APR https://www.wisebread.com/taxonomy/term/1060/all en-US 5 Smart Ways to Reduce Your Credit Card Interest https://www.wisebread.com/5-smart-ways-to-reduce-your-credit-card-interest <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-smart-ways-to-reduce-your-credit-card-interest" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/girl_is_shopping_online_and_calling_card_support.jpg" alt="Girl is shopping online and calling card support" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you've been trying to get out of credit card debt, you've probably heard about 0% APR credit cards that offer balance transfers. They are so well known that it can be disappointing every time you see a headline proclaiming some great idea about how to pay off your debt, only to find out it's just another description of interest free balance transfer offers.</p> <p>While these offers can be incredibly valuable, they're only one of the ways you can reduce your credit card interest payments, and ultimately get rid of your debt. Here are five smart strategies that go beyond <a href="https://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">interest-free balance transfers</a>.</p> <h2>1. Make multiple payments throughout the month</h2> <p>Every month, each credit card account issues a statement, along with a due date and a minimum payment. In addition to always paying more than just the minimum payment, you should also consider making more than a single payment each month.</p> <p>Credit cards incur interest charges based on your account's average daily balance, and anything you can do to reduce the balance each day will reduce your interest charges. If you can make an additional payment before the due date, you'll lower your average daily balance. (See also: <a href="https://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt?ref=seealso" target="_blank">The Fastest Method to Eliminate Credit Card Debt</a>)</p> <h2>2. Pay your balance early</h2> <p>Even if you can't make multiple payments throughout the month, just making your payment a week earlier will save you money. When the payment gets credited to your account, the average daily balance will be lower from that day forward. (See also: <a href="https://www.wisebread.com/6-smart-reasons-to-pay-your-credit-card-bill-before-its-due?ref=seealso" target="_blank">6 Smart Reasons to Pay Your Credit Card Bill Before It's Due</a>)</p> <h2>3. Wait to make big purchases</h2> <p>You can avoid interest charges by paying your statement balance in full every month. But if you aren't sure you'll be able to do that next month, there's a little trick you can use to reduce your next statement balance. Find out when your statement closing date is, and postpone large purchases until after that date. Charges processed after the end of your statement will appear on your next statement, giving you an additional month to pay it in full. And even if you incur interest, every day you can postpone making a large purchase will reduce your average daily balance. (See also: <a href="https://www.wisebread.com/how-a-simple-do-not-buy-list-keeps-money-in-your-pocket?ref=seealso" target="_blank">How a Simple &quot;Do Not Buy&quot; List Keeps Money in Your Pocket</a>)</p> <h2>4. Keep a &quot;clean card&quot; that you pay in full each month</h2> <p>When you have to carry a balance, the smaller the balance, the less interest you'll incur. One strategy to reduce your balance is to put some charges on a different credit card, one that you can avoid interest charges on by paying in full each month. For example, let's say you need to spend a total of $1,000, but you charge $500 to two different cards. Pay one off in full, and you will have avoided much of the interest you would have paid if you charged the entire $1,000 to a card and only paid off half of it. (See also: <a href="https://www.wisebread.com/6-secrets-to-mastering-the-debt-snowball?ref=seealso" target="_blank">6 Secrets to Mastering the Debt Snowball</a>)</p> <h2>5. Ask for a lower interest rate</h2> <p>Your credit card's interest rates were set based on your creditworthiness when you applied for your account. But that could have been a long time ago, and your credit may have improved since then. If you have a strong record of making on-time payments, then it's possible that you may qualify for a <a href="https://www.wisebread.com/7-ways-to-lower-your-credit-card-interest-rate?ref=internal" target="_blank">lower standard interest rate</a>. Furthermore, it never hurts to ask. Contact your card issuer and ask for a lower rate. You may even let them know that you're considering transferring your balance elsewhere. Credit card users are very profitable customers, and banks will often make special offers when they fear losing your business.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/jason-steele">Jason Steele</a> of <a href="https://www.wisebread.com/5-smart-ways-to-reduce-your-credit-card-interest">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="https://www.wisebread.com/8-things-you-need-to-know-about-debt-management-plans">8 Things You Need to Know About Debt Management Plans</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="https://www.wisebread.com/2-minute-read-what-you-need-to-know-about-cash-advances">2-Minute Read: What You Need to Know About Cash Advances</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="https://www.wisebread.com/re-age-your-credit-card-debt-to-protect-your-credit-score">Re-Age Your Credit Card Debt to Protect 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="https://www.wisebread.com/6-steps-to-getting-a-credit-card-when-you-have-bad-credit">6 Steps to Getting a Credit Card When You Have Bad Credit</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="https://www.wisebread.com/5-reasons-you-can-be-denied-for-a-credit-card-even-with-good-credit">5 Reasons You Can Be Denied for a Credit Card Even With Good Credit</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Debt Management APR credit card interest credit card tips debt management tips interest charges monthly payments Fri, 14 Sep 2018 08:01:09 +0000 Jason Steele 2175305 at https://www.wisebread.com 7 Times You Definitely Will Be Charged Credit Card Interest https://www.wisebread.com/7-times-you-definitely-will-be-charged-credit-card-interest <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-times-you-definitely-will-be-charged-credit-card-interest" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/young_woman_paying_by_credit_card_shopping_online.jpg" alt="Young woman paying by credit card shopping online" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Credit card interest is the worst. For one thing, most cards have APRs of nearly 17% on average, according to CreditCards.com. That's compared to less than 4% for a mortgage or 11% on a personal loan.</p> <p>When you use credit cards, you should aim to avoid paying interest whenever possible. Every time you open a credit card bill, check the line at the top that shows how much interest you have been charged. If this amount is not zero, figure out why you got charged interest so that it doesn't happen again.</p> <p>If you're paying your full balance before the payment due date each month, that number should be zero. Here are some times when credit cards charge you interest.</p> <h2>1. When you pay late</h2> <p>Most cards offer a <a href="http://www.wisebread.com/everything-you-didn-t-understand-about-credit-card-interest-grace-periods-and-penalty-aprs?ref=internal" target="_blank">grace period</a>, which means that a new purchase is not subject to interest until after the payment due date. The law requires interest-free grace periods to be at least 21 days. But the grace period applies only if you <em>do</em> <em>not have a balance</em> at the beginning of the billing period.</p> <p>Let's say you have a new card with no balance. You charge $100 on your card on July 1, the billing cycle closes on July 28, and payment is due on August 18. You have until August 18 to pay your $100 balance off in full without paying any interest. This means that in effect, you're getting nearly two months of an interest-free loan.</p> <p>However, if you forget to send your payment and it's late, you'll pay a late fee as well as interest on the balance, including on the late fee. While you might think that if you pay your balance two days after the due date, you'll be charged two days' interest, you will actually be charged much more than that. By paying late, you've lost your grace period retroactively, and interest is calculated starting July 1 &mdash; the day you made the purchase.</p> <p>How much will you be charged? Credit cards disclose how they calculate the interest they'll charge in those thin-papered, lengthy disclosures they send you, but in general, for every day that you have a balance during that month, you'll owe that day's balance multiplied by your daily periodic rate. You get your daily periodic rate by dividing your APR by 365. So the daily rate for a 20% APR is 0.054%. Depending on the card issuer, this rate may compound daily, meaning you will pay interest upon your interest each day.</p> <p>You'll see charges for this balance on next month's bill. You started the new billing period with a balance, so you won't have a grace period in the new billing cycle, either. At the end of the new month, you'll pay for the interest on last month's balance, which runs into the new month's balance as well, plus interest on any new charges you make all month, and of course, a late fee for not paying on time. In addition, you may pay &quot;trailing interest&quot; the following month. More on that in a moment.</p> <h2>2. When you pay on time, but not the full balance</h2> <p>As we mentioned before, the grace period that cards offer only applies when you start the billing cycle with no balance. If you charged $1,000 last month, but only paid $900, you are starting the new billing cycle with a $100 balance. You might think that the bank would start charging interest only on the $100 balance that starts at the new billing period. But that's not so.</p> <p>As we saw in the example above, interest is charged <em>retroactively </em>if a purchase is not paid in full within the grace period. So you'll be charged interest on the full $1,000 for the duration of last month's billing cycle until the date the payment for the $900 was received by your issuer. At that point, your balance dropped to $100, and interest will then be calculated on that new balance until this month's statement closes.</p> <p>Want that grace period back? You'll need to pay off the $100 balance plus the interest shown on your current month's statement. But that's not all. You may also be charged interest in the days between when the statement is issued and when your payment is received. This is sometimes called &quot;trailing interest&quot; or &quot;residual interest,&quot; and it's most pronounced if you pay your bill with a check, which takes a few days to reach the issuer and clear.</p> <p>For example, imagine you started February with that $100 balance. You receive a statement dated February 5 and send your check for the $100 plus interest on February 10. The issuer applies payment to your account on the 15th. Next month, you receive another statement saying you currently have a balance of $3.23. That's the amount of the residual interest, which was charged to your account between February 5 and February 15. One way to avoid this is to use online payments, but even then you should call the bank and ask exactly how much you will owe if you make your online payment on February 5. Then pay that amount in full on February 5.</p> <p>Unfortunately, even doing that is no guarantee. Some credit cards require you to have no revolving balance for two full billing cycles before you get your grace period back.</p> <h2>3. When a promotional 0% interest offer ends</h2> <p>There are a number of credit cards that offer a promotional period of <a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases?ref=internal" target="_blank">0% interest on your purchases</a>. You won't be charged any interest during the promotional period. But you <em>will</em> be charged interest on any new purchases as soon as the promotional period ends &mdash; and those interest rates can be high. That's why it's important to pay off the whole balance before the promotional period ends, and only use the card if you can pay off the full balance every month.</p> <p>Also note that you can be charged interest if you pay late or violate some other part of the card's terms and conditions. If you choose to take advantage of an offer like this, read every word of fine print to make sure you understand what you're getting into. Check each month's statement to check that you have not been charged any interest.</p> <h2>4. When you take out a cash advance</h2> <p>Your card agreement will lay this out: Your grace period usually does not apply to <a href="http://www.wisebread.com/how-a-credit-card-cash-advance-costs-you-more-than-a-purchase?ref=internal" target="_blank">cash advances</a>. Interest will start accruing the day you get the advance. Not only that, but cash advances often charge a higher interest rate than purchases and may come with a fee as well.</p> <h2>5. When you use a convenience check</h2> <p>Those paper checks that your credit card mails you are basically like low-tech cash advances, with the same disadvantages: Interest starts accruing the moment the check is deposited, probably at a higher rate than your regular rate, and there may be fees. When I get these, I immediately shred them.</p> <h2>6. When you charge a lottery ticket</h2> <p>I was surprised to find this warning in one of my credit card agreements: Purchases of &quot;cash equivalents&quot; such as lottery tickets, traveler's checks, money orders, and gambling chips are not subject to the grace period. You may be charged interest on such purchases starting the day you make them, even if you don't carry a balance.</p> <h2>7. When you transfer a balance from another card</h2> <p>Transferring a balance from a high rate card to a lower rate card can save you money, especially since many <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">balance transfer cards offer 0% interest</a> for a limited amount of time. But you should keep in mind that once you have transferred a balance to a card, you are carrying a balance until you pay it in full. That means that you will not have a grace period on that card.</p> <p>That may not matter as long as you're in the 0% promotional period and only have the transferred balance on the card. But as soon as you make a purchase on the card, it's subject to interest from the moment you bought the item.