fees http://www.wisebread.com/taxonomy/term/253/all en-US What You Need to Know About Homeowners' Associations http://www.wisebread.com/what-you-need-to-know-about-homeowners-associations <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-you-need-to-know-about-homeowners-associations" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/handing_over_the_key_from_a_new_home.jpg" alt="Handing Over the Key from a New Home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When my husband and I were thinking about <a href="http://www.wisebread.com/5-reasons-you-shouldnt-buy-a-house-yet" target="_blank">buying a house</a>, we toured a lovely home that was on the lower end of our budget. It was gorgeous. It had high-end appliances and the owners had completely updated it. We couldn't believe the price, or that it had been on the market for weeks.</p> <p>We told the realtor we were interested and were ready to make an offer and that's when she told us that the house was part of a homeowners association (HOA). She pulled out a massive binder with the HOA's rules, including what kind of grass we could plant, what kind of fencing was permitted, and what colors we could paint our home.</p> <p>Finally, she dropped one more bomb: The monthly HOA fee was a staggering $600 a month. We quickly gave up any idea of buying that home, but it was a well-learned lesson.</p> <p>Our experience isn't unique. HOAs are increasingly common, and they can be costly. Here's what you need to know about HOAs before buying a home. (See also: <a href="http://www.wisebread.com/how-to-deal-with-a-rude-neighbor?ref=seealso" target="_blank">How to Deal With a Rude Neighbor</a>)</p> <h2>HOAs can be costly</h2> <p>HOAs are residential governing bodies that provide certain services to the owners in the community. They are most commonly seen in condominium complexes or townhome communities, but some single-family home neighborhoods may have an HOA, too.</p> <p>HOAs can be very expensive. According to Investopedia, the average monthly HOA fee is $200, yet it can easily reach as high as $700 a month. That amount is completely separate from your mortgage payment, taxes, and homeowners insurance. An HOA can dramatically increase your monthly housing bill.</p> <h2>HOAs vary from community to community</h2> <p>In some communities, HOAs provide many valuable services. They may cut your lawn, maintain building exteriors, provide a community pool, and set rules about community appearance.</p> <p>Other HOAs are more bare-bones; they may only maintain common areas and you're responsible for your own landscaping. Because they can vary so widely from community to community, it's important to do your research and understand what's included in your fee.</p> <h2>HOAs may affect your mortgage application</h2> <p>When you're ready to buy a home, you will need to include the home's information in your mortgage application. Besides factors like your income, down payment, and the home's sale price, the mortgage lender will also ask you about HOA fees.</p> <p>Mortgage companies will include the HOA cost in their evaluation of your application. If the HOA fee worsens your debt-to-income ratio, they won't give you a loan.</p> <h2>What happens if you fall behind on HOA payments?</h2> <p>Depending on where you live, the consequences for falling behind on your HOA payments can be severe.</p> <p>When you first miss a payment, your HOA may charge you a late fee. If they still don't receive payment, they may send your debt to collections, which can damage your credit report. They can also ban you from using community amenities, such as the neighborhood pool or fitness center, until you pay what you owe.</p> <p>An HOA can also file a lien on your property. That means if you sell the home, the HOA gets their share before you get any of the money from the sale.</p> <p>Some states also allow an HOA to evict homeowners if they become delinquent on their payments. And in some areas, they can even foreclose on your property.</p> <p>These consequences can have long-lasting effects, and can cost you thousands in late fees, interest charges, and even legal fees. That's why it's so important to ensure the HOA payment is well within your budget before buying a home.</p> <h2>Do your research</h2> <p>Buying a house is a huge decision. Besides factors like price, school district, and taxes, make sure you research the community's HOA and its rules. Depending on your area, your HOA fees can add thousands to your housing costs and can cause plenty of headaches.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kat-tretina">Kat Tretina</a> of <a href="http://www.wisebread.com/what-you-need-to-know-about-homeowners-associations">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-7"> <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/house-hunting-these-features-will-save-you-big-over-the-long-haul">House Hunting? These Features Will Save You Big Over the Long Haul</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-should-be-saving-big-with-bi-weekly-mortgage-payments">Why You Should Be Saving Big With Bi-Weekly Mortgage Payments</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-money-moves-that-will-ruin-your-mortgage-application">5 Money Moves That Will Ruin Your Mortgage Application</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/23-hidden-costs-of-buying-an-old-house">23 Hidden Costs of Buying an Old House</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/yes-you-need-home-title-insurance-heres-why">Yes, You Need Home Title Insurance — Here&#039;s Why</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing amenities buying a house community debt to income ratio expenses fees HOA homeowners association homeownership house hunting mortgage Wed, 09 Aug 2017 09:00:06 +0000 Kat Tretina 1986885 at http://www.wisebread.com 8 Surprising Ways Confidence Can Hurt Your Investments http://www.wisebread.com/8-surprising-ways-confidence-can-hurt-your-investments <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-surprising-ways-confidence-can-hurt-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/strong_man_self_confident_young_entrepreneur.jpg" alt="Strong man, self confident young entrepreneur" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There may come a moment when you feel like you have this investing thing all figured out. You've made some great stock picks and your portfolio is going gangbusters. But are you letting your confidence get the best of you and your investments?</p> <p>Being confident is OK. You need some confidence in yourself to invest in the first place. But being too cocky can lead you to make bad investment choices, and have a blind spot to your own weaknesses. Here are some of the ways confidence may actually hurt your investments.</p> <h2>1. You develop a selective memory</h2> <p>Maybe you bought shares of Facebook when they were trading below $25, and have made a killing on the investment since. You like to hold up that one purchase as proof of your genius as an investor. But are you forgetting about the other investments that didn't do so well? On balance, are you really any smarter than anyone else out there?</p> <p>Don't let your memory of one great decision delude you into thinking you have a special gift as an investor. Doing so can make you believe that every stock will eventually turn out to be a winner, even if there's no rational basis for your confidence.</p> <h2>2. You have too much faith in the market</h2> <p>While it's true that history shows the stock market has gone up consistently over time, it's still important to protect your investments against a possible downturn. As you get older and approach retirement age, consider shifting some investments into less volatile instruments, such as bonds, even if you believe the market will continue to go up.</p> <p>It's also important to avoid being too optimistic about markets in the short term. If you're investing money that you need in a year or two, the stock market may not be the best place to put it. Having faith in the market is crucial to building wealth over time, but protecting your investments against a down period is also part of the formula for success.</p> <h2>3. Your portfolio is not properly balanced</h2> <p>So you've had some great success with some of your investments, and decide to buy more shares of those that have done the best. There's nothing wrong with buying a lot of something if it performs well for you, but it's important to keep your overall portfolio from getting out of whack. This means not being too heavily invested in one particular stock or group of stocks.</p> <p>Ideally, your portfolio should have a nice mix of stocks from various industries, sectors, and asset classes. Depending on your retirement age, mixing in some bonds and dividend stocks may also make sense. You may fall in love with a certain investment, but you should not let it dominate your portfolio. Diversification is key to mitigating risk. (See also: <a href="http://www.wisebread.com/the-basics-of-asset-allocation?ref=seealso" target="_blank">The Basics of Asset Allocation</a>)</p> <h2>4. You're taking on too much risk</h2> <p>Investing is not without risk, and you must be comfortable with that if you plan to accumulate wealth over time. But don't be too tempted to take on extra risk just to chase higher returns. It's one thing to invest heavily in stocks, but it can be financial suicide to go after notoriously volatile investments, or to engage in risky practices like trading on margin or buying and selling options.</p> <p>The best approach is to build a portfolio that roughly performs in line with the whole stock market, ensuring that you'll likely make money over time but will avoid catastrophic downturns that wipe out your whole savings.</p> <h2>5. You never check up on your investments</h2> <p>For most people, it's not necessary to check your investments every day and obsess over every movement in the markets. But you don't want to completely ignore your investment accounts, either. Even if you are invested in simple, reliable things like index funds, an occasional check-in is usually a good idea. (See also: <a href="http://www.wisebread.com/the-4-best-investments-for-lazy-investors?ref=seealso" target="_blank">The 4 Best Investments for Lazy Investors</a>)</p> <p>Without a checkup, you may be unaware that certain investments are underperforming. You might allow your portfolio to become unbalanced, leaving you under- or over-invested in some areas. You may be left unaware of company sales or mergers that result in changes to your investment mix. Don't get cocky; the stock market has gone up reliably over time, but your investments still need some tending to from time to time.</p> <h2>6. You trade too often</h2> <p>Let's face it: Buying and selling stocks can be fun. And when you feel confident in your stock picking abilities, you'll feel the urge to trade stocks frequently. You may even feel like you can &quot;time&quot; the market. But trading frequently has financial consequences.</p> <p>First, if your stocks are in a taxable brokerage account, you'll end up paying tax on any gains when you sell. Second, most brokerage firms charge a commission for every trade. These expenses can put a dent in the value of your portfolio.</p> <h2>7. You miss out on popular, but well-performing investments</h2> <p>Imagine there's a hot stock that everyone is buying. But you stay away, because you think everyone else is dumber than you. Your confidence got in the way of rationally examining an investment on its merits rather than being influenced by the decisions of others. Buying a stock just because it's popular is silly, but so is refusing to buy it for the same reason. (See also: <a href="http://www.wisebread.com/7-everyday-things-that-are-surprisingly-awesome-investments?ref=seealso" target="_blank">7 Everyday Things That Are Surprisingly Awesome Investments</a>)</p> <h2>8. You hold on to investments too long</h2> <p>Years ago, you bought 100 shares of OmniCorp and it netted you a massive return in the first year. You still have some of those shares, but the company has since been struggling, and may even declare bankruptcy. But still, you refuse to cut your losses and sell, because you made so much money from this stock early on. You are utterly convinced the company will turn things around, despite all evidence to the contrary. This is a dangerous mentality to have, and can cost you plenty in the long run.</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%2F8-surprising-ways-confidence-can-hurt-your-investments&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Surprising%2520Ways%2520Confidence%2520Can%2520Hurt%2520Your%2520Investments.jpg&amp;description=8%20Surprising%20Ways%20Confidence%20Can%20Hurt%20Your%20Investments"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/8%20Surprising%20Ways%20Confidence%20Can%20Hurt%20Your%20Investments.jpg" alt="8 Surprising Ways Confidence Can Hurt 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/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-surprising-ways-confidence-can-hurt-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/how-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</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-signs-an-etf-isnt-right-for-you">8 Signs an ETF Isn&#039;t Right for You</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in Retirement</a></span> </div> </li> <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-questions-to-ask-before-you-sell-a-stock-or-a-fund">10 Questions to Ask Before You Sell a Stock or a Fund</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment arrogance confidence fees rebalancing risk stock markets stocks taxes trading Wed, 26 Jul 2017 08:00:17 +0000 Tim Lemke 1988261 at http://www.wisebread.com Here's How Debt Settlement Can Make Your Debt Worse http://www.wisebread.com/heres-how-debt-settlement-can-make-your-debt-worse <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-how-debt-settlement-can-make-your-debt-worse" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/financial_problems.jpg" alt="Financial problems" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The commercials, usually played on AM radio or late-night TV, promise an easy solution to your debt woes: Debt settlement companies say they can eliminate your debts in as little as two months or reduce the amount you owe by 65 percent, 75 percent, or 85 percent.</p> <p>That sounds pretty great. But debt settlement isn't quite as simple as those commercials promise.</p> <p>Working with debt settlement companies &mdash; firms that negotiate lower debt amounts with your creditors &mdash; comes with serious financial repercussions. And plenty can go wrong. Before you sign up for debt settlement, make sure you explore your other options.</p> <h2>A dangerous gamble</h2> <p>The biggest problem with debt settlement is that it's a gamble. You're gambling that the process will work and that your debts will either be eliminated or lowered. Unfortunately, there are no guarantees that this will actually happen.</p> <p>And because of how debt settlement companies operate, you can cause severe damage to your credit while taking this bet. Say you are struggling to afford your monthly credit card payments and a host of large medical bills. You call a company specializing in debt settlement. That company will then tell you to stop making your payments to this creditor.</p> <p>That sounds like terrible advice (because it is). The debt settlement company's goal here is to convince your creditors that there is no way you can afford to pay off your debt in full. But it often takes months for the settlement company to convince your creditors to lower your debt. Defaulting for that long ruins your credit.</p> <p>At the same time, the debt settlement company will ask you to make regular payments to it, which the company will deposit in a savings account. During the time that you're not making payments to your creditors but you are making them to the debt settlement service, the company will negotiate with your creditors, hoping to reduce the amount you owe to each of them.</p> <p>Once your creditors and your debt settlement company reach an agreement, the company will use the funds you've deposited to pay off the remainder of your debt, taking a cut as its own fee.</p> <h2>It doesn't always work</h2> <p>Unfortunately, debt settlement doesn't always work. A report by the Association of Debt Settlement Companies made to the Federal Trade Commission in 2007 reported that on average, only 45 percent to 50 percent of consumers complete a debt settlement program once they've started it. Many customers take actions that will hurt their credit scores only to gain no financial relief by doing so.