of its own investment.</p> <h2>Expect a higher interest rate</h2> <p>Even though some mortgage lenders and loan programs accommodate weak credit, there's no escaping a higher mortgage rate. A low credit score and higher rates go hand-in-hand. Because the size of a borrower's down payment and credit affects mortgage rates, people with the lowest credit scores usually pay the highest rates. A higher rate increases borrowing costs and monthly payments, which makes homeownership more expensive in the long run.</p> <p>Of course, as your credit score improves, so does the opportunity to refinance your mortgage loan. If you refinance down the road and snag a lower rate, you'll reduce the amount you pay in interest and potentially lower your mortgage payment.</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%2Fweak-credit-you-can-still-get-a-mortgage-despite-tough-lending-standards&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWeak%2520Credit-%2520You%2520Can%2520Still%2520Get%2520a%2520Mortgage%2520Despite%2520Tough%2520Lending%2520Standards.jpg&amp;description=Weak%20Credit%3F%20You%20Can%20Still%20Get%20a%20Mortgage%20Despite%20Tough%20Lending%20Standards"></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/Weak%20Credit-%20You%20Can%20Still%20Get%20a%20Mortgage%20Despite%20Tough%20Lending%20Standards.jpg" alt="Weak Credit? You Can Still Get a Mortgage Despite Tough Lending Standards" 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/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/weak-credit-you-can-still-get-a-mortgage-despite-tough-lending-standards">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/do-you-really-need-a-20-percent-down-payment-for-a-house">Do You Really Need a 20 Percent Down Payment for a House?</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/make-these-5-money-moves-before-applying-for-a-mortgage">Make These 5 Money Moves Before Applying for a Mortgage</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-things-to-consider-before-buying-a-home-when-youre-single">5 Things to Consider Before Buying a Home When You&#039;re Single</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-mortgage-details-you-should-know-before-you-sign">5 Mortgage Details You Should Know Before You Sign</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-build-equity-in-your-home">How to Build Equity in Your Home</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing bad credit buying a home credit score down payments equity fha loan home loans homeownership interest rates mortgages portfolio lenders Thu, 05 Oct 2017 08:30:11 +0000 Mikey Rox 2030975 at http://www.wisebread.com 6 Things You Might Miss in Your Credit Card's Fine Print http://www.wisebread.com/6-things-you-might-miss-in-your-credit-cards-fine-print <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-things-you-might-miss-in-your-credit-cards-fine-print" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_is_shopping_online_with_laptop_computer_and_credit_card.jpg" alt="Woman is shopping online with laptop computer and credit card" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Be honest: Do you ever read through all that fine print in your credit card agreement? Or do you simply skim and sign up? While poring over fine print might feel like a waste of time, it's important. It can hold critical information about your new card; read it carefully to understand the following key terms and conditions.</p> <h2>1. How your credit limit can change</h2> <p>First things first: Make sure you know exactly what your credit limit is. Introductory offers often include language like &quot;You can be approved for as much as $10,000!&quot; or &quot;Up to $20,000 credit limit!&quot; Those &quot;as much as&quot; and &quot;up to&quot; phrases are important, because they don't guarantee that amount of credit; they just imply that it's possible. Know exactly what your credit limit is so you don't go over it, because doing so tends to invoke fees and trigger a high interest rate.</p> <p>Once you know how much credit you have on a certain card, find out what actions or events might change your credit limit. If you miss a payment, make a late payment, or incur a fee, will your credit limit change? It's important to know, particularly if you plan to use the card to make a big purchase. (See also: <a href="http://www.wisebread.com/4-questions-to-ask-before-getting-a-credit-increase?ref=seealso" target="_blank">4 Questions to Ask Before Getting a Credit Increase</a>)</p> <h2>2. How the interest rate will change</h2> <p>You'll often see the interest rate for a new credit card in big, prominent print on the initial offer. That's because a low interest rate is often the marketing tactic used to appeal and bring in new cardholders. How soon will that introductory interest rate change, and what will it become when it does? Look through the fine print for terms like APR (annual percentage rate), variable rate information, interest rate, and introductory interest rate to be sure you know exactly when that introductory offer is over, and what happens when it ends.</p> <p>Be aware, also, that something as simple as one missed payment could cause you to lose the introductory interest rate sooner. Those terms should be spelled out in the fine print, and it's important to know that slipping up on a payment may bump your interest rate up sooner than you expect. (See also: <a href="http://www.wisebread.com/everything-you-didn-t-understand-about-credit-card-interest-grace-periods-and-penalty-aprs?ref=seealso" target="_blank">Everything You Didn't Understand About Credit Card Interest, Grace Periods, and Penalty APRs</a>)</p> <h2>3. How your payments will be allocated</h2> <p>If you use a credit card for purchases as well as cash advances, you probably have two different interest rates. Typically, cash advances come with a higher interest rate than purchases made on the card. And if you use the card for purchases made after that introductory, low-interest period, you'll have three different interest rates in play. (See also: <a href="http://www.wisebread.com/how-a-credit-card-cash-advance-costs-you-more-than-a-purchase?ref=seealso" target="_blank">How a Credit Card Cash Advance Costs You More Than a Purchase</a>)</p> <p>You want to find out exactly how your payment will be allocated for these different interest rates. In some cases, the default terms might put a much lower percentage of each payment toward the higher interest rate charges. Find out in the fine print if that's true, and if you have the option to request a particular payment allocation yourself for each payment you make.</p> <h2>4. How extra fees might add up</h2> <p>Credit cards come with plenty of extra fees: missed payment, late payment, and extra fees for cash advances or particular types of purchases. Look, too, for fees that kick in if you use the card over the credit limit.</p> <p>Read the fine print to find out how many potential fees come with the card, when those fees are charged to you, how much each fee is, if there is a limit to how many fees can be charged, and if the company can change the fees at any time.</p> <p>The ability to change fees can become problematic if you're counting on a particular window of time before a payment becomes late and that window changes. Some credit card companies will even set a time of day for payments due &mdash; say, noon on the 25th &mdash; and if your payment processes after 12 p.m., you're charged a late fee. (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>5. How old debts might resurface</h2> <p>Although this particular term may not be as common, it's one well-worth noting. Some credit card companies purchase old debts, then offer cards to those debt-holders. The first statement comes in and the old debt is included in the balance due. If you've ever defaulted on a debt, read the fine print to make sure the credit card company is not asserting their right to include old or defaulted debts on newly opened credit cards.