</p> <p>Not only that, but because of the way payments are allocated, it will take you longer to pay off the balance than if you'd put that purchase on a different card. According to the law, an issuer can apply the minimum payment amount to whichever balance it chooses (the 0% transferred balance or the higher-interest new purchase balance). The bank will no doubt choose to put that minimum payment toward the no-interest balance. Whatever you pay above the minimum must, by law, go to the higher-interest purchase balance. But if it's not enough to clear the purchase balance, you'll now accrue more interest charges on it next month. Bottom line: Don't put new purchases on a balance transfer card.</p> <p>And, as with the cards that offer 0% APR on new purchases for an introductory period, if you pay late or violate some other terms of the card, you could immediately lose your promotional rate and be subject to interest going forward. (See also: <a href="http://www.wisebread.com/your-comprehensive-checklist-for-a-successful-balance-transfer#avoidpurchases?ref=seealso" target="_blank">Your Comprehensive Checklist for a Successful Balance Transfer</a>)</p> <h2>Beware the penalty APR</h2> <p>If you have multiple late payments, or if you write bad checks that the company has to return to you, your credit card company might slap you with a higher APR, which would apply to all future purchases, not just the late payment. Some cards will review your account and return your APR to your previous rate if you make consecutive on-time payments immediately for a certain amount of time.</p> <h2>Do you really have to pay?</h2> <p>Just because you see an interest charge on your credit card statement doesn't mean you absolutely have to pay it. If you have a sterling &mdash; and long &mdash; history with this card company, they may be understanding if you slip up only occasionally. I have successfully had customer service agents waive both late fees and interest charges when I accidentally paid a few days late or even when I forgot a monthly payment altogether. On other occasions, customer service waived the fee but not the interest. It never hurts to ask.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F7-times-you-definitely-will-be-charged-credit-card-interest&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Times%2520You%2520Definitely%2520Will%2520Be%2520Charged%2520Credit%2520Card%2520Interest.jpg&amp;description=7%20Times%20You%20Definitely%20Will%20Be%20Charged%20Credit%20Card%20Interest"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/7%20Times%20You%20Definitely%20Will%20Be%20Charged%20Credit%20Card%20Interest.jpg" alt="7 Times You Definitely Will Be Charged Credit Card Interest" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="https://www.wisebread.com/7-times-you-definitely-will-be-charged-credit-card-interest">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="https://www.wisebread.com/your-interest-rates-are-about-to-go-up">Your Interest Rates Are About to Go Up</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="https://www.wisebread.com/5-smart-ways-to-reduce-your-credit-card-interest">5 Smart Ways to Reduce Your Credit Card Interest</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="https://www.wisebread.com/everything-you-didn-t-understand-about-credit-card-interest-grace-periods-and-penalty-aprs">Everything You Didn’t Understand About Credit Card Interest, Grace Periods, and Penalty APRs</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="https://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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://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> </ul> </div> </div> </div> </div><br/></br> Credit Cards Debt Management 0% interest APR credit card grace period interest Mon, 18 Jun 2018 08:30:26 +0000 Carrie Kirby 2148865 at https://www.wisebread.com What to Do If Your Balance Transfer Limit Is Too Low https://www.wisebread.com/what-to-do-if-your-balance-transfer-limit-is-too-low <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-do-if-your-balance-transfer-limit-is-too-low" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/young_woman_online_shopping.jpg" alt="Young woman online shopping" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You're trying to fix an expensive financial mistake: You ran up too much debt on your credit cards, and now you're carrying a balance of thousands of dollars from month to month. The interest that this balance generates makes it even harder to pay down the debt.</p> <p>Consumers often turn to a balance transfer &mdash; moving high-interest credit card debt to a new <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">card offering a promotional 0% APR</a> &mdash; to help tackle their debt repayment. Once you move your debt to your new card, you'll have a window (usually between six and 18 months) to pay off the balance before that promotional APR window closes and the card's actual interest rate kicks in.</p> <p>But what if the balance transfer limit on your new card is too low to accommodate your existing credit card debt? What steps can you take to reduce the burden that high interest is adding to your credit card problem?</p> <h2>Call the financial institution behind your balance transfer credit card</h2> <p>Your first step should be to call the bank or financial institution that issued your new credit card (you'll find the number on the back of the card). Simply ask a representative if you can have a higher balance transfer limit. Explain that you want to transfer the entire balance from another card, and that the limit on your new card isn't high enough to accommodate this.</p> <p>Now, there's no guarantee that this will work. The issuers of credit cards rely on a formula to determine your credit limit. That formula includes your credit score, debt-to-income ratio, and the income you earn. If your financial numbers aren't strong enough to justify the higher limit, your issuer probably won't budge. You won't know, though, until you ask. (See also: <a href="http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards?ref=seealso" target="_blank">7 Important Things You Should Know About Balance Transfer Cards</a>)</p> <h2>Transfer as much of your balance as you can</h2> <p>Say you owe $10,000 in credit card debt, but your new balance transfer card comes with a limit of just $7,000. You can always transfer $7,000 of your $10,000 debt to your 0% interest credit card, and leave the remaining $3,000 on your current card. That's not ideal, but at least you are eliminating high interest on a good portion of your debt.</p> <p>Just make sure to pay down both of your balances. And make sure to pay off the amount on your 0% interest card before that card's actual interest rate kicks in. Otherwise, you are defeating the purpose of a balance transfer. (See also: <a href="http://www.wisebread.com/step-by-step-guide-to-doing-a-balance-transfer-on-credit-cards?ref=seealso" target="_blank">Step-by-Step Guide to Doing a Balance Transfer on Credit Cards</a>)</p> <h2>Apply for a personal loan</h2> <p>You might also apply for a personal loan from a bank, credit union, or other financing source, and use the money from this loan to pay off your credit card debt.</p> <p>Once you take out a loan, you'll have to pay it back in monthly installments. There are some advantages to this approach. First, you'll have a set payment each month, so you can budget for it more easily. Secondly, making payments on a personal loan, as long as you make them on time each month, will help your all-important credit score. Moving debt from a credit card into a personal loan will also help something known as your credit utilization ratio.</p> <p>Your credit utilization ratio measures how much of your available credit you are using. The higher this ratio, the worse it is for your credit score. If you have a combined credit limit of $20,000 on your credit cards, and you have $10,000 of credit card debt, you are using 50 percent of your available credit. If you pay off $5,000 of that debt with a personal loan, you are now using just $5,000 of your $20,000 of available credit, instantly improving your credit utilization ratio. Yes, you still have the same amount of debt &mdash; some of it has simply been moved to a personal loan &mdash; but your credit score will improve. (See also: <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=seealso" target="_blank">This One Ratio Is the Key to a Good Credit Score</a>)</p> <p>The key with a personal loan is to find one that comes with a significantly lower interest rate than the ones attached to your credit card debt. Otherwise, there is no point.</p> <h2>A final tip</h2> <p>Once you initiate a balance transfer on your credit card debt, get serious about paying it off. Your goal is to eliminate this debt before the 0% APR offer disappears and your new card's interest rate kicks in. You'll also need to get your spending under control. Don't continue to run up massive amounts of debt on any of your credit cards. If you do, even that 0% interest rate won't be much help. (See also: <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=seealso" target="_blank">When to Do a Balance Transfer to Pay Off Credit Card Debt</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhat-to-do-if-your-balance-transfer-limit-is-too-low&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhat%2520to%2520Do%2520If%2520Your%2520Balance%2520Transfer%2520Limit%2520Is%2520Too%2520Low.jpg&amp;description=What%20to%20Do%20If%20Your%20Balance%20Transfer%20Limit%20Is%20Too%20Low"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/What%20to%20Do%20If%20Your%20Balance%20Transfer%20Limit%20Is%20Too%20Low.jpg" alt="What to Do If Your Balance Transfer Limit Is Too Low" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="https://www.wisebread.com/what-to-do-if-your-balance-transfer-limit-is-too-low">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="https://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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/6-things-you-might-miss-in-your-credit-cards-fine-print">6 Things You Might Miss in Your Credit Card&#039;s Fine Print</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="https://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan">10 Things You Need to Know Before Taking Out a Personal Loan</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/all-the-ways-minimum-payments-are-evil">All the Ways Minimum Payments Are Evil</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management APR balance transfers credit card debt credit limits interest rates personal loans Wed, 21 Feb 2018 09:31:05 +0000 Dan Rafter 2104966 at https://www.wisebread.com 3 Easy Ways to Improve Your Credit Score During the Holidays https://www.wisebread.com/3-easy-ways-to-improve-your-credit-score-during-the-holidays <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-easy-ways-to-improve-your-credit-score-during-the-holidays" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/beautiful_woman_shopping_online_for_christmas.jpg" alt="Beautiful woman shopping online for Christmas" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Whether you're stuffing yourself with delicious turkey, putting up decorations, or just enjoying a well-deserved break, you're probably not thinking about your credit score much during the holidays. But even though it may not be fun, monitoring your credit score this time of year can help bring you closer to your financial New Year's resolutions or goals. Here are a few ways to give your credit score a much-needed boost during this holiday season.</p> <h2>Plan to make more purchases with cash</h2> <p>It's a myth that most people do their holiday shopping with credit cards. In 2016, Experian's Holiday Spending Survey found that 55 percent of respondents selected cash as their planned method of payment for holiday gifts. Spending with cash instead of credit cards is a smart move to prevent the potential debt cycle that the holidays can bring. Paying with cash instead of plastic will help keep your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal" target="_blank">credit utilization ratio</a> low. This ratio compares total credit available to you with the amount of credit you have used. A low ratio means you do not use very much of your credit. Remember that your credit utilization ratio accounts for 30 percent of your credit score.</p> <h2>Apply for a credit card with a low APR</h2> <p>While cash is king, 47 percent of respondents were still planning to use credit cards for their holiday shopping last year. If you're planning on pulling out plastic for this holiday shopping season, you may want to pay a visit to your local credit union before you start swiping.</p> <p>According to data from the National Credit Union Administration, the average interest rate of a regular credit card from a credit union was 11.61 percent as of September 2017. At the same time, cards from banks came with an average rate of 12.96 percent. (See also: <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?ref=seealso" target="_blank">Best Low Interest Rate Credit Cards</a>)</p> <p>Let's assume that you were to spend $1,000 with a credit card and pay it all back in three months. With a 12.96 percent APR, you would have to make three monthly payments of $341. That's $23 in interest payments for that $1000. Another way to avoid interest charges on your holiday spending is to get a <a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases?ref=internal" target="_blank">card that offers 0% APR on purchases</a> for a promotional period.</p> <p>By paying less interest, you're more likely to make payments on time (which accounts for 35 percent of your credit score) and owe less to credit card lenders overall (which accounts for 30 percent of your credit score).</p> <p>However, the most important thing is you make a commit to pay off your holiday purchases, so that you're not still paying for it when the holidays roll around again.</p> <h2>Consolidate high-interest credit cards</h2> <p>Trying to reach the recommended 30 percent credit utilization ratio can feel like an overwhelming task when the majority of your monthly payment goes to cover high interest. One way to overcome this is to explore your options of consolidating balances of other cards with a personal line of credit or other type of financing.</p> <p>Credit unions also beat national banks with lower rates for personal lines of credit. As of September 2017, a 36-month unsecured fixed rate loan came with an average interest rate of 9.20 percent at credit unions and 10.04 percent at banks. And during the holiday season, credit unions tend to offer even lower rates.