</p> <p>In 2010, the U.S. Government Accountability Office reported even lower rates, saying that less than 10 percent of consumers successfully complete a debt settlement program.</p> <h2>You could be charged high monthly fees</h2> <p>The National Foundation for Credit Counseling says that many debt settlement companies charge monthly fees for their services that can run as high as $89 a month. That's a lot of money for a service that might not reduce your debt significantly anyway.</p> <h2>You'll pay a lot even if your debts are reduced</h2> <p>Debt settlement companies typically charge their clients in one of two ways: They'll either charge a percentage of your total debt for their fee, or a percentage of the final debt amount that they negotiate.</p> <p>Say you owe $70,000. If the company charges you 20 percent of your total debt, you'll pay $14,000 for their services. Maybe the debt settlement company reduces that $70,000 debt to $35,000. If the company charges, say, 20 percent of your final negotiated debt, you'd pay $7,000.</p> <p>Obviously, it's better to work with a company that charges you a percentage of your settled debt. But even then, you'll be paying plenty for debt settlement.</p> <h2>Your credit score might crash</h2> <p>Debt settlement can devastate your credit score. Any time you pay a credit card bill more than 30 days late, for example, your credit score will fall by 100 points or more. If you deliberately do this while working with a debt settlement company, you will see your score plummet.</p> <p>Your credit report will also list any debts that were settled. This is considered a negative on your report because your creditors were forced to accept less than what they were owed. This, understandably, might make creditors less excited to work with you in the future.</p> <p>Often, debt settlement companies negotiate a debt that has already been charged off, meaning that the original creditor has given up on collecting it and has sold the debt to another creditor that then tries to get at least some money from you. Such debt will be listed as charged off on your report. This negative mark will remain on your credit report for seven years, and won't disappear just because you eventually settled the debt.</p> <h2>Alternatives</h2> <p>Fortunately, there are alternatives to debt settlement.</p> <ul> <li> <p>If you have a high enough credit score, you can apply for a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards" target="_blank">balance transfer credit card</a>. Many of these cards have low or no interest for periods of at least a year &mdash; often longer. You will have to pay a balance transfer fee (usually 3 percent of your balance) and be very careful about finishing paying your balance before the introductory period ends and a new, much higher rate kicks in. But for some people, this option works. (See also: <a href="http://www.wisebread.com/6-hidden-dangers-of-credit-card-balance-transfers?ref=seealso" target="_blank">6 Hidden Dangers of Balance Transfers</a>)</p> </li> </ul> <ul> <li> <p>You can also check with your bank or <a href="http://www.wisebread.com/should-you-use-peer-to-peer-lending-to-pay-down-credit-card-debt" target="_blank">peer-to-peer lenders</a> to get a <a href="http://www.wisebread.com/5-times-personal-loans-may-be-better-than-credit-cards" target="_blank">debt consolidation loan</a> at a lower interest rate than you're paying now. But with these types of loans you'll also need a good credit score.</p> </li> </ul> <ul> <li> <p>If you don't have good credit, consider contacting your creditors directly to work out a repayment plan that fits your budget. Creditors are under no obligation to work with you, but many will as a way to eventually get the money that you owe them.</p> </li> <li> <p>You can also work with a nonprofit consumer credit counseling agency to craft a debt management plan (DMP). The counseling agency will negotiate with your creditors on your behalf, typically resulting in a 20 percent lower interest rate and a 50 percent lower monthly payment.</p> <p>You will usually have to close all of your credit card accounts while you're under the DMP, but the upside is that you will only have one payment to make and that's to the credit counseling agency. Closing your accounts will cause a temporary dip in your credit score, but a DMP is much less harmful overall to your credit than debt resettlement. You can find nonprofit credit counselors in your area through one of two associations: the <a href="https://www.nfcc.org/locator/" target="_blank">National Foundation for Credit Counseling (NFCC)</a> or the <a href="http://fcaa.org/" target="_blank">Financial Counseling Association of America (FCAA)</a>.</p> </li> <li> <p>As a last resort, you may consider bankruptcy. This is sometimes less damaging to your credit report than a debt settlement, though certain types of bankruptcy stay on your credit report for longer. Be sure you thoroughly assess the <a href="http://www.wisebread.com/3-times-bankruptcy-is-the-right-move" target="_blank">pros and cons of bankruptcy</a> before taking this step.</p> </li> <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-how-debt-settlement-can-make-your-debt-worse&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHeres%2520How%2520Debt%2520Settlement%2520Can%2520Make%2520Your%2520Debt%2520Worse.jpg&amp;description=Heres%20How%20Debt%20Settlement%20Can%20Make%20Your%20Debt%20Worse"></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%20How%20Debt%20Settlement%20Can%20Make%20Your%20Debt%20Worse.jpg" alt="Here's How Debt Settlement Can Make Your Debt Worse" width="250" height="374" /></p> <p style="text-align: center;">&nbsp;</p> </ul> <p>&nbsp;</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-how-debt-settlement-can-make-your-debt-worse">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/5-things-you-should-know-about-debt-relief-lawyers">5 Things You Should Know About Debt Relief Lawyers</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-credit-repair-mistakes-that-will-cost-you">8 Credit Repair Mistakes That Will Cost You</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-deal-with-collection-agencies">How to Deal With Collection Agencies</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-signs-it-s-time-to-see-a-credit-counselor">5 Signs It’s Time to See a Credit Counselor</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Consumer Affairs Debt Management bad advice credit score Creditors debt settlement fees hidden dangers repayment plans Thu, 20 Jul 2017 08:00:12 +0000 Dan Rafter 1985925 at http://www.wisebread.com Stop Believing These 5 Home Refinance Myths http://www.wisebread.com/stop-believing-these-5-home-refinance-myths <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/stop-believing-these-5-home-refinance-myths" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/color_question_mark_in_drawing_house.jpg" alt="Color question mark in drawing house" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You might think, because of rising interest rates, that it no longer makes sense to refinance your home mortgage. Or maybe you are certain you don't have enough equity in your home. Perhaps you don't think you have enough available cash to afford a refinance, so what is the point of trying?</p> <p>Here's the truth: Those are all refinancing myths.</p> <p>Don't let these common falsehoods stop you from trying to refinance your existing mortgage into one with a lower interest rate or a shorter term. Refinancing can boost your financial health, either by lowering your monthly payment or reducing the amount of interest you'll pay during the life of your loan.</p> <h2>1. I don't have enough equity in my home</h2> <p>Traditionally, mortgage lenders have required that homeowners have at least 20 percent equity in their residences before refinancing. It might not be easy to hit that mark if your home has lost value since you purchased it.</p> <p>But the 20 percent rule isn't quite as absolute as it once was. The federal government's <a href="https://www.harp.gov/" target="_blank">Home Affordable Refinance Program</a>, better known as HARP, allows homeowners to refinance even if they have no equity or negative equity in their homes. You will have to meet certain requirements, but if you are low on equity, HARP can help.</p> <p>To participate in HARP, ask the lender that is handling your refinance. This lender will help you determine if you qualify for the program.</p> <h2>2. I can't afford it</h2> <p>No one disputes that refinancing is expensive. Lenders vary, but you can expect to pay about 1.5 percent of your loan's outstanding value in closing costs. If you are refinancing a loan with a balance of $200,000, you'll pay about $3,000 in fees.</p> <p>Don't panic, though: Most lenders will allow you to roll these fees into the balance of your new loan. This means you won't have to pay them upfront when you close on your refinance. Instead, they'll be paid out over time, every time you make a monthly payment on your new mortgage.</p> <p>Of course, if you can afford the costs of refinancing, you can also pay the closing fees upfront in one lump sum.</p> <h2>3. I was turned down before, so there's no reason to try again</h2> <p>Maybe you tried refinancing a year ago, but your lender rejected your application. This doesn't mean that you can't ever qualify. The reason for your rejection is key.</p> <p>Did your lender reject your application because your credit score was too low? If you start a new history of paying all your bills on time and <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt?ref=internal" target="_blank">cutting down on credit card debt</a>, your score might be high enough today to secure a &quot;yes&quot; from a lender. Maybe your lender rejected you because your monthly debt obligations were too high for your gross monthly income. If your income has risen or you've reduced your monthly debts, you might qualify if you try again. (See also: <a href="http://www.wisebread.com/5-ways-to-improve-your-credit-score-fast?ref=seealso" target="_blank">5 Ways to Improve Your Credit Score Fast</a>)</p> <h2>4. It's easier to refinance with your existing lender</h2> <p>You are free to refinance with any mortgage lender that is licensed to do business in your community. This means that you don't have to close your refinance with the lender to which you are already sending your monthly payments. You might think it's easier to work with your existing lender, but this isn't really true. You'll still have to send paperwork to your current lender verifying your job status, salary, and yearly income. This information, after all, might have changed since you first took out your mortgage. Your current lender will want to verify that your income is still high enough to afford your new monthly mortgage payments.</p> <p>Also, it makes sense to get quotes from several lenders when refinancing. You might nab a lower interest rate or fees from a new lender.</p> <h2>5. Interest rates are too high to make refinancing worthwhile</h2> <p>Mortgage interest rates are still at historic lows, but they have risen in the last year. You might think that it no longer makes sense to refinance. That's not necessarily true.</p> <p>It all depends on where your current interest rate stands. If the interest rate on your 30-year, fixed-rate loan is 5 percent and you can refinance to a new loan with a rate of 4 percent, you will save money each month. Sure, you would have saved even more had you refinanced earlier, when you might have nabbed an interest rate of 3.5 percent. But if you can still drop your rate by a full percentage point, you will still save a significant amount of money in a refinance.</p> <p>There are also other reasons to refinance besides chopping your monthly payment. You might consider refinancing to a mortgage with a shorter term. By refinancing from, say, a 30-year, fixed-rate loan to a 15-year, fixed-rate loan, you can reduce the amount of interest you pay over the life of your loan by $100,000 or more, if you hold onto your loan for its entire term. Your monthly mortgage payment will go up because you are paying your loan back at a faster rate, but your interest rate, and the interest you pay in total, will fall.</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%2Fstop-believing-these-5-home-refinance-myths&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FStop%2520Believing%2520These%25205%2520Home%2520Refinance%2520Myths.jpg&amp;description=Stop%20Believing%20These%205%20Home%20Refinance%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/Stop%20Believing%20These%205%20Home%20Refinance%20Myths.jpg" alt="Stop Believing These 5 Home Refinance 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/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/stop-believing-these-5-home-refinance-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-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/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-3 views-row-odd"> <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-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/yes-you-need-home-title-insurance-heres-why">Yes, You Need Home Title Insurance — Here&#039;s Why</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing equity fees HARP interest rates lenders mortgages myths refinance turned down Fri, 07 Jul 2017 08:01:04 +0000 Dan Rafter 1976047 at http://www.wisebread.com Should You Buy a Car With a Credit Card? http://www.wisebread.com/should-you-buy-a-car-with-a-credit-card <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/should-you-buy-a-car-with-a-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/businesswoman_hold_credit_card_a_toy_car_and_a_stack.jpg" alt="Businesswoman hold credit card, a toy car and a stack" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>While most people rely on cash or bank financing to buy a car, it may be possible to make all or part of your vehicle purchase with a credit card instead. This might seem like a risky proposition, but there are real, tangible benefits that can come from using this payment method if you're careful.</p> <p>With the right credit card strategy, you could earn rewards for your car purchase, save money on interest, and potentially pay your car off faster. Obviously, there are also a lot of things that can go wrong with this strategy. If you can't afford a car and are looking at a credit card as your way to finance it because you have no other options, forget it. You'll end up worse off if you can't make payments on your credit card.</p> <p>Even if you can afford the car, you'll need to answer a few questions. Let's talk about whether charging it makes sense &mdash; and when it's possible.</p> <h2>Is it possible to buy a car with a credit card?</h2> <p>First, you need to determine whether the dealership or car lot you're buying from will allow it. There are instances when a car lot may let you&nbsp;pay for your entire car purchase with credit, but those situations are rare.</p> <p>More likely, if a dealership lets you pay with a credit card at all, it will cap the amount at, say, $5,000. The main reason dealerships hesitate to let you charge tens of thousands of dollars to your card is that, like other merchants, they pay interchange fees to accept credit cards. These fees are usually around 2 percent, sometimes higher. So, if you charge a $30,000 car, your dealership could be on the hook for at least $600 in processing costs.</p> <p>The other thing you need to note is your available balance. Obviously, you can't charge more than your credit limit, so you'll need to be aware of that limit.</p> <h2>Earning rewards with a car purchase</h2> <p>While there is more than one way charging your car to a credit card can leave you ahead, the most intriguing opportunity is the rewards you could earn. You can get <a href="http://www.wisebread.com/5-best-cash-back-credit-cards?ref=internal" target="_blank">cash back</a> or <a href="http://www.wisebread.com/top-5-travel-reward-credit-cards?ref=internal" target="_blank">travel rewards</a>. You might even want to use a <a href="http://www.wisebread.com/capital-one-buypower-get-your-dream-gm-car?ref=internal" target="_blank">co-branded car credit card</a> (yes, they exist!). This can provide you a hefty discount when you are ready for your next car.