</p> <h2>6. How those terms can change</h2> <p>One last important point to remember about the fine print: What you read in that initial agreement can change, usually at any time. Credit card companies generally retain the right to change the terms of the agreement as they see fit, but they're required to update the card holders when those terms change.</p> <p>That's why reading the fine print isn't a one-and-done event. You need to stay updated on changes to your credit card agreement, which means going over any material you receive with your regular monthly statement. If you see a change you don't like, take action right away: Call the company and negotiate for different terms, or, if the terms are really bad, simply pay the card off and stop using it. It's often better to go this route instead of canceling, since canceling a card can hurt your credit score. (See also: <a href="http://www.wisebread.com/how-to-ditch-a-credit-card-without-dinging-your-credit-score?ref=seealso" target="_blank">How to Close a Credit Card Without Dinging Your Credit Score</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" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-things-you-might-miss-in-your-credit-cards-fine-print&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Things%2520You%2520Might%2520Miss%2520in%2520Your%2520Credit%2520Card%2527s%2520Fine%2520Print.jpg&amp;description=6%20Things%20You%20Might%20Miss%20in%20Your%20Credit%20Card's%20Fine%20Print"></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%20Things%20You%20Might%20Miss%20in%20Your%20Credit%20Card%27s%20Fine%20Print.jpg" alt="6 Things You Might Miss in Your Credit Card's Fine Print" 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/annie-mueller">Annie Mueller</a> of <a href="http://www.wisebread.com/6-things-you-might-miss-in-your-credit-cards-fine-print">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-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</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-a-credit-card-cash-advance-costs-you-more-than-a-purchase">How a Credit Card Cash Advance Costs You More Than a Purchase</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-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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-reasons-to-pay-your-credit-card-bill-before-its-due">6 Smart Reasons to Pay Your Credit Card Bill Before It&#039;s Due</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-ways-to-pay-off-high-interest-credit-card-debt">5 Ways to Pay Off High Interest Credit Card Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards APR credit limits debt fine print Hidden fees interest rates introductory rates payments terms and conditions Thu, 28 Sep 2017 09:00:05 +0000 Annie Mueller 2027476 at http://www.wisebread.com Is a 15-Year Mortgage a Good Idea? http://www.wisebread.com/is-a-15-year-mortgage-a-good-idea <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-a-15-year-mortgage-a-good-idea" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/coins_stack_in_columns_with_saving_book_and_paper_home.jpg" alt="Coins stack in columns with saving book and paper home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You're ready to buy a home, and it's time to choose a mortgage. Mortgage loans come in a wide variety of options, including everything from a standard 30-year, fixed-rate mortgage, to loans with interest rates that adjust every year.</p> <p>Then there's the 15-year, fixed-rate mortgage. It comes with an interest rate that doesn't change and is lower than the one you'd get with a 30-year loan. But because this loan has a shorter term, it also comes with a higher monthly payment.</p> <p>Should you consider a 15-year, fixed-rate home loan? Maybe. There are pros and cons to this type of mortgage.</p> <h2>The pros</h2> <p>Let's first look at some of the upsides to a shorter-term mortgage loan.</p> <h3>You'll pay a lot less interest</h3> <p>Say you take out a mortgage loan for $200,000. If you take out this loan as a 30-year, fixed-rate mortgage with an interest rate of 4.10 percent, you'll pay more than $140,000 in interest if you take the full three decades to pay off your loan.</p> <p>Say, instead, you take out that $200,000 as a 15-year, fixed-rate loan with an interest rate of 3.25 percent. You'd pay just under $53,000 in interest if you paid off this mortgage over its full term.</p> <p>That's a savings of about $87,000 in interest.</p> <h3>Your interest rate will be less</h3> <p>You pay less in interest on a 15-year, fixed-rate loan for two reasons. First, because the loan is paid back in half the time, you pay off a greater amount of its principal balance with each monthly payment. Secondly, 15-year loans come with lower interest rates than 30-year versions because you aren't holding the bank's money for as long.</p> <p>According to the Freddie Mac Primary Mortgage Market Survey, the average interest rate on a 30-year, fixed-rate loan stood at 3.78 percent as of September 2017. The survey showed the average rate on a 15-year, fixed-rate loan was 3.08 percent during the same time frame.</p> <p>If nabbing the lowest possible interest rate is important to you, a 15-year, fixed-rate mortgage is a good choice.</p> <h3>You'll free up your money faster</h3> <p>Because the term is cut in half, you'll pay off your mortgage faster if you go with the 15-year version. Once you've paid off your mortgage loan, you'll be able to spend or invest the dollars that once went to your lender.</p> <p>Just be aware that many homeowners never pay off their loans in full. You might refinance your 15-year loan to another type long before you pay it off. Or you might sell your home and move before you reach the end of your term.</p> <h2>The cons</h2> <p>Here are the downsides to a shorter-term mortgage.</p> <h3>Your monthly payment will be higher</h3> <p>Because you pay off a 15-year mortgage in half the time as you would a 30-year version, your monthly payments will be higher.</p> <p>How much higher? If you take out a $200,000 30-year, fixed-rate mortgage with an interest rate of 4.10 percent, your monthly payment, not including property taxes and homeowners insurance, would be about $966.</p> <p>If you take out that same $200,000 in the form of a 15-year, fixed-rate loan with an interest rate of 3.25 percent, your monthly payment would be about $1,400, again not including property taxes and insurance.</p> <p>That's a big difference. Yes, it might sound good to eliminate all the extra interest payments that come with a 30-year loan. But if you'll struggle to make the monthly payments that come with a 15-year loan, the shorter-term mortgage is not a good move.</p> <h3>There's less flexibility</h3> <p>If you're worried about the higher monthly payments of a 15-year mortgage, but also concerned about paying too much interest over the life of your loan, you can take out a 30-year, fixed-rate mortgage and pay a bit extra toward your loan's principal balance every month.</p> <p>Doing this often enough will put a dent in the amount of interest you pay. And if there's a tighter month in which you don't have as much extra money, you can simply make your required mortgage payment without sending along a bit of extra cash toward principal.</p> <p>However, if you take out a 15-year mortgage, you must make the higher mortgage payment each month. You don't have the option of paying less. If your budget is already tight, or if you're struggling with high amounts of other debt, the smaller payments of a 30-year loan might make more sense.</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" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fis-a-15-year-mortgage-a-good-idea&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FIs%2520a%252015-Year%2520Mortgage%2520a%2520Good%2520Idea-.jpg&amp;description=Is%20a%2015-Year%20Mortgage%20a%20Good%20Idea%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/Is%20a%2015-Year%20Mortgage%20a%20Good%20Idea-.jpg" alt="Is a 15-Year Mortgage a Good Idea?" 