</p> <p>You could also do a <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=internal" target="_blank">balance transfer to consolidate high-interest credit card debt</a>. To make this work, you'd need to open a new credit card offering a promotional introductory rate on balance transfers. You may have to pay a fee to transfer your balance (typically around 3 percent), and you'll want to repay your debt before the promotional APR window closes (typically between six and 21 months) and the rate increases. However, having a year or so to tackle credit card debt at a much lower interest rate can save you a great deal of money if you're diligent. (See also: <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=seealso?ref=seealso" target="_blank">The Best 0% Balance Transfer Credit Cards</a>)</p> <p>Being able to consolidate your balances allows you slay your debt monsters faster, which will certainly make your holidays a little brighter &mdash; and improve your credit score. Remember that the longer you carry a balance on high-interest credit cards and loans, the more interest you'll rack up on your debt, and the longer that your credit score will remain low. (See also: <a href="http://www.wisebread.com/5-tricks-to-consolidating-your-debt-and-saving-money?ref=seealso" target="_blank">5 Tricks to Consolidating Your Debt and Saving Money</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F3-easy-ways-to-improve-your-credit-score-during-the-holidays&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F3%2520Easy%2520Ways%2520to%2520Improve%2520Your%2520Credit%2520Score%2520During%2520the%2520Holidays.jpg&amp;description=5%20Affordable%20Vacations%20to%20Please%20Every%20Age%20Group"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/3%20Easy%20Ways%20to%20Improve%20Your%20Credit%20Score%20During%20the%20Holidays.jpg" alt="3 Easy Ways to Improve Your Credit Score During the Holidays" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="https://www.wisebread.com/3-easy-ways-to-improve-your-credit-score-during-the-holidays">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan">10 Things You Need to Know Before Taking Out a Personal Loan</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/10-money-goals-you-should-set-for-the-holidays">10 Money Goals You Should Set for the Holidays</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/the-millennials-guide-to-avoiding-credit-card-debt">The Millennials Guide to Avoiding Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/7-easy-first-steps-to-paying-off-debt">7 Easy First Steps to Paying Off Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/all-the-ways-minimum-payments-are-evil">All the Ways Minimum Payments Are Evil</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance APR balance transfers cash consolidating debt credit score credit unions Holidays interest rates personal line of credit repayment shopping Fri, 17 Nov 2017 10:00:06 +0000 Damian Davila 2055198 at https://www.wisebread.com 10 Things You Need to Know Before Taking Out a Personal Loan https://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/10-things-you-need-to-know-before-taking-out-a-personal-loan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/hand_giving_and_hand_receiving_money.jpg" alt="Hand giving and hand receiving money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I recently called my bank to ask about fees for using my debit card on an upcoming international trip. I laughed when the banker followed up by asking, &quot;Are you interested in taking out a personal loan for spending money on your vacation?&quot;</p> <p>There are plenty of good reasons to take out a personal loan, but going on vacation isn't one of them. A personal loan is, in essence, an unsecured loan that you get on the basis of your credit and income &mdash; unlike a mortgage loan or home equity line of credit, which uses your home as collateral. Personal loans have advantages and disadvantages compared to secured loans, so whether you go for one of these when you're in need of cash depends on your individual situation.</p> <p>Here's what you should consider before getting a personal loan.</p> <h2>1. The interest rate may be higher than you expect</h2> <p>When you hear about interest rates in the media, they're often talking about the 30-year fixed rate for a standard mortgage, which has been around 4 percent or lower for a long time now. But a personal loan's interest rate will probably be at least twice that. The reason for the difference: When you refinance your home or take out a home equity line of credit, you're promising to relinquish your home if you can't pay back the debt. That's a bigger risk for you, and less of a risk for the bank, compared to a personal loan. In return, banks give you a low interest rate on secured loans. (See also: <a href="http://www.wisebread.com/the-different-types-of-loans-a-primer?ref=seealso" target="_blank">The Different Types of Loans: A Primer</a>)</p> <h2>2. Your credit score matters more for personal loans</h2> <p>With no collateral, all the lender has to go on is your personal creditworthiness. You can expect the available interest rates to increase steeply if your credit is average or poor, going up as high as 36 percent APR.</p> <h2>3. A personal loan is not a long-term solution</h2> <p>While the typical mortgage is paid off over decades, personal loan terms are typically limited to seven years or less. This can be a good thing, because you should never borrow money for longer than you really need to. But it also means that if you are trying to borrow a lot of money, like for a major home remodel, the payments might be too high for you to keep up with on a personal loan.</p> <h2>4. Banks aren't the only option</h2> <p>As nonprofits, credit unions often offer lower rates and fees than banks for the same personal loan products. Then there are the crop of new &quot;marketplace lenders,&quot; such as SoFi and Prosper, which promise easy, quick online loan approval and good rates, especially to folks with the best credit. This nascent industry has had some bumps in the road, but it's still an avenue worth looking into. (See also: <a href="http://www.wisebread.com/best-lenders-for-personal-loans?ref=seealso" target="_blank">Best Lenders for Personal Loans</a>)</p> <h2>5. Personal loans can be a lifesaver when you need cash quickly</h2> <p>When an urgent financial need rears its head &mdash; a leaky roof, an emergency medical bill, or, heaven forbid, an unexpected funeral &mdash; many people turn to credit cards or payday lenders for help. These lenders can be punishingly expensive, but they may seem attractive because in such situations you just don't have time to sit down and apply for a home equity line of credit or look at refinancing your mortgage.</p> <p>You can get the funds from a personal loan within two weeks of applying online, making it just a little slower than the alternatives and potentially much more affordable. (See also: <a href="http://www.wisebread.com/5-times-personal-loans-may-be-better-than-credit-cards?ref=seealso" target="_blank">5 Times Personal Loans May Be Better Than Credit Cards</a>)</p> <h2>6. Personal loans can save you a lot on debt you already have</h2> <p>One of the most common uses for a personal loan is to <a href="http://www.wisebread.com/5-tricks-to-consolidating-your-debt-and-saving-money?ref=iternal" target="_blank">consolidate existing debt</a>, like credit card balances, student loans, and car loans. You may be able to get a lower interest rate than you were paying on your other debts, and you also have the organizational benefit of having only one bill to pay each month. However, when transferring one kind of loan to another, you should ...</p> <h2>7. &hellip; Be aware of what you may be giving up</h2> <p>Some marketplace lenders heavily market the idea of refinancing student loan debt into personal loans. But before you make a decision like that, you should compare your old loan and new loan carefully, the Consumer Financial Protection Bureau warned in a 2016 release.</p> <p>&quot;[I]n some cases consumers could lose important loan-specific protections by refinancing an existing debt. Specifically, consumers should know that they may sign away certain federal benefits, such as income-driven repayment for federal student loans or service member benefits,&quot; the CFPB said. (See also: <a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans?ref=seealso" target="_blank">8 Valuable Rights You Might Lose When You Refinance Student Loans</a>)</p> <h2>8. You might be better off with a different type of loan</h2> <p>If you're trying to get a better rate on credit card debt while you pay it off, before you commit to a personal loan, shop around to see what else is out there. You may be able to transfer your balance to a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">card with a promotional 0 percent interest rate</a>. Another potentially better deal could be <a href="http://www.wisebread.com/this-is-when-you-should-borrow-from-your-retirement-account?ref=internal" target="_blank">taking money out of your retirement account</a> for a short time, especially if you have a Roth IRA. Just make sure to pay back whatever you borrow.</p> <h2>9. Watch out for fees and extras</h2> <p>Some lenders will try to throw in an insurance policy or other extra expenses as you close the loan. You may or may not want an insurance policy to make sure that your survivors aren't stuck with your loan if tragedy strikes, but that's a separate financial decision that you should undertake with research, not just because you're under the impression that it's required for your loan. (If the lender says it is, walk away.)</p> <p>Also, ask the lender if they use the &quot;pre-compute&quot; method to calculate interest, or if they have prepayment penalties &mdash; you should avoid these, because both will punish you if you're able to pay the loan back ahead of schedule.</p> <h2>10. Never get a personal loan to fund certain expenses</h2> <p>One of the nice things about a personal loan is that unlike a car loan or mortgage, you don't have to justify your purchase to the lender. However, there are things you should know better than to borrow for &mdash; whether it's with a credit card, a home equity line of credit, or a personal loan.</p> <p>Don't take out a personal loan to buy an engagement ring; why would you want to start out your relationship with a pile of debt? While some lenders may advertise a personal loan as a &quot;travel loan,&quot; that's another bad idea; once the vacation is over, you have nothing that you could sell to pay off the loan if you need to. Do I need to tell you that you shouldn't take out a personal loan for gambling money? I didn't think so. (See also: <a href="http://www.wisebread.com/never-borrow-money-for-these-5-buys?ref=seealso" target="_blank">Never Borrow Money for These 5 Buys</a>)</p> <p>A more complex question is whether it's OK to use a personal loan for a down payment on a home. The whole point of requiring a buyer to make a down payment is to show that they can afford the home and to help them feel invested in the purchase. So your mortgage lender may not like it if you try to fund the down payment with a personal loan. At the very least, with this method, you'll need to get the loan several months in advance of the purchase. But even then, proceed with caution; adding debt in the form of a personal loan could affect your chances of getting approved for the mortgage at all. (See also: <a href="http://www.wisebread.com/5-money-moves-that-will-ruin-your-mortgage-application?ref=seealso" target="_blank">5 Money Moves That Will Ruin Your Mortgage Application</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F10-things-you-need-to-know-before-taking-out-a-personal-loan&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F10%2520Things%2520You%2520Need%2520to%2520Know%2520Before%2520Taking%2520Out%2520a%2520Personal%2520Loan.jpg&amp;description=10%20Things%20You%20Need%20to%20Know%20Before%20Taking%20Out%20a%20Personal%20Loan"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/10%20Things%20You%20Need%20to%20Know%20Before%20Taking%20Out%20a%20Personal%20Loan.jpg" alt="10 Things You Need to Know Before Taking Out a Personal Loan" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="https://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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="https://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/3-easy-ways-to-improve-your-credit-score-during-the-holidays">3 Easy Ways to Improve Your Credit Score During the Holidays</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/the-millennials-guide-to-avoiding-credit-card-debt">The Millennials Guide to Avoiding Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/6-important-things-to-look-for-in-a-savings-account">6 Important Things to Look for in a Savings Account</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/all-the-ways-minimum-payments-are-evil">All the Ways Minimum Payments Are Evil</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Banking APR balance transfer credit score fees interest rates lenders personal loans unsecured loan Fri, 20 Oct 2017 08:30:10 +0000 Carrie Kirby 2037745 at https://www.wisebread.com 6 Things You Might Miss in Your Credit Card's Fine Print https://www.wisebread.com/6-things-you-might-miss-in-your-credit-cards-fine-print <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-things-you-might-miss-in-your-credit-cards-fine-print" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/woman_is_shopping_online_with_laptop_computer_and_credit_card.jpg" alt="Woman is shopping online with laptop computer and credit card" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Be honest: Do you ever read through all that fine print in your credit card agreement? Or do you simply skim and sign up? While poring over fine print might feel like a waste of time, it's important. It can hold critical information about your new card; read it carefully to understand the following key terms and conditions.</p> <h2>1. How your credit limit can change</h2> <p>First things first: Make sure you know exactly what your credit limit is. Introductory offers often include language like &quot;You can be approved for as much as $10,000!&quot; or &quot;Up to $20,000 credit limit!&quot; Those &quot;as much as&quot; and &quot;up to&quot; phrases are important, because they don't guarantee that amount of credit; they just imply that it's possible. Know exactly what your credit limit is so you don't go over it, because doing so tends to invoke fees and trigger a high interest rate.