</p> <p>Obviously, this strategy is only worth pursuing if you have the cash in the bank to pay your card off right away. While the cards with the most lucrative rewards programs help you earn &quot;free money&quot; on large purchases, the interest rates they offer tend to be higher than average. If you put $30,000 on a credit card that charges 15 percent and it took you five years to pay your loan off, you would fork over $12,822 in interest alone.</p> <h2>Saving interest on a car purchase with a 0% APR card</h2> <p>This leads to the second reason some people may choose to charge their car purchase &mdash; to save money on interest. While many rewards cards charge higher interest rates than most, an array of cards charge <a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases?ref=internal" target="_blank">0% APR for new purchases</a> for 12&ndash;21 months.</p> <p>The key to making a 0% APR card work in this scenario is making sure you can pay the balance in full before your introductory offer ends. Once it's over your rate will reset to a regular credit card interest rate, which is almost certainly higher than the rate you'd get on a car loan.</p> <p>Before you pick a 0% APR card for your car purchase, make sure you can pay the balance in full before the introductory offer ends. That way, you can truly save money on interest &mdash; and not end up potentially paying more in interest than if you'd just gone with a loan.</p> <h2>Buying a car with a credit card</h2> <p>If you're dead set on charging your car to a credit card, it's important to think through several important scenarios first. Here are four tips that can help you get the most out of the situation.</p> <h3>1. Don't talk about payment until you've negotiated a price</h3> <p>While there's nothing wrong with using credit for a car, your car salesman may want to make up for their fees by charging you a higher sales price. That's why you should never reveal that you intend to pay with credit until you've negotiated the terms of the sale. By slow-rolling your credit card payment plan, you can get the best price possible while also gaining the benefits of using a card.</p> <h3>2. Make sure you're getting the best deal possible</h3> <p>As with any car purchase, you should research the cars you're interested in online before you ever step into a dealership. Websites like&nbsp;Kelley Blue Book&nbsp;can help you figure out exactly what a car is worth based on its make, model, and condition. If the dealership wants you to pay more than a car is truly worth, the rewards you're earning probably won't be worth it, especially if they decide to tack on a fee for using a credit card.</p> <h3>3. Do the math before you buy</h3> <p>While getting 0% APR on your car purchase can pay off, it's important to do the math if you don't think you'll pay off the entire purchase before the introductory offer ends. If you need several years to pay your car loan in full, for example, you will be better off with bank or dealership financing &mdash; even if the ongoing APR seems high.</p> <h3>4. Decide what you want &mdash; 0% APR&nbsp;or&nbsp;rewards</h3> <p>While a slew of popular credit cards offer rewards or 0% APR for a limited time, few cards offer the best of both. Before you charge your car to a credit card, make sure you have defined goals and a plan to reach them. And if you don't have the right credit card to meet your needs for this purchase, explore your card options and apply for a new card before you step into a dealership.</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%2Fshould-you-buy-a-car-with-a-credit-card&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FShould%2520You%2520Buy%2520a%2520Car%2520With%2520a%2520Credit%2520Card-.jpg&amp;description=Should%20You%20Buy%20a%20Car%20With%20a%20Credit%20Card%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%20Buy%20a%20Car%20With%20a%20Credit%20Card-.jpg" alt="Should You Buy a Car With a Credit Card?" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/holly-johnson">Holly Johnson</a> of <a href="http://www.wisebread.com/should-you-buy-a-car-with-a-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/10-new-car-costs-the-dealer-is-hiding-from-you">10 New Car Costs the Dealer Is Hiding From You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-magic-words-to-say-to-get-the-best-new-car-price">10 Magic Words to Say to Get the Best New Car Price</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-secrets-to-a-higher-car-trade-in-value">8 Secrets to a Higher Car Trade-In Value</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-times-you-can-score-a-great-deal-on-a-new-car">5 Times You Can Score a Great Deal on a New Car</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/7-money-mistakes-everyone-makes-when-buying-their-first-car">7 Money Mistakes Everyone Makes When Buying Their First Car</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Cars and Transportation APR dealerships fees financing interest rates negotiating new car rewards vehicles Wed, 05 Jul 2017 08:30:12 +0000 Holly Johnson 1974820 at http://www.wisebread.com The Best Airline Rewards Programs for Trips to Europe http://www.wisebread.com/the-best-airline-rewards-programs-for-trips-to-europe <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-best-airline-rewards-programs-for-trips-to-europe" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-511319338.jpg" alt="couple in Europe" title="couple in Europe" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>If you&rsquo;ve been dreaming of a trip to Europe but can&rsquo;t stomach the cost of airfare, now is the perfect time to rethink your travel goals. Scoring a round-trip flight to nearly any European city may be easier than you think. The following airline loyalty programs offer great deals on their award seats.</p> <p>If you&rsquo;re trying to decide which airline program to join to get to Europe, consider these (and the credit cards that help you accrue points faster with them). (See also: <a href="http://www.wisebread.com/6-european-destinations-finally-cheap-enough-to-visit?ref=seealso">6 European Destinations Finally Cheap Enough to Visit</a>)</p> <h2>Air France/KLM Flying Blue</h2> <p>With Flying Blue, a round-trip flight to Europe is only 50,000 points from most American cities. And if you&rsquo;re worried that Air France or KLM don&rsquo;t fly out of your home airport, don&rsquo;t despair. You can book Air France and KLM flights with Delta Air Lines, which is part of the SkyTeam Airline Alliance with Air France, KLM, and others.</p> <p>For this summer, I booked round-trip flights into Munich, Germany and home from Zurich, Switzerland using 50,000 Flying Blue miles for each of my family members. Keep in mind you&rsquo;ll still need to pay government-mandated airline taxes and fees in addition to your miles. For our summer trip using Flying Blue miles, our taxes worked out to around $93 per person.</p> <h2>British Airways Avios</h2> <p>British Airways flights to Europe can cost varying amounts based on the class of ticket and when you fly. However, you can find off-peak round-trip tickets to most European cities for less than 50,000 BA points, called Avios, plus taxes and fees.</p> <p>While anything less than 50,000 miles to Europe is a steal, you must keep an eye on those taxes and fees. British Airways is notorious for its larger-than-life fuel surcharges on transatlantic itineraries, and there&rsquo;s no way around them. Before you transfer points to British Airways, make sure you have a handle on the fees you&rsquo;ll pay.</p> <h2>Air Canada Aeroplan</h2> <p>You can pick up an economy flight with Air Canada to most western European countries for 60,000 miles round-trip. You&rsquo;ll also need to pay government-mandated taxes and fees.</p> <p>Air Canada is also part of Star Alliance, meaning you can use them to book flights on European partners like Lufthansa. The number of miles you&rsquo;ll need will vary depending on when you travel and the country you&rsquo;re traveling to.</p> <h2>Delta SkyMiles</h2> <p>The bad news about Delta Air Lines is that they no longer publish an award chart. The good news is, you can occasionally find round-trip flights to Europe for 50,000&ndash;60,000 miles. It helps to do some digging, be flexible with dates and times, and be willing to fly into and out of alternate airports.</p> <p>Since Delta is part of the SkyTeam Alliance, you can use points to book flights on KLM or Air France. Again, the number of points you&rsquo;ll need will depend on your destination and travel dates.</p> <h2>Etihad</h2> <p>Award availability on Etihad can be extremely limited. If you&rsquo;re considering this strategy, make sure to start looking early and stay flexible in terms of dates and times. Once you&rsquo;re able to find a seat, you can fly round-trip to Europe for 60,000 miles plus taxes and fees.</p> <h2>Credit cards that transfer to airline partners</h2> <p>Joining the loyalty program of an airline that will fly to your desired European destination is just the first step. Loading up on miles and points is the next. The credit cards below transfer to the programs mentioned above. Use them for your everyday purchases and start planning your European adventure. Sometimes the bonus alone (after the spending requirement) can be enough for one round trip ticket!</p> <h3>Chase Sapphire Preferred&reg; Card</h3> <p><img src="http://www.imgsynergy.com/191x120/chase-sapphire-preferred-card-110716.png" class="img-exempt" style="float:right;margin:0 5px 5px 10px;" alt="" border="0" height="97" width="154" /><a href=" http://ct.wisebread.com/click.php?pg=289&amp;pid=38&amp;pp=1&amp;uv=xcardbutton" target=" rel=" style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" class="img-exempt img-button" alt="" /></a>The <a href="http://ct.wisebread.com/click.php?pg=289&amp;pid=38&amp;pp=1&amp;uv=xname" rel="nofollow" target="_blank">Chase Sapphire Preferred&reg; Card</a> is offering 50,000 points after you spend $4,000 on your card within the first three months from account opening. Those points are worth $625 if you use them to book travel through the Chase Ultimate Rewards portal, but they can be worth considerably more when you transfer them to a partner airline (includes Air France/KLM Flying Blue and British Airways Avios). This card does charge a $95 annual fee, but the fee is waived the first year.</p> <p><strong><a href="http://ct.wisebread.com/click.php?pg=289&amp;pid=38&amp;pp=1&amp;uv=xend" rel="nofollow" target="_blank">Click here to learn more and apply for the Chase Sapphire Preferred&reg; Card today!</a></strong></p> <h3>Gold Delta SkyMiles&reg; Credit Card from American Express</h3> <p><img class="img-exempt" style="float:right;margin:0 5px 5px 10px;" src="http://www.imgsynergy.com/191x120/gold-delta-skymiles-credit-card-from-american-express-022415.png" alt="" border="0" width="154" /><a target="_blank" href="http://ct.wisebread.com/click.php?pg=289&amp;pid=9&amp;pp=2&amp;uv=xcardbutton" style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" class="img-exempt img-button" alt="" /></a>The <a target="_blank" href="http://ct.wisebread.com/click.php?pg=289&amp;pid=9&amp;pp=2&amp;uv=xname">Gold Delta SkyMiles&reg; Credit Card from American Express</a> is offering 30,000 bonus miles after you spend $1,000 within the first 3 months, plus a $50 statement credit if you make a Delta purchase within the first 3 months. Redeem miles toward travel on Delta and more than 15 airline partners. The $95 annual fee is waived for the first year. Terms apply. See <a href="https://www.americanexpress.com/us/credit-cards/personal-card-application/terms/delta-gold-credit-card/26129-10-0/?print#terms-details">rates and fees</a>.</p> <p><strong><a target="_blank" href="http://ct.wisebread.com/click.php?pg=289&amp;pid=9&amp;pp=2&amp;uv=xend">Click here to learn more and apply for the Gold Delta SkyMiles&reg; Credit Card from American Express today!</a></strong></p> <h3>The Platinum Card&reg; from American Express</h3> <p><img style="float:right;margin:0 5px 5px 10px;" class="img-exempt" src="http://imgsynergy.com/product_creatives/d7a443fe113188ab241309d0eb0c2e33.png" alt="" border="0" height="97" width="154" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" target="_blank" alt="The Platinum Card&reg; from American Express" title="The Platinum Card&reg; from American Express" rel="nofollow" href="http://ct.wisebread.com/click.php?pg=289&amp;pid=11&amp;pp=3&amp;uv=xcardbutton"><img alt="" class="img-exempt img-button" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a>The current welcome offer on the <a href="http://ct.wisebread.com/click.php?pg=289&amp;pid=11&amp;pp=3&amp;uv=xname" target="_blank">Platinum Card&reg; from American Express</a> makes it possible to earn 60,000 points after you use your card for $5,000 in purchases within the first three months of card membership. While you could potentially afford a flight to Europe by booking through the AmexTravel.com portal (where 60,000 points is worth $600 in flights), you&rsquo;ll have a better shot at getting to Europe with an Amex transfer partner (includes Air Canada, British Airways, Delta, Etihad, and KLM/Air France).</p> <p>This card comes with a $550 annual fee. However, it also include a $200 airline credit, access to over 1,000 lounges around the world, Uber credits, and a global entry credit do add up to more value than that, but only if you actually use it. Terms apply. <a href="https://www.americanexpress.com/us/credit-cards/personal-card-application/terms/platinum-charge-card/26129-10-0/?print#terms-details">See rates and fees.</a></p> <p><strong><a href="http://ct.wisebread.com/click.php?pg=289&amp;pid=11&amp;pp=3&amp;uv=xend" target="_blank">Click here to learn more and apply for the&nbsp;The Platinum Card&reg; from American Express today!</a></strong></p> <p>(See also: <a href="http://www.wisebread.com/5-steps-to-getting-a-free-or-close-to-free-vacation-in-9-months-or-less-with-credit-cards?ref=seealso2">How to Get a Free Vacation in 9 Months through Credit Cards</a>)</p> <h2>Tips for getting to Europe with points</h2> <p>Before you dive in, there are a few things you should know. Consider these tips:</p> <ul> <li>Start earning points early. Airline miles are notoriously difficult to use due to limited award availability, blackout dates, and the general wonkiness of their online booking portals. The best strategy for anyone planning to use miles is to start earning them early &mdash; then book ahead. Booking at least nine months in advance will make finding the flights you want easier.</li> <li>Check for award availability before you transfer points. Even if an airline promises you can get to a specific destination on miles, that doesn&rsquo;t mean it offers the award availability. Before you transfer points to an airline, check to make sure the flights you want are available.</li> <li>Compare taxes and fees with different transfer partners. Some airlines tack ridiculous fees on award bookings, and these fees can make using your miles especially expensive. Make sure to compare fees and availability with different airlines before you settle on an award flight with high fees.</li> </ul> <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%2Fthe-best-airline-rewards-programs-for-trips-to-europe&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThe%2520Best%2520Airline%2520Rewards%2520Programs%2520for%2520Trips%2520to%2520Europe.jpg&amp;description=The%20Best%20Airline%20Rewards%20Programs%20for%20Trips%20to%20Europe"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/The%20Best%20Airline%20Rewards%20Programs%20for%20Trips%20to%20Europe.jpg" alt="The Best Airline Rewards Programs for Trips to Europe" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/holly-johnson">Holly Johnson</a> of <a href="http://www.wisebread.com/the-best-airline-rewards-programs-for-trips-to-europe">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-steps-to-picking-the-best-airline-credit-card-for-the-most-rewards-value">5 Steps to Picking the Best Airline Credit Card for the Most Rewards Value</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/amazing-destinations-you-can-go-to-with-rewards-points-and-miles">Amazing Destinations You Can Go to With Rewards Points and Miles</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/once-in-a-lifetime-experiences-ive-earned-with-credit-card-rewards">Once-In-A-Lifetime Experiences I&#039;ve Earned With Credit Card Rewards</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/are-airline-or-travel-rewards-credit-cards-the-better-deal">Are Airline or Travel Rewards Credit Cards the Better Deal?