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/is-a-15-year-mortgage-a-good-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-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-mortgage-details-you-should-know-before-you-sign">5 Mortgage Details You Should Know Before You Sign</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/weak-credit-you-can-still-get-a-mortgage-despite-tough-lending-standards">Weak Credit? You Can Still Get a Mortgage Despite Tough Lending Standards</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/is-it-safe-to-re-finance-your-home-close-to-retirement">Is it Safe to Re-Finance Your Home Close to Retirement?</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-should-consider-an-adjustable-rate-mortgage">Why You Should Consider an Adjustable-Rate Mortgage</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-long-does-it-take-break-even-with-a-home-refi">How Long Does it Take Break Even With a Home ReFi?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing 15-year mortgage home loans interest rates monthly payments mortgages principal pros and cons short term loan Tue, 26 Sep 2017 08:30:10 +0000 Dan Rafter 2025923 at http://www.wisebread.com Debunking 8 Common Credit Score Myths http://www.wisebread.com/debunking-8-common-credit-score-myths <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/debunking-8-common-credit-score-myths" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_paying_with_credit_card_on_smart_phone.jpg" alt="Man paying with credit card on smartphone" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Credit: Like it or loathe it, most of us need it to survive. And the kind of credit we have access to is dependent on our credit scores. A mortgage, a car payment, credit cards, and even health care financing all impact and depend on our credit score.</p> <p>The problem is, there's a lot of misinformation out there, and if you believe it, you could be doing yourself a disservice. Here are the top myths about credit scores that we have debunked for you.</p> <h2>1. Closing a lot of credit accounts will improve your score</h2> <p>It seems logical, but it's completely incorrect. Credit scores are calculated in part by something called a debt-to-credit, or <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal" target="_blank">credit utilization</a>, ratio. The agencies calculating your score are looking at how much debt you have, and how much available credit you can tap into.</p> <p>So, if you have 10 credit cards with a combined credit availability of $100,000, and you've only used $15,000 of that available credit, your credit utilization ratio is 15 percent. This is considered good: You have 85 percent of your credit unused.</p> <p>Now, let's say you close seven accounts, because you just aren't using them. You still have $15,000 in debt, but now your overall available credit drops to $30,000. Your credit utilization ratio just skyrocketed to 50 percent, and that means your credit score takes a dive.</p> <p>Do not close credit card accounts like this. Simply put the cards you aren't using somewhere safe. And if you get the chance to increase your credit limit, do it. As long as you don't plan to max it out, it will help your credit score. (See also: <a href="http://www.wisebread.com/stop-dont-cut-up-your-credit-cards?ref=seealso" target="_blank">Stop! Don't Cut Up Your Credit Cards</a>)</p> <h2>2. The amount of money you make has an impact on your score</h2> <p>Your credit score lists credit accounts, not income from employers. So, whether you're a CEO making $3 million a year, or an entry-level worker earning $30,000 a year, income is not a factor in determining your credit score. In fact, a rich CEO might actually have a terrible credit score, despite the money, because of a bankruptcy or series of late payments in the past.</p> <p>The only way income can have an impact on your credit score is if you live a Champagne lifestyle on a beer budget. If you are maxing out your cards, making minimum payments, and missing payments altogether, you will see your score take a big hit.</p> <h2>3. Credit scores change just a few times a year</h2> <p>Credit scores are changing all the time. The information used to calculate your score comes from the financial institutions you do business with. If you miss a payment, that will be reflected pretty quickly. If you close several accounts, that information will impact your score a lot sooner than in three to six months.</p> <p>In fact, if you look at your credit score right now, you will see when the last updates were made. Sometimes, it will be a matter of hours, rather than days or weeks. For this reason alone, you should be checking your credit score on a regular basis. When something negative happens, you can jump on that issue quickly and get it resolved.</p> <h2>4. A bad credit score makes it impossible to get credit or loans</h2> <p>This is a myth that comes from years of advertising messaging about needing a good credit score to get financing. Actually, most people can get financing, whether their score is up in the 800s or down in the 400s.</p> <p>A credit score represents a level of risk to financial institutions, and this will dictate the terms of any loan or credit your receive. For example, someone with a credit score of 800 is considered very low risk to the financial institution. They know this person pays on time, has a lot of available credit, and has longevity with his or her accounts. This will result in a low interest rate, and more available credit.</p> <p>Someone with a 450 credit score, on the other hand, is considered a very high risk client. Loans and credit offers will be available, but they will have oppressive interest rates for very little credit.</p> <h2>5. Checking your credit report damages your score</h2> <p>This is rooted in truth. A &quot;hard inquiry&quot; on your credit will have an impact on your score, albeit a small and temporary one. This happens when you apply for a loan, credit card, or other form of financial assistance. The hard inquiry dings your credit a little because if you do it a lot, say applying for 10&ndash;12 new accounts every month, you could be setting yourself up for some financial ruin down the line.</p> <p>However, if you, yourself, are examining your credit report, that is considered a &quot;soft inquiry.&quot; It will not have any impact on your score, and you can do it daily, or even hourly, without any consequences. (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> <h2>6. If you don't have credit, you'll have a great credit report</h2> <p>Not in the U.S. In some countries, a lack of credit is considered a good thing. If you've never had a credit card or a car loan, you must be financially responsible. But in the U.S., you don't get a good credit score unless you have a good history with credit.</p> <p>The fact is, credit scores are built. Financial institutions want to know that you will borrow money and pay it back on time, with interest. If they can see you have done that well, and often, you are not a risk. If you have never had any kind of loan or credit card, you represent an unknown quantity. And unknown quantities do not sit well with people putting a stamp of approval on a credit line. (See also: <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?ref=seealso" target="_blank">How to Use Credit Cards to Improve Your Credit Score</a>)</p> <h2>7. Carrying a balance on your credit card helps your score</h2> <p>No, it doesn't. To be fair, it doesn't hurt it either. But if you are under the impression that keeping money on your card is helping your score, you are not doing yourself any favors. Ideally, you want to pay off the balances on your cards in full every month, to avoid paying interest on purchases. If you are only paying the minimum, you are basically throwing money into the trash. Most of that minimum payment is going to the credit card company; very little pays down the balance.