credit cards

Banks Still Offering Free Checking and Savings with Great Interest Rates

Ashley Jacobs — Wed, 10 Mar 2021 02:00:33 +0000

Are you shopping for a new bank thanks to the new bank fee increases?

Here are four banks that are still offering awesome perks, like free interest-bearing checking accounts and high-yield savings accounts.

Capital One 360

Capital One 360 offers a variety of products including checking, savings, loans, investing, retirement, and business services to their customers.

Simple

With Simple banking, there are no fees whatsoever. A variety of budgeting and saving tools are built into your account, including advanced record keeping, separate savings pools for your goals, and the Safe-To-Spend feature, which subtracts upcoming bill payments and pending transactions to give you an accurate idea of how much money you actually have on hand. You get a Visa debit card for making transactions anywhere Visa is accepted and at more than 50,000 fee-free ATMs. While the APY is only 0.01%, Simple is still a solid choice thanks the built-in tools and the lack of fees.

Discover Bank

Discover's Cashback Checking is definitely worth checking out. You can earn 1% cashback on up to $3,000 in debit card purchases.

Discover's savings account is also quite attractive. At .40%, the APY is over the National Savings Average. There are no monthly maintenance fees or balance requirements.

Ally Bank

Ally Bank was named one of the Best Banks of 2011 by Money Magazine, and offers checking, savings, retirement, and auto financing services.

Checking account: APY is 0.10% on accounts with under $15,000 and 0.25% on accounts with over $15,000. No fees and minimums.
Savings account: APY is 0.50% with no fees and minimums.

All the banks on this list are FDIC insured.

This article is from Ashley Jacobs of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Capital One 360: A Competitive Banking Option

Miranda Marquit — Tue, 09 Mar 2021 08:35:15 +0000

It's been a few years since Capital One bought ING DIRECT, the popular bank that conducted most of its operations online. (See also: 7 Banks Still Offering Free Interest-Bearing Checking Accounts)

For most people looking to centralize their banking and find competitive rates, Capital One 360 is a viable option. Capital One 360 makes it easy to access all of your accounts, including your investment accounts, from your account summary.

Features and Benefits of Capital One 360

Capital One 360 offers a variety of banking products and services.

360 Savings

This is the classic account that started it all. There are no fees, no minimum deposit requirements, and no catches. Right now, the yield is .40% APY, which is reasonably competitive, especially when you consider that there are no minimums and no fees. It’s easy to link your account to other banks and set up automatic transfers to make saving easy.

Kids Savings Account

My son’s savings account at Capital One 360 kicks the crap out of the 0.20% he was getting at the local credit union. It’s easy to monitor the account from your own dashboard and to teach your child the value of saving early on.

360 Checking

You can open a checking account with Capital One 360 and earn a yield on the balance. Current yield is .10%. Account holders can use over 70,000 Capital One or Allpoint ATMs at no cost.

This account has no fees and no minimums, and you can use P2P Payments to send money to family and friends for free.
Bill pay is free, even when you have paper checks sent.
You can use CheckMate to deposit checks remotely, and the account comes with overdraft protection.
If you overdraw your account, you won’t end up paying a fee. Instead, you are just charged an interest fee on the overdraft until it’s paid off.

MONEY (Teen Checking)

MONEY is an account created specifically for the teen user. Teach your teen to manage her money with this no fee and no minimum account that earns interest.

CDs

The yields on the CDs from Capital One 360 are not as competitive as they could be, ranging from 0.20% to .40%. You can choose your term, and you can also choose when you want to receive your interest payments.

Business Account

Capital One 360 also offers business banking products. You can open a business savings account, or a business CD. The current yield on the business savings account is lower than what you get with personal savings, though.

You can also set up a retirement plan for your small business through Capital One. It’s fairly easy to set up, and you can offer this benefit to your employees.

Bottom Line

Overall, Capital One 360 is a viable competitor. The products offered remain fairly competitive. Additionally, the low-fee, low-hassle structure of the bank makes it easy to open accounts, and avoid watching your wealth erode due to hidden fees and complicated requirements.

This article is from Miranda Marquit of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Best Online Checking Accounts

Miranda Marquit — Sun, 07 Mar 2021 11:24:30 +0000

The Internet provides us almost limitless choices, especially when it comes to finances. These days, you can choose to keep your money at almost any bank in the nation rather than limit yourself to the brick-and-mortar choices in your local area.

If you aren't happy with your local offerings, turn to the Internet. There are plenty of online checking accounts with no fees, and some that even pay yields on your account balance. With low overheads, online checking account providers can afford to be more generous in their terms, and that benefits consumers.

How to Choose an Online Checking Account

The first thing you should look for is FDIC or NCUA protection — you want to make sure that your money is safe. You should also check into the reputation of the bank or credit union, since you don't want to end up with a fly-by-night operation.

Consider your individual needs. Think about whether or not you can handle maintaining a large account balance. Will you use the checking account as your primary account, or is it more of an emergency fund? Paper checks, remote deposit of checks you receive, ATM access, and other perks are also things to consider.

You can also compare yields, but it's important to recognize that yield isn't everything. If you have to maintain a high balance to get a high yield, it might not be worth the trouble — especially if you can get a great account with a little lower yield, but fewer restrictions.

Here are a few great options for online checking accounts.

Capital One 360

Capital One 360 offers an interest bearing checking account with a 0.10% APY along with no fees and no minimums. Get access to 70,000 fee-free Allpoint and Capital One ATMs. You'll also get a MasterCard debit card for purchases.

Simple

Simple is an online bank with all the features you'd expect from a traditional bank without any of the fees. You get a Visa debit card for making transactions anywhere Visa is accepted and at more than 50,000 fee-free ATMs. A variety of budgeting and saving tools are built into your account, including advanced record keeping, separate savings pools for your goals, and the Safe-To-Spend feature, which subtracts upcoming bill payments and pending transactions to give you an accurate idea of how much money you actually have on hand.

Discover Cashback Checking

Discover's Cashback Checking offers up to 1% cash back on up to $3,000 in debit purchases each month. There are no monthly fees or monthly balance requirements, and you have access to over 60,000 free ATMs.

Ally Interest Checking Account

Ally offers a checking account yield that is very competitive (currently up to 0.25%). You receive unlimited checks for check writing if you want, and there is free online bill pay. You don't have to pay any monthly fees, and you can open an account without a deposit.

Ally also reimburses you for ATM fees, offers great customer service, as well as eCheck Deposit to remotely add funds to your account.

This article is from Miranda Marquit of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Tools That Can Help You Boost Your Credit Score This Year

Holly Johnson — Mon, 25 Jun 2018 08:30:20 +0000

Building credit takes time and vigilance, and that's especially true if you need to repair credit problems from the past. If you have a history of late payments, debts in collections, or a bankruptcy, for example, you can't expect your credit score to fix itself.

Once the dust has settled and you're ready to get on the right track, you need to take the appropriate steps to rebuild trust and boost your FICO score month by month. Some of the best steps to take whether you're building credit from scratch or trying to fix poor credit include getting a secured credit card, making sure you pay all your bills on time, paying down your debts, and keeping your credit utilization ratio low.

Fortunately, there are some apps and online tools that can make improving your credit score easier. Some of these tools are free and easy to use, while others require a bigger commitment. If you know your credit score needs help but you need help to move it along, consider these apps and strategies.

1. Self Lender

If you need to build credit from scratch but can't yet qualify for a credit card or loan on your own, you may want to consider a "credit builder loan." To understand how these work, you need to forget about the usual notions of why you borrow money. In this case, you're only taking out a loan in order to build credit.