</p> <p>Once you know how much credit you have on a certain card, find out what actions or events might change your credit limit. If you miss a payment, make a late payment, or incur a fee, will your credit limit change? It's important to know, particularly if you plan to use the card to make a big purchase. (See also: <a href="http://www.wisebread.com/4-questions-to-ask-before-getting-a-credit-increase?ref=seealso" target="_blank">4 Questions to Ask Before Getting a Credit Increase</a>)</p> <h2>2. How the interest rate will change</h2> <p>You'll often see the interest rate for a new credit card in big, prominent print on the initial offer. That's because a low interest rate is often the marketing tactic used to appeal and bring in new cardholders. How soon will that introductory interest rate change, and what will it become when it does? Look through the fine print for terms like APR (annual percentage rate), variable rate information, interest rate, and introductory interest rate to be sure you know exactly when that introductory offer is over, and what happens when it ends.</p> <p>Be aware, also, that something as simple as one missed payment could cause you to lose the introductory interest rate sooner. Those terms should be spelled out in the fine print, and it's important to know that slipping up on a payment may bump your interest rate up sooner than you expect. (See also: <a href="http://www.wisebread.com/everything-you-didn-t-understand-about-credit-card-interest-grace-periods-and-penalty-aprs?ref=seealso" target="_blank">Everything You Didn't Understand About Credit Card Interest, Grace Periods, and Penalty APRs</a>)</p> <h2>3. How your payments will be allocated</h2> <p>If you use a credit card for purchases as well as cash advances, you probably have two different interest rates. Typically, cash advances come with a higher interest rate than purchases made on the card. And if you use the card for purchases made after that introductory, low-interest period, you'll have three different interest rates in play. (See also: <a href="http://www.wisebread.com/how-a-credit-card-cash-advance-costs-you-more-than-a-purchase?ref=seealso" target="_blank">How a Credit Card Cash Advance Costs You More Than a Purchase</a>)</p> <p>You want to find out exactly how your payment will be allocated for these different interest rates. In some cases, the default terms might put a much lower percentage of each payment toward the higher interest rate charges. Find out in the fine print if that's true, and if you have the option to request a particular payment allocation yourself for each payment you make.</p> <h2>4. How extra fees might add up</h2> <p>Credit cards come with plenty of extra fees: missed payment, late payment, and extra fees for cash advances or particular types of purchases. Look, too, for fees that kick in if you use the card over the credit limit.</p> <p>Read the fine print to find out how many potential fees come with the card, when those fees are charged to you, how much each fee is, if there is a limit to how many fees can be charged, and if the company can change the fees at any time.</p> <p>The ability to change fees can become problematic if you're counting on a particular window of time before a payment becomes late and that window changes. Some credit card companies will even set a time of day for payments due &mdash; say, noon on the 25th &mdash; and if your payment processes after 12 p.m., you're charged a late fee. (See also: <a href="http://www.wisebread.com/5-simple-ways-to-never-make-a-late-credit-card-payment?ref=seealso" target="_blank">5 Simple Ways to Never Make a Late Credit Card Payment</a>)</p> <h2>5. How old debts might resurface</h2> <p>Although this particular term may not be as common, it's one well-worth noting. Some credit card companies purchase old debts, then offer cards to those debt-holders. The first statement comes in and the old debt is included in the balance due. If you've ever defaulted on a debt, read the fine print to make sure the credit card company is not asserting their right to include old or defaulted debts on newly opened credit cards.</p> <h2>6. How those terms can change</h2> <p>One last important point to remember about the fine print: What you read in that initial agreement can change, usually at any time. Credit card companies generally retain the right to change the terms of the agreement as they see fit, but they're required to update the card holders when those terms change.</p> <p>That's why reading the fine print isn't a one-and-done event. You need to stay updated on changes to your credit card agreement, which means going over any material you receive with your regular monthly statement. If you see a change you don't like, take action right away: Call the company and negotiate for different terms, or, if the terms are really bad, simply pay the card off and stop using it. It's often better to go this route instead of canceling, since canceling a card can hurt your credit score. (See also: <a href="http://www.wisebread.com/how-to-ditch-a-credit-card-without-dinging-your-credit-score?ref=seealso" target="_blank">How to Close a Credit Card Without Dinging Your Credit Score</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-things-you-might-miss-in-your-credit-cards-fine-print&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Things%2520You%2520Might%2520Miss%2520in%2520Your%2520Credit%2520Card%2527s%2520Fine%2520Print.jpg&amp;description=6%20Things%20You%20Might%20Miss%20in%20Your%20Credit%20Card's%20Fine%20Print"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/6%20Things%20You%20Might%20Miss%20in%20Your%20Credit%20Card%27s%20Fine%20Print.jpg" alt="6 Things You Might Miss in Your Credit Card's Fine Print" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/annie-mueller">Annie Mueller</a> of <a href="https://www.wisebread.com/6-things-you-might-miss-in-your-credit-cards-fine-print">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://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="https://www.wisebread.com/how-a-credit-card-cash-advance-costs-you-more-than-a-purchase">How a Credit Card Cash Advance Costs You More Than a Purchase</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://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> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/6-smart-reasons-to-pay-your-credit-card-bill-before-its-due">6 Smart Reasons to Pay Your Credit Card Bill Before It&#039;s Due</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/is-a-balance-transfer-offer-a-good-deal">Is a Balance Transfer Offer a Good Deal?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards APR credit limits debt fine print Hidden fees interest rates introductory rates payments terms and conditions Thu, 28 Sep 2017 09:00:05 +0000 Annie Mueller 2027476 at https://www.wisebread.com Should You Buy a Car With a Credit Card? https://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="https://wisebread-killeracesmedia.netdna-ssl.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="https://wisebread-killeracesmedia.netdna-ssl.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="https://www.wisebread.com/holly-johnson">Holly Johnson</a> of <a href="https://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="https://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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://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="https://www.wisebread.com/5-ways-to-get-out-of-a-car-lease-early">5 Ways to Get Out of a Car Lease Early</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 https://www.wisebread.com 4 New Reasons You Need an Emergency Fund https://www.wisebread.com/4-new-reasons-you-need-an-emergency-fund <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-new-reasons-you-need-an-emergency-fund" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/emergency_fund_money_jar_filled_with_american_currency.jpg" alt="Emergency fund money jar filled with American currency" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You need an emergency fund: You've probably been told this plenty of times before, and you maybe haven't taken it as seriously as you should have.</p> <p>Well, some fresh data from 2017 proves that &hellip; yes, you really do need an emergency fund! If you've delayed stashing that money away, now is the time to start.</p> <h2>1. Potentially higher health care costs under AHCA</h2> <p>Let's start with a big-ticket item: health care. Under the current administration, the American Health Care Act (AHCA) is adjusting several items from its predecessor, the Affordable Care Act (ACA), otherwise known as Obamacare.</p> <p>Depending on several factors, including your age, and income level, and where you live, you may end up paying more or less under the AHCA than you did under the ACA. Those who are older, have a lower income, and live in an area with higher premiums are likely to pay more under the AHCA. For example, while a 40-year-old resident of Cherry County, Nebraska making $50,000 per year would pay 21 percent more in health premiums under the AHCA, a 27-year-old resident of Tulare County, California would pay 26 percent <em>less</em>.</p> <p>To get an idea of how much you would in pay under the AHCA, use this <a href="http://kff.org/interactive/tax-credits-under-the-affordable-care-act-vs-replacement-proposal-interactive-map/" target="_blank">predictor tool</a> from the Kaiser Family Foundation and get more information from your current health plan provider. Having an emergency fund would allow you to be ready to cover not only medical emergencies, but also the potential hike in those health care premiums.</p> <h2>2. Worrying about finances makes you less productive at work</h2> <p>According to recent data from the Employment Benefit Research Institute, three in 10 American workers claim they worry about personal finance at their workplace. Even worse, over 50 percent of those workers believe that time spent fretting about money is making them less productive for their employers.</p> <p>If you belong to this group of workers, then you would regain peace of mind at work with an emergency fund. By knowing that you could cover your necessities for three to six months if you were to lose your job, you would be able to focus on performing better and increasing your chance of a raise.</p> <h2>3. Average credit card APR is on the rise</h2> <p>What do you do when you don't have money to cover surprise expenses, such as the water heater breaking or the car going on the fritz? Most people without an emergency fund turn to a credit card.</p> <p>Well, here is some bad news: A CreditCards.com survey found that the average credit card APR had reached a record 15.89 percent as of June 14, 2017. If your credit score is less than perfect, you can expect to pay an interest rate even higher than that average.</p> <p>Remember, the whole point of having an emergency fund is to lower your financial risk. By using a credit card as an emergency fund, you're only adding risk to your personal finances.</p> <h2>4. Opportunity only comes around so often</h2> <p>Many people think of an emergency fund as a &quot;rainy day fund.&quot; However, others think of it as an &quot;opportunity fund&quot; &mdash; a way to never miss out on a great opportunity for want of cash. And while an emergency fund should never be thought of as play money, if you have enough saved, you can use some of that cash to fund a special opportunity that may not come again. (See also: <a href="http://www.wisebread.com/why-opportunity-funds-are-the-new-emergency-funds?ref=seealso" target="_blank">Why &quot;Opportunity&quot; Funds Are the New Emergency Funds</a>)</p> <p>Here are some examples:</p> <ul> <li> <p>You have the chance to refinance your mortgage to a lower rate (and lower your monthly payment!), but you don't have any savings to cover the necessary $2,000 to $3,000 closing costs. Luckily, there's enough in your emergency fund to help you go through with the refi.</p> </li> <li> <p>You've had a lifelong dream of taking a two-week trip around Europe, but the tour company that you like is a little out of your price range. They offer a limited-time discount, and you pull some money from your emergency fund to take that trip of a lifetime.</p> </li> <li> <p>The refrigerator that you've had since college has been jacking up your electricity bill for years. You discover that you could slash your monthly bill by 40 percent <em>and </em>get an energy rebate from the state government if you were to buy a more energy-efficient model. You don't have the money upfront, and the rebate expires next month &hellip; but there's enough in your emergency fund.</p> </li> </ul> <p>The list goes on. An emergency fund is usually a building block to achieve financial security, but it could also allow you to gain financial freedom. Once you gain the discipline to save enough to cover your necessities in case of an emergency, you may be able to continue to save in case of a seizable opportunity &mdash; or even a lifelong dream.</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%2F4-new-reasons-you-need-an-emergency-fund&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520New%2520Reasons%2520You%2520Need%2520an%2520Emergency%2520Fund.jpg&amp;description=4%20New%20Reasons%20You%20Need%20an%20Emergency%20Fund"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/4%20New%20Reasons%20You%20Need%20an%20Emergency%20Fund.jpg" alt="4 New Reasons You Need an Emergency Fund" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="https://www.wisebread.com/4-new-reasons-you-need-an-emergency-fund">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/25-money-saving-strategies-that-are-actually-hurting-you">25 Money-Saving Strategies That Are Actually Hurting 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="https://www.wisebread.com/why-saving-money-is-harder-today">Why Saving Money Is Harder Today</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="https://www.wisebread.com/5-minute-finance-start-an-emergency-fund">5-Minute Finance: Start an Emergency Fund</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="https://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0">6 Ways You Can Cut Costs Right Before You Retire</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="https://www.wisebread.com/5-places-to-check-out-medical-care-for-the-uninsured">5 Places to Check out Medical Care for the Uninsured</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance APR emergency fund expenses health care interest rates job loss opportunity fund rainy day fund saving money stress surprises Thu, 29 Jun 2017 08:00:10 +0000 Damian Davila 1973594 at https://www.wisebread.com We Do the Math: Save for Retirement or Pay Off Credit Card Debt? https://www.wisebread.com/we-do-the-math-save-for-retirement-or-pay-off-credit-card-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/we-do-the-math-save-for-retirement-or-pay-off-credit-card-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/iStock-514332608.jpg" alt="Couple wondering if they should save for retirement or pay off debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Should you save for retirement or pay off credit card debt? If you're carrying a card balance, you may be wrestling with whether to put all your resources into attacking the debt, or start building your retirement nest egg while you slowly pay off debt.