</p> <p>Whenever possible, don't carry a balance. And if your balance is more than 30 percent of the card, consider transferring half to another card. When you are using more than a third of the credit on one card, you can actually hurt your score. Ideally, your balance will be below 30 percent of the available credit &mdash; the lower, the better. This is a good time to request a credit line increase. If you get your line increased a few thousand dollars, so that your balance drops below 30 percent, that can increase your score. (See also: <a href="http://www.wisebread.com/4-questions-to-ask-before-getting-a-credit-increase?ref=seealso" target="_blank">4 Questions to Ask Before Getting a Credit Increase</a>)</p> <h2>8. A bad credit score will stay with you for life</h2> <p>If you are currently looking at a poor score, it's not the end of the world. You won't be paying exorbitant interest rates forever. However, it does take time to rebuild it.</p> <p>The score will change, for the better, if you open new lines of credit and <a href="http://www.wisebread.com/5-simple-ways-to-never-make-a-late-credit-card-payment?ref=internal" target="_blank">pay your credit card bills on time</a>. Never miss a payment. Keep your balances low. Maintain a very low credit utilization ratio. Try not to apply for too many cards or accounts in one year. If you continue to be a model credit citizen, even after financial difficulty, your score will rise.</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" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fdebunking-8-common-credit-score-myths&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FDebunking%25208%2520Common%2520Credit%2520Score%2520Myths.jpg&amp;description=Debunking%208%20Common%20Credit%20Score%20Myths"></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/Debunking%208%20Common%20Credit%20Score%20Myths.jpg" alt="Debunking 8 Common Credit Score Myths" 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/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/debunking-8-common-credit-score-myths">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/5-reasons-building-credit-in-college-helps-you-win-at-life">5 Reasons Building Credit in College Helps You Win at Life</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-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-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/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-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 credit history credit score credit utilization ratio debt financing interest rates loans myths payment history Fri, 08 Sep 2017 09:00:06 +0000 Paul Michael 2017189 at http://www.wisebread.com Here's the Difference Between a Federal and Non-Federal Credit Union http://www.wisebread.com/heres-the-difference-between-a-federal-and-non-federal-credit-union <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-the-difference-between-a-federal-and-non-federal-credit-union" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/human_hands_exchanging_money.jpg" alt="Human hands exchanging money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You likely already know that credit unions are a bit different from banks, mostly in the way these financial institutions are owned and operated. But as you research your local credit unions, you'll see that some are listed as federal credit unions and others are not.</p> <p>Is there a difference? Does it matter whether you join a federal credit union or one chartered by the state in which it resides? It all depends on how important it is for you to have the money you deposit with a credit union insured by the U.S. government, instead of a private insurer.</p> <h2>Making the switch to credit unions</h2> <p>Both types of credit unions, federal and state-chartered, are not-for-profit organizations owned by its members. If you take out a loan or credit card, or open a savings or checking account with that credit union, this includes you. Because credit unions are not-for-profits, the earnings that they make are paid back to their members as higher savings rates and lower interest rates on loans and credit cards. (See also: <a href="http://www.wisebread.com/credit-unions-vs-banks-whats-the-difference?ref=seealso" target="_blank">Credit Unions vs. Banks: What's the Difference?</a>)</p> <h2>Federal vs. state-chartered</h2> <p>Once you decide that you want to join a credit union, you'll have to determine if you want to become the member of a federal credit union, a state-chartered one, or whether it matters to you at all.</p> <p>The National Credit Union Share Insurance Fund, a federal insurance fund backed by the U.S. government, insures all federal credit unions. Congress created this fund in 1970 to protect the deposits members make at credit unions. Today, an independent agency, the National Credit Union Administration, oversees this fund.</p> <p>The fund operates much like the Federal Deposit Insurance Corporation, which insures the deposits made at traditional banks. The National Credit Union Share Insurance Fund covers deposits of up to $250,000 for each individual member of a credit union.</p> <p>The other type of credit union is state-chartered. The deposits members make here are not covered by the federal insurance fund. Instead, these deposits are insured by private insurers. These funds are still protected. They're just not protected by the federal government.</p> <p>If that matters to you, you can search MyCreditUnion.gov's <a href="https://www.mycreditunion.gov/Pages/mcu-map.aspx" target="_blank">Find a Credit Union</a> tool, which will find federal credit unions near you. Credit unions that are insured by the National Credit Union Share Insurance Fund must display the official National Credit Union Administration sign in their lobbies. Federal credit unions usually include the word &quot;federal&quot; in their name, too.</p> <p>There is no better type of credit union. Both federal and state-chartered offer a range of banking services, credit cards, and loans. The big difference comes down to how these institutions are insured.</p> <h2>Limits</h2> <p>Whether you decide to join a state-chartered or federal credit union, be aware that there are sometimes requirements for membership that you might not be able to meet.</p> <p>Some credit unions are only open to current or former members of the U.S. Military and their relatives. Others are only available to those working in a specific profession, such as teachers or nurses. Others only serve a specific geographic boundary, and its members must live in those boundaries. As you research credit unions, keep these restrictions in mind.</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" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fheres-the-difference-between-a-federal-and-non-federal-credit-union&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHeres%2520the%2520Difference%2520Between%2520a%2520Federal%2520and%2520Non-Federal%2520Credit%2520Union.jpg&amp;description=Heres%20the%20Difference%20Between%20a%20Federal%20and%20Non-Federal%20Credit%20Union"></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/Heres%20the%20Difference%20Between%20a%20Federal%20and%20Non-Federal%20Credit%20Union.jpg" alt="Here's the Difference Between a Federal and Non-Federal Credit Union" 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/heres-the-difference-between-a-federal-and-non-federal-credit-union">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-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-2 views-row-even"> <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> <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-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> <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/credit-unions-vs-banks-whats-the-difference">Credit Unions vs. Banks: What&#039;s the Difference?