With a credit builder loan from Self Lender, the amount you borrow is held in an interest-bearing CD and you don't see it until the end of the loan term, which is 12—24 months. You make regular monthly payments, which are reported to the three credit reporting agencies — Experian, Equifax, and TransUnion. Once the term is complete, you'll get the funds back you paid in. In that sense, a credit builder loan is like a forced savings account.

In addition to a small administrative fee, you'll also pay interest on your loan. As an example, if you take out $1000, you'll pay $89 per month for 12 months. After 12 months you get $1000 back. That ends up being an additional $68 in interest that was paid out over the course of 12 months, plus a $12 administrative fee. That's a total cost of $80.

2. Credit Karma

If you want to improve your credit score, you need to find out what it is — and be able to track it regularly. One of the best ways to do this is by signing up for a program that offers a free estimate of your credit score every month.

Credit Karma is a service that does just that. Once you sign up for a free account, you can check your credit score whenever you want, see all your debts in one place, and monitor hard inquiries on your credit reports. You can also get information on reasons your credit score has gone up or down, and steps you can take to fix problems or avoid having your credit score drop in the future. (See also: The 5 Things With the Biggest Impact on Your Credit Score)

Finally, you can sign up for alerts that will let you know any time a new account is opened in your name. This can be helpful for avoiding identity theft.

3. Mint

Mint is a service that offers to help you manage your money so you can "get more out of your life." The website does this by offering a free credit score along with budgeting and bill-paying tools.

Once you sign up for a free account with Mint, you can see all your finances in one place, including your debts, your spending transactions, and your bills. You can also monitor your investments and use the app's tools to set budgets and find creative ways to spend less.

While many of these features are aimed at helping you control your finances and boost your net worth, having a place to monitor your debts and keep track of bills should inevitably help you improve your credit score over time.

4. Debt Snowball Calculator

If you're deep in debt and ready to dig your way out, one popular method to consider is the debt snowball method. This debt repayment scheme recommends you to first throw as much money as you can toward your smallest debt while making minimum payments on your other debts. Once you pay off the smallest debt, you move on to the next-smallest debt until all your debts are gone.

This sounds simple enough, but it's hard to map out a debt snowball plan and know how long it will take you to become debt-free without any tools. The most helpful debt snowball calculator we've found is offered via Financial Mentor. This calculator lets you enter all your debts and respective interest rates, then offers a comprehensive month-by-month plan showing exactly how much you'll pay on each debt every month.

As your debt is paid off and you continue making on-time monthly payments, your credit score should slowly rise.

5. Debitize

Debitize is an app that links your credit card with your banking account. Every time you make a credit card purchase, the service withdraws that amount from your checking account and holds it in an FDIC-insured bank account. At the end of your billing cycle, the funds are used to pay your credit card bill in full. The result is that you can use credit as if it were debit. This lets you earn credit card rewards without risking you'll charge more than you can pay off.

One of the most important factors that dictates your credit score is your credit utilization ratio — how much you owe in relation to your credit limits. Eliminating debt from your life can have a marked impact on your credit score due to the fact it will lower your utilization to zero.

With Debitize, you can avoid debt, earn rewards, and take advantage of important consumer protections offered by credit cards. Best of all, the basic version of this app is free.

6. YNAB

YNAB (You Need a Budget) is a comprehensive budgeting app that can help you pay down debt, improve your credit, and build wealth. This tool helps users create their own "zero-sum budget," which is a type of budget that requires you to give each dollar you earn a job and live off your last month's income.

This app comes with comprehensive budgeting software and tracking tools that can help you stay on top of your expenses and manage your bills. Ideally, you will use the app to become more intentional with your spending and pay down debt. As your debt decreases and your credit utilization ratio drops, you may also see an improvement to your credit score.

While you can try YNAB free for 34 days, you'll pay $6.99 per month to use the app thereafter. In exchange for the fee, you'll get automatic bank syncing, free online money workshops, support seven days a week, and debt paydown tools that can help you reach your goals faster.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Money Moves to Make Before Applying For a Credit Card

Dan Rafter — Mon, 04 Jun 2018 09:00:16 +0000

You're ready to apply for your first credit card. Or, maybe you simply want to add another card to the rotating deck of plastic in your wallet. Whatever the case, there are certain money moves you must make before filling out an application.

Adding a credit card to your name might seem like a small thing, but a credit card carries tremendous weight. It can be either a useful tool for building credit — or, if misused, it can lead you straight toward high-interest debt. It all depends on how you use that card and if you're financially prepared for it.

To get yourself off on the right foot, here are some important money moves smart consumers must make before applying for a credit card — whether it's their first or their fifth.

1. Do some budgeting

Don't have a household budget? It's time to make one. Have one? It's time to review it to make sure that it accurately reflects the money you are earning each month and the dollars you are spending.

Getting a new credit card could tempt you to make purchases that you can't afford to pay off in full each month. This will lead to you carrying a balance on your cards from month to month. With interest rates on credit cards being so high, this balance can grow out of control quickly.

Make a household budget listing the income you earn each month and the expenses you face. Expenses should include fixed costs that never change, such as your car bill, mortgage payment, and student loan costs. It should also include estimates for expenses that aren't the same each month, such as your utility bill or grocery bills. And don't forget to budget for discretionary expenses such as restaurant meals and entertainment.

If you have a budget, study it to make sure that it accurately reflects how much you spend and earn each month. If you rarely meet your budget, adjust it. Once you have an accurate budget in place, you'll know how much you can charge on a new card and still be able to pay it off each billing cycle. (See also: Build Your First Budget in 5 Easy Steps)

2. Check your credit reports

If you want to qualify for the best cards — with generous rewards programs and low interest rates — you'll need a solid credit score. Before you apply for a new card, do some research on your credit. (See also: Best Credit Cards for Excellent Credit)

You are entitled to one free copy of your three credit reports — one each maintained by Experian, Equifax, and TransUnion — every year. You can order these reports at AnnualCreditReport.com. Once you've done this, review them carefully. They will list how much you already owe on your credit card accounts, car loans, student loans, mortgage loans, and other forms of revolving credit.

They'll also list any late or missed payments up to seven years old. Other financial missteps, such as bankruptcy filings or foreclosures, will also be listed on your reports if they are not older than seven or 10 years.

If there are mistakes on your reports, contact the credit bureaus to let them know. And if your credit report is filled with late payments and high balances, you might want to take some time to pay down your other debts and build a history of on-time payments before applying for a new credit card. (See also: How to Read a Credit Report)

3. Order your credit score

Your credit score is another important number to know when applying for a credit card. This number gives financial institutions an instant look at how you've handled your credit in the past. A low score indicates that you have missed payments or other negatives on your record. A high score indicates that you have a history of paying your bills on time and keeping your debt under control.

You can order your credit score from any of the national credit bureaus. Expect to pay about $15 or so for your score. You might even have a credit card that shows your credit score in your monthly statement.

If your score comes in low, it again might be a good idea to pause your search for a new credit card. Build that score up by making on-time payments and paying off your existing credit card debt. This will boost your odds of qualifying for the best credit cards. (See also: I Checked My Credit Score in 11 Places — Here's What I Learned)

4. Pay off your existing credit card debt

You shouldn't be adding a credit card to your collection simply because you're running out of available credit on your other cards. This will only tempt you to make more purchases that you can't afford and lead you deeper into a cycle of debt.

Instead, work on paying off the credit card debt you already have. Don't apply for a new card until you've gotten your existing credit card debt under control. (See also: The 7 Best Credit Card Debt Elimination Strategies)

5. Build your savings

Financial experts recommend that everyone have an emergency fund of cash to help them pay for life's unexpected expenses — everything from a furnace on the fritz to a car that needs a new transmission. If you don't have an emergency fund, you might find yourself needing to turn to credit cards to pay for such emergencies. And that will only make your debt grow.