</p> <p>Which one will give you a better net worth? There's no simple answer. For some people the situation may warrant clearing credit card debt first; for others, it's better to start investing right away. To figure out which scenario is better in a given situation, we'll need to do some math. Don't worry, we'll show you how to do it in a few easy steps.</p> <h2>Step 1: Gather important numbers about your debt and your retirement plan</h2> <p>First, look through your credit card statements and accompanying information to pull up the following numbers:</p> <ul> <li>Credit card debt. You'll find this on the front of your credit card statement.<br /> &nbsp;</li> <li>Credit card interest rate, or APR (Annual Percentage Rate). You'll find this further down on your statement, in a section labeled &quot;Interest Charged&quot; or something similar.<br /> &nbsp;</li> <li>Minimum payment. You'll find this in your card's terms and conditions, under a discussion about how minimum payments are calculated. It will probably be a percentage, but there may also be a flat sum.</li> </ul> <p>Next, consider any retirement plan you are enrolled in or have available. What is the average annual return? You can identify past returns by reviewing your retirement account statements. For example, your 401(k) plan account may list your annual return. Note that past returns don't guarantee or predict future returns, but we'll use the average annual return as a proxy for future returns in this case, knowing that if our portfolio takes a long-term downward turn, our calculations will change.</p> <p>Finally, how much extra do you have in your monthly budget that you could put toward credit card payments, retirement investments, or both?</p> <p>Follow along as we consider a hypothetical debt situation and retirement opportunity. Let's say there's $500 in our monthly budget, which equals $6,000 annually ($500 x 12 months = $6,000) to put toward debt or retirement.</p> <p>Currently, the balance on our credit card is $5,000. Our APR is 22%. Our minimum monthly payment is 3% of our outstanding balance or $25, whichever is greater.</p> <p>Our employer offers a 401(k) plan. For the sake of keeping this illustration simple, we'll say our employer doesn't match employee contributions and we choose to make taxable contributions with a Roth designated account within the 401(k).</p> <p>In reality, you might choose instead to make tax-deductible contributions to a&nbsp;<a href="http://www.wisebread.com/how-to-set-up-an-ira-to-build-wealth?ref=internal" target="_blank">traditional retirement account</a>. With a Roth 401(k) there are no immediate tax benefits, which makes our calculations simpler and therefore better suited for this purpose.</p> <p>We'll say the default investment in our 401(k) is a&nbsp;<a href="http://www.wisebread.com/the-4-best-investments-for-lazy-investors?ref=internal" target="_blank">target-date mutual fund</a> with an average annual return of 6.3% since its inception. We know that future performance is unpredictable. But to run the numbers for the retirement vs. debt decision, we'll apply an annual return of 6% to our retirement account.</p> <p>We'll look at the retirement account and credit card balance after five years to compare the two choices: 1) making minimum payments on our card balance so we can start investing right away, or 2) putting all our extra money toward our credit card debt before we consider retirement investing.</p> <p>In both scenarios, we'll assume that we won't make additional charges on our credit card. In addition, we'll contribute to our retirement account when we have money available to invest.</p> <h2>Step 2: Calculate net worth if you prioritize retirement savings over paying off credit card debt quickly</h2> <p>In this scenario, we'll see what happens if we only make minimum payments on our credit card so that we can get started investing for retirement right away. Your credit card statement should state very clearly how long it will take to pay off your balance if you make minimum payments.</p> <p>You can also find an&nbsp;<a href="http://www.calcxml.com/calculators/how-long-will-it-take-to-pay-off-my-credit-card" target="_blank">online calculator</a> to help you with these calculations. Here's the information we'll enter for our example (you can put in your own numbers from your real-life situation):</p> <ul> <li>Current credit card balance: $5,000<br /> &nbsp;</li> <li>Annual percentage rate: 22%<br /> &nbsp;</li> <li>Proposed additional monthly payment: $0<br /> &nbsp;</li> <li>Minimum payment percentage: 3%<br /> &nbsp;</li> <li>Minimum payment amount: $25<br /> &nbsp;</li> <li>Skip December payment when offered? No</li> </ul> <p>Results indicate that we'll carry this debt for more than 17 years (205 months) and pay more than $7,000 in interest during this time. Click the button that says &quot;Detailed Results&quot; to see a breakdown of the payments. Make sure that under the Assumptions tab, you've asked for a monthly table display.</p> <p>In the first month, our payment is $150 and this amount slowly diminishes until we're paying the minimum amount of $25 for the last several years.</p> <p>Since we're making minimum payments on the credit card, we'll be able to put $350 of our total available $500 toward retirement in the first month ($500 - $150 = $350). The second month and subsequent months, we'll be able to increase the amount we invest, as our credit card balance dwindles. Every month we also earn some interest (6%/12 months), so our retirement account balance grows in that way, too.</p> <p>After five years (60 months), our credit card balance will be trimmed to less than $2,500.</p> <p>At the end of five years, our retirement account grows to just over $27,300. Considering our debt and retirement balances, our net worth is $24,800 ($27,300 in assets and $2,500 in liabilities). Note that investment returns are not guaranteed; the 6% rate is for illustration purposes only.</p> <p>You can&nbsp;<a href="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/Rains_We Do The Math Spreadsheet - Sheet1.pdf" target="_blank">download the spreadsheet</a> with these calculations.</p> <h2>Step 3: Calculate net worth if you pay off credit card debt completely before investing for retirement</h2> <p>In this scenario, we'll apply all of our extra income to credit card debt first. When the debt is paid in full, we'll begin to contribute to the retirement account.</p> <p>We enter this information to learn how quickly we'll pay off the debt with $500 per month (again, enter your own information to get personalized results):</p> <ul> <li>Current credit card balance: $5,000<br /> &nbsp;</li> <li>Annual percentage rate: 22%<br /> &nbsp;</li> <li>Minimum payment percentage: 0%<br /> &nbsp;</li> <li>Minimum payment amount: $0<br /> &nbsp;</li> <li>Proposed additional monthly payment: $500<br /> &nbsp;</li> <li>Skip December payment when offered? No</li> </ul> <p>To keep the credit card payment at $500 per month (and pay off credit card debt first), we'll enter the minimum payment percentage as 0% and the minimum payment amount as $0 &mdash; even though the actual terms of the credit card agreement will most likely specify a percentage of 2% or more and a minimum payment of $10 or more. When we view the results, we find that the payoff happens in 12 months. We'll make 11 payments of $500 and one payment of $74.</p> <p>After we finish paying off the credit card debt, we can begin investing. We'll invest $426 in the twelfth month ($500&ndash;$74) and $500 in subsequent months. Consider using a&nbsp;<a href="http://www.calculator.net/future-value-calculator.html" target="_blank">Future Value calculator</a>, to determine how much your retirement account will be worth at the end of five years.</p> <p>Here's the information we entered into the Future Value calculator:</p> <ul> <li>Number of periods: 48. (We'll invest for four years, or 48 months.)<br /> &nbsp;</li> <li>Start amount: $426. (We'll start with the first month's contribution as the balance in our account.)<br /> &nbsp;</li> <li>Interest rate: 0.5% (6% annual rate divided by 12 months).<br /> &nbsp;</li> <li>Periodic deposit: $500.<br /> &nbsp;</li> <li>Deposit made at the beginning or end of the period: End.</li> </ul> <p>If we earn 6% annually on our investments, our retirement account grows to $27,590 in five years. In addition, our credit card debt is paid off. Our net worth is $27,590 &mdash; that's $2,790 <em>more </em>than if we had prioritized retirement savings first and stuck with only paying the minimum on our credit card debt each month.</p> <h2>What else to consider</h2> <p>These calculations are a starting place. Your situation may be similar to this scenario, but it might not be. For instance, if your APR is considerably lower and your retirement returns higher than in the scenarios above, you may very well find that you're better off investing in the market while reducing your credit card debt slowly. Changes in one or several of these factors could alter results:</p> <ul> <li>Larger or smaller credit card balances;<br /> &nbsp;</li> <li>Higher or lower credit card APRs;<br /> &nbsp;</li> <li>Better or worse investment performance;<br /> &nbsp;</li> <li>Availability of a company match on your 401(k);<br /> &nbsp;</li> <li>Administrative fees associated with your 401(k);<br /> &nbsp;</li> <li>Choosing to invest in a traditional 401(k).</li> </ul> <p>If you opt for a traditional 401(k), your contributions come out of your pretax income, thereby reducing your taxable income, which could result in a lower tax liability and a higher tax refund. A tax refund could be applied to your credit card balance, allowing you to more easily pay off debt while also saving for retirement.</p> <p>To calculate the immediate tax benefit of saving within a traditional 401(k) account, multiply the contribution amount by your marginal tax rate. In addition, you could be eligible for a&nbsp;<a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit" target="_blank">saver's credit</a>, which further increases the benefit of retirement savings.</p> <h2>How to get started with either scenario</h2> <p>Whatever path you choose, you may need help taking first steps. Consider these ways to get started:</p> <h3>Debt payoff</h3> <ul> <li>Consider transferring or consolidating your balances on a&nbsp;<a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">0% balance transfer card</a>.<br /> &nbsp;</li> <li>Consider a&nbsp;<a href="http://www.wisebread.com/how-to-do-a-one-month-spending-freeze?ref=internal" target="_blank">no-spend week or month</a> in which you don't spend on anything except essentials.<br /> &nbsp;</li> <li>Apply cash gifts from family to credit card balances.<br /> &nbsp;</li> <li>Work a part-time job to pay down balances.<br /> &nbsp;</li> <li>Find ways to spend less on everyday expenditures and apply savings to debt payoff.</li> </ul> <h3>Retirement saving</h3> <ul> <li>Consider enrolling in your employer's retirement plan, if offered. You may have the opportunity to contribute to a&nbsp;<a href="http://www.wisebread.com/403b-vs-401k-how-are-they-different?ref=internal" target="_blank">401(k) or 403(b) account</a>, for example.<br /> &nbsp;</li> <li>Set up an&nbsp;<a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you?ref=internal" target="_blank">IRA</a> with a brokerage account or&nbsp;<a href="http://www.wisebread.com/should-you-trust-your-money-with-these-4-popular-financial-robo-advisers?ref=internal" target="_blank">robo-adviser</a>.<br /> &nbsp;</li> <li>Start an&nbsp;<a href="http://www.wisebread.com/the-sep-ira-is-how-the-self-employed-do-retirement-like-a-boss?ref=internal" target="_blank">SEP-IRA</a> if you have self-employment income.</li> </ul> <p>When considering your choices, keep in mind that credit card interest rates are relatively fixed, whereas investment returns tend to be much more variable. The main instances in which credit card rates fluctuate these days are when the Federal Reserve raises the federal funds rate, or when you make late payments and are charged a penalty interest rate.</p> <p>The point is, if your card's APR is 22%, you could be certain to save at least 22% of your balance by paying off credit card interest early. In contrast, the precise benefit of early investing is less certain.</p> <p>Should you save for retirement or pay off credit card debt? Doing the math can help you make a decision.</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%2Fwe-do-the-math-save-for-retirement-or-pay-off-credit-card-debt&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWe%2520Do%2520the%2520Math-%2520Save%2520for%2520Retirement%2520or%2520Pay%2520Off%2520Credit%2520Card%2520Debt-.jpg&amp;description=We%20Do%20the%20Math%3A%20Save%20for%20Retirement%20or%20Pay%20Off%20Credit%20Card%20Debt%3F"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/We%20Do%20the%20Math-%20Save%20for%20Retirement%20or%20Pay%20Off%20Credit%20Card%20Debt-.jpg" alt="We Do the Math: Save for Retirement or Pay Off Credit Card Debt?" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="https://www.wisebread.com/we-do-the-math-save-for-retirement-or-pay-off-credit-card-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://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="https://www.wisebread.com/all-the-ways-minimum-payments-are-evil">All the Ways Minimum Payments Are Evil</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/funding-your-401k-when-youre-in-debt">Funding your 401(k) when you&#039;re in debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/7-warning-signs-youre-in-debt-denial">7 Warning Signs You&#039;re In Debt Denial</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Retirement 401(k) APR bills calculating comparisons interest rates nest egg Paying Off Debt Thu, 18 May 2017 08:30:15 +0000 Julie Rains 1949201 at https://www.wisebread.com How a Credit Card Cash Advance Costs You More Than a Purchase https://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="https://wisebread-killeracesmedia.netdna-ssl.