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking credit unions federal insurance interest rates not-for-profits u.s. government Wed, 16 Aug 2017 08:30:12 +0000 Dan Rafter 2003616 at http://www.wisebread.com 7 Easy First Steps to Paying Off Debt http://www.wisebread.com/7-easy-first-steps-to-paying-off-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-easy-first-steps-to-paying-off-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/worried_young_woman_counting_bills.jpg" alt="Worried young woman counting bills" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Facing debt can be stressful and overwhelming. But it's important to remember that no matter how much you might feel that you're in over your head, debt is a hole you can climb out of. You can absolutely do this. Here are the first steps you need to take.</p> <h2>1. Figure out how much you owe</h2> <p>The first step can be the most painful. It's time to get an overview of your debt, which means you need to add up everything you owe and take a good look at your total. That, my friends, can be a difficult moment. But that difficult moment will also provide you with the clarity you need to start taking back power over your financial future.</p> <h3>How to do it</h3> <p>Gather your financial statements or log in to the online portal for each account you owe on: your credit cards, mortgage, student loan, car loan, lines of credit, home equity loan, etc. Create a simple spreadsheet with four columns: one to identify each debt (&quot;Student Loan&quot;), one for the amount owed, one for the minimum monthly payment, and one for the interest rate. <a href="http://www.wisebread.com/how-to-read-a-credit-report" target="_blank">Pull your credit report</a> to search for outstanding debts, and compare the information against what you have in your own records.<strong> </strong></p> <h2>2. Sort and prioritize the debt list</h2> <p>Now it's time to start sorting out your spreadsheet entries so you can come up with the best possible plan to get out of debt.</p> <p>You might think that the most important debt to pay off is the biggest one; however, it's often a good idea to identify the debt with the highest interest rate and knock that out first. This is known as the avalanche method of debt repayment. Higher interest rates lead to faster debt accumulation and result in you paying a higher amount over the course of your debt repayment. The faster you can get rid of high-interest debts, the better.</p> <h3>How to do it</h3> <p>Sort your spreadsheet by the fourth column, the one for the interest rate. You might see anything from a 4 percent interest rate (for example, on a student loan) to a whopping 22 percent interest rate on, say, a credit card. You may owe more principal on your student loan, but relatively speaking, you're wasting more in interest every month on that credit card. The credit card is therefore the higher priority for complete repayment. (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>3. Add up your minimum payments</h2> <p>You don't get to stop making payments on the lower-interest debts, even though they're not the highest priority. Instead, you need to continue making the minimum monthly payments on all lower-interest debts while making bigger payments on your debt with the highest interest rate. Once you knock one high-interest debt out completely, you prioritize the debt with the next-highest interest rate and continue paying minimums on everything else.</p> <h3>How to do it</h3> <p>Add up the monthly minimum payments for <em>all</em> the debts on your list, including the highest-interest debt. This is the total, bare minimum debt repayment amount that needs to fit into your current budget. This can be a nerve wracking step, especially if you don't have enough income to comfortably afford that total monthly minimum amount. You may need to take steps to cut expenses elsewhere, or bring in sources of additional income.<strong> </strong></p> <h2>4. Determine your needed overage payment</h2> <p>Now it's time to calculate the payment you need to get that highest-interest debt paid off as quickly as possible. If you keep making only the minimum payment on it, you'll keep accumulating interest charges and it will take much longer to pay it off. Instead, think of a target timeline (maybe six months or a year) for paying off the highest-interest debt, and calculate an ideal amount you can pay above the minimum payment to achieve that goal.</p> <h3>How to do it</h3> <p>Use an online <a href="https://www.calcxml.com/calculators/how-long-will-it-take-to-pay-off-my-credit-card" target="_blank">credit card payoff calculator</a>. Enter the information for your highest-interest debt: total amount owed, interest rate, and the minimum payment. You'll see how long it will take to pay off the debt if you only make the minimum payments. Now, instead of minimum payments, enter how many months you'd like to have it paid off in. The result will show you the monthly amount you need to pay in order to clear the debt within your target timeline.</p> <h2>5. Give yourself the best possible conditions</h2> <p>You have the essential numbers that you need. They may be painful, but knowledge is power. The next step is to find ways to reduce the financial impact that these debts have while you repay them. <a href="http://www.wisebread.com/5-tricks-to-consolidating-your-debt-and-saving-money" target="_blank">Debt consolidation</a> may be the best way to do this; however, you may also be able to lower your interest rates and negotiate better payment plans on individual debts, as well. (See also: <a href="http://www.wisebread.com/4-ways-to-negotiate-credit-card-debt?ref=seealso" target="_blank">4 Ways to Negotiate Credit Card Debt</a>)</p> <h3>How to do it</h3> <p>This takes some time, depending on the number of debts you have. Call each creditor and ask how you can reduce your interest rate. You may be able to refinance a home mortgage or car loan for a lower rate, for example. If you have a good repayment history, ask credit card companies to consider your reliable record and give you a better interest rate. If you're able to take out a low-interest loan, such as a line of credit or home equity loan with your bank, you may be able to use it to pay off your high-interest debt and consolidate at least some of your debts into a single, lower-interest loan.</p> <h2>6. Protect your credit and your finances</h2> <p>If you're late on a payment, being proactive can save you from accumulating fees and damaging your credit score. For example, if you call the credit card company and explain that you can't make the full minimum payment on time, they may work with you to split the payment in half for the month so you can avoid late fees. Many times, a phone call and a courteous conversation can reduce or remove a fee, extend a deadline, or result in a more manageable payment plan.</p> <h3>How to do it</h3> <p>Set up alerts or schedule automatic minimum monthly payments so you don't miss due dates. If you know you won't have the money on time for a particular payment, call in advance to negotiate an extended deadline or set up a split payment plan. Additionally, you may want to keep an eye on changes in your credit report.