Before you apply for a new credit card, build an emergency fund. That way, you'll be less tempted to use your new card to pay for urgent big-ticket items such as a new water heater or an emergency brake repair for your car.

How much should you have in this emergency fund? It's generally recommended that you have enough to cover six months' to a year's worth of daily living expenses, though you may need more or less depending on your unique circumstances. (See also: 5-Minute Finance: Start an Emergency Fund)

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

2-Minute Read: What You Need to Know About FICO Scores

Holly Johnson — Fri, 25 May 2018 08:30:30 +0000

FICO scores are the most widely used credit scores in the U.S. According to myFICO.com, 90% of the top U.S. lenders access these scores to make important credit decisions.

FICO scores range from 300 to 850, with higher scores representing better credit.

Why your FICO score is important

A FICO score considered "very good" or "exceptional" (in the 740+ range) makes it more likely you'll qualify for credit approval with the best terms. If your score is below that, you may still qualify, but with a higher interest rate.

Besides, lenders, landlords, car insurance companies, and even some employers check your credit score because it's considered an indication of risk and responsibility.

Why FICO scores aren't always the same

There are many places to get your credit score, and those scores may differ. All three credit reporting agencies — Experian, Equifax, and TransUnion — assign you a FICO score, and they may not be the same since each reporting agency may have different information on file. On top of that, FICO itself offers different versions of your score — some are tailored for car lenders, others for mortgages, etc. Your FICO scores will also fluctuate over time as your credit use is reported.

Another thing: Since there are other types of credit scores (VantageScore being the main competitor to FICO), your lender may not even look at your FICO scores. But since FICO is the most commonly used scoring model, getting acquainted with your FICO scores is still a smart way to check your credit health.

5 factors used to determine your FICO scores

Payment history (35%): Your ability to make payments on time consistently is the biggest determinant of your FICO scores.
Amounts owed (30%): How much you owe in relation to your credit limits — your credit utilization ratio — is the second most important factor. You want to keep this as low as possible.
Length of credit history (15%): This is the average time that all your credit accounts have been open, with a longer history considered better.
New credit (10%): Too many new credit accounts can imply that you're desperate for credit, and lower your score.
Credit mix (10%): Having more than one type of loan is typically considered a good thing and will boost your score.

Where to get your credit score

There are several ways to get your credit scores, and some of them are free. Not all are FICO scores, but may still be worth checking to get an idea of how you're doing. You can pay about $20 to get your score from myFICO.com. Several credit cards offer free credit scores, as do Credit Karma and Credit Sesame. In addition, some lenders (e.g. Sallie Mae for student loans) offer a free FICO score or estimate of your credit score on your monthly statement.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Fun Facts About Credit Cards

Emily Guy Birken — Thu, 24 May 2018 09:00:36 +0000

Receiving your credit card statement each month may be the opposite of fun, but credit cards themselves are actually a pretty fascinating subject. The little plastic cards that we all rely on have a long, storied history, and there is a lot that most people simply don't know about their primary payment choice.

Here are some surprising facts about credit cards that might just change the way you look at your wallet.

1. Credit card numbers can be validated via a checksum formula

Valid credit card numbers follow a formula known as the Luhn algorithm. With this algorithm, starting from the right, you double every second digit. (For instance, 1111 would become 2121). You then add together all of the resulting digits. If the number you come up with is divisible by 10, then the credit card number is valid. If it's not divisible by 10, it's an invalid card number.

2. The first digit of your credit card tells what industry issued the card

You may have noticed that all of your cards from the same provider start with the same number. That isn't an accident. The first digit of a credit card indicates what industry issued the card: 1 and 2 indicate an airline card; 3 is for the travel and entertainment industry; 4 and 5 are for banking institutions; 6 is for merchandising and banking; 7 is for gas cards; 8 is for telecommunications; and 9 is for assignments by national standards bodies. American Express account numbers start with a 3, Visa accounts with a 4, Mastercard accounts with a 5, and Discover accounts with a 6.

3. Your card expires but your account doesn't

An expiration serves two purposes. First, a physical credit card can only last for about three-to-four years' worth of swiping and dipping. An expiration date provides your issuer with a date on which to send you a new card before the old one falls apart. Second, the expiration offers a small measure of identity theft protection for cardholders, since it is another piece of information that you would only have if you had the card in your possession.

Most credit card companies send you a new card before your current one expires. If for some reason they don't and you try to use a card that's past its expiration date, it will be declined. But your account should still be valid — you just need to ask your card issuer for a new card.

4. Farming communities used "credit cards" in the 19th century

Long before credit cards were accepted everywhere as payment, farmers would rely on credit extended by local general stores. In the 19th and early 20th century, farmers would need to use credit at their local store for at least part of the year because their income was seasonal. In areas with a large number of farmers, stores started issuing credit cards (initially made of cardboard) to help identify which customers were associated with which accounts.

5. Credit cards were "invented" by several different people

John Briggs created the first bank-issued credit card in 1946. Briggs was a banker with Flatbush National Bank of New York, and he invented the "Charge-It" card, which was technically a charge card since the balance had to be paid in full each month. However, Charge-It was only available for customers of Briggs's bank, and the card could only be used for local purchases.

In 1950, Frank McNamara, head of Hamilton Credit Corporation, created the Diners Club card — the first credit card that could be used in more than one store. McNamara came up with the idea for such a card after a business meal at a major New York restaurant. He had changed his suit before the dinner, and forgotten his wallet in his other jacket. After that embarrassing incident, it occurred to McNamara that it would be useful to have a noncash method of paying for meals. The Diners Club card was born. When it was first introduced, the card was issued to fewer than 200 people and was only accepted at 27 restaurants in New York. However, within a year, more than 20,000 people were using it.

6. Single women could not get credit cards until 1974

Until the passage of the Equal Credit Opportunity Act of 1974, women could not get a credit card without a husband as a co-signer. That meant single women and married women who wished to establish credit separate from their spouses were denied credit cards. The 1974 law made it illegal for creditors to discriminate against applicants on the basis of race, color, religion, national origin, sex, or marital status.

7. Laid end-to-end, all the credit cards on earth would circle the globe 3.5 times

As of 2013, there were over 1.635 billion credit cards in circulation around the world, according to SuperMoney. If all of those cards were laid end-to-end, they would stretch over 86,981 miles, which would circle the earth three and a half times.

8. There are 10,000 worldwide credit card transactions every second

The American Bankers Association estimated in March of 2009 that there are nearly 10,000 credit card transactions occurring every single second worldwide.

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This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

I Checked My Credit Score in 11 Places — Here's What I Learned

Carrie Kirby — Thu, 12 Apr 2018 08:00:06 +0000

For decades after credit scores emerged in the late 1950s, they were rarely seen by anyone but loan officers. Nowadays, offers of free and cheap credit scores are everywhere — from the online dashboard of your bank or credit card account, to self-help finance sites. Other sites charge as much as $20 for a credit score.

Why would you pay $20 for something you could get for free? Is the free score as accurate as the $20 score? It turns out, the answers to those questions are not simple, but — spoiler alert — it is sometimes worth it to pay up.

I tested the various credit scores available myself by visiting a number of free sites, checking the free scores offered by my bank and credit cards, and by purchasing three credit score products. Of my three checking accounts, two of them offered free credit scores. Of three credit card issuers I looked at, all of them offered free scores, although I sometimes had to dig around for them once signed into my account. I learned that different credit scoring systems can come up with a range of numbers based on the same credit history. While all my scores were pretty good, they were spread over a 39-point range, which put me in the top category on some score reports, but only the second-best on others.

Test results

My results are summarized in the chart below. The chart notes the website or other source where I got each score, the name of the particular score I got (more on that in a minute), the credit bureau that provided the information upon which each score was based, and the price for the score. All the scores are based on a range of 300-850 points, unless otherwise noted. (See also: What Is a Good Credit Score and Why Is It Important?)