</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/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> </ul> </div> </div> </div> </div><br/></br> Credit Cards Travel Airfare airlines credit cards destinations Europe fees international miles points rewards taxes vacation Sun, 02 Jul 2017 20:24:55 +0000 Holly Johnson 1973264 at http://www.wisebread.com How to Boost Your Credit With a Balance Transfer http://www.wisebread.com/how-to-boost-your-credit-with-a-balance-transfer <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-boost-your-credit-with-a-balance-transfer" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_calculate_how_much_cost_orspending_have_with_credit_cards_0.jpg" alt="Woman calculate how much cost or spending have with credit cards" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Balance transfers can be a practical and effective way to tackle your credit card debt. Simply, you transfer your high-interest credit card debt to a card with a lower rate. This could be a card with a lower APR, or a card that offers a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">0 percent promotional rate on balance transfers</a> for a limited time. (See also: <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=seealso" target="_blank">When to Do a Balance Transfer for Credit Card Debt</a>)</p> <p>This can help your credit score, too. A few weeks ago, I was feeling pretty good about the balance transfer offer I used to move some high-interest credit card debt to a card with a great introductory rate. But, then I realized you have to be careful of your balance transfer strategy. In addition to boosting your credit score, there are a few pitfalls to be aware of.</p> <h2>Pitfall: Applying for a balance transfer generates a hard credit inquiry</h2> <p>If you are trying to boost your credit score, be careful when applying for any new credit cards &mdash; including for balance transfers. Each credit application generates a &quot;hard&quot; inquiry on your credit report, which is a negative factor in calculating your credit score. Applying for new credit is considered a risk because it can be a sign of financial distress, especially if you have multiple hard inquiries over a short period of time.</p> <h2>Boost: If used effectively, the balance transfer will eventually raise your score</h2> <p>The drop in score from a hard inquiry is temporary. Unless you are planning on applying for any big loans such as a mortgage, refinance, or car loan, the drop shouldn't affect you too much. Once you start paying off your balance, your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal" target="_blank">credit utilization ratio</a> will drop. Your credit utilization ratio, which is all of your credit card balances divided by the total of your credit card limits, is a big factor in the &quot;amounts owed&quot; category of your FICO credit score, which accounts for 30 percent of your score. Most experts recommend your credit utilization ratio not exceed 30 percent, and keeping it even lower &mdash; under 10 percent &mdash; can help raise your score.</p> <h2>Pitfall: Using balance transfers to grow your debt</h2> <p>Balance transfers should be used to consolidate your debt &mdash; never to &quot;make room&quot; on other credit cards so you can keep on charging past limits. All this does is rack up more debt.</p> <p>This can quickly spiral out of control, too. If your debt grows too much, it can increase your credit utilization ratio, which lowers your credit rating. Eventually, taking on too much debt can reach the point where you can no longer make payments on time, and your credit score will take a huge hit. Lenders also consider your debt-to-income ratio when deciding whether to approve or deny you for financing. If your debt becomes too large relative to your income, you may not be able to get approved for any new loans or credit cards.</p> <h2>Boost: A balance transfer can help pay down your debt faster</h2> <p>If you transfer your high-interest credit card debt to a balance transfer card with a lower rate, more of your payment will go toward paying down the principal. Not only will this save you money from interest, but you'll get rid of your debt faster. Only do a balance transfer if you have a solid debt repayment plan to pay off the balance within the promotion period. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso" target="_blank">Fastest Way to Pay Off $10K in Credit Card Debt</a>)</p> <h2>Pitfall: Maxing out the balance transfer card you are transferring to</h2> <p>If you get a great introductory interest rate for a balance transfer, you may conclude that you should transfer as much of your high-interest credit card debt as possible to the new card. The problem with this strategy is that you can hurt your credit score by having a high utilization of available credit, even if it is only on one credit account.</p> <p>Your credit utilization ratio is a major factor in calculating your credit score. Even if you have lots of credit available overall, pushing your balance transfer account near its credit limit can hurt your credit score. The credit utilization metric that contributes to your credit score not only considers <em>overall </em>credit balances compared to your overall credit limit, but also scores utilization of <em>individual </em>credit cards. If you are trying to maximize your credit score, keep your balance under 30 percent of your credit limit on all of your accounts, even after you complete a balance transfer.</p> <p>Even if the interest rate is great, leave some room on your balance transfer card to avoid getting a lower credit score due to credit utilization.</p> <h2>Boost: Use a personal loan rather than a credit card to refinance debt</h2> <p>Personal loans aren't counted toward your credit utilization ratio, since a personal loan is not a revolving credit account. However, like credit card debt, the amount you owe on installment loans does figure into the &quot;amounts owed&quot; category of your credit score, though it harms your score much less than a high credit utilization ratio does. In fact, having an installment loan can help boost your &quot;credit mix,&quot; which is a different scoring category that comprises 10 percent of your credit score.</p> <p>The downside is that you will typically pay higher interest for a personal loan than you would with a balance transfer introductory rate at or near 0 percent. Still, if your credit score is low, or you are trying to boost your credit score to secure the best interest rate you can get on a mortgage, you may want to consider using a personal loan instead of a balance transfer card to refinance your credit card debt. (See also: <a href="http://www.wisebread.com/5-times-personal-loans-may-be-better-than-credit-cards?ref=seealso" target="_blank">5 Times a Personal Loan May Be Better Than Credit Cards</a>)</p> <p>Check with your bank about a personal loan as an alternative to transferring credit card debt to another credit card if you are trying to improve your credit score.</p> <h2>How much will you really save?</h2> <p>In addition to pitfalls that can lower your credit score, you also need to watch out for pitfalls that can reduce how much money you can save through a balance transfer.</p> <p>When doing a balance transfer, you'll typically have to pay a fee between 3 and 5 percent of the transfer amount. The balance transfer fee is charged all at once at the time the transaction is processed, and is often added to your balance on the transfer account. Avoid being dazzled by a great interest rate that distracts you from noticing a higher fee compared with other balance transfer offers. (See also: <a href="http://www.wisebread.com/5-best-credit-cards-with-no-balance-transfer-fees?ref=seealso" target="_blank">Best Credit Cards With No Balance Transfer Fees</a>)</p> <p>The low introductory interest rate that is offered on balance transfers usually expires after 12 to 18 months and is replaced by an interest rate that can be much higher &mdash; over 20 percent in some cases. If you can pay off the balance transfer balance before the end of the introductory offer, you don't need to worry about the higher rate later on. But if you don't pay off the balance transfer during the introductory offer, you may end up paying higher interest rates than you had on your original credit card.</p> <p>Balance transfers can be a useful tool to lower your interest rate and help you pay down debt, if you avoid the pitfalls and choose a balance transfer card that makes sense for you.</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%2Fhow-to-boost-your-credit-with-a-balance-transfer&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Boost%2520Your%2520Credit%2520With%2520a%2520Balance%2520Transfer.jpg&amp;description=How%20to%20Boost%20Your%20Credit%20With%20a%20Balance%20Transfer"></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%20Boost%20Your%20Credit%20With%20a%20Balance%20Transfer.jpg" alt="How to Boost Your Credit With a Balance Transfer" 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/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/how-to-boost-your-credit-with-a-balance-transfer">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-these-5-common-mistakes-while-rebuilding-your-credit">Avoid These 5 Common Mistakes While Rebuilding Your Credit</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/this-one-ratio-is-the-key-to-a-good-credit-score">This One Ratio Is the Key to a Good Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards">7 Important Things You Should Know About Balance Transfer Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-expect-when-youre-expecting-a-huge-credit-card-bill">What to Expect When You&#039;re Expecting a Huge Credit Card Bill</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-moves-to-make-before-cutting-up-your-credit-card">6 Moves to Make Before Cutting Up Your Credit Card</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards 0% balance transfers credit history credit score credit utilization ratio debt fees introductory rates Tue, 27 Jun 2017 08:00:11 +0000 Dr Penny Pincher 1970388 at http://www.wisebread.com These Apps Turn Saving Money Into a Game — Are They Worth It? http://www.wisebread.com/these-apps-turn-saving-money-into-a-game-are-they-worth-it <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/these-apps-turn-saving-money-into-a-game-are-they-worth-it" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_surprised_phone_598171710.jpg" alt="Woman turning money saving into a game" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you have two dollars in your hand, do you save it or buy a scratch-off lottery ticket? We all know that the sensible choice is to put that money right in the bank. But the reality is, at today's anemic interest rates, saving is boring. The chance of winning a prize is exciting.</p> <p>What if you could have both the long-term financial benefit of saving, and the momentary thrill of getting a chance to win a prize? Combining responsible behavior and fun is the idea behind a crop of products and services that gamify saving money.</p> <p>Let's look at the pros and cons of some of these prize-linked savings products, which allow users the chance to win money without risking any of their own.</p> <h2>1. Long Game</h2> <p>At first, <a href="https://www.longgame.co/" target="_blank">Long Game</a> sounds like the same humdrum routine. It offers a savings account that you link to your regular checking account; money you transfer to savings earns 0.1 percent interest. But here's where it gets good: Long Game rewards you for depositing money into savings with &quot;coins.&quot; You can use your coins to buy virtual lottery tickets, and the prizes are either real cash or more coins.</p> <p>One nice feature of Long Game is that it doesn't charge fees. Another aspect, which could be either a feature or a drawback, depending on your interests, is that you have to actually play games, like spinning a wheel, to win money. Personally, I don't have the time for such games and would rather get automatic entries, but for people like my grandmother who play fake online slots just for fun, this could be a plus.</p> <h2>2. Wal-Mart MoneyCard</h2> <p>Walmart's MoneyCard was already a popular way for low-income, unbanked workers to store their paycheck and pay bills. Now, it's also billing itself as a savings vehicle, with a feature called Vault that allows users to set aside money that can't be spent on purchases (unless you transfer that money back out of the Vault). Recently, Wal-Mart debuted the <a href="https://www.walmartmoneycard.com/account/prizesavings" target="_blank">Prize Savings program</a> for MoneyCard, which gives card users chances to win up to $1,000 each month. The more money you keep in the Vault, the more chances you get to win.</p> <p>This program differs from Long Game in several notable ways: One, you don't need a separate bank account to participate &mdash; MoneyCard functions as a bank account replacement. Two, money in the Vault does not earn interest. Three, MoneyCard charges several fees: a $5 monthly fee, $3&ndash;$4.95 to put money on the card, and a $2.50 fee to get cash at an ATM. Fourth, you don't have to enter the drawing &mdash; putting the money in your Vault enters you automatically.</p> <h2>3. SaveUp</h2> <p>Link your savings and debt-bearing accounts to <a href="https://www.saveup.com/" target="_blank">SaveUp</a>, and you'll be rewarded with credits not just for saving money, but also for paying down debt. The credits can be used to buy virtual lotto tickets for cash prizes, including $50 weekly drawings and a monthly chance at a $2 million &quot;super jackpot.&quot;</p> <p>SaveUp is free to join. As with Long Game, you have to actively play to win; entries are not automatic.</p> <h2>4. Save to Win</h2> <p>The only nonprofit on this list, <a href="http://www.savetowin.org/" target="_blank">Save to Win</a> rewards credit union members with weekly and monthly prize drawings; the more you deposit, the more entries you get. Prizes vary by state but generally start at $25 and can go into the thousands.</p> <p>Save to Win is currently available at select credit unions in 13 states. Once you're enrolled in Save to Win, entry is automatic, so you don't need to remember to play the game.</p> <h2>5. Tip Yourself</h2> <p>This one is not a prize-linked program, but another gamified approach to saving money. <a href="https://www.tipyourself.com/" target="_blank">Tip Yourself</a> encourages users to transfer money from their checking account into a virtual &quot;tip jar&quot; as a reward for performing a desirable activity. The &quot;tip jar&quot; is a non-interest-paying account.</p> <p>It's an interesting idea for combining savings and self-motivation. I can imagine using Tip Yourself to save for a trip or a small goal like a spa pedicure; every time you exercise, you could reward yourself by moving some money to the trip or spa fund. It doesn't cost money to make the transfer. However, since the tip jar doesn't pay interest, it seems like you would be better off setting up a money market account linked to your checking account for saving toward a goal; most banks offer that option.</p> <h2>The take-away</h2> <p>The majority of these apps share a common drawback: To use them, you have to share your bank account information, which could put your account at risk if the company gets hacked. It also calls your financial privacy into question; if you plan to use any of these, study the company's privacy policy before taking the plunge.</p> <p>Several of these apps encourage users to keep savings in accounts that don't pay interest. Even though current interest rates are low, that makes little sense to me.</p> <p>If you are a member of a credit union that offers it, using the nonprofit Save to Win is a no-brainer. It won't take you any extra time to play, and it doesn't appear that you'd sacrifice security or privacy to do so. For the rest of these apps, carefully weigh the value of your privacy, security, and any financial costs against the chance of winning before committing.</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/these-apps-turn-saving-money-into-a-game-are-they-worth-it">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/everyones-using-spare-change-apps-are-they-really-worth-it">Everyone&#039;s Using Spare Change Apps — Are They Really Worth It?