</p> <h2>7. Protect your financial future</h2> <p>As difficult as it seems to save money when you're trying to pay down debt, it's so important. You need an emergency fund for those unpredictable expenses that will happen. Building an emergency fund will keep you from having to add to your debt when the car breaks down or you don't get that bonus you were counting on. In other words, it's the essential tool that keeps you climbing out of that debt pit, even when life happens. Without it, one setback can set off a downward spiral deeper into debt. You don't want that. (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> <h3>How to do it</h3> <p>If your budget is absolutely maxed out, you can pick up a side hustle or employ another short-term strategy &mdash; such as selling off a few high-value items, or taking on seasonal work &mdash; to quickly build up an emergency fund. (See also: <a href="http://www.wisebread.com/6-fast-ways-to-restock-an-emergency-fund-after-an-emergency?ref=seealso" target="_blank">6 Fast Ways to Restock an Emergency Fund</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" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F7-easy-first-steps-to-paying-off-debt&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Easy%2520First%2520Steps%2520to%2520Paying%2520Off%2520Debt.jpg&amp;description=7%20Easy%20First%20Steps%20to%20Paying%20Off%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/u5180/7%20Easy%20First%20Steps%20to%20Paying%20Off%20Debt.jpg" alt="7 Easy First Steps to Paying Off 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/annie-mueller">Annie Mueller</a> of <a href="http://www.wisebread.com/7-easy-first-steps-to-paying-off-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/all-the-ways-minimum-payments-are-evil">All the Ways Minimum Payments Are Evil</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/7-ways-being-debt-free-can-cost-you">7 Ways Being Debt Free Can Cost You</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-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> <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-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</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-common-debt-reduction-roadblocks-and-how-to-beat-them">6 Common Debt Reduction Roadblocks — And How to Beat Them</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management avalanche method budgeting credit report credit score emergency funds interest rates minimum payments negotiating principal repayment Mon, 14 Aug 2017 08:00:05 +0000 Annie Mueller 2001479 at http://www.wisebread.com What to Do if You've Signed Up for a Terrible Loan or Credit Card http://www.wisebread.com/what-to-do-if-youve-signed-up-for-a-terrible-loan-or-credit-card <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-do-if-youve-signed-up-for-a-terrible-loan-or-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/iStock-540503334 (1).jpg" alt="Woman signed up for a bad credit card" title="" class="imagecache imagecache-250w" width="250" height="142" /></a> </div> </div> </div> <p>You thought you were buying your dream home, but now you realize that you'll struggle to afford the monthly mortgage payments. Or maybe you thought that new car would look great in your driveway, only to realize after you signed the sales contract that it barely gets 15 miles to the gallon.</p> <p>We all make bad decisions. But when you sign up for a bad loan or credit card, those bad decisions can come with serious financial repercussions.</p> <p>Fortunately, a bad loan or credit decision doesn't have to be permanent. Here are some financial contracts you might regret signing, and the steps you can take to get out of them.</p> <h2>Refinancing your mortgage</h2> <p>Maybe you thought refinancing your 30-year, fixed-rate mortgage loan to a 15-year version was a smart financial move. A 15-year loan, after all, would give you a lower interest rate and save you thousands on interest payments. Unfortunately, you overestimated your ability to make the higher monthly payments that come with a shorter-term mortgage.</p> <p>You can get out of a refinance agreement easily if you act quickly. The &quot;right of rescission&quot; gives borrowers the right to cancel their refinance agreement if they do it within three days of either closing on their loan, or receiving their loan disclosure documents, whichever comes first. You don't have to provide a reason for backing out of your refinance agreement.</p> <p>These three days are business days, but they do include Saturday. If you want to cancel that refinance, act quickly.</p> <h2>Home equity loans</h2> <p>The three-day right of rescission applies to home equity loans, too. The rules are the same for refinancing: If you want to back out of your new home equity loan, you have to do so within three business days.</p> <p>There is a reason for the right of rescission: The government wants to offer consumers a final way to protect their homes before they take on new loans. Homes are used as collateral in refinances and home equity loans, meaning that lenders can take these assets if their owners stop making payments. The right of rescission gives consumers one last chance to avoid signing up for a new loan that they might not be able to afford.</p> <h2>A single-family mortgage</h2> <p>Consumers often mistakenly believe that the right of rescission applies to buying a single-family home, as well. Unfortunately, it doesn't.</p> <p>Unless buyers include a set cooling-off period in their sales contracts &mdash; specifying a certain number of days in which they can change their mind about buying the home &mdash; walking away from an agreement to buy a single-family home can cause them plenty of financial pain.</p> <p>After buyers sign a contract to buy a home, they write out an earnest money check. This check, which is supposed to show sellers that the buyers are serious about purchasing their home, is deposited into an escrow fund until the home sale actually closes. The amount of earnest money buyers deposit varies, but it is usually 1 percent to 2 percent of a home's sale price. For a $200,000 home, buyers can provide $2,000 to $4,000.</p> <p>If buyers change their mind and walk away from a home purchase, they will usually lose that earnest money, breaking a sales contract could cost them thousands of dollars. But there are exceptions, known in the real estate business as contingencies. If the home inspection turns up serious problems, buyers can usually break the contract and keep their earnest money. If buyers can't qualify for a mortgage loan to finance the purchase of the home, they can again usually break the contract and keep that earnest money.</p> <h2>Buying a condo</h2> <p>Things are different when you sign a contract to purchase a condominium or co-op. You'll still have to provide earnest money. But you also have a window of time &mdash; which varies according to the state in which you are buying &mdash; to break your contract without losing that money.</p> <p>Condo and co-op purchase agreements come with a review period. During this period, you can opt out of the purchase agreement you signed and receive your earnest money back, no questions asked. Just make sure you act within the review period.</p> <p>This review period can vary significantly. In North Carolina, buyers have seven days to back out of a purchase agreement without suffering a financial hit. In Florida, the review period lasts 15 days. Make sure to check what the review period is in your particular state.</p> <h2>Leasing a car</h2> <p>If you buy a car and finance it through a traditional auto loan, you're pretty much stuck, even if you don't like the car. If your car has continual mechanical problems, and is always in the shop, you might be able to turn to your state's lemon law to cancel your purchase contract. But that is a long shot.</p> <p>If you are leasing a car, you have more options. You can transfer your auto lease &mdash; and get rid of that car you don't like &mdash; by using a third-party service such as Lease Trader or Swapalease.com to pass your lease onto another consumer seeking to lease a vehicle.</p> <p>Before you do this, make sure that your leasing company allows such transfers. And be sure to read the fine print in your lease. Some leasing companies will list you as guarantor on your lease even after you transfer it. If the person who takes over your lease stops making payments, your leasing company will seek to collect those payments from you.</p> <h2>A credit card</h2> <p>Is there a credit card in your wallet that comes with sky-high interest rates? Or maybe it's just a basic card that doesn't offer any rewards. You might decide to cancel that card. But you should think twice.</p> <p>Canceling a credit card can hurt your credit score, even if you never plan to use that card again. The amount of available credit you have is a determining factor in calculating your credit score. Canceling a card will remove some of your unused, available credit &mdash; and, if you carry a balance on your other cards, automatically increase the amount of available credit that you are using. As a result, your credit score will take a hit. It's often smarter to simply not use that card than to cancel it.