I am just one person, with one set of credit cards and one mortgage. How can I have so many different credit scores? How can I even have different credit scores that say they are based on the credit report from the same bureau? Which score is correct? (See also: FICO or FAKO: Are Free Credit Scores From Credit Cards the Real Thing?)

What you're paying for

Barry Paperno, who worked in the credit industry for 40 years and now writes about credit in his blog, Speaking of Credit, explained that I was looking at least three different products, created by different companies. The free score offered by popular websites is usually the VantageScore, formulated by a software product co-created in 2006 by the three major credit bureaus, Experian, TransUnion, and Equifax.

The $15.95 score was created by Equifax with its own proprietary scoring system. Both VantageScore and the proprietary scores offered by the individual credit bureaus are great for educational purposes; in other words, they'll tell you if you have generally good credit or bad credit. But most banks don't use them to make lending decisions, Paperno says.

The scores I paid $19.95 each for are from FICO, the original credit score company and the one that most banks turn to when making mortgage decisions.

Another small difference among the different scores may be how old they are. The free scores that my financial institutions and Credit Sesame gave me were between two weeks and two months old, while the ones I paid for were dated only a couple of days before I checked them, and the free scores I got from FreeCreditScore.com and Credit Karma were dated the same day I checked them. (See also: 4 Surprising Things Lenders Check Besides Your Credit Score)

To further complicate things, several weeks passed between when I paid for the myFICO scores and when I checked the free scores. myFICO, I found, doesn't update once you've paid, so those scores are now almost a month old. During the intervening time, I charged some large purchases, and my credit score declined by 10 points or more on some of the other score reports but you'd never know that looking at the myFICO scores.

Which score should you get?

None of these scores are fake or inaccurate. All work in similar ways, assessing how likely you are to repay debt by looking at your history and your current use of credit. All provide an accurate picture of how your credit stacks up compared to other consumers. Which one you should get depends on your purpose.

Credit score health check

If you just want to know whether you have good or bad credit, any score will do. In that case, you might as well get a free score from your bank or credit card issuer, or go to one of the free sites listed here.

There is no apparent advantage to going to a credit score site rather than getting it from your own bank or credit card site. Different sites have different bells and whistles; some show you the history of your score, while others take information from your credit report to help explain your score.

Mortgage

The type of score you look at matters more if your goal is to get a new credit card, mortgage, or other type of loan. "Then your goal is to get your score to a certain point so that your credit application will be accepted," says Paperno. "Since the scores tend to differ, it becomes important to know what score the lender is likely to pull."

If it's a mortgage lender, they're likely to pull older FICO scores from each credit bureau, namely the FICO 2, FICO 4, and FICO 5 scores, possibly along with others. When you purchase your FICO score from myFICO, you can get your FICO Score 8 from all three credit bureaus, as well as a number of industry-specific scores. So if you want a mortgage and you're not sure if your credit is good enough (760 is usually the cutoff to qualify for the best rates, Paperno says), it's a great idea to go this route.

For a one-off snapshot of your FICO scores, go to myFICO.com and click on the Products tab at the top. You can buy one-time single-bureau credit reports (FICO Score 1B Report for $19.95) or three-bureau reports (FICO Score 3B Report for $59.85).

Why pay more for scores from all three credit bureaus instead of just getting one? Since the credit report from each bureau could be slightly different (each may include some details but not others), it's best to avoid surprises by making sure that the credit score based on each report is in the same range.

Car loan

If you're getting a car loan, the lender might pull the industry-specific FICO Auto Score, which comes with the scores from myFICO. To know for sure, call the finance department at the dealership you're considering and ask which bureau they pull from or which scores they use.

Next, go to myFICO.com, click on the Products tab at the top of the page, buy one or all three scores from myFICO, then click on "View additional FICO score versions used in mortgage, auto and bank card decisions." There, you'll find your FICO Auto Score 8, optimized to reflect the credit behavior that auto lenders care most about, with an emphasis on how well you've paid off previous auto loans (mine was 779, four points higher than my FICO Score 8).

Credit card

There is also a FICO score customized for the credit card industry, FICO Bankcard Score, but Paperno said that it's not as popular with credit card lenders as the Auto Score is with car lenders. He says it's not worth paying money just to get a Bankcard score. Any free FICO Score 8 is good enough.

Personal loan

For personal loans, even a 50-point difference in your credit score could affect your interest rate by several percentage points, according to GoBankingRates.com. But many lenders will do a soft pull of your credit during a prequalification process.

How do you know which score you're getting?

Most of the time, if you're getting it for free you can assume you're looking at a VantageScore, but not always. Most websites will identify — sometimes in small print — the source of the score they're providing. I purchased my three-bureau FICO score report from myFICO.com for $59.85; Experian also offers a three-score and credit report package for $39.99.

But is it possible to find a FICO score for free? Yes. I got an Experian-based FICO Score 8 at FreeCreditScore.com, a site owned by Experian. And my bank provided my Equifax-based FICO Bankcard score.

If you want to follow Paperno's advice and check FICO scores from all three credit bureaus when you have an important borrowing decision ahead of you, you will have to pay to do so. I didn't find any way to get all three for free.

Why are your FICO Score and VantageScore different?

Now that I understand that both FICO and VantageScore give me an accurate picture of my credit, I still wonder how they can look at the same reports and come up with different numbers. In particular, my FICO scores are my lowest scores. Is it always that way?

"FICO tends to be a little stricter," Paperno says. Although both systems consider basically the same facts — late payments, how much credit you have available, how much debt you have, the age of your accounts, etc. — they might vary slightly in the details. For example, if you have an account that went to collections and you paid it off, VantageScore will drop that black mark from your record, but it will still influence most versions of the FICO Score.

Buyer beware

When searching for free credit scores, I came across a number of Google ads promising them, leading to websites I was unfamiliar with. I found that many such sites are owned by companies with some pretty unsatisfied customers, many who complain they were charged for ongoing credit monitoring services without their knowledge.

Even with the big name companies, make sure when paying for a credit score that you know what you're signing up for. Many will at least ask you if you want to sign up for a paid monthly credit monitoring subscription. When I purchased the $1 TransUnion score, I at first completely missed that I had also signed up for a weeklong free trial of a $19.95-per-month credit monitoring service. Fortunately, I canceled it in time to avoid billing. I didn't want to repeat that experience, so when I clicked on a $1 credit score offer from Experian and realized that buying it would sign me up for a free trial of their $14.99-per-month monitoring service, I didn't buy either.

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This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How the Fair Credit Reporting Act Protects You

Susan Johnston Taylor — Fri, 02 Feb 2018 09:30:05 +0000

Your credit report plays an important role in determining whether you can get a loan, a credit card, insurance, an apartment, and even a job in some cases. It can also help determine how much interest you pay on a credit card or loan, and your insurance rate.

So, if your credit report contains errors — say, your report lists a loan you didn't initiate, an incorrect balance, or a closed account still being reported as open — that can result in a higher interest rate, or an outright rejection. Fortunately, the Fair Credit Reporting Act (FCRA) gives consumers protections, including the ability to access their credit reports and dispute errors on them.

Enacted in October 1970, just as small, local credit reporting agencies were consolidating and becoming a national presence, the FCRA imposes strict guidelines on consumer reporting agencies and the companies that feed them data. Understanding your rights under this law helps you stay on top of your credit and finances. Here's an overview of your rights under the FCRA and how to exercise them.

You have a right to see your credit reports

The act says that you're entitled to view your credit file from each of the three main credit bureaus (Equifax, Experian, and TransUnion) for free once every 12 months. You easily can do so at AnnualCreditReport.com. Just be sure you look at the web address closely if you type in the URL. Some copycat websites exist that may charge you for this service or may not be legitimate services.