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="https://www.wisebread.com/jason-steele">Jason Steele</a> of <a href="https://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="https://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="https://www.wisebread.com/6-things-you-might-miss-in-your-credit-cards-fine-print">6 Things You Might Miss in Your Credit Card&#039;s Fine Print</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="https://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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/6-scary-facts-about-credit-card-debt">6 Scary Facts About Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan">10 Things You Need to Know Before Taking Out a Personal Loan</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> 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 https://www.wisebread.com 8 Most Common Mistakes When Doing a Balance Transfer to Eliminate Debt https://www.wisebread.com/8-most-common-mistakes-when-doing-a-balance-transfer-to-eliminate-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-most-common-mistakes-when-doing-a-balance-transfer-to-eliminate-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/iStock-497316392.jpg" alt="Learning common mistakes when doing a balance transfer" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Many credit cards offer 0% APR promotional financing on balance transfers, allowing you to <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=internal" target="_blank">move debt from high-interest cards</a> onto one that offers zero interest for an introductory promotional period. These promo periods are nothing to sneeze at. They can last as long 21 months.</p> <p>So what's the catch? The truth is that <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">balance transfer offers</a> can be incredibly valuable, but only when you use them properly and avoid making some common mistakes.</p> <h2>1. Assuming You'll Get the Best Balance Transfer Deal<strong> </strong></h2> <p>You might not always be approved for the balance transfer card you want. For example, the best 0% APR deals are only given to those with <a href="http://www.wisebread.com/5-best-credit-cards-for-people-with-excellent-credit?ref=internal" target="_blank">excellent credit</a>. While you may have had excellent credit in the past, having a large balance for a long time might have caused your credit score to slip. (See also: <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=seealso" target="_blank">One Ratio Is Key to a Good Credit Score</a>)</p> <p>Even if you are approved for the card, it may come with a credit line that's substantially lower than you need. If that's the case, you may want to consider applying for a second balance transfer card.</p> <h2>2. Trying to Transfer a Balance From the Wrong Card</h2> <p>Consumers sometimes don't realize that you can't transfer a balance between two cards issued by the same bank. So if you have an outstanding balance on your <a href="http://www.wisebread.com/get-cash-back-for-every-purchase-chase-freedom-unlimited-review?ref=internal" target="_blank">Chase Freedom Unlimited card</a>, you can't open up a new <a href="http://www.wisebread.com/chase-slate-visa-review?ref=internal" target="_blank">Chase Slate card</a> and expect to transfer your balance to it.</p> <p>Keep this in mind before you apply for a balance transfer card. Every time you apply for a credit card your credit score takes a little hit. It can usually recover fairly quickly, but there's no need to ding it unnecessarily for a card that doesn't even serve your needs. (See also: <a href="http://www.wisebread.com/which-balance-transfer-credit-card-is-the-best-for-you?ref=seealso" target="_blank">How to Choose a Balance Transfer Card</a>)</p> <h2>3. Overlooking Balance Transfer Fees</h2> <p>Almost all credit cards charge a fee when you make a transfer, except for a few notable cards that <a href="http://www.wisebread.com/5-best-credit-cards-with-no-balance-transfer-fees?ref=internal" target="_blank">don't charge balance transfer fees</a>. Typically the fee is 3% of the transfer amount, but it could be as high as 5%. If your balance is small enough that you can pay it off within a few months, you're probably better off not transferring it to a new card.</p> <h2>4. Delaying Your Balance Transfer</h2> <p>You'll usually have 60 or 90 days to transfer your balance to the new card. After that the deal expires. Transfer the balance as soon as you can to get the most use of the promotional 0% period and cut down on the number of days your balance is accruing interest on your old card. Transferring your balance early will also ensure you don't forget about the deal and miss it altogether.</p> <h2>5. Misunderstanding How New Purchases Are Treated</h2> <p>If you make a new purchase on a balance transfer card, it will be subject to the card's regular interest rate unless the card specifically offers <a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases?ref=internal" target="_blank">0% interest on purchases</a>, too. That means you've got two balances on the card: the interest-free transferred balance and the new purchase balance.</p> <p>By law, credit card issuers must apply any payments above the minimum to the balance with the highest interest rate first. But they can apply your <em>minimum payment</em> to whichever balance they choose, which of course will be the one with no interest charges. As a result, you'll still incur interest on your new purchases.</p> <p>Bottom line: It's best not make new charges on the balance transfer card unless it offers interest-free financing on new purchases as well.</p> <h2>6. Paying Late</h2> <p>It's always important to pay your bills on time, but it's even more so with promotional balance transfer offers. Pay late and you may find your 0% offer revoked, subjecting you to the card's regular higher interest rate way before you're ready for it. Add to that late fees the card may impose, and you've got an expensive mistake.</p> <h2>7. Stopping Payments on Your Old Card Too Soon</h2> <p>What some cardholders don't realize is that your balance transfer may not be completed immediately. It can take up to two weeks to process the transfer. Even if you've initiated a balance transfer, you will still need to make payments on your old card until you've confirmed that it's been paid off. Don't worry about overpaying &mdash; credit cards are very good about refunding you any overage you might have submitted during the transition.</p> <h2>8. Using a Balance Transfer Offer to Rack Up More Debt</h2> <p>Those 0% APR balance transfer offers are your chance to <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=internal" target="_blank">get out of debt</a>, but unfortunately, many people squander that chance and continue to rack up debt. They can't resist the temptation of having an empty balance on their old card, so they keep making charges on it that they can't pay off right away.</p> <p>Instead, use balance transfer deals as part of a <a href="http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off?ref=internal" target="_blank">comprehensive debt repayment plan</a>. You should view the end of these limited time offers as a deadline for paying off your entire balance, knowing that 100% of each payment you make during this time will go toward your principle.</p> <p>See also: <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=seealso" target="_blank">5 Ways to Pay Off High Interest Credit Card Debt</a></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/jason-steele">Jason Steele</a> of <a href="https://www.wisebread.com/8-most-common-mistakes-when-doing-a-balance-transfer-to-eliminate-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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="https://www.wisebread.com/everything-you-didn-t-understand-about-credit-card-interest-grace-periods-and-penalty-aprs">Everything You Didn’t Understand About Credit Card Interest, Grace Periods, and Penalty APRs</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="https://www.wisebread.com/6-things-you-might-miss-in-your-credit-cards-fine-print">6 Things You Might Miss in Your Credit Card&#039;s Fine Print</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="https://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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/7-times-you-definitely-will-be-charged-credit-card-interest">7 Times You Definitely Will Be Charged Credit Card Interest</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards APR balance transfer debt eliminate debt financing grace period promotional period Fri, 24 Feb 2017 10:30:36 +0000 Jason Steele 1896814 at https://www.wisebread.com The 25 Best Credit Cards From Credit Unions https://www.wisebread.com/the-best-credit-cards-from-credit-unions <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-best-credit-cards-from-credit-unions" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/woman_smile_credit_card_588598074.jpg" alt="Woman using best credit cards from credit unions" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Credit unions have come a long way from their local, affinity group roots. These days credit unions offer all of the convenience and service of their much larger brethren, but usually at lower cost &mdash; and often with more personal customer service. Joining a credit union has never been easier, as most credit unions make membership available to almost anyone through affiliated nonprofits and groups. Of course, credit cards are among the banking products a credit union will offer.</p> <p>We've collected 25 of the best credit union credit cards on offer, many equal or superior to big bank cards. Have a look, and then decide if it's time to finally <a href="http://www.wisebread.com/9-good-reasons-to-choose-a-credit-union-instead-of-a-bank">dump your bank and join a credit union</a>.</p> <h2>Our Top 10 Credit Union Credit Cards</h2> <p>The 10 cards at the top of our list feature relatively low interest rates and familiar credit card features and perks.</p> <h3>State Department Federal Credit Union: Visa Platinum Card</h3> <p>The SDFCU offers a pair of Platinum Visa cards with several attractive benefits, including no balance transfer fees, and a rewards program called &quot;Flexpoint.&quot; Variable interest rates start as low as 8.74%, depending on credit score. The SDFCU is open to employees of the US State Department and their families, affiliated companies, and members of the American Consumer Council, which anyone can join.</p> <h3>GTE Financial Credit Union: Go To Card</h3> <p>The Go To from GTE Federal Credit Union offers attractive interest rates (8.49% for the best credit scores.) This card awards 1x point per dollar spent with the card. Visa Alerts and Travel and Baggage insurance round out the perks. Membership in the GTEFCU is through employers, family members, or by joining GTE's CU Savers club.</p> <h3>Air Force Federal Credit Union: Visa Platinum Card<strong> </strong></h3> <p>You don't have to be a pilot to enjoy the benefits of the AFFCU Platinum Visa.There's no annual fee for this card, relatively low interest rates (starting at 9.25% for those with excellent credit scores), and 2,500 bonus CURewards points just for signing up. Membership is open to military service personnel and their families, government employees and their families, DOD contractors, and members of the Airman Heritage Foundation, which anyone can join for a fee.</p> <h3>Navy Federal Credit Union: cashRewards Credit Card</h3> <p>This card features no annual fee and an attractive cash back rewards program that returns 1.5% for every dollar spent. Interest rates start at 11.40%, so be sure to take advantage of the rewards while keeping balances at zero. There are no annual fees, no balance transfer fees, and no foreign transaction fees with this card. Membership is open to current and former service members, DOD civilians, and their families.</p> <h3>Pentagon Federal Credit Union: Platinum Rewards Visa Signature Card</h3> <p>The relatively high interest rates on this card (starting at 11.49%), make it an unwise choice for cardholders who carry a balance. For those who can keep balances low, the attractive rewards program can pay well, with 5x points for gasoline purchases and 3x for groceries. No annual fee and no foreign transactions fee keep the cost of this card down. PenFed membership is open to service members and their families, affiliate organizations, and members of Voices for America's Troops or the National Military Family Association, both of which anyone can join for a one-time fee.</p> <h3>Pentagon Federal Credit Union: PenFed Pathfinder Rewards American Express</h3> <p>As with the other PenFed card on this list, interest rates aren't the lowest, but the rewards are attractive, especially for frequent travelers. This card features a 12 month 0% balance transfer APR, then a variable APR of 12.49% to 17.99% will apply. It also awards 25,000 bonus points if new cardholders spend $2,500 in the first three months. There's no annual fee and no foreign transaction fees. PenFed membership is open to service members and their families, members of affiliate organizations, and members of Voices for America's Troops or the National Military Family Association, which anyone can join for a one-time fee.</p> <h3>Navy Federal Credit Union: Go Rewards Visa Signature Card</h3> <p>This Visa Signature card offers a decent rewards program &mdash; 3x points for restaurants, 2x for gasoline and 1x for everything else &mdash; at the cost of relatively high interest rates (10.74% to 18%, depending on credit score). There is no annual fee, no balance transfer fee, and no foreign transaction fee. Membership is open to current and former service members, DOD civilians, and their families.</p> <h3>Affinity Plus Credit Union: Visa Premier Classic</h3> <p>This no frills card from Affinity Plus Credit Union offers relatively low interest rates (9.90% to 18%, depending on creditworthiness), no annual fee, and no balance transfer fee. Other perks include a rental vehicle damage waiver and Visa spending alerts. Membership is open to employees of the State of Minnesota, affiliate organizations, and members of the Affinity Plus Foundation, which anyone can join for a one-time fee.