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-apps-that-actually-pay-you-to-shop">8 Apps That Actually Pay You to Shop</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-apps-that-monitor-your-credit-for-you">7 Apps That Monitor Your Credit for You</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-10-best-couponing-apps">The 10 Best Couponing Apps</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-apps-for-busy-working-parents">The 5 Best Apps for Busy Working Parents</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Technology apps fees games prizes rewards saving money smartphones winning money Fri, 09 Jun 2017 09:00:10 +0000 Carrie Kirby 1960490 at http://www.wisebread.com Everyone's Using Spare Change Apps — Are They Really Worth It? http://www.wisebread.com/everyones-using-spare-change-apps-are-they-really-worth-it <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/everyones-using-spare-change-apps-are-they-really-worth-it" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/shopping_woman.jpg" alt="Shopping woman" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Dad had one. His grandfather had one, too. And today, despite using credit cards for most transactions, I, too, have a change jar sitting on my dresser.</p> <p>As people shift from cash transactions to paying for everything with credit cards, debit cards, and even their phones, is the opportunity to invest &ldquo;spare change&rdquo; lost? Not if you try one of these <a href="http://www.wisebread.com/with-micro-investing-your-smartphone-pays-you?ref=internal" target="_blank">micro-investing apps</a> that purport to effortlessly grow your savings. Let's review some of the most popular apps, including their pros and cons.</p> <h2>1. Acorns</h2> <p><strong>What it does</strong>: After you link one or all of your credit cards to your account, <a href="https://www.acorns.com/">Acorns</a> rounds up each purchase to the nearest dollar and takes the difference from your checking account. (See also: <a href="http://www.wisebread.com/heres-what-i-learned-about-money-after-using-acorns?ref=seealso" target="_blank">Here's What I Learned About Money After Using Acorns</a>)</p> <p><strong>Cost</strong>: Free for college students for four years, $1 per month for others; 0.25 percent for accounts of $5,000 or more.</p> <p><strong>The good</strong>: Automatic saving is great because you don&rsquo;t have to remember to do it. Your investment account is auto-managed in ETFs (exchange-traded funds), so the money that grows there will feel like pennies from heaven.</p> <p>Partners including Jet, Airbnb, and Hulu have agreed to give Acorns users cash back, which they deposit straight into your account. Free money, people!</p> <p><strong>The bad</strong>: If you are only investing a few dollars a month, that $1 management fee could turn out to be an outrageously high percentage of your investment. Also, if your bank account tends to run low, the money this app withdraws could cause an overdraft and cost you a nasty fee.</p> <h2>2. Stash</h2> <p><strong>What it does</strong>: <a href="https://www.stashinvest.com/start-investing/wisebread">Stash</a> is simply an ETF investing app, but unlike stockbrokers who require a $1,000 or larger initial investment, Stash keeps the initial investment threshold at just $5. Pre-arranged portfolios have cute names like &ldquo;The Activist,&rdquo; to help people with no interest in financial jargon figure out what funds to buy. The Auto Stash feature will periodically transfer a predetermined amount of money from a linked bank account.</p> <p><strong>Cost</strong>: $1 per month for balances under $5,000; 0.25 percent per year after that (which starts at $12.50 per year for $5,000).</p> <p><strong>The good</strong>: If not knowing what to invest in or not having enough money to buy into a mutual fund was keeping you from investing, user-friendly Stash could be a good jump start. It could be a good way for kids or young adults to experiment with investing on a small scale.</p> <p><strong>The bad</strong>: As with Acorns, the $1 a month fee is actually quite expensive for small account balances. Then there&rsquo;s the question of whether you&rsquo;re getting good advice on what to invest in. The funds currently offered on Stash have a relatively high expense ratio, meaning that, market performance being equal, other funds might yield more money to the investor after fees. And Stash doesn&rsquo;t auto-balance your investments over time like other <a href="http://www.wisebread.com/should-you-trust-your-money-with-these-4-popular-financial-robo-advisers?ref=internal">robo-advisers</a>.</p> <p><strong>Special offer:</strong> Want $5 to get started? Use our referral link: <a href="https://www.stashinvest.com/start-investing/wisebread"><strong>Sign up for Stash and get $5 to start investing today!</strong></a></p> <h2>3. Qoins</h2> <p><strong>What it does</strong>: <a href="https://qoins.io/">Qoins</a> skims the &ldquo;change&rdquo; from transactions, and then uses that change to pay off debt. The company estimates that most people end up paying down an extra $40 in debt each month they use Qoins.</p> <p><strong>Cost</strong>: Quoins deducts $1.99 from each monthly payment sent out on your behalf. If your monthly total is less than $20, Quoins won&rsquo;t send out a debt payment and won&rsquo;t charge you; instead it will roll over your accumulated spare change into the next month&rsquo;s payment.</p> <p><strong>The good</strong>: If you&rsquo;ve got high-interest loans, you can probably save more in interest by chipping away at debt than you could earn from saving at today&rsquo;s low interest rates. And unlike investing, paying off debt is risk free.</p> <p><strong>The bad</strong>: Again, that fee is going to erode gains. Paying $500 extra each year on a student loan might save you $25 in interest, but the app costs nearly $24 a year to use. You could achieve the same benefit for free by setting your monthly automatic loan payment $40 higher.</p> <h2>4. Debitize</h2> <p><strong>What it does</strong>: Aiming to help people avoid credit card debt, <a href="https://debitize.com/">Debitize</a> links your checking account to your credit card and makes a checking withdrawal every time you make a credit card charge. Then it pays your monthly credit card bill with the money it withdrew. The end result is the ability to use a credit card like a debit card.</p> <p><strong>Cost</strong>: Free.</p> <p><strong>The good</strong>: At first it&rsquo;s hard to grasp the point of Debitize. I mean, if you want to pay for all your purchases at the time you make them, you could simply stick to a debit card, a choice millions of conservative spenders make.</p> <p>However, Debitize positions itself as a way for previous debit users to take advantage of all those rich credit card rewards out there, and build their credit score, while avoiding the risk of getting into credit card debt. I can imagine this as a training wheels program for people who have had trouble with credit card debt before. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso" target="_blank">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a>)</p> <p><strong>The bad</strong>: To me, this service would add an unnecessary layer of complexity to life. It doesn&rsquo;t offer to increase my savings or cut my expenses, just to save me from myself by putting aside money to pay my bills.</p> <h2>5. Digit</h2> <p><strong>What it does</strong>: Instead of focusing on transactions, <a href="https://digit.co/">Digit</a> analyzes your checking account inflow and outflow. Every day that it judges you can afford to, it moves a little money from your checking to an FDIC-insured savings account.</p> <p><strong>Cost</strong>: $2.99 per month.</p> <p><strong>The good</strong>: Digit's &ldquo;no overdraft&rdquo; promise means that if a transfer causes your account to go negative, it&rsquo;ll cover the fee. It&rsquo;s also nice that Digit will allocate your savings toward goals of your choice, such as a rainy day fund or a new TV.</p> <p><strong>The bad</strong>: When you save and invest, your money is supposed to grow. But unless you&rsquo;re saving large amounts each month, your savings may shrink a bit with Digit. Digit is putting your money in a savings account on your behalf, and paying you a 1 percent annual &ldquo;savings bonus,&rdquo; broken into four quarterly payments &mdash; which is not a bad rate. But it also charges $2.99 per month. So if you invest $1,000 over the course of the year through Digit, you&rsquo;d earn $10 in interest, but pay $35.88 in fees.</p> <h2>6. Change</h2> <p><strong>What it does</strong>: <a href="https://gochange.co/intro/s/4?tk=AF78188" target="_blank">Change</a> monitors all your transactions and texts you with reminders and suggestions for wiser money management. For example, the app might point out how much you&rsquo;ve paid over the course of a year for a service you forgot you were signed up for.</p> <p>Change also offers &ldquo;auto saving&rdquo; which, like Digit, analyzes your account and transfers money it thinks you don&rsquo;t need to a separate account that pays you &ldquo;savings bonuses&rdquo; instead of interest. The standard bonus rate (like today&rsquo;s interest rates) is low at 3 percent, but you can increase your rate by referring friends to sign up for the auto-save service.</p> <p><strong>Cost</strong>: Free.</p> <p><strong>The good</strong>: Fans of the app appreciate getting insight that they would not have gleaned on their own. Unlike the other apps in this post, which focus on saving in small increments, Change is looking to change big picture and long-term behavior. Its impact on your savings efforts could be huge.</p> <p><strong>The bad</strong>: If you already get a lot of texts, having your phone start notifying you when you've spent too much money could be annoying.</p> <h2>The takeaway</h2> <p>One drawback to all of these accounts is that they focus on adding money to after-tax accounts. If you are earning income, you should really focus on contributing to your tax-advantaged retirement account. That said, if you&rsquo;re already paying into your retirement fund, one of these apps could be a way to contribute to a rainy day fund, or to chip away at debt.</p> <p>Another concern that applies to all of these apps is that you're inviting a second or third company to peruse and make use of your financial data, meaning that your privacy and the security of your accounts could be diminished. Of course, each app has reassurances on its website about how great its data security is, but hacks happen. Before handing over your account information to any service provider, make sure you understand how it plans to handle your data.</p> <p>Personally, I don&rsquo;t like paying fees. I don&rsquo;t dump my real change jar into one of those machines that charges a fee to turn it into folding money, and I wouldn&rsquo;t pay a monthly fee for a company to make micro-withdrawals from my checking account for me. Instead, I&rsquo;d be inclined to emulate their effect for free by setting my checking account to autodeposit a set amount of money into savings or an investment account.</p> <p>If you value novelty and convenience over a buck or three a month, and you have never invested before, any of these apps might help jump start your savings and investment career. If that&rsquo;s you, take one of them for a spin. But be sure to re-evaluate after six months or so to see if you&rsquo;re getting enough value from your monthly fee, or if you&rsquo;re ready to graduate to another form of saving and investing.</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/everyones-using-spare-change-apps-are-they-really-worth-it">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/these-apps-turn-saving-money-into-a-game-are-they-worth-it">These Apps Turn Saving Money Into a Game — Are They Worth It?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-apps-for-busy-working-parents">The 5 Best Apps for Busy Working Parents</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-apps-that-monitor-your-credit-for-you">7 Apps That Monitor Your Credit for You</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-manage-your-money-no-budgeting-required">How to Manage Your Money — No Budgeting Required</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-millennial-money-habits-every-retiree-should-learn">6 Millennial Money Habits Every Retiree Should Learn</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Technology acorns apps cons debitize digit fees micro investing pros qoins saving money spare change stash Mon, 05 Jun 2017 08:30:13 +0000 Carrie Kirby 1957903 at http://www.wisebread.com How to Fix Your Finances After Missing a Payment http://www.wisebread.com/how-to-fix-your-finances-after-missing-a-payment <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-fix-your-finances-after-missing-a-payment" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/portrait_of_an_attractive_woman_at_table_grabbing_her_head.jpg" alt="Portrait of an attractive woman at table grabbing her head" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>No matter how much you plan ahead with your finances, sometimes you'll mess up a payment. Whether you miss a due date or bounce a check, take a deep breath. It's not as bad as you think.</p> <p>Let's review what you can expect to happen, how to fix the problem, and how you can make sure this doesn't happen again.</p> <h2>Missing a credit card payment</h2> <p>According to research from the Urban Institute, one in every 20 Americans is at least 30 days behind on a credit card payment or other nonmortgage type of debt. But you don't have to be that late to suffer consequences. Simply forgetting about a due date by a few days can land you in trouble.</p> <h3>What you can expect</h3> <p>Miss a credit card payment by as little as one day and you can be hit with a penalty fee. Late fees are capped by the Consumer Financial Protection Bureau at $27 for the first time you miss a due date; $38 for subsequent late payments within a six-month period. Those caps are adjusted for inflation every year.</p> <p>But fees aren't the only penalty for late credit card payments. Most credit card issuers will also hike up your APR, typically to between 20 percent and 35 percent. The Credit Card Act of 2009 requires the issuer to send you a notice saying why it is increasing your rate 45 days in advance of the rate hike, and the issuer can only apply the penalty rate to purchases made 14 days after the notice was sent. However, if you don't make at least the minimum payment within 60 days of the due date, the penalty APR can be applied to your <em>existing</em> balance as well as any future transactions. There is a chance to reverse that, though, if you make the next six payments on time.</p> <p>One silver lining exists for late payers: If your payment is less than 30 days past due, it will not be reported late to the credit bureaus.</p> <h3>How to fix it</h3> <p>If you make at least your minimum payment within 48 hours past the due date, your credit card company may credit you back any late payment fees.</p> <p>Many credit card companies offer a 24-hour or after-hours customer service line to accept late payments, but you will most likely need the routing and account numbers of your bank account to make the payment immediately. If that's not an option, then make the payment through the credit card's website. A last resort is to use the mailing address for courier deliveries provided on your credit card statement, if available, and overnight a check to the card issuer.</p> <p>Once you make your payment, request your credit card company waive or credit back your late payment fee and keep your standard APR (don't forget about that second item!). If approved, most credits may take up to two business days to be reflected in your balance.</p> <h3>How to prevent it</h3> <p>Your best bet is to set up automatic, recurring payments by no later than the bill's monthly due date. You can do this through your online banking platform, but payments made that way can take longer and are not as flexible as payments made through the credit card website. When you set up autopay with the card issuer, you can choose whether you want to pay the balance in full every month, make the minimum payment, or pay some other amount.</p> <p>If your current due date is causing you problems, call your credit card company and request a new date that's a better match with the timing of your incoming cash flow. Just be aware that this change can take two to three business cycles to take effect. (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>Missing a utility payment</h2> <p>Forgetting to pay the electric, gas, or water bill can threaten your service and may even harm your credit score.</p> <h3>What you can expect</h3> <p>Utility companies don't typically report payments directly to the three credit bureaus (Equifax, Experian, and TransUnion). But there's a wrinkle: If the companies send unpaid bills to collection agencies, then those agencies will <em>definitely</em> report the debts to the credit bureaus. How badly a debt in collections will hurt your credit score depends on how high your credit score is when the collections agency reports it. If you have a higher credit score, you'll lose more points.