</p> <p>If you really do want to cancel the card &mdash; maybe you're worried that having it in your wallet will tempt you to use it &mdash; simply call the customer service number on the back. You will have to pay off your existing balance (or have previously transferred it to a different card) before you can close your account. (See also: <a href="http://www.wisebread.com/how-to-ditch-a-credit-card-without-dinging-your-credit-score?ref=seealso" target="_blank">How to Close a Credit Card Without Dinging Your Credit Score</a>)</p> <h2 style="text-align: center;">Like This Article? Pin it!</p> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhat-to-do-if-youve-signed-up-for-a-terrible-loan-or-credit-card&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhat%2520to%2520Do%2520if%2520You%2527ve%2520Signed%2520Up%2520for%2520a%2520Terrible%2520Loan%2520or%2520Credit%2520Card.jpg&amp;description=What%20to%20Do%20if%20You've%20Signed%20Up%20for%20a%20Terrible%20Loan%20or%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/What%20to%20Do%20if%20You%27ve%20Signed%20Up%20for%20a%20Terrible%20Loan%20or%20Credit%20Card.jpg" alt="What to Do if You've Signed Up for a Terrible Loan or Credit Card" width="250" height="374" /></p> </h2> <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/what-to-do-if-youve-signed-up-for-a-terrible-loan-or-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-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-monthly-bills-that-vary-based-on-your-credit-behavior">5 Monthly Bills That Vary Based on Your Credit Behavior</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-you-need-to-know-the-difference-between-secured-and-unsecured-debts">Why You Need to Know the Difference Between Secured and Unsecured Debts</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-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</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-your-credit-score-matters-in-retirement">Why Your Credit Score Matters in Retirement</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/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> </ul> </div> </div> </div> </div><br/></br> Personal Finance auto loans bad loans condos credit score home equity loan interest rates monthly payments mortgages new car refinancing Mon, 07 Aug 2017 08:31:10 +0000 Dan Rafter 1994331 at http://www.wisebread.com 5 Mortgage Details You Should Know Before You Sign http://www.wisebread.com/5-mortgage-details-you-should-know-before-you-sign <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-mortgage-details-you-should-know-before-you-sign" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-475902363.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Taking out a mortgage is a big financial commitment. Not only are mortgage loans expensive, they also represent the biggest monthly payment for most consumers' budgets.</p> <p>That's why it's so important to ask the right questions before signing the documents that officially close your mortgage. Here are five key questions you need to ask your lender when looking over your mortgage documents.</p> <h2>1. What are my closing costs?</h2> <p>Taking out a mortgage isn't free. Your lender and several third-party service providers will charge you what are known as closing costs, the fees you'll have to pay for your mortgage loan. You can expect to pay from 2 percent to 5 percent of your home's purchase price in closing costs.</p> <p>This means for a home costing $200,000, you can expect to pay between $4,000 and $10,000 in closing costs. That's a lot of money, and often consumers roll the amount into their final loan, which can slightly increase their monthly payment.</p> <p>Fortunately, uncovering your closing costs is an easy process. Your lender must send you a form known as a loan estimate within three business days of receiving your loan application. This form includes a list of your estimated closing costs. At least three days before closing your loan, your lender will provide you with another form, the closing disclosure. This form lists your final closing costs.</p> <p>It's important to study both of these forms to make sure your closing costs are what you expected them to be.</p> <h2>2. What is my interest rate?</h2> <p>When you pay a mortgage loan, a good chunk of your monthly payment will go toward interest. In fact, during the earliest years of your mortgage, a far larger percentage of your monthly payment will go toward interest than toward paying down your principal balance.</p> <p>That's why getting the lowest possible interest rate makes such a difference in both the amount of interest you'll pay during the life of your loan, and how much you'll pay each month.</p> <p>Here's an example: Say you take out a 30-year, fixed-rate mortgage loan for $200,000 at an interest rate of 3.76 percent. Your monthly payment &mdash; not including property taxes and homeowners insurance &mdash; would be about $927.</p> <p>If on that same loan your interest rate was 4.76 percent, your monthly payment would shoot up to $1,044, not including taxes and insurance.</p> <h2>3. What is my monthly payment?</h2> <p>Your monthly payment doesn't just include the amount you pay in interest and principal. Most lenders require that you pay extra with each payment to cover the yearly cost of your homeowners insurance and property taxes.</p> <p>Your lender will then take this extra money and deposit it into an escrow account. When your taxes and insurance come due each year, your lender will use this money to pay these bills on your behalf. This can add hundreds of dollars to your monthly payment, so knowing this ahead of time is important.</p> <p>Don't be fooled into thinking that your mortgage payment <em>only</em> includes your mortgage loan. Your property taxes and insurance make a big difference in your monthly bill.</p> <h2>4. What type of loan do I have?</h2> <p>There are several types of mortgages out there. The most common are fixed loans, usually with terms of 30 or 15 years. With these loans, your interest rate remains the same until you pay off the loan, sell your home, or refinance it.</p> <p>You might also opt for an adjustable-rate loan. With an adjustable-rate mortgage, the interest rate remains fixed for a set period &mdash; usually five to seven years &mdash; and then adjusts according to whatever economic indexes your loan is tied to. Your loan's interest rate could adjust every year or it could adjust every five years. It all depends on your loan's specifics.</p> <p>Consumers choose adjustable-rate loans because their initial interest rates are usually lower than those you'd get with a fixed-rate loan. But adjustable-rate loans do come with more risk: When your loan adjusts, your new rate could be higher than the rate you would have had if you had gone with a fixed-rate loan.</p> <h2>5. Is there a penalty for paying early?</h2> <p>They're not as common as they once were, but some loans come with a prepayment penalty. This means that you'll have to pay a penalty &mdash; often about 2 percent of your loan's remaining balance &mdash; for paying off your mortgage before it's due. Often, lenders who charge prepayment penalties assess them if you pay off your loan in the first two to five years.</p> <p>You might not worry about such a penalty. After all, you'll never pay off your mortgage loan in two to five years, right?</p> <p>But a prepayment penalty may also kick in if you decide to refinance your loan or sell your home during the penalty phase. Because of this, it's best not to sign onto a loan with a prepayment penalty.</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" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-mortgage-details-you-should-know-before-you-sign&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Mortgage%2520Details%2520You%2520Should%2520Know%2520Before%2520You%2520Sign.jpg&amp;description=5%20Mortgage%20Details%20You%20Should%20Know%20Before%20You%20Sign"></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/u5180/5%20Mortgage%20Details%20You%20Should%20Know%20Before%20You%20Sign.jpg" alt="5 Mortgage Details You Should Know Before You Sign" 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/5-mortgage-details-you-should-know-before-you-sign">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/is-a-15-year-mortgage-a-good-idea">Is a 15-Year Mortgage a Good Idea?