</p> <h3>NASA Federal Credit Union: Visa Platinum Advantage Rewards</h3> <p>This basic rewards card offers a point per dollar spent, which are redeemable for travel and merchandise. There is no annual fee and no balance transfer fee. Interest rates range from 11.65% to 17.99%, with a balance transfer rate of 9.9% on transfers made in the first 90 days. Membership is open to NASA employees and their families, affiliate organizations, and members of the National Space Society, which is free to join.</p> <h3>McGraw-Hill Federal Credit Union: Visa Platinum Card</h3> <p>This Platinum Visa card features interest rates between 11.9% and 17.9%, which is middle of the pack for this collection of cards. There is no annual fee. The rewards program requires a separate login on the credit union's website. The card offers Visa services not every credit union card offers, such as roadside assistance and car rental insurance. Membership is open to employer groups, members of their families, and members of VOICE foundation, which anyone can join.</p> <h2>Other Credit Union Credit Cards to Consider</h2> <p>If none of the above suit your needs, consider one of these.</p> <h3>Pentagon Federal Credit Union: Gold Visa Card</h3> <p>No frills, no fees, and relatively low interest rates (8.99% to 17.99%).</p> <p>PenFed membership is open to service members and their families, affiliate organizations, and members of Voices for America's Troops or the National Military Family Association, which anyone can join for a one-time fee.</p> <h3>Pentagon Federal Credit Union: Platinum Cash Rewards Visa Card</h3> <p>Cash back on gas of 3% or 5%, depending on which card you qualify for (Standard or Plus).</p> <p>PenFed membership is open to service members and their families, affiliate organizations, and members of Voices for America's Troops or the National Military Family Association, which anyone can join for a one-time fee.</p> <h3>Pentagon Federal Credit Union: Promise Visa Card</h3> <p>No fees, relatively low interest rates (11.49% to 17.99%).</p> <p>PenFed membership is open to service members and their families, affiliate organizations, and members of Voices for America's Troops or the National Military Family Association, which anyone can join for a one-time fee.</p> <h3>Pentagon Federal Credit Union: Defender Visa Signature Card</h3> <p>Cash back on all purchases of 1.5% and $100 bonus credit if new cardholders spend $1500 in the first three months.</p> <p>PenFed membership is open to service members and their families, affiliate organizations, and members of Voices for America's Troops or the National Military Family Association, which anyone can join for a one-time fee.</p> <h3>Lake Michigan Credit Union: Prime Platinum Visa Card</h3> <p>This card offers a relatively low interest rate (Prime + 3.00%) and no annual fee.</p> <p>Membership is open residents of Michigan, family members, and members of the ALS foundation, which requires a one-time fee.</p> <h2>Lake Michigan Credit Union: Max Rewards Visa Card</h2> <p>Cash back of 3% on gas (up to $500 per month), 2% on groceries (unlimited) and 1% on everything else (unlimited), redeemable via the CURewards program. No annual fee and no balance transfer fee.</p> <p>Membership is open residents of Michigan, family members, and members of the ALS foundation, which requires a one-time fee.</p> <h3>NASA Federal Credit Union: Visa Platinum Cash Rewards</h3> <p>Unlimited 1.5% cash back on all purchases. No annual, balance transfer, or foreign transaction fees.</p> <p>Membership is open to NASA employees and their families, affiliate organizations, and members of the National Space Society, which is free to join.</p> <h3>Affinity Plus Credit Union: Visa Premier Select Rewards</h3> <p>No annual or balance transfer fees. Earn one CURewards point per dollar spent, Visa Signature perks such as travel accident insurance and cell phone protection.</p> <p>Membership is open to employees of the State of Minnesota, affiliate organizations, and members of the Affinity Plus Foundation, which anyone can join for a one-time fee.</p> <h3>Apple Federal Credit Union: Visa Platinum</h3> <p>Low variable interest rates (9.74% to 18%) and no penalty APR. No annual, balance transfer, or foreign transaction fees.</p> <p>Membership in the credit union is open to anyone who lives, works, worships, volunteers, or attends school in several Northern Virginia counties, their families, and affiliated employee groups.</p> <h3>Apple Federal Credit Union: Signature Reward Visa</h3> <p>No annual, balance transfer, or foreign transaction fees. Earn 3x points on gas, 2x on groceries and 1x on everything else.</p> <p>Membership in the credit union is open to anyone who lives, works, worships, volunteers, or attends school in several Northern Virginia counties, their families, and affiliated employee groups.</p> <h3>Kitsap Credit Union: Visa Gold Card</h3> <p>Low variable APR (Prime +2.9%) and no annual, balance transfer, or foreign transaction fees.</p> <p>Membership is open to people who live work, or worship in the state of Washington.</p> <h3>Abri Credit Union: Visa Platinum Credit Card</h3> <p>Low interest rates (Prime + 3.9%), no annual, balance transfer, or foreign transaction fees. Promotional balance transfer rate of 1.99% for six months.</p> <p>Membership is open to people who live in select Chicagoland counties and their families.</p> <h3>Fort Community Credit Union: Visa Platinum Credit Card</h3> <p>Low variable APR (Prime + 3.99%), no annual, balance transfer, or foreign transaction fees. Cash back of 1% on all purchases.</p> <p>Membership is open to people who live and work in select counties in and around Milwaukee, Wisconsin, and their families.</p> <h3>America First Credit Union: Visa Platinum Credit Card</h3> <p>Cash back of 1.5% on all purchases, no annual or balance transfer fees.</p> <p>Membership is open to those who live, work, or worship in select Utah, Arizona, and Nevada counties.</p> <h3>Suncoast Credit Union: Rewards Platinum Visa</h3> <p>Variable interest rates starting at 8.9%, one rewards point for every dollar spent, redeemable for travel and merchandise. No annual or balance transfer fees.</p> <p>Membership is open to those who live or work in select Florida counties and their families.</p> <h3>Alliant Credit Union: Visa Platinum Credit Card</h3> <p>Introductory APR of 0% for 12 months; variable after (10.99% to 22.99%). No annual fee, no balance transfer fee.</p> <p>Membership is open to select employer groups, people who live or work in select Chicagoland counties, or members of a nonprofit, which anyone can join for a one-time fee.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/greg-go">Greg Go</a> of <a href="https://www.wisebread.com/the-best-credit-cards-from-credit-unions">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="https://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="https://www.wisebread.com/6-things-you-might-miss-in-your-credit-cards-fine-print">6 Things You Might Miss in Your Credit Card&#039;s Fine Print</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="https://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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/how-a-credit-card-cash-advance-costs-you-more-than-a-purchase">How a Credit Card Cash Advance Costs You More Than a Purchase</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/3-easy-ways-to-improve-your-credit-score-during-the-holidays">3 Easy Ways to Improve Your Credit Score During the Holidays</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards APR cash back credit unions interest rates rewards cards Sat, 28 Jan 2017 01:09:38 +0000 Greg Go 1882265 at https://www.wisebread.com 5 Ways to Pay Off Your Student Debt Faster https://www.wisebread.com/5-ways-to-pay-off-your-student-debt-faster <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-ways-to-pay-off-your-student-debt-faster" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/new_grad_debt_100645843.jpg" alt="New grad finding ways to pay off student debt faster" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Plenty of us face student debt payments every month. In fact, in the United States an <a href="http://www.marketwatch.com/story/americas-growing-student-loan-debt-crisis-2016-01-15">estimated 40 million people</a> have student loan debt. With the rising cost of education, loans are becoming an increasingly common way for people to pay for school.</p> <p>While compounding debt may feel overwhelming, paying off your student debt isn't impossible &mdash; and you may be able to pay it off faster than you think. There are a few advantages that come along with paying off your debt faster. The sooner you reduce those balances, the sooner you'll stop paying interest on them. And once your debts are all paid off, you can feel good about putting that money toward something else.</p> <p>Here are some easy steps you can take that will help you pay off your student debt faster, saving you money in the long run.</p> <h2>Refinance and Consolidate Your Loans</h2> <p>If you've never <a href="http://www.wisebread.com/what-s-the-difference-between-student-loan-refinancing-and-consolidation?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=student">refinanced your student loans</a>, consider that it may be a good way to save a lot of money and help you to pay off loans faster. With <a href="http://www.wisebread.com/3-private-lenders-that-can-really-save-you-money-on-your-student-loans?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=student">online lenders like CommonBond</a>, you can save thousands through lower APRs.</p> <p>You may also want to consolidate multiple loans so that you're making a single monthly payment. This will simplify your payment process, and you'll further benefit from a lower APR when it applies to all of your loans &mdash; not just one of them.</p> <h2>Pay Off Your Student Debt With a Credit Card</h2> <p>You can actually put your monthly loan payment on a credit card and earn rewards for cash or travel. But don't do this if you can't pay off your balance in full each month. You'll end up paying more in interest than any amount of rewards you could earn. (See also: <a href="http://www.wisebread.com/the-5-best-credit-cards-for-college-students?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=student">Best Credit Cards for College Students</a>)</p> <h2>Make an Extra Principal Payment</h2> <p>This is an extra payment that you can make on a schedule that you determine &mdash; every two weeks, for instance. If you're making extra payments, it will reduce the time it takes to pay off your loan in full.</p> <h2>Set a Goal and Stick to It</h2> <p>It's really important to figure out a budget that makes sense given your personal situation. You'll need to take into account monthly expenses, like rent, food, a car payment, etc.</p> <p>From there, consider how much money you can put toward paying off your student debt. Remember that the more money you pay toward your loan, the faster you'll be able to pay it off. So you should also consider how much time you'd like to take to pay off your loan. Then you can factor in the money you'll save in the long run by paying off your debt sooner rather than later.</p> <h2>Get a Second Job or Side Hustle</h2> <p>If your budget falls a bit short on cash, you can always look into getting a second job and put those funds toward paying off your student debt. The more time you spend working, the less free time you'll have to spend your money, anyhow. And the effort and discipline you expend on acquiring or perfecting a second income stream will serve your career path and finances well in the future.</p> <p><em>How are you paying off your student loans?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/nick-wharton">Nick Wharton</a> of <a href="https://www.wisebread.com/5-ways-to-pay-off-your-student-debt-faster">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="https://www.wisebread.com/what-is-student-loan-forbearance-anyway">What Is Student Loan Forbearance, Anyway?</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="https://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans">4 Things You Need to Know About Deferring Student Loans</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="https://www.wisebread.com/6-ways-to-travel-when-you-have-student-loans">6 Ways to Travel When You Have Student Loans</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://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="https://www.wisebread.com/dont-get-trapped-by-these-higher-education-scams">Don&#039;t Get Trapped by These Higher Education Scams</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training APR consolidation debt interest monthly payments online lenders principal side jobs student loans Thu, 01 Sep 2016 09:30:34 +0000 Nick Wharton 1783722 at https://www.wisebread.com 6 Ways to Travel When You Have Student Loans https://www.wisebread.com/6-ways-to-travel-when-you-have-student-loans <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-to-travel-when-you-have-student-loans" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/woman_backpack_travel_87628739.jpg" alt="Woman finding ways to travel while paying student loans" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Student loans are a reality for millions of recent graduates and even some of us who have been out of school for a while. Americans alone have <a href="https://commonbond.co/blog/average-student-loan-debt-and-student-loan-refinancing/">1.36 trillion dollars</a> of student loan debt. That's second only to U.S. mortgage debt.</p> <p>Don't worry! There are plenty of ways to manage your student debt and continue doing what you love. With these tips, you can get out and spend your time traveling while making all of your payments on time!</p> <h2>1. Take a Look at Your Loans Before You Go</h2> <p>Getting ready for a big trip is actually a very good time to re-evaluate your student loans (and the rest of your finances), especially because it has the potential to save you a lot of money. By <a href="http://www.wisebread.com/should-you-refinance-your-student-loan">refinancing your student loans</a> you could save thousands. That's because you may be able to get a better APR, and you can also change the terms of your loan so that your monthly payment feels more manageable.</p> <p>Even a small difference in the interest rate can make a big difference over the time that you're paying off your loan. With <a href="http://www.wisebread.com/3-private-lenders-that-can-really-save-you-money-on-your-student-loans">online lenders like CommonBond</a>, you can get an APR starting as low as 2.14%. It only takes minutes to fill out the application, and you're under no obligation to change your loan once you get your free quote.