If you're requesting your credit file online, you'll need to answer some ID verification questions to prevent scammers from posing as you. The online verification process can be frustrating to some consumers. "If they have thin credit files, a lot of those questions won't be pertinent," explains Linda Sherry, a spokesperson for Consumer Action, a national nonprofit that educates underrepresented consumers about their rights. If the website won't verify your identity and share your credit file, the alternative is to request information via the automated phone system or through the mail.

In addition to your three annual credit reports, you're entitled to a free annual copy of any reports from other types of consumer reporting agencies. These include agencies such as LexisNexis, CoreLogic, and Certegy Check Services, which may collect noncredit information about you such as your rent payments, insurance claims, or check-writing history. The Consumer Financial Protection Bureau has a list of more consumer reporting companies. Each one has its own procedures for requesting your free report. (See also: How Alternative Credit Data Can Help Those With Little or No Credit)

You have a right to ask for a credit score

The FCRA also gives you the right to request a credit score. Don't confuse that with a credit report. Credit scores and credit reports are not the same thing. The contents of your credit report determine your credit score, which can vary depending on which credit bureau supplies the information and which scoring model is used. In other words, you don't have just one score; you could have many different scores based on which factors are weighted more heavily.

Most credit agencies and other businesses charge you for your credit score and it's legal for them to do so. Fortunately, an increasing number of credit cards provide free credit scores so you may not need to pay for a credit score. (See also: FICO vs. Fakes: Are You Getting the Wrong Credit Score?)

Access to your credit report is limited

Credit reporting agencies may only share your credit record with people or institutions who have a legitimate reason to see it. Typically, that means someone who is considering your application for credit, insurance, housing, or a job, or who is a current creditor.

Potential employers and landlords generally need your written consent to check your credit. If a reporting agency shares your credit file with someone who doesn't have a valid need, it could be in violation of your rights under the FCRA.

You have the right to dispute errors on your credit reports

Once you receive a credit report, review it line by line for errors. "If you see something there that's labeled as negative that may be pulling down your score or your ability to access credit, look at it carefully and make sure it's accurate," says Sherry. (See also: How to Read a Credit Report).

If you don't recognize a line of credit or other loan, that could be a sign of identity theft, but don't panic. It could also be that you don't recognize the name of a creditor you actually did have an account with. Maybe you took out a store credit card and the issuing bank's name is unfamiliar to you (you'll likely see the name of the issuing bank, not the retailer where you opened the card). Or perhaps your mortgage was sold to a new loan servicer.

Google any unfamiliar creditors to check if the loan might be legitimate before you try to dispute it. If you still suspect identity theft, Sherry suggests filing a police report. (See also: 9 Signs Your Identity Was Stolen)

The FCRA also grants you the right to dispute any erroneous information you find with the credit reporting agency or agencies. They must investigate your dispute and respond (typically within 30 days) unless they deem your dispute frivolous.

To dispute an item with a credit bureau, mail the credit bureau a letter and copies of documents that support your position (for instance, a notice stating a loan is paid in full if your credit record is still showing an outstanding balance). The Federal Trade Commission (FTC) has this sample letter showing you how to dispute items on your credit report.

The FTC recommends sending dispute letters by certified mail, "return receipt requested." That way you have proof of what the credit reporting agency received and when. Also keep your own copies of your dispute letter and any supporting documents.

If the credit bureau corrects an error, it must send you a new, free copy of your credit report through AnnualCreditReport.com. That way you can check to see that all the mistakes have been corrected.

You can also dispute inaccurate information with the company that provided the information to the credit bureau. For instance, if a bank claims you defaulted on a loan that you know you paid in full, also contact the bank so that you don't have to deal with erroneous collections actions later on.

Starting in September of 2018, credit agencies will be required to send you a detailed report of their dispute investigation, providing you with contact information of the company or companies that supplied the data in question. The bureau will also have to explain what you can do if you're not happy with the investigation's findings.

Negative information can't stay on your credit record forever

It's helpful to understand the difference between negative and positive credit information. Late payments or accounts in default are negative factors on your credit report, while on-time payments and low balances reflect positively on your credit report. Positive items stay on the report up to 10 years after the date of the last activity on the account. But by law, credit bureaus cannot report negative information that is more than seven years old, except for some forms of bankruptcy, which may linger on your credit report for 10 years.

Sherry says negative items are typically labeled as negative on your credit report. But take heart. Negative information that's accurate won't haunt you indefinitely. What's more, the weight that lenders give to negative items they see on your credit report decreases over time. (See also: How to Rebuild Your Credit in 8 Simple Steps)

You have a right to know if you've been rejected because of information on your credit report

When a creditor, employer, insurer, or landlord denies your application based on the contents of your credit report, it's called an adverse action. They must then notify you and tell you the name, address, and phone number of the credit reporting agency that provided the information.

You're entitled to order a free copy of your credit report from the bureau that provided the information within 60 days of an adverse action. (This is in addition to the three free reports you're allowed every year.) However, it's wise to check your credit report in advance so you have time to correct errors before you get turned down for a mortgage or lose a job offer. (See also: Why Your Credit Card Application Was Denied — And What You Can Do About It)

You can take further action

If you've lost a dispute over your credit record and aren't happy with the result, you can file a complaint with the Consumer Financial Protection Bureau.

In other cases, you may be able to sue for damages in state or federal court.

You can sue a credit reporting agency (CRA) if they allow someone to view your credit report without a permissible purpose.
You can sue a CRA if you tell them about an error on your report and they fail to fix it and as a result, you receive an adverse action. While the CRA is investigating items you dispute, they must indicate on your credit report that the item is in dispute.
You can sue a credit information provider if they willfully provide incorrect information to the CRA.
You can sue an employer or other party who views your credit report without disclosing it to you or securing permission from you.
You can sue someone who pulls your credit report and doesn't dispose of your information appropriately, which results in your identity being stolen.

Lawyer Sonya Smith-Valentine says consumers sometimes get confused about their right to sue after they receive an adverse action. To be clear, you won't get awarded damages if the adverse action occurred before you notified the credit bureau. Many consumers don't realize this nuance, according to Smith-Valentine, who is president of Financially Fierce, LLC and a former managing attorney with Valentine Legal Group, which handled financial and consumer protection litigation.

"They tried to get a mortgage or a job and found out because of going through this that there was a mistake," she says. "They want to be compensated for losing out on the job or the house, but [the FCRA] does not allow for harm that occurred before you contacted the credit bureau about the mistake. That's where a lot of people get tripped up."

Your right to legal action doesn't kick in until after the creditor or credit reporting agency has been notified of an error and has had a chance to fix their mistake. All the more reason to be proactive about requesting your credit report and reviewing it for errors.

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This article is from Susan Johnston Taylor of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Deferred Interest Credit Cards: Don't Fall For This Trick Over The Holidays

Lindsay VanSomeren — Wed, 22 Nov 2017 09:30:10 +0000

"Would you like to apply for a store credit card today? You can get [insert number here] months free financing."

We've all heard it before when checking out at a retail store. Chances are, you'll be hearing it a lot more over the holidays as you ramp up your holiday shopping.

It can be tempting — you can make a large purchase today, and pay it off over time interest-free. Some companies will even throw in a gift card or a discount if you apply for their credit card. But before you say "yes" to the cashier, there's one hidden trick that these companies often use. If you're not aware of it, your "free financing" might end up backfiring in a big way. (See also: Should You Sign Up for That Store Credit Card?)

What is a "deferred interest" credit card?

There are two types of credit cards that offer free financing: 0% Intro APR cards, and deferred interest cards.