</p> <p>Most utility companies won't turn off your service for one late payment within 30 days, but they may do so after several missed payments. Consult your service agreement for applicable late payment fines. Before a utility company can shut down your service, it must have attempted to reach you and provided a final termination notice several days (or even weeks, in some states) in advance.</p> <h3>How to fix it</h3> <p>Don't ignore the bill. Pay it in full right away, or at least ask if your service provider will agree to a payment plan. As long as you're making agreed minimum payments, you'll continue to have access to the service and prevent the company from turning your debt over to a collector. Utility companies are usually willing to work with you to arrive at a solution. Taking initiative will prevent further headaches (and fees!) and keep the utility company from demanding a security deposit from you to continue service.</p> <h3>How to prevent it</h3> <p>Set up a recurring, automatic payment either directly with your utility company or through your financial institution. It's best to pay with a bank account rather than a credit card because many utility companies charge a convenience fee for processing credit cards, if they allow it at all.</p> <p>When using your bank's bill payment service, check the processing time for payments. Some institutions mail out physical checks to your payees, so you may have to account for mailing times.</p> <p>Don't have access to either option? Then consider a third-party bill payment service, such as <a href="http://www.mint.com" target="_blank">Mint</a>, <a href="http://paytrust.quicken.com" target="_blank">PayTrust</a>, or <a href="http://www.billgo.com/" target="_blank">BillGO</a>.</p> <p>Last but not least, consider finding ways to limit your water and electricity use to give your budget some breathing room. (See also: <a href="http://www.wisebread.com/34-smart-ways-to-cut-your-electric-bill?ref=seealso" target="_blank">34 Smart Ways to Cut Your Electric Bill</a>)</p> <h2>Bouncing a check</h2> <p>You wrote a check thinking you could cover it because a deposit you'd been waiting on had finally cleared your bank account, but it didn't. Now, your bank has sent you a notice that your check bounced.</p> <h3>What you can expect</h3> <p>First, let's talk about the actual payment: Your payee may or may not receive the money. Some banks won't process the payment at all. Other banks may ding your payee with an annoying fee. If the recipient of the check is a friend or family member, you may just get an earful. If it's a company or service provider, then you may have to pay them a fee.</p> <p>On top of that, your bank will charge you a fee. Depending on your type of account, you can expect one of these fees to kick in:</p> <ul> <li> <p>Overdraft fee: When your checking account comes with overdraft privilege, the charge is covered and your bank charges you an overdraft fee (average $32.13 in Q4 2016).</p> </li> <li> <p>Insufficient funds fee: When your checking account lacks overdraft protection, your check won't clear and your bank charges you an insufficient (or nonsufficient) funds fee (average $31.86 in Q4 2016).</p> </li> </ul> <h3>How to fix it</h3> <p>As soon as you notice the problem, make a deposit into your account to cover the amount of the bounced check and the applicable fee. If you have money in another account with the same bank, the fastest way to do this is by logging on to your bank's website or app and doing a transfer. If you don't have another account with the same bank, then head to your bank to make a cash deposit (a check deposit will take longer to clear).</p> <p>After making the deposit, contact your financial institution to request a one-time waiver of the overdraft or insufficient funds fee. Most banks are willing to credit back one of these charges to clients in good standing. Keep in mind, however, that they're under no obligation to do so.</p> <h3>How to prevent it</h3> <ul> <li> <p>Know the processing time for different types of deposits coming into your bank account. For example, some mobile check deposits can take up to three business days before they clear and the funds are available in your account.</p> </li> <li> <p>Keep track of your checks. Some checks, such as tax payment checks, are usually cashed after several days or even weeks. Forgetting about these may give you the illusion that you have a higher account balance than the one you actually have.</p> </li> <li> <p>Set up an emergency fund in a separate account with the same bank. That way you'll be able to tap into that account to cover that bad check right away.</p> </li> <li> <p>Sign up for mobile banking. This enables you to check and make transactions without stepping foot in a brick-and-mortar branch.</p> </li> </ul> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/how-to-fix-your-finances-after-missing-a-payment">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/heres-why-you-shouldnt-freak-out-if-you-miss-a-payment-due-date">Here&#039;s Why You Shouldn&#039;t Freak Out If You Miss a Payment Due Date</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-late-payments-affect-your-credit">How Late Payments Affect Your Credit</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-credit-repair-mistakes-that-will-cost-you">8 Credit Repair Mistakes That Will Cost You</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-financial-mistakes-that-wont-hurt-your-credit-score">5 Financial Mistakes That Won&#039;t Hurt 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/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> </ul> </div> </div> </div> </div><br/></br> Personal Finance bills bounced checks collections credit report fees late payments missed payments past due penalties Tue, 30 May 2017 08:00:10 +0000 Damian Davila 1955480 at http://www.wisebread.com How to Make Sure You Don't Run Out of Money in Retirement http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-make-sure-you-dont-run-out-of-money-in-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/nest_made_of_american_currency_horizontal.jpg" alt="Nest Made of American Currency Horizontal" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>An annuity is a stream of fixed payments that's guaranteed, often for as long as you live. Having an annuity can make retirement more secure, but it's hard to recommend them as investment vehicles, because almost every annuity on the market is a terrible investment. They tend to be sold by salesmen, so they're often loaded with fees. And, because being upfront about the fees would make them hard to sell, these fees are obscure (often outright hidden) and are typically different for every product, making it especially hard to comparison shop. (See also: <a href="http://www.wisebread.com/dont-know-what-annuities-are-you-might-be-missing-out?ref=seealso" target="_blank">Should You Get an Annuity?</a>)</p> <p>But my experience these past few years &mdash; helping older relatives with their finances, and starting to take the little pension I earned as a software engineer &mdash; has given me a new perspective on annuities. Having an annuity is more than just nice: It's wonderful! It's just <em>buying</em> them that's usually terrible.</p> <p>Fortunately, there are a few that are worth buying. You don't hear about them often, because they don't siphon off a big chunk of your investment to pay a salesman, so salesmen don't push them.</p> <h2>Why annuities are great</h2> <p>It used to be that anyone with a good job retired with an annuity in the form of a pension. This is how I've gotten my recent experience with just how great it is to have an annuity: All my older relatives are now receiving pensions.</p> <h3>You never outlive your income</h3> <p>The main thing that's great about an annuity is that having one means you're never going to be broke. Even if you overspend and run down your savings, even if the stock market crashes or you make terrible investment decisions and your investment portfolio takes huge losses, you'll still get that monthly check for as long as you live.</p> <p>You don't <em>need</em> to have an annuity to arrange that &mdash; you can live off capital in a way that makes it last the rest of your life &mdash; but an annuity makes it much easier.</p> <h3>They can raise your income</h3> <p>The other thing that's great about an annuity is that it can, at least potentially, be more money to live on. See, the only safe way to live off capital is to just spend the income from your investments. But that's not much money (especially these days).</p> <p>If you knew how long you were going to live, you could spend down your capital so that you'd die with just enough money to pay off your last month's bills. But since you don't know how long you're going to live, you have to make a conservative estimate, holding back enough capital so that you won't go broke even if you live to 100. (Of course even that might not be enough. What if you live to 114?)</p> <p>The company that provides your annuity has a much easier job. They don't need to know whether you'll live to 97 or kick the bucket at 67. They count on the fact that the average person will live an average life span. They can arrange the terms of the annuities so that the payouts don't exhaust the total pool until the last person dies. The fact that some people die the month after their pension starts means that there's enough money to pay for the people who go on to live for decades.</p> <p>Offset against that is the fact that the company that's providing your annuity needs to make a profit, and it also needs to hold back a reserve against the possibility that it'll get unlucky and a bunch of their customers will live longer than average &mdash; but both of those factors are relatively small.</p> <h2>Annuitize, but how much?</h2> <p>If you accept the idea that you probably ought to have an annuity of some size, the next question is: How big should the annuity be?</p> <p>At one extreme, you could just annuitize all your money &mdash; take all your savings and investments (except your checking account and your emergency fund) and buy an annuity. Then you'd know what your income would be for the rest of your life and you could budget for it.</p> <p>I recommend against that. There are many reasons why it's <a href="http://www.wisebread.com/on-the-importance-of-having-capital" target="_blank">worth having some capital</a>. Your capital earns an investment return and it also provides a measure of safety as a backup to your emergency fund. It makes it possible to fund expenses beyond your bare-bones budget. Perhaps most important, having some capital saves you money in all kinds of different ways &mdash; because you have funds on hand, you can take advantage of deals, you can avoid high-interest borrowing, and you have money to put down a large security deposit in cases where that will save you money.</p> <p>At the other extreme, you could annuitize none of your money and just live off your capital. I've just explained the downsides to that.</p> <p>You want to be somewhere in the middle. With a modest annuity, you're protected from running your income down to zero, and yet you can preserve some amount of capital.</p> <p>My advice is this: You should annuitize <em>enough to cover your rock-bottom expenses</em>, the lowest amount you could live on indefinitely. That way, you're putting yourself in a position where you can be sure you can get by no matter what happens to your investments, while preserving enough of an investment portfolio to fund your other life goals &mdash; travel, making a major purchase, leaving an estate to your heirs, etc.</p> <p>Before you start shopping for annuities, be sure to take into account any annuities you already have. But unless you're old, and even then only if you had a pretty good job at a pretty big company for many years, you probably aren't going to have a great pension. (If you're only kind of old, and worked at a pretty big company for a few years before they all phased out their traditional pensions in the early 2000s, maybe there's a small pension waiting for you. If so, that's great. Even if it's not enough to live on, it's a very positive contribution to your retirement income.)</p> <p>However, most people reading this probably won't get a good pension.</p> <p>Fortunately, there is an annuity you very likely do have.</p> <h2>The annuity you already have</h2> <p>You almost certainly already have an annuity in the form of a national pension scheme, such as Social Security. The amount of Social Security you will get depends on your own employment history. For most people, it will provide a large fraction of the &quot;rock-bottom expenses&quot; I recommend you cover with an annuity, but you can generally expect there to be some gap.</p> <p>If you have an employer-sponsored pension, even a small one, it may well cover the gap. If you don't, I recommend that you cover it with an annuity that you buy.</p> <h2>How to buy an annuity</h2> <p>As I said at the beginning, most of the annuities you can buy are terrible investments, but there are good ones. It is possible to buy an individual annuity and get an OK deal. It's just hard because the companies that sell them make it virtually impossible to compare one annuity to another.</p> <p>This is especially true for the sorts of annuities that are most like a pension: The ones set up so you make a payment every month starting in your 30s or 40s, then get a check every month starting when you're 65.</p> <p>Those are called deferred annuities (because you defer getting your money until age 65), and they're always terrible. They always have what are called &quot;back-end&quot; fees &mdash; money that the salesman gets to keep when you figure out that you've made a terrible deal and want to get (some of) your money back. The rules on back-end fees are always different.</p> <p>To make it even harder, these sorts of annuities are usually bundled with some sort of life insurance (supposedly so that if you die before you retire your estate won't &quot;lose&quot; all the money paid into the annuity) &mdash; and of course the details of those insurance policies are always different as well.</p> <h3>Comparison shopping</h3> <p>It is possible to buy an annuity in a way that does allow you to compare them. Don't buy one with monthly payments. Instead, save and invest the money in the stock market yourself during your working years. Then, when you're ready to retire, buy what's called a &quot;single premium immediate annuity&quot; &mdash; you put up a big chunk of money today, and then start receiving monthly payments immediately that last for the rest of your life. (The monthly payments, of course, should equal the gap you identified between your Social Security and your rock-bottom budget.)</p> <p>That is something that's easy to compare: How much do you have to pay today for a stream of income that starts next month and lasts the rest of your life? You can get a few quotes and pick the best deal.</p> <p>These sorts of annuities usually don't have the life insurance policy that supposedly protects against your dying before you start taking payments, because the payments start immediately. That's good. Bundling in life insurance just makes it harder to compare prices. If you need life insurance, buy a life insurance policy separately.</p> <p>Be very careful of letting them include any sort of survivor benefit, because that can also make the annuities harder to compare (although as long as the rules are exactly the same, it is at least possible). One alternative, if you need a survivor benefit, is to buy a life insurance policy that will pay off enough for your spouse to buy his or her own annuity.</p> <p>As an aside, let me mention that the annuity salesmen among you are going to jump in and point out that you're giving up an important tax advantage if you only consider an immediate annuity. This is technically true, but in fact is pretty unimportant. Let me just say this: If you are maxing out your 401(k), <em>and</em> your IRA, <em>and</em> your Roth IRA, there is an opportunity to tax shelter a bit more money through an annuity contract. In practice, I'm willing to bet that the tax advantage will never equal the fees you're going to end up paying.