</p> <p>That cash you're saving can easily go into your travel fund!</p> <h2>2. Consider Consolidating Your Loans</h2> <p>This second tip is closely linked to the first, since in the process of refinancing your loans, you may also want to <a href="http://www.wisebread.com/what-s-the-difference-between-student-loan-refinancing-and-consolidation">consolidate your loans</a>. This means that if you have multiple student loans, instead of paying, let's say, three separate bills every month, you can combine all of your existing loans into one.</p> <p>Consolidating your loans will help to simplify the payment process for you and reduce the time you spend every month administering and worrying about your loan payments.</p> <p>This is an especially important point for people planning to travel, since you're already going to have a lot of logistics to keep straight. The simpler you can keep your loan payments, the better.</p> <h2>3. Put Things in Perspective &mdash; And Into Your Budget!</h2> <p>It can be paralyzing to think about the total amount of money that you owe, especially if you know you're going to be spending the next 20 years of your life paying it off.</p> <p>It's more helpful to put things in perspective, so once you've refinanced your loans and you have a manageable monthly payment, treat that like you would any other monthly bill that you have to pay.</p> <p>Take it on a month-to-month basis and you won't feel as limited by the amount of money that you owe. When you're making your travel budget, simply factor in the monthly payment that you'll be making into your overall budget for the time you'll be traveling, and set aside that money before you go. That way, you won't feel like you have to scramble for funds at the last minute.</p> <h2>4. Start a Travel Fund</h2> <p>Figure out how much money you can commit to setting aside for travel every month. Then you can set up an automatic transfer into a special bank account that is dedicated just to travel expenses. Even if you're only putting in a few hundred dollars a month, you'll be surprised at how fast these funds can add up over time.</p> <p>See also: <a href="http://www.wisebread.com/the-5-best-credit-cards-for-college-students?utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=travel">Best Credit Cards for College Students</a></p> <h2>5. Create a Realistic Budget</h2> <p>You should think about how you like to travel and be honest with yourself. Frugal travel is not for everyone, so you should consider what your priorities are; maybe you will be just as satisfied going on a shorter trip and putting more emphasis on higher-end accommodations and fancy restaurant meals.</p> <p>If these types of comforts or luxuries don't matter to you, you can probably get by with a smaller budget, but on a longer trip. (See also: <a href="http://www.wisebread.com/savor-your-trip-and-save-big-with-these-5-slow-travel-tips">Save Big With These Slow Travel Tips</a>)</p> <p>Budgeting is all about striking a balance that works best for you while being realistic about how much you can afford to spend on your trip. By weighing these decisions before you leave, you'll eliminate a lot of money-related stress so that you can just enjoy your trip, knowing that you've already budgeted in the funds to cover your student loans.</p> <h2>6. Earn Extra Money for Travel</h2> <p>You're probably already getting excited to go, so if you want to speed up the process you can always consider earning a little extra money to cover your travel expenses.</p> <p>It's up to you what skills you have and what kind of work you enjoy, but maybe you want to consider getting a second part-time job and putting the money you earn right into your travel account!</p> <p>Depending on your professional skill set, you can also consider taking on some <a href="http://www.wisebread.com/22-websites-that-will-pay-you-to-write-for-them">freelance gigs</a>, since they can be very flexible and add a little something extra to your normal paycheck. While you'll have less free time, this also means less time to be out spending money which can be a big help when you're trying to save money. There are also ways to <a href="http://www.wisebread.com/15-ways-to-make-money-while-you-travel">make money while you&rsquo;re traveling</a>.</p> <h2>Don't Let Debt Stop You</h2> <p>There's no reason to let student debt paralyze you, and there are simple steps you can take if you're passionate about traveling. It will take a bit of good strategy, combined with some hard work and a proper execution of your plan, but if you're willing to put in the time you can really reap the rewards on your next trip (and even at home).</p> <h2 style="text-align: center;">Like this post? Pin it!</h2> <p>&nbsp;</p> <p style="text-align: center;"><a href="//www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-ways-to-travel-when-you-have-student-loans&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%20Ways%20to%20Travel%20When%20You%20Have%20Student%20Loans.jpg&amp;description=6%20Ways%20to%20Travel%20When%20You%20Have%20Student%20Loans" data-pin-do="buttonPin" data-pin-config="above" data-pin-color="red" data-pin-height="28"><img src="//assets.pinterest.com/images/pidgets/pinit_fg_en_rect_red_28.png" alt="" /></a> </p> <!-- Please call pinit.js only once per page --><!-- Please call pinit.js only once per page --><script type="text/javascript" async defer src="//assets.pinterest.com/js/pinit.js"></script></p> <p style="text-align: center;"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/u5180/6%20Ways%20to%20Travel%20When%20You%20Have%20Student%20Loans.jpg" width="250" height="374" alt="" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/amanda-gokee">Amanda Gokee</a> of <a href="https://www.wisebread.com/6-ways-to-travel-when-you-have-student-loans">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-ways-to-pay-off-your-student-debt-faster">5 Ways to Pay Off Your Student Debt Faster</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="https://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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/what-really-happens-when-you-dont-pay-your-student-loans">What Really Happens When You Don&#039;t Pay Your Student Loans</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/4-ways-to-make-the-most-of-your-student-loan-grace-period">4 Ways to Make the Most of Your Student Loan Grace Period</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="https://www.wisebread.com/how-a-new-marriage-can-survive-student-loan-debt">How a New Marriage Can Survive Student Loan Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Education & Training Travel APR budgeting consolidation debt refinancing strategy student loans travel funds trips Mon, 22 Aug 2016 10:00:13 +0000 Amanda Gokee 1775891 at https://www.wisebread.com Why Rent-to-Own Is a Bad Idea https://www.wisebread.com/why-rent-to-own-is-a-bad-idea <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-rent-to-own-is-a-bad-idea" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="https://wisebread-killeracesmedia.netdna-ssl.com/files/fruganomics/imagecache/250w/blog-images/woman_shopping_computers_84494997.jpg" alt="Woman learning why rent-to-own is a bad idea" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Rent-to-own plans may seem like a good idea at first. But once you look into the total cost, it is apparent that these plans are just too good to be true. In fact, according to Dave Ramsey, it is &quot;one of the worst moves you can make with your money.&quot;</p> <h2>How the Plan Works</h2> <p>With a rent-to-own plan, you can enjoy the freedom of making a large purchase with smaller weekly or monthly payments, over a prolonged period of time. The payments include the interest charged and a portion of the principal. Repaying this obligation is similar to repaying a credit card obligation.</p> <h2>It'll Cost You in the End</h2> <p>The problem with these programs is the finance charge. Even using a credit card with a 20% APR would save you money compared to a rent-to-own program, which you will need to pay off over a significant amount of time (on a weekly, semimonthly, or monthly basis). The longer your contract is, the more you will pay in finance charges.</p> <p>Rent-to-own plans are significantly more expensive than outright purchases. By paying the purchase cost and effective interest rate over time, you can expect to spend significantly more than the retail price. In fact, according to Consumer Affairs, &quot;Even in the best-case scenario, you'll pay at least <a href="https://www.consumeraffairs.com/news/rent-to-own-is-an-expensive-way-to-do-either-110613.html">twice the standard retail price</a>.&quot; (See also: <a href="http://www.wisebread.com/this-is-how-much-a-rent-to-own-tv-really-costs?ref=seealso">This Is How Much a &quot;Rent-to-Own&quot; TV Really Costs</a>)</p> <h2>Rent-to-Own Programs Are Unregulated</h2> <p>Rent-to-own programs do not require credit and are not a form of credit, so they are <a href="https://www.ftc.gov/reports/survey-rent-own-customers">excluded from regulation</a> by federal law. While some states do effectively regulate the purchase agreements, there are other states that have no regulations at all, which means that the buyer is taking on all the risk.</p> <h2>What About Missed Payments?</h2> <p>Some rental centers are lenient about missed payments and might just charge a late payment fee, but will allow you to keep the item. However, there are some rental centers that will repossess the item should you miss a payment. In this case, you will experience the worst of both worlds. You will lose the money that you invested toward the purchase of the item, and the item will be repossessed.</p> <h2>Unexpected Additional Fees</h2> <p>If you will only be using the item for a short amount of time, such as for a prolonged business trip, make sure the rental center you choose offers free repairs, delivery, pick up, and set up. This should be standard because the last thing you want is to be paying additional fees on top of the already exorbitant prices. These unexpected additional fees can really add up, so make sure to inquire about them before signing any agreements.</p> <h2>Is It Ever a Good Idea?</h2> <p>The only time rent-to-own may be a good idea (for the short-term) is in the following situations:</p> <ul> <li>You are traveling for business and need furniture and appliances for a short period of time. The benefit of rent-to-own programs is you only pay for the item as long as you need it, and you can stop making payments once you are ready to return the item.<br /> &nbsp;</li> <li>You need appliances or furniture right away and you can't wait until you have the money to purchase them.<br /> &nbsp;</li> <li>You frequently get bored with your appliances and like to upgrade often. Some rental centers will allow you to upgrade to newer products and technologies at no extra cost, as often as you want. In this case, you can think of it almost like leasing a car.</li> </ul> <h2>Bad Credit or No Credit?</h2> <p>Rent-to-own will allow you to buy items without credit, so if you have bad credit or no credit, it will be much easier to sign up for a rent-to-own program rather than trying to get your new TV financed. With a rental center, they will not check your credit or base their decision on mistakes you've made in the past. This also means that it won't show up on your credit, so the plan won't hurt or help your current situation.</p> <p>Certain rental centers, like Rent-A-Center, will allow you to purchase the item within 90 days or less with no interest charges. This means you can purchase an item with 0% APR over three months. If you can pay off the item within three months, then this may be a good idea for you.</p> <h2>What About Large Purchases?</h2> <p>If you can't qualify for a mortgage loan, a rent-to-own agreement will allow you to live in your dream home today, with the option to purchase it down the road. However, this can be a pitfall for renters and may end up costing you more in the end. (See also: <a href="http://www.wisebread.com/5-things-you-need-to-know-when-renting-to-own-a-home?ref=seealso">5 Things You Need to Know When Renting-to-Own a Home</a>)</p> <p>Rent-to-own can apply to vehicles as well. The agreement is similar to a leasing agreement, except the money you pay every week or month will go toward the eventual purchase price of the vehicle. Whereas with a leasing agreement, your payment does not go toward the purchase price and you need to return the vehicle at the end of the term.</p> <h2>Consider Layaway Plans Instead</h2> <p>Instead of signing on to a rent-to-own agreement, consider a layaway plan. With a layaway plan, you can split the cost up into payments that meet your budget until it is paid off. Generally, you will need to make a down payment (usually 10%&ndash;20% of the purchase price) and can then arrange payments on a weekly, biweekly, or monthly basis.</p> <p>A layaway plan is almost identical to a rent-to-own plan, except you won't have to worry about the high finance charges, and with layaway, your item will stay in the store until you have paid it off. There is generally a small service fee involved, but it is nothing compared to the finance charges you would face with rent-to-own.</p> <p><em>Do you have any positive or negative experiences with rent-to-own programs? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="https://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="https://www.wisebread.com/why-rent-to-own-is-a-bad-idea">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-smart-ways-to-reduce-your-credit-card-interest">5 Smart Ways to Reduce Your Credit Card Interest</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="https://www.wisebread.com/the-9-everyday-products-with-the-biggest-markups">The 9 Everyday Products With the Biggest Markups</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="https://www.wisebread.com/10-things-you-need-to-know-before-taking-out-a-personal-loan">10 Things You Need to Know Before Taking Out a Personal Loan</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="https://www.wisebread.com/5-ways-to-pay-off-your-student-debt-faster">5 Ways to Pay Off Your Student Debt Faster</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="https://www.wisebread.com/10-questions-to-ask-before-accepting-a-credit-card-offer">10 Questions to Ask Before Accepting a Credit Card Offer</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Shopping APR bad credit fees monthly payments rent a center rent to own rip-offs waste of money Mon, 08 Aug 2016 09:30:33 +0000 Andrea Cannon 1767116 at https://www.wisebread.com