You see ads for 0% APR cards all the time — you get 0% APR for a limited time. After that, the standard interest rate goes into effect. When stores offer a "deferred interest credit card" you might reasonably assume they work the same way. But they are very different.

With a deferred interest card, you must pay off the charge in full before the promotional free financing period is over. If you don't, you'll have to pay the full amount of interest charges, as if that interest rate was in effect the whole time. All that "deferred" interest comes rolling back the moment the promotional period is over, not just on the balance you have left, but on the entire purchase amount.

And it'll be a heck of a bill too: the interest rates on these types of credit cards are often sky-high, running upward of 25% APR. As a comparison, the current average interest rate for all credit cards combined is 13.08% APR, according to the Federal Reserve.

Let's look at an example of how much a deferred interest credit card might cost you. A store credit card offers 12 months deferred interest financing, with a standard 27.99% APR. If you make a $1,500 purchase and only make the minimum payments during those 12 months (about $45), you'll owe a walloping $321.63 in interest at the end of it — and still owe over $950 on your purchase.

How do you spot a deferred interest credit card?

Your first clue is who is offering the card. Most deferred interest credit cards are offered by retail stores. If a store employee is trying to get you to sign up for the card, ask them: "what happens if I don't have the purchase paid off by the end of the financing period?"

But the best way to find out if the card you're interested in really is a deferred interest card or not is to simply look at the Terms and Conditions disclosure. Here's a snippet from a store credit card's disclosure to give you an idea of what the language will look like:

"If the balance is not paid in full by the end of the promotional period, interest charges will be imposed from the purchase date at the purchase rate on your account which is 26.24%."

See how the charges are imposed "from the purchase date?" Other words to look for are "deferred" or "financing" or "no interest if paid off in X months" which is different from just 0% APR during the promotional time. A credit card that offers 0% APR for 12 months mean that there are no interest charges on your balance for 12 months, then at the end of the 12 months, the standard APR will start, and will only be applied to the current balance, not the entire purchase. (See also: Same-As-Cash Store Offers vs. 0% Intro APR Credit Cards — Which Is Right for You?)

Come up with a game plan to tackle your debt

Despite all of this, deferred interest cards aren't necessarily something you always need to avoid. In fact, they can really help you out — as long as you have a game plan to deal with them.

Setting up a plan is simple. All you have to do is take the amount of your purchase and divide it by however many months you have to pay off the charge. If you want to play it on the safe side, you can even subtract a month or two to give yourself some space if something comes up. That way, you'll have it paid off with plenty of time to spare.

Here's an example. Say your child's old computer died, and you want to buy them a new $1,100 computer for Christmas. Luckily, your local electronic store chain offers a 12-month deferred interest credit card, which you use to purchase your new computer.

If you want to have it paid off early, divide the purchase price ($1,100) by 11 months, to give you a monthly payment of $100. You can further boost your chances of having it paid off by setting up that payment on autopay, so then you don't even have to worry at all about making payments. (See also: The Best Store Credit Cards)

When you should choose a store credit card over a 0% APR card

A 0% APR credit card will give you the safety net in case you don't actually pay off the entire balance within the promotional time frame. Even if you leave a $10 balance on a store credit card, you'll get charged all the interest from the purchase date. It's pretty brutal.

It can also be of use to you even after the promotional period. Perhaps it's a very good travel rewards credit card that can fund your next vacation.

But there are times you might end up choosing the store credit card instead.

You have bad credit

I won't remind you that if you're in this position, you should be considering ways to build back your credit which doesn't include adding more debt. But assuming you've already thought this through, getting approved for a 0% APR card might not be in your cards. So if you really need this buffer to pay off the purchase, and you are committed to the payoff goal, then go ahead and sign up for the card. Store cards generally have a lower threshold for approving customers, because their regular APR is so high, and their credit limits usually low.

You will benefit from the rewards

Stores can be generous to their credit card holders, offering big rewards and discounts that will save you loads of money. If you're a frequent shopper there, and the store card can offer you much better deals and rewards than you'd get from a typical cash back card, for example, then it can be worth it to be a loyal card holder. Just don't ever leave a balance because the APR will always destroy any savings or rewards the card would have offered.

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This article is from Lindsay VanSomeren of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How Small Business Credit Cards Affect Your Personal Credit

Jason Steele — Tue, 21 Nov 2017 09:30:10 +0000

If you're looking for a new credit card, then you’ve probably noticed that many cards are offered in both personal and small business versions. Business credit cards can offer rewards and benefits more suited to the needs of small companies, but how does their use affect your personal credit?

Business credit card basics

When you apply for a small business credit card, the card issuer will check your personal credit report and credit score to see if you qualify for a new account. It doesn’t matter whether you supply an Employer Identification Number (EIN) or a Social Security Number, your personal credit information will be checked, since nearly all small business credit cards require your personal guarantee of repayment. This means that even if your business dissolves, gets sold, or goes into bankruptcy, you’re still responsible for paying off the credit card debt. The credit card may have your business name on it, but as part of the application, you agree to be personally responsible for it. (See also: 5 Ways to Build Business Credit When You’re Self-Employed)

How applying for a business credit card affects your credit

When you apply for any new credit card, it has several effects on your credit. To grasp these, it helps to understand the five main factors that go into your FICO score — the most commonly used personal credit score. These factors are:

Payment history (35 percent of the total credit score): On-time payments are the most important part of your credit score. (See also: How Late Payments Affect Your Credit)

Credit utilization (30 percent of the total score): It’s best to keep your credit utilization ratio — the amount you owe compared to how much total credit you have available — as low as possible.

Length of credit history (15 percent of the total score): The higher the average age of your accounts, the better. (See also: Why the Age of Your Credit History Matters)

New credit: (10 percent of the total score): Opening too many credit lines at once could suggest you’re having financial trouble.

Credit mix: (10 percent of the total score): Lenders like to see that you can handle a variety of debt types, such as installment loans and credit cards. (See also: How Credit Inquiries Affect Your Credit Score)

When you apply for a new card, it affects the new credit part of your score because the application will result in a new inquiry on your credit report — a so-called hard inquiry. Applying for a single line of credit will have very little effect on your credit score, but applying for multiple new lines of credit in a short period of time could cause a small, temporary drop in your score.

How business credit cards may affect your personal credit differently

In most ways, a small business credit card will affect your credit just like a personal credit card. However, some credit card issuers only report your business credit card account if it’s delinquent and don’t report balance and payment information at all. Therefore, your use of business credit card accounts may or may not affect your credit one way or another. (See also: When to Get a Business Credit Card Over a Consumer Card)

Assuming you have a card that does report regularly to your personal credit, once approved, the new account will affect the credit history part of your score. It will lower the average age of your lines of credit, which on its own might cause a small drop in your score, especially if you have a very limited credit history.

Your monthly balances and payment for this new account will appear on your credit report as well. So long as you make your payments on time, this new account will help build your credit history, which is good for your credit score.

Finally, having a new line of credit may or may not help to reduce your credit utilization ratio. A card with a large credit limit (and business cards tend to have higher limits than personal cards) raises your amount of available credit. But in order to keep your utilization ratio low, you have to keep your balances low. If you quickly max out the new card, you could actually hurt your credit utilization ratio.

If you get a business credit card that doesn’t report to your personal credit, then the small dip in your credit from the hard inquiry will bounce back and nothing else will happen to your credit, unless you default on the business credit card. Then it will appear on your credit report as a loan in default.

The only way to know for sure if your business credit card accounts are reporting your balance and payment information is to look at a copy of your credit report. You can obtain a free credit report each year from each of the three major consumer credit bureaus by going to AnnualCreditReport.com.