</p> <p>If you do save your money in a 401(k) or IRA, there are tax rules for using that money to buy your annuity. Follow the rules and you won't owe any taxes when the money is used to buy the annuity. You will, however, pay taxes on the annuity payments when you receive them (just like you would if you'd taken distributions from the tax-deferred plan directly).</p> <h3>Where to buy</h3> <p>Pretty much any life insurance company will sell you an annuity, but I only know of two places to get a good one: Vanguard and TIAA-CREF. (There used to be a third, but Berkshire Hathaway got out of the business a few years ago.)</p> <p>The main problem with buying directly from an insurance company is just that their annuity sales operations are organized around their annuity salesmen, who will immediately start trying to sell you something that's more profitable (to them) than a single premium immediate annuity &mdash; that's the step you avoid by going through Vanguard or TIAA-CREF. (They also have enough buying power to get especially good rates, because they bring in large numbers of customers.)</p> <p>If you're sure you can bear up under the sales pressure, there's no reason not to get quotes directly from the insurance companies. (Just because I don't know of any other good places to buy one doesn't mean there aren't any.) Insurance companies that sell annuities will be very easy to find &mdash; just do an internet search for information about annuities and you'll get a dozen ads for them and for online tools to compare their offerings.</p> <p>You're handing over a large fraction of your wealth and counting on the insurance company to be around for the rest of your life, so you want to have considerable confidence in the financial soundness of the company you pick. I would not consider any company rated less than A by the insurance grading firm A.M. Best, and I'd be happier with one rated A+.</p> <h3>Buy when rates are high</h3> <p>To buy an annuity, you have to put up a pretty sizable chunk of cash. (Vanguard quotes the cost today to a 65-year-old male buying a single premium immediate annuity of $1,000 a month for the rest of his life as being $180,052.)</p> <p>Unless you're rich, the cost of an annuity that covers your rock-bottom expenses is going to be a large fraction of your entire retirement savings &mdash; which is OK, because it's going to be a large chunk of your entire retirement income.</p> <p>The insurance company that sells you your annuity is going to invest that sizable chunk of cash in a portfolio of stocks and (mostly) bonds, and then use the dividends from those stocks and (mostly) the interest payments from those bonds to pay your annuity. Because of this, an annuity is much cheaper when interest rates are high.</p> <p>If you bought an annuity right before the financial crisis, you made out very well. If you wanted to buy one in the past eight or nine years, you probably found that they were incredibly expensive. But in the current era of rising interest rates, annuities are becoming more affordable again.</p> <p>Still, if you're approaching retirement age, understand that there is no rush. Figure out your rock-bottom expenses &mdash; and then live with that budget as an experiment. Maybe you'll find that you'll need more than that in retirement. Maybe you'll actually need less. Do some comparison shopping. Take your time. Then, when you've got a pretty good handle on the expense of your retirement lifestyle, at a time when interest rates are up a bit and you're ready to quit working, go ahead and buy that annuity.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">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-11"> <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-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-stocks-and-bonds-that-will-profit-from-the-fed-rate-hike">10 Stocks and Bonds That Will Profit From the Fed Rate Hike</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-safe-investments-that-arent-bonds">9 Safe Investments That Aren&#039;t Bonds</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/what-you-need-to-know-about-the-easiest-way-to-save-for-retirement">What You Need to Know About the Easiest Way to Save for 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/8-questions-financial-advisers-hear-most-often">8 Questions Financial Advisers Hear Most Often</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement annuities benefits bonds fees interest rates investment vehicles life insurance pensions stocks Fri, 26 May 2017 08:30:09 +0000 Philip Brewer 1953940 at http://www.wisebread.com 5 Steps to Picking the Best Airline Credit Card for the Most Rewards Value http://www.wisebread.com/5-steps-to-picking-the-best-airline-credit-card-for-the-most-rewards-value <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-steps-to-picking-the-best-airline-credit-card-for-the-most-rewards-value" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-534200480.jpg" alt="Woman picking the best airline credit card for rewards" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're ready for a change of scenery but have limited travel funds, an airline credit card might be a dream come true. With an airline card, you'll earn valuable frequent flyer miles you can use to book free airfare and seat upgrades. Some of the <a href="http://www.wisebread.com/5-best-co-branded-airline-credit-cards?ref=internal" target="_blank">best co-branded airline credit cards</a> even offer additional perks that make travel cheaper, such as free checked bags, companion ticket deals, and discounted award bookings.</p> <p>But with so many airline credit cards out there, choosing one can seem overwhelming. Before you can truly benefit from an airline credit card, you need to learn about these cards and weed out the options that won't work for you.</p> <p>To get a handle on your choices, you should consider several factors including your airline preferences, your travel style, and your spending habits. Follow these steps, and you'll have the ideal airline credit card in no time.</p> <h2>Step 1: Figure out which airlines you can fly</h2> <p>First things first. To pick the right airline credit card, you need to know which frequent flyer miles you can actually use.</p> <p>To find out which airlines you should consider &mdash; and which you should mark off your list &mdash; check your local airport's website. You might discover that nearly every major airline flies into your area, or that only a few do. Finding out which airlines fly out of your home airport is the best way to narrow down your options fast.</p> <h2>Step 2: Ask yourself where you want to go</h2> <p>Now that you know which airlines are at your disposal, you can ask yourself where you want to go. Maybe you have family that you fly to visit frequently, or you have a list of dream vacations that you want to tackle. Knowing where you want to fly in the near- to medium-term is key to narrowing down which airline's frequent flyer program you'd like to concentrate on.</p> <p>Larger and more established carriers such as American Airlines and United Airlines fly almost everywhere. Smaller regional carriers often offer limited travel schedules, but they may be the best option for your home airport or for the airports you'd like to fly into.</p> <p>Searching airline websites for flight availability is the best way to figure out which local airlines offer fares to destinations you desire.</p> <p>Don't forget about airline partners. Some airlines are owned by the same parent company, which allows you to use points from one airline program to get award seats on another. In addition, most airlines are part of a larger network, which will also allow you to use points from one airline program for another. (See also: <a href="http://www.wisebread.com/how-airline-partnerships-can-supercharge-your-travel-rewards?ref=seealso" target="_blank">How Airline Partnerships Work and How to Use Them to Get More from Your Rewards Points</a>)</p> <h2>Step 3: Compare credit card rewards earning programs</h2> <p>Once you know which airlines operate nearby and whether or not they fly to your preferred destinations, you can begin comparing airline credit cards in terms of their earnings structures and any bonus points you can earn by signing up for the cards.</p> <p>Most airlines have several credit cards to choose from. They differ in the amount of rewards and perks each offers, and the more the card offers, the higher the annual fee. If you can take advantage of all those extra benefits, the annual fee will be well worth it. These cards let you earn miles faster, and give you a better travel experience. But if you aren't a frequent flyer and just want to be able to slowly earn points through your usual spending, you'll want to stick to their basic, no fee card.</p> <p>See also:</p> <ul> <li><a href="http://www.wisebread.com/5-best-sign-up-bonuses-for-airline-miles-credit-cards?ref=seealso" target="_blank">Credit Cards With the Best Sign Up Bonuses for Travel</a></li> <li><a href="http://www.wisebread.com/which-delta-skymiles-credit-card-has-the-best-value?ref=seealso" target="_blank">Which Delta Credit Card Should You Choose?</a></li> <li><a href="http://www.wisebread.com/which-american-airlines-us-airways-credit-card-should-you-get?ref=seealso" target="_blank">Which American Airlines Credit Card Should You Choose?</a></li> <li><a href="http://www.wisebread.com/which-united-mileageplus-credit-card-should-you-get?ref=seealso" target="_blank">Which United Airlines Credit Card Should You Choose?</a></li> </ul> <p>Compare each card's earning structure to your regular spending to see which card(s) might leave you better off.</p> <h2>Step 4: Take a closer look at annual fees and perks</h2> <p>Plenty of other perks are worth considering as you narrow down the list. For example, some cards offer free checked bags for cardholders and a certain number of guests on domestic flights. If you plan to fly within the U.S. often, this perk can save you $50 per round-trip ticket, or more, each time you fly. Some airlines don't charge for checked bags at all. Knowing some of this information ahead of time can help you determine which airline cards offer the best value. Other travel perks credit cards offer discounts on in-flight purchases, priority boarding, free upgrades, and <a href="http://www.wisebread.com/5-best-credit-cards-with-free-airport-lounge-access?ref=internal" target="_blank">airport lounge access</a>.</p> <h2>Step 5: Choose the airline card that makes the most sense</h2> <p>Tally up the rewards points you'd earn with each card, consider the additional benefits and perks (and the costs), and decide which card will give you the most value. Sometimes it makes sense to pay that higher annual fee, if it'll get you to your vacation sooner, and you'll enjoy the extra benefits. But sometimes you can get the card that gives you fewer rewards, at a lower cost, so that you can save that annual fee for something else. (See also: <a href="http://www.wisebread.com/5-steps-to-getting-a-free-or-close-to-free-vacation-in-9-months-or-less-with-credit-cards?ref=seealso" target="_blank">How to Get a Free Vacation in 9 Months With Credit Card Rewards</a>)</p> <h2>Alternative Option: Consider a flexible travel credit card</h2> <p>If you're still unsure which airline credit card might leave you better off, a flexible <a href="http://www.wisebread.com/top-5-travel-reward-credit-cards?ref=internal" target="_blank">travel rewards credit card</a> is worth considering. These credit cards give you more options for redeeming rewards for travel. Some allow you to book travel through any airline or travel site, and you can redeem points as statement credit to pay for it. Others let you transfer your points to a selection of airlines at a favorable ratio. (See also: <a href="http://www.wisebread.com/airline-credit-card-or-flexible-rewards-card-whats-the-best-way-to-earn-a-free-flight?ref=seealso" target="_blank">Airline Credit Card or Flexible Rewards Card: What's the Best Way to Earn a Free Flight?</a>)</p> <p>See our <a href="http://www.wisebread.com/choose-the-best-travel-rewards-credit-card-with-this-guide?ref=internal" target="_blank">guide to choosing the best travel rewards credit card</a> if you are unsure which is the best for you.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/holly-johnson">Holly Johnson</a> of <a href="http://www.wisebread.com/5-steps-to-picking-the-best-airline-credit-card-for-the-most-rewards-value">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-airline-rewards-programs-for-trips-to-europe">The Best Airline Rewards Programs for Trips to Europe</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-evaluate-a-travel-program-for-the-best-rewards-redemption">How to Evaluate a Travel Program for the Best Rewards Redemption</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/are-airline-or-travel-rewards-credit-cards-the-better-deal">Are Airline or Travel Rewards Credit Cards the Better Deal?</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/how-to-save-frequent-flyer-miles-that-are-about-to-expire">How to Save Frequent Flyer Miles That Are About to Expire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Travel air travel Airfare airlines best value co-branded fees miles perks rewards sign up bonuses Wed, 17 May 2017 08:30:07 +0000 Holly Johnson 1947499 at http://www.wisebread.com How a Credit Card Cash Advance Costs You More Than a Purchase http://www.wisebread.com/how-a-credit-card-cash-advance-costs-you-more-than-a-purchase <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-a-credit-card-cash-advance-costs-you-more-than-a-purchase" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-625782024.jpg" alt="Learning how a credit card cash advance costs more" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Credit cards are all about convenience. With one swipe, anything we want or need is right at our fingertips; and that includes cash. That convenience comes at a steep price, however &mdash; quite literally.</p> <p>Credit cards call it a &quot;cash advance&quot; when you use them to take cash out at an ATM, or use one of their convenience checks to pay for purchases (for example, when the vendor doesn't take credit cards, but will take a check).</p> <p>Here is what you need to know before even considering a cash advance, and some alternative solutions for when you need funds fast.</p> <h2>What is a credit card cash advance?</h2> <p>Taking a cash advance is done much the same way as making a withdrawal with your debit card. Instead of taking your own money out of your bank account, however, you borrow directly from your credit card. You may also receive checks in the mail from your card issuer that allow you to make credit card purchases via check payments. Again, this is not your money &mdash; the checks will pull funds from your credit card account.</p> <h2>What happens when you take a cash advance</h2> <p>Most credit card issuers impose entirely different terms on cash advance transactions. First, you will be charged a transaction fee, which will either be a flat rate or a percentage of the cash advance you're withdrawing (typically between 2 percent and 5 percent). Additional ATM fees and foreign transaction fees if you're out of the country may apply as well.</p> <p>In addition to fees, you'll likely be hit with a much higher interest rate. In some cases, the APR can be double the percentage for regular purchases. This catches many people off guard, since they're unaware different terms apply for cash advances. The longer it takes you to pay off this amount, the more that hefty interest will pile up.</p> <p>There is no grace period for cash advances, either. Typically, you have a month or so to pay off a credit card purchase in full before accruing any interest charges. This doesn't happen with a cash advance &mdash; you pay interest starting the day you make the transaction.</p> <p>Credit card companies also typically impose a separate limit on the amount of money you can take in a cash advance. This will often be much lower than your actual credit card limit.</p> <h2>How much will this actually cost you?</h2> <p>Let's say you are going out for dinner with friends, and you need to get a quick $40 from an ATM using your credit card. First, you will be hit with the cash advance fee. Next, you will start incurring interest on that withdrawal immediately (possibly around 30%). Furthermore, the operator of the ATM may also impose its own fees, which can be anywhere between $3&ndash;$5 per transaction. You could be looking at anywhere from $10&ndash;$15 in fees for taking out $40 (and that's assuming you pay it off by the next billing cycle). As you can see, that $40 dinner could wind up costing you $15 extra. Now imagine if you were borrowing $1,000 or more!