</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/weak-credit-you-can-still-get-a-mortgage-despite-tough-lending-standards">Weak Credit? You Can Still Get a Mortgage Despite Tough Lending Standards</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/is-it-safe-to-re-finance-your-home-close-to-retirement">Is it Safe to Re-Finance Your Home Close to Retirement?</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-long-does-it-take-break-even-with-a-home-refi">How Long Does it Take Break Even With a Home ReFi?</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/heres-whats-included-in-a-homes-closing-costs">Here&#039;s What&#039;s Included in a Home&#039;s Closing Costs</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing closing costs home buying home loans homeownership interest rates lenders monthly payments mortgages penalties questions Fri, 04 Aug 2017 08:00:06 +0000 Dan Rafter 1990976 at http://www.wisebread.com 5 Monthly Bills That Vary Based on Your Credit Behavior http://www.wisebread.com/5-monthly-bills-that-vary-based-on-your-credit-behavior <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-monthly-bills-that-vary-based-on-your-credit-behavior" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_screaming_papers_599701902.jpg" alt="Man&#039;s bills varying based on credit behavior" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Your credit score is one of the most important numbers in your financial life. Because it incorporates data about your past behavior with credit &mdash; how much credit and debt you have and how good you are at paying those bills off &mdash; it's deemed as a good predictor of how you'll behave with future bills.</p> <p>A <a href="http://www.wisebread.com/what-does-your-credit-score-mean-good-bad-or-excellent" target="_blank">low credit score</a> can hurt you in many ways: It makes it more difficult to qualify for mortgages, car loans, or credit cards. And when you do qualify for a loan or credit card, you'll be stuck with higher interest rates and the higher monthly payments that come with them. Poor credit behavior can also cost you money each month in the form of higher student loan and insurance payments. (See also: <a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you?ref=seealso" target="_blank">15 Surprising Ways Bad Credit Can Hurt You</a>)</p> <p>Most lenders today still consider a credit score of 740 or higher to be a strong one. Anything at 640 or lower, though, is considered weak.</p> <p>Here's a look at five monthly bills that you'll pay more for if your credit score is low.</p> <h2>1. Mortgage payment</h2> <p>Your credit score has a big impact on your mortgage payment. If your score is high, odds are good that you'll qualify for a lower interest rate, which will, in turn, lower your monthly mortgage payment. If your score is low, the opposite will happen.</p> <p>Here's an example of the difference that a high or low interest rate can have on your monthly mortgage payment: If you take out a 30-year, fixed-rate mortgage loan of $200,000 at an interest rate of 3.80 percent, you'll have a monthly payment of about $931, not counting what you might pay for homeowners insurance and property taxes.</p> <p>If you take out that same loan with a higher interest rate of 4.80 percent &mdash; which you may have gotten due to a low credit score &mdash; your monthly payment, again not counting taxes and insurance, will be about $1,049. That's $118 more a month, or about $1,416 a year. (See also: <a href="http://www.wisebread.com/4-smart-ways-to-lower-your-monthly-mortgage-payment?ref=seealso" target="_blank">4 Smart Ways to Lower Your Monthly Mortgage Payment</a>)</p> <h2>2. Auto loans</h2> <p>You'll face the same situation when applying for an auto loan with a lower credit score. Auto lenders, like mortgage lenders, rely heavily on your credit score. If they see a low score, they'll protect themselves financially by charging you a higher interest rate. This higher rate will result in a higher monthly payment.</p> <p>The higher rates make sense if you look at your loan from your lender's point of view. A lower credit score means you have a history of making bad financial choices, whether that means paying bills late or missing them entirely. Lenders then levy a higher interest rate to make up for the danger of lending to riskier borrowers.</p> <h2>3. Credit cards</h2> <p>Interest rates on credit cards can be high &mdash; 20 percent or higher in some cases. But if your credit score is high, you'll increase your chances of qualifying for a lower rate on your cards. This is important: If you carry a balance on your cards each month, a lower interest rate will mean a lower required minimum monthly payment. It also means your debt will grow at a slower rate.</p> <p>How you use credit cards has a big impact on your credit score. If you always pay your cards on time, and if you don't run up too much debt on them, you will steadily boost your score. (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>4. Student loans</h2> <p>There are two types of student loans: federal and private. Your credit score won't affect your interest rate on federal loans. But lenders originating private student loans will look at your credit score. If your score is low, they'll charge you higher interest rates and fees. This will result in a higher monthly student loan payment.</p> <h2>5. Homeowners insurance</h2> <p>Insurance companies don't rely on your credit score to set your homeowners insurance rates. They do, however, use a similar metric known as an insurance score. This score includes information about your past payment history, your debts, and your number of open credit accounts, just like your credit score. It can also include information about any safety features &mdash; such as fire alarms and security systems &mdash; protecting your home and whether you've made a high number of insurance claims in the past.</p> <p>If your insurance score is high, you'll qualify for a lower insurance bill. If that score is low, you can expect to pay more for your homeowners insurance.</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" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-monthly-bills-that-vary-based-on-your-credit-behavior&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Monthly%2520Bills%2520That%2520Vary%2520Based%2520on%2520Your%2520Credit%2520Behavior.jpg&amp;description=5%20Monthly%20Bills%20That%20Vary%20Based%20on%20Your%20Credit%20Behavior"></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/u5180/5%20Monthly%20Bills%20That%20Vary%20Based%20on%20Your%20Credit%20Behavior.jpg" alt="5 Monthly Bills That Vary Based on Your Credit Behavior" 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/5-monthly-bills-that-vary-based-on-your-credit-behavior">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/why-you-need-to-know-the-difference-between-secured-and-unsecured-debts">Why You Need to Know the Difference Between Secured and Unsecured Debts</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/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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-things-your-credit-report-does-not-include">7 Things Your Credit Report Does NOT Include</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-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</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/pay-these-6-bills-first-when-money-is-tight">Pay These 6 Bills First When Money Is Tight</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance auto loans bills credit score fico homeowners insurance interest rates mortgages payments student loans Tue, 01 Aug 2017 07:47:46 +0000 Dan Rafter 1990977 at http://www.wisebread.com