How business credit cards affect your business credit report

In addition to possibly affecting your personal credit report, your small business credit card may also affect your business credit reports. Your issuer may report your balance and payment information to companies that compile credit reports on small businesses. The main business credit reporting agencies are Dun & Bradstreet, Experian, and Equifax. For many small businesses, having a strong business credit report is vital to securing future lines of credit and favorable payment terms from suppliers. It’ll also benefit you to be able to get funding without a personal guarantee, which can only happen by building a strong business credit history first.

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This article is from Jason Steele of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Ways Your Credit Card Can Help You Manage Your Finances

Jason Steele — Thu, 19 Oct 2017 08:30:10 +0000

When most people think of credit cards and personal finances, they imagine the former ruining the latter. It's incredibly easy to make purchases with your credit card, which can be both its greatest strength and its most profound weakness.

But rather than seeing credit cards as an enemy of your budgeting efforts, consider all the ways your cards can actually help you to manage your financial life. Try thinking of your credit cards as incredibly powerful financial tools that can be harnessed to achieve your goals.

Here are five ways that your credit card can help you manage your finances.

1. Keeping records

One of the great things about both credit cards and debit cards is that they can offer you a record of every transaction you make. Your statements include the merchant name, the date of the transaction, and the amount. So if you ever wonder where your money is going, this is one way to find out in great detail. (See also: Top 7 Reasons I Use My Credit Cards for Everything)

2. Paying taxes

The record of all your payments can be vital when it comes time to complete your taxes. Your credit card statements can help you to identify and claim charitable contributions and other deductions, as well as business expenses.

3. Tracking category spending

Many credit cards have reporting features built in, so you can see statistics on where your money is being spent. For example, you can find out if you spent more at restaurants this month versus last, or how much you've been spending at gas stations. If you're a small-business owner, your credit card may contain even more robust expense reporting tools. Using these tools, you can see if you need to adjust your budget or tighten up spending in certain areas. (See also: Best Credit Cards for Your Small Business)

4. Smoothing out your cash flow

Our income and our expenses are never as predictable as we would like them to be. Freelancers and small business owners occasionally deal with delayed payments from, and all of us will eventually have an unexpected home repair, car repair, or health care bill. Thankfully, your credit card can be used as a shock absorber of sorts for your personal finances. When a large bill arrives, or your income is delayed, you can rely on your credit card's grace period to hold you over until you can make ends meet.

A credit card's grace period is the time between when your statement period closes and your payment is due. When you pay your statement balance in full before the grace period ends, nearly all credit cards waive your interest charges. By law, a credit card's grace period must be at least 21 days, but many have grace periods of 25 days. This means that you could have as many as 30 days before your statement period ends, plus as many as 25 days to pay your balance in full. That adds up to an interest-free float of up to 55 days on your credit cards, giving you a lot of time to get your finances in order while avoiding interest charges.

5. Earning rewards

When you avoid interest charges by paying your monthly statement balances in full, then you can earn rewards from your credit cards at no cost. For example, some credit cards offer cash back or travel statement credits worth a percentage of all your purchase transactions — sometimes as high as 2 percent on every purchase. Two percent might not sound like a lot, but it can help you to make ends meet.

Instead of earning cash back, some people use travel rewards credit cards to earn frequent flyer miles or hotel points. When you are able to use these travel rewards instead of paying out of pocket for a flight or a hotel stay, it's another way that your credit card can help you save money and manage your budget. (See also: Best Travel Credit Cards for Small Businesses)

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6 Pitfalls When Chasing Travel Rewards

Holly Johnson — Tue, 17 Oct 2017 08:30:10 +0000

By signing up for travel credit cards, earning travel points through bonus offers and regular spending, and using your points in the smartest way possible, you can travel to far-flung corners of the world while minimizing out-of-pocket expenses. (See also: 5 Steps to Getting a Free Vacation in 9 Months with Credit Cards)

While this probably sounds intriguing and fun, and it is, there are so many nuances to this strategy that it’s easy to get it all wrong. To be a pro, you need to know which types of travel currency to pursue, how to maximize your miles, and how to avoid the many pitfalls that come with using credit cards in general. (See also: How to Use Travel Rewards Cards to Get Free Trips)

1. Missing out on a sign-up bonus

Credit card sign-up bonuses offer one of the easiest ways to earn points or miles in a hurry. Often, you can earn up to 50,000 hotel points or airline miles after meeting a minimum spending requirement in the $1,000–$5,000 range within three months. Sounds easy, right?

Unfortunately, far too many people jumble the details along the way. Either they fail to meet the minimum spending requirement because they mix up the dates, or they misread the fine print and don’t spend enough.

Either way, you’ll want to avoid this mistake if you want to maximize the points and miles you earn. It helps to read the offer details and understand it inside and out before you take the plunge.

2. Failing to optimize

Failing to optimize is another common mistake many new travel hackers make. When you don’t understand the details of individual rewards programs, it’s easy to assume they’re all the same. The thing is, not all travel programs are created equal — not even close. (See also: How Travel Rewards Credit Cards Really Work)

Here’s a good example of failing to optimize: Let’s say someone has 50,000 Chase Ultimate Rewards points and needs to book a flight from Chicago to Los Angeles. Because they don’t know any better, they might go ahead and book their flight through the Chase Ultimate Rewards portal for the current price, which happens to be 32,000 Chase points on that specific day.

If they had dug a little deeper, however, they might find that you can often fly Southwest Airlines from Chicago Midway Airport into LAX for less than 13,000 points round trip. By transferring their points to Southwest instead of booking through the portal, they could have saved 19,000 points!

The bottom line: Make sure you consider all your options before you use your points for travel. With some creative thinking and planning, you could find a much better deal. (See also: 7 Frequent Flyer Rules to Go Farther on Fewer Miles)

3. Racking up credit card debt

Often, people who aren’t financially sophisticated dive into the credit card rewards hobby without setting limits or expectations. Unfortunately, not having a plan for credit or never tracking your spending can easily lead down the winding road of credit card debt.

To avoid debt and all the stress that comes with it, only use credit cards when you have a spending plan in place — and the discipline to pay your balance in full each month. If you wind up in debt, the rewards you earn will be wiped out by the credit card interest you’ll pay each month.

4. Letting your points expire

It’s crucial to make sure your hard-earned points don’t expire before you’ve had a chance to use them. While some programs like Delta SkyMiles and Chase Ultimate Rewards offer points that never expire, other travel currencies can expire if you don’t “earn or burn” any points for 12–24 months.

The best way to avoid expiring currencies is to know when your points will expire and enact a plan to “restart the clock.” Most of the time, it’s fairly easy to save points by shopping through a loyalty shopping portal or spending even a handful of points. (See also: How to Save Frequent Flyer Miles That Are About to Expire)

5. Earning points without a plan

I can’t tell you how many times I’ve seen people earn points and miles without any type of plan at all. Sometimes they are pursuing a currency that won’t even work with their travel plans. For example, I know one person who built up a giant stash of Southwest Rapid Rewards points for a trip to Europe, without ever realizing that Southwest doesn’t fly to Europe. (See also: Choose the Best Travel Rewards Credit Card with this Guide)

The best way to get ahead in the game is to get strategic about the points and miles you’re earning and why. Figure out where you want to go, then decide which travel currency will get you there. Better yet, pursue flexible travel currency like Chase Ultimate Rewards or American Express Membership Rewards. That way, you can earn all the points you want and decide how to use them later on. (See also: Tools for Tracking Your Rewards Points)

6. Waiting too long to book

While it’s possible to book award travel right up to the last minute, anyone who has been in this hobby for a while will tell you it’s better to book ahead.