</p> <h2>Alternatives to credit card cash advances</h2> <p>Simply put, you should always use a debit card to access cash instead of a credit card. Most major banks offer debit cards that can be used at in-network ATMs for no additional fees. In addition, many banks and credit unions are part of a larger ATM network that allows transactions for no additional fees.</p> <p>If the issue is that you're simply short on money, or stuck living paycheck-to-paycheck, a cash advance is not the solution. Instead, consider ways you can bring in extra income. Perhaps you can take up a part-time or side gig, sell a few items on eBay, or throw a big garage sale. (See also: <a href="http://www.wisebread.com/how-to-come-up-with-1000-in-the-next-30-days?ref=seealso" target="_blank">How to Come Up With $1,000 in the Next 30 Days</a>)</p> <h2>When is it Ok to take a cash advance?</h2> <p>A cash advance isn't the best option, but if it's your <em>only</em> option in an emergency, take it. Be sure to understand that there will be fees involved and that you need to repay the money you borrowed as soon as possible.</p> <p>Cash advances should never be used for everyday expenses, &quot;fun&quot; money (shopping or gambling, for example), or even to make ends meet until your next paycheck. It can be all too easy to fall into a cycle of cash advances, which will ultimately lead to credit card debt. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso" target="_blank">Fastest Way to Pay Off $10K in Credit Card Debt</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/jason-steele">Jason Steele</a> of <a href="http://www.wisebread.com/how-a-credit-card-cash-advance-costs-you-more-than-a-purchase">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/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/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/i-dont-love-capital-one-how-to-get-a-lower-apr-or-possibly-not">How to Get a Lower APR, or Possibly Not</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/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-5 views-row-odd views-row-last"> <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> </ul> </div> </div> </div> </div><br/></br> Credit Cards APR borrowing money cash advance debt emergencies fees interest rates limits transactions Fri, 14 Apr 2017 08:30:14 +0000 Jason Steele 1925859 at http://www.wisebread.com What to Do When Your Tax Preparer Makes a Mistake http://www.wisebread.com/what-to-do-when-your-tax-preparer-makes-a-mistake <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-do-when-your-tax-preparer-makes-a-mistake" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-501391448.jpg" alt="Man learning what to do when a tax preparer makes a mistake" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You might think that hiring a tax preparer to file your income taxes will guarantee a mistake-free return. Unfortunately, you'd be wrong.</p> <p>In 2015, the National Consumer Law Center used mystery shoppers to test the work of 29 tax preparers. The results were surprising: Only two of the returns compiled by these preparers came in error-free. That's bad news for a lot of people. USA Today reported in February that almost <a href="https://www.usatoday.com/story/money/personalfinance/2017/02/06/should-you-do-your-taxes-yourself-hire-tax-preparer/97198816/" target="_blank">79 million e-filed tax returns</a> were completed last year by professional tax preparers.</p> <p>And here's even more bad news: The IRS says that if your tax preparer makes a mistake resulting in you having to pay additional taxes, interest, or penalties, <em>you</em> are responsible for paying these fees &mdash; not your tax preparer.</p> <p>If your tax preparer does make a mistake on your return, what can you do? Here are five suggestions.</p> <h2>1. Contact your preparer</h2> <p>If the IRS sends you a letter claiming that there are mistakes on your taxes, call your tax preparer for an explanation. Tax preparers who do make mistakes might offer to pay any fees, penalties, or interest charges for you. This might not restore your confidence in their abilities, but it will help save your budget.</p> <h2>2. Pay the penalties</h2> <p>If the IRS is charging you a penalty for a tax mistake, even if that mistake was made by your preparer, pay it. You might be battling it out with your tax preparer in the hope of getting this professional to pay the penalty on your behalf, but the IRS doesn't care. If it doesn't receive its payment, you are the one who will face additional financial penalties.</p> <p>If your tax preparer refuses to pay for its mistake, send a check to the IRS. Then continue your fight against the preparer.</p> <h2>3. Know your rights</h2> <p>Check any contract you signed with your tax preparer. There might be language in the contract stating what your tax preparer will do in the event of a mistake. Some tax preparers will pay the interest and penalties that result from a mistake, but not any extra taxes you might owe.</p> <p>Some tax preparation firms, especially the big ones, might offer insurance that you can purchase for an extra fee. If you've bought this insurance, your tax preparer might be obligated to pay any interest, fees, or extra taxes you owe because of their mistakes.</p> <p>Be aware that tax preparers won't pay any penalties on your behalf, even if you've purchased extra insurance, if the mistakes they've made are because you provided them with inaccurate information.</p> <h2>4. Check the statute of limitations</h2> <p>If your tax preparer made a mistake that caused you to overpay on your taxes, you have three years to request a refund from the IRS. You must provide documentation to back up your claim that you overpaid.</p> <p>This statute of limitations works in reverse, too. If you underpaid your taxes because of a preparer mistake, the IRS has three years in which they can come after you for the money you owe. If your tax preparer made a substantial error, however (such as omitting 25 percent or more of your gross income), the IRS can go back up to six years. It's recommended to keep your records for at least this long. Be aware there is no statute of limitations for those who knowingly file fraudulent returns, evade taxes, or fail to file altogether.</p> <h2>5. File a complaint</h2> <p>If you discover that your preparer made an intentional mistake, perhaps to boost your return, make an official complaint with the Office of Responsibility at the IRS. If your preparer is a member of the American Institute of Certified Public Accountants, National Association of Enrolled Agents, or a state law association, you can also file a complaint with these organizations. Such complaints could cause tax preparers to face fines or lose their licenses.</p> <h2>Reduce the odds of a mistake by hiring the right professional</h2> <p>Sometimes you can prevent a future mistake by hiring the right tax professional upfront. The truth is, anyone can work as a tax preparer. Preparers must apply for a Preparer Tax Identification Number from the IRS. But getting this number is easy: It costs $50, and the IRS says that applying takes just 15 minutes.</p> <p>If you're searching for a tax professional, it's best to work with either a certified public accountant with experience completing tax returns, or what is known as an Enrolled Agent. To become an Enrolled Agent, tax preparers must first pass a three-part test given by the IRS that covers the ins and outs of individual and business tax returns. Some certified public accountants will also be Enrolled Agents.</p> <p>Ask any tax preparer for the phone numbers of past clients. Then call these clients to ask about the work the tax preparer turned in. The IRS also recommends that consumers only work with tax preparers who charge a flat fee. Preparers who charge a percentage of your tax refund might be tempted to fudge the numbers to boost your return.</p> <p>Finally, make sure that you provide all the proper documents and numbers. The tax preparer may or may not double check your numbers. Maybe you forgot about the antique you sold on eBay. Maybe you transposed a number when adding up your home office deductions. You can't depend on the tax preparer to notice that something is off or verify your numbers. The best professionals will ask you a lot of questions to ensure you've provided all the information. But others may just take your documents and enter the numbers.</p> <p>The bottom line is if the IRS audits you and discovers that the preparer made mistakes &mdash; intentional or accidental &mdash; you'll have to pay any penalties and fees.</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/what-to-do-when-your-tax-preparer-makes-a-mistake">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-7"> <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/heres-what-happens-if-you-dont-pay-your-taxes">Here&#039;s What Happens If You Don&#039;t Pay Your Taxes</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-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-reasons-you-should-really-fear-an-irs-audit">10 Reasons You Should Really Fear an IRS Audit</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-lessons-from-tax-day-to-remember-for-next-year">7 Lessons From Tax Day to Remember for Next Year</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-tax-return-mistakes-even-smart-people-make">8 Tax Return Mistakes Even Smart People Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes accountants complaints cpa enrollment agents errors fees IRS Mistakes penalties statute of limitations tax filing tax returns Thu, 13 Apr 2017 08:00:10 +0000 Dan Rafter 1925856 at http://www.wisebread.com Why Warren Buffett Says You Should Invest in Index Funds http://www.wisebread.com/why-warren-buffett-says-you-should-invest-in-index-funds <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-warren-buffett-says-you-should-invest-in-index-funds" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-465649794.jpg" alt="Learning why Warren Buffett says you should invest in index funds" title="" class="imagecache imagecache-250w" width="250" height="142" /></a> </div> </div> </div> <p>About nine years ago, Warren Buffett <a href="http://www.usatoday.com/story/money/personalfinance/columnist/2017/03/08/buffetts-best-investment-tip-everyone-index-funds/98525306/" target="_blank">made a $500,000 bet</a>. He wagered that a simple index fund would outperform an actively managed hedge fund run by expert investors. Which would you pick?</p> <p>Before you decide, here is some additional information about the fund contenders:</p> <ul> <li>Index funds buy a mix of stocks in a proportion that represents the overall stock market or a particular market segment. Index funds are typically managed automatically by a computer algorithm, and management fees for this type of fund are usually very small &mdash; around 0.1 percent or sometimes even lower.<br /> &nbsp;</li> <li>Hedge funds put money into alternative investments that can go up if the stock market goes down. Of course, hedge funds also try to provide maximum returns and beat the stock market if possible. Hedge funds may invest in real estate, commodities, business ventures, and other opportunities that fund managers think will hedge against potential stock market losses and produce good returns. These funds are actively managed and have high management fees of around 2 percent or more.</li> </ul> <p>Buffett picked a simple S&amp;P 500 index fund for the wager. He bet against an investment manager who picked a set of five hedge fund portfolios. After letting these investments play out for nine years, Buffett announced the results of this wager in the chairman's letter in this year's annual report for the holding company he controls and runs, Berkshire Hathaway: The index fund outperformed the actively managed funds. (See also: <a href="http://www.wisebread.com/the-5-best-pieces-of-financial-wisdom-from-warren-buffett?ref=seealso" target="_blank">The 5 Best Pieces of Financial Wisdom From Warren Buffett</a>)</p> <p>Buffet's experience mimics numerous studies that have shown that index funds consistently beat the results of actively managed funds. Why does a simple and essentially automatic investment strategy (the index fund) outperform sophisticated investment funds managed by active expert investors?</p> <h2>Low fees</h2> <p>Fund fees, also known as expense ratios, are much lower for index funds than for actively managed hedge funds or mutual funds. You can find index funds with fees under 0.1 percent, while actively managed hedge funds can have fees of 2 percent or more.</p> <p>Although the wager Buffett made concerned hedge funds with high expense ratios, the same principle applies when comparing index funds to actively managed mutual funds, which can have fees as high as 1 percent. Higher fees mean that actively managed funds have to outperform the market significantly to offset them. Over the long run, actively managed funds may not consistently outperform the market by enough to make up for the higher fees.</p> <h2>Investment errors</h2> <p>Another reason actively managed funds can fall behind index funds is investment errors. In active funds, someone is making investment decisions and moving money around trying to get higher returns. Sometimes an investment manager can outperform the market and get higher returns, but this doesn't always work out. It only takes one mistake to wipe out a lot of investment gains. In an index fund, the only investment decision is to adjust the ratio of holdings to match the market segment of interest.</p> <p>Index funds accurately reflect the performance of the market they are mirroring. The investment strategy is simple, and there is no opportunity for investment error. If you invest in an index fund, you will reliably receive similar returns to the market that your index fund represents.</p> <h2>How to buy an index fund for your portfolio</h2> <p>During my research for this article, I moved around $10,000 of my own investment funds from actively managed funds into index funds with much lower fees. I figured if index funds are good enough for Warren Buffett, they are good enough for me!</p> <p>You can log in to your investment account website and view the expense ratios for your current investments and for other available funds. I found that my investment choices had expense ratios ranging from 0.02 percent to 0.83 percent &mdash; a difference of more than 40-fold. This is definitely a big enough difference to worry about.</p> <p>A good first step is to check your own investment funds and find out how high the fees are. You may be happy with what you find, or you may decide you want to move to index funds with much lower fees.</p> <p>Of course, when choosing your investment funds, you shouldn't look only at the expense ratio. You should balance your portfolio to include a strategic mix of large cap, medium cap, and small cap investments and an intentional balance of foreign and domestic stocks to meet your investment goals.</p> <p>When I moved my investment money into index funds with very low fees, I picked funds that made sense to balance my portfolio. For example, I moved some funds from a mid-cap growth fund with a 0.3 percent expense ratio into a mid-cap index fund with a 0.07 percent expense ratio &mdash; over four times lower fees. In the long run, I think this is a bet that will pay off.</p> <p>Even if you don't have $500,000 to wager, you might as well minimize what you are paying in fees by moving from actively managed funds to index funds. You'll keep more of your money working for you instead of having it go to work for someone else.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/why-warren-buffett-says-you-should-invest-in-index-funds">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-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</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/11-investing-tips-you-wish-you-could-tell-your-younger-self">11 Investing Tips You Wish You Could Tell Your Younger Self</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-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</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/what-are-income-stocks">What Are Income Stocks?</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/7-traps-to-avoid-with-your-401k">7 Traps to Avoid With Your 401(k)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment actively managed funds expense ratios fees hedge funds index funds mutual funds portfolio returns stock markets Warren Buffett Mon, 10 Apr 2017 09:00:08 +0000 Dr Penny Pincher 1922477 at http://www.wisebread.com