If you can book a flight six to nine months in advance, for example, you’ll normally find more award availability than you will closer to departure. The same is true for hotels; since hotels have limited award availability, waiting too long to book can mean missing out. (See also: 12 Expert Tips for Redeeming Miles for Free Travel)

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The Best Airline Rewards Programs for Trips to Europe

Holly Johnson — Sun, 02 Jul 2017 20:24:55 +0000

If you’ve been dreaming of a trip to Europe but can’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.

If you’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: 6 European Destinations Finally Cheap Enough to Visit)

Air France/KLM Flying Blue

With Flying Blue, a round-trip flight to Europe is only 50,000 points from most American cities. And if you’re worried that Air France or KLM don’t fly out of your home airport, don’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.

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’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.

British Airways Avios

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.

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’s no way around them. Before you transfer points to British Airways, make sure you have a handle on the fees you’ll pay.

Air Canada Aeroplan

You can pick up an economy flight with Air Canada to most western European countries for 60,000 miles round-trip. You’ll also need to pay government-mandated taxes and fees.

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’ll need will vary depending on when you travel and the country you’re traveling to.

Delta SkyMiles

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 50,000–60,000 miles. It helps to do some digging, be flexible with dates and times, and be willing to fly into and out of alternate airports.

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’ll need will depend on your destination and travel dates.

Etihad

Award availability on Etihad can be extremely limited. If you’re considering this strategy, make sure to start looking early and stay flexible in terms of dates and times. Once you’re able to find a seat, you can fly round-trip to Europe for 60,000 miles plus taxes and fees.

Credit cards that transfer to airline partners

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!

Tips for getting to Europe with points

Before you dive in, there are a few things you should know. Consider these tips:

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 — then book ahead. Booking at least nine months in advance will make finding the flights you want easier.
Check for award availability before you transfer points. Even if an airline promises you can get to a specific destination on miles, that doesn’t mean it offers the award availability. Before you transfer points to an airline, check to make sure the flights you want are available.
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.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Amazing Hawaiian Resorts You Can Book With Rewards Points

Holly Johnson — Thu, 22 Jun 2017 08:30:16 +0000

Hawaii is notoriously expensive as a vacation destination, both in terms of getting there and accommodations. Due to the high cost of living on the island, you'll also pay more for food, drinks, and entertainment than you would on the mainland.

The good news is, airline and hotel rewards programs can take the sting out of a Hawaiian getaway — or at least, part of the expense. Airline credit cards can boost your frequent flyer stash, making it fairly easy to fly to Hawaii for free, especially if you live on the West Coast.

With British Airways, for example, you can redeem 25,000 Avios for a round-trip flight to Hawaii (on partners Alaska Airlines or American Airlines) from specific West Coast cities like Los Angeles. So, for a family of four, you would only need 100,000 Avios. That's a lot of miles, but it's not beyond reach.

You can get even more value if you strategically plan your credit card spending to earn free hotel nights for your tropical getaway. With an array of hotel credit cards, you can book free nights at properties on nearly every Hawaiian island, and at nearly any price point.

Aching for a Hawaiian getaway, but trying to avoid full fare? Check out these Hawaiian hotels you can book with points.

1. Andaz Maui at Wailea Resort

For just 25,000 Hyatt points per night, you can book a garden room with a king or queen bed, score a complimentary minibar with snacks, and enjoy a private lanai with stunning views at the Andaz Maui at Wailea Resort.

The Andaz Maui is popular for its beachfront location on Maui's Pacific coast, multitiered infinity pools, and top-notch customer care. Guests have access to a private adults-only pool, an on-site spa and salon, and beach activities like kayaking and stand-up paddleboarding.

2. Grand Hyatt Kauai Resort and Spa

The Grand Hyatt Kauai Resort and Spa owns a startling spot on the white sand beaches of Poipu with 50 acres of beachfront gardens, manicured lawns, and open courtyards for guests to enjoy. A nightly stay here costs just 25,000 Hyatt points, for which you'll get a standard king or queen guest room with a private lanai and classic Hawaiian décor.

The resort itself, which is fairly large considering it has more than 600 rooms, offers complimentary Wi-Fi, a 24-hour fitness center, Camp Hyatt for children, and access to a beautiful beach and pools.

3. Hilton Waikiki Beach

Consider a stay at the Hilton Waikiki Beach. A standard room with two queen beds and a city view can cost as little as 50,000 Hilton Honors points outside of peak times. These spacious rooms come with a flat screen TV and complimentary HBO, private balconies, and luxurious marble bathrooms.

The hotel itself features an amazing location in the thick of Waikiki Beach, along with a spectacular beachfront and plenty of on-site activities and restaurants for families and couples. It's just over a mile from Diamond Head, and some rooms feature views of the famous mountain. It's also walking distance to the International Marketplace, Honolulu Zoo, Kapiolani Park, and the Waikiki Aquarium.

4. Grand Wailea, a Waldorf Astoria Resort

If you're familiar with the Waldorf Astoria Brand, you already know just how luxurious and opulent the Grand Wailea must be. This gorgeous beachfront property features seven on-site restaurants, inspiring art, an unbelievable beachfront directly out its doors, and nine amazing pools perfect for families. Active adults and kids can sign up for stand-up paddleboarding, kayaking tours, scuba lessons, and much more.

If you want to stay here, you'll need a lot of Hilton Honors points. A standard garden view room with two queen beds can cost 138,000 Hilton Honors points per night or more. A Hilton credit card, however, could get you free stays at this property. (See also: Which Hilton Credit Card Should You Get?)

5. Holiday Inn Resort: Waikiki Beachcomber

The Waikiki Beachcomber Holiday Inn Resort is located in a premier spot near the heart of Waikiki, upscale shopping, and one of the area's most beautiful beaches. The property itself offers free internet, spectacular ocean and mountain views, the perfect beach for swimming or sunbathing, and a pool ideal for kids.

You can book a standard king room for just 40,000 IHG points per night, or use a combination of points and cash. Like other Holiday Inn Resorts, this property lets kids stay free when they share a room with their parents.

6. Sheraton Kona Resort & Spa at Keauhou Bay

For just 10,000 Starwood starpoints per night, you can stay at the Sheraton Kona Resort & Spa at Keauhou Bay. Its basic mountain and garden view rooms (bookable with points) feature the Sheraton Signature sleep experience with upgraded bedding, a private lanai, and an in-room refrigerator.

The Sheraton Kona Resort & Spa sits right at the edge of the water, providing amazing views of the mountains and ocean. You'll find meandering pools perfect for splashing or relaxing, killer views from every angle, and spacious rooms perfect for families. Enjoy sailing canoe tours, fishing, snorkeling, lei making, morning yoga, and many other activities.

7. Moana Surfrider, a Westin Resort & Spa, Waikiki Beach

If you're in the mood to splurge, book the Moana Surfrider for 20,000-25,000 starpoints per night with the Starwood Preferred Guest program. A free night award qualifies you for a stay in a historic Banyan room with Heavenly bedding, high-speed internet access, and basic décor.

The resort itself is bursting with things to do and see. An expansive lobby, outdoor dining opportunities, huge pool, and idyllic beachfront make it the perfect spot for families and couples alike. You'll also find an on-site fitness center and spa, perfect for staying in shape and scoring some much-needed relaxation.

8. Residence Inn Maui Wailea

If you're looking for a Hawaiian getaway with as much room as possible, consider cashing in some Marriott Rewards points for a stay at the Residence Inn Maui Wailea. Here, 40,000 Marriott Rewards points will get you a studio suite with a king or two queen beds, a living and dining area with full kitchen, and free breakfast. If you've vacationed in Hawaii in the past, you already know just how valuable free breakfast can be.

The hotel itself has a spacious lobby, outdoor fire pits for guests, outstanding ocean views, a putting green, basketball court, fitness center, and a huge pool. With your own kitchen and so many amenities, you may never want to leave.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: