banking

Capital One 360: A Competitive Banking Option

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

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

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

Features and Benefits of Capital One 360

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

360 Savings

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

Kids Savings Account

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

360 Checking

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

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

MONEY (Teen Checking)

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

CDs

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

Business Account

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

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

Bottom Line

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

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

The Fine Art of Negotiating With Your Financial Institution

Annie Mueller — Wed, 06 Jun 2018 08:00:22 +0000

We recently sold our house to buyers who were eager to move in. No problem; we scheduled a quick closing date and began making arrangements. We called the bank to request a payoff statement, something that's usually accomplished in a matter of minutes.

"Sure," they said. "It will be there in three days."

That seemed a little weird to us, but we had four days until the closing. We called the next day and were told it would be there in 24 hours. "Even better," we thought. We were so naive.

The night before the closing was scheduled, the title company let us know they still hadn't received the payoff statement. By this time, the bank's service center was closed. The next morning — the day of the closing — we were on the phone once again.

"It's in the queue," they said this time. "It will be sent soon, but it's impossible to know when, exactly."

The bank rep told us there was no possible way to send the statement immediately. We were polite but insistent. Finally, after over 30 minutes of being told it was impossible, they transferred us to a manager.

"What do you need? Your payoff statement? Sent immediately?" she asked. "Sure, no problem. I can do that right away."

The title company had the statement in less than five minutes.

Why we're bad at negotiating

I share this little story with you because people are often intimidated by financial institutions. There's complicated terminology — legalese, corporate jargon, and specific "money terms" that sound like you need a doctorate to understand them. Plus, people often feel out of the loop when it comes to particular money matters, which can lead to hesitation and uncertainty. If you're not sure of your own financial footing, how are you supposed negotiate with the pros?

But it's important that you learn. If you don't negotiate, chances are every agreement you enter with a financial institution will favor that institution far more than it favors you. Insecurity about your poor credit, past financial mistakes, or a current bad hair day can make you feel like you don't have the right to ask questions or stand up for yourself.

The consequences of not negotiating can be dire. In our little story, if we hadn't pushed until we got what we wanted, we might have lost the sale of our house. So let's learn how to negotiate. (See also: 8 Negotiating Skills Everyone Should Master)

Get to the right person

Negotiating with a financial institution is a lot different from negotiating with an individual — like, say, your landlord. Individuals make decisions based on many factors. They could be influenced by something as simple as how good — or bad — of a mood they're in. It all comes down to the person.

Institutions operate, presumably, on a set of rules. The individuals within the institution are motivated to adhere to the rules because it's safer for them. The less secure they are in their role, the less willing (and sometimes able) they are to negotiate.

The workaround is to go as far up the chain of authority as you can when negotiating. Generally, the more authority an individual has within a business, the more job security they have and more freedom to make decisions. You want to work with someone who doesn't feel threatened by your request. If you feel that the person you're working with is unable or unwilling to meet your terms, keep asking for the next person up the ladder.

Find the real rules

There are rules, and then there are the real rules.

Generally, the first people you talk to are working with the rules. There are lots of these rules, and most of them sound like "No." They are designed to protect the institution from loss. They are written into the scripts used to train the people who work there.

To negotiate effectively, you'll need to keep asking questions until you push past the script and find the real rules. For example, you might be told, "There's no way we can offer that kind of discount to you; it's against our policy." This is your cue to ask for a supervisor; someone who can override the policy.

When you get to that someone, you find out the real rules, which might be quite different: "Well, we don't usually offer discounts like that. The only way I could do that is if you sign a two-year contract with us." Now you know the real rule, which is, "Only offer deep discounts to get long-term contracts."

Once you know the real rules, you can use them in your negotiating: "I understand you need to get a long-term agreement in order to give me the discount I want. But that's a big commitment for me. I'm interested, but I'll need a lower interest rate in addition to the discount." (See also: 10 Negotiation Mistakes That Will Destroy Your Deal)

Be excruciatingly courteous

Bad manners really won't get you very far. Good manners alone will not win your negotiation, of course. But they can open the door. They can help you get to the right person. They can help you extend the conversation so you're able to see your options.

Good manners can also keep you from having to start the negotiation process over again. If you are kind and courteous when you speak with someone, they're more likely to do what they can to help you. They may not be the person with the authority to make the ultimate decision, but all help is valuable.

Being courteous can get you a direct phone number to call rather than the catchall service line, information on general policies that will help you negotiate better, and notes left in your account which get passed up the line with you. These little things will all nudge you forward toward your goal.

Prepare to repeat yourself

You will have to repeat yourself. Over, and over, and over.

Really, negotiating with a financial institution is a test of patience and how many times you can say the same exact thing without snapping. Parents of young children have a real advantage here.

If you want to talk to a person with more authority, you may have to ask five times. That's because of the value at stake in any individual's time. Entry-level people get paid less. Their job is to maximize the gain for the institution and minimize the (potential) loss. It's well worth it for an hourly worker to sit on the phone with you all day long if they can get you to agree to their preferred terms by the end of the call.

And most people will give up — either on getting to the right person, or on getting to an agreement that benefits them — far too soon. Be clear about what you're asking, and be prepared to ask for it over and over.

Remember that you're in charge

There are many scenarios that can involve a negotiation. Maybe you need a business loan, or you're looking for a better interest rate on an existing one. Maybe you're looking to buy or sell a property. Maybe you need to negotiate payment or contract terms. In all of these cases, the institution will make more money by doing business with you than by refusing you. Some interest is better than no interest; any payment is better than no payment. You hold the power here, even if you feel like you are in the subordinate position.

If they won't meet your terms, go elsewhere. Be prepared to do so, rather than just making empty threats. Knowing that you have options is important. When you know you have other avenues, you can feel more confident. And that will make you a better negotiator.

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

7 Modern Ways to Balance Your Checkbook

Tim Lemke — Thu, 24 May 2018 08:00:46 +0000

I remember watching my mom sit at the kitchen table at the end of each month, examining a checkbook ledger and paper statement from the bank. It was time to balance the checkbook — an essential task for any family looking to accurately track spending, avoid overdrafts, and stay on budget.

Balancing your checkbook is still practiced in some circles. It's akin to how some people still listen to compact discs or carry around flip phones. But these days, balancing your checkbook manually isn't nearly as essential due to advancements in technology and changes to our financial habits.

It's still necessary to make sure you're tracking withdrawals and deposits and staying on top of your checking account balance. So how do we do it? Check out these ways to balance your checkbook in the modern age.

1. Use online banking

These days, every bank encourages you to sign up for their online banking service. In fact, many modern banks don't have physical branches at all. Online banking gives you a real-time look at your money, so you know if payments and deposits are processed correctly. It's easy to check balances, transfer funds, and pay bills. There's no waiting around for monthly statements; you can look immediately to see if a transaction cleared, and you'll notice any errors immediately. (See also: 5 Best Online Savings Accounts)

2. Use smartphone apps

If you have online banking, most banks also offer smartphone apps with the same functionality as their websites. Many of them also allow you to deposit checks by sharing an image. Other apps like Clarity Money and Wally will also help you track spending money so you know precisely what's going in and out at any given time. (See also: These 5 Apps Will Help You Finally Organize Your Money)

3. Get text alerts

If you really want to stay on top of every dollar that goes in and out, you can use online banking apps to set up text alerts for when transactions post. You can get text alerts for when your balance dips below a certain limit, or when you face a possible overdraft charge. You'll know the very second when a check clears or when a bill is paid, so you're never confused about where you stand financially. It's also possible to get fraud alerts via text.

4. Automate everything

It's possible these days to send paychecks directly to your bank account through direct deposit, and also set up bills to pay automatically as well. It's may not be possible to automate everything, but the bulk of your income and most of your major bills (mortgage, loan payments, utilities, etc.) can all be sent directly from your bank account with no check required.

You can even select the dates when you want money to go out. This means you will never miss a bill, and the possibility of error is very small. Automate enough, and you may be able to "set and forget" a lot of your monthly transactions. (See also: 5 Ways to Automate Your Finances)

5. Use an account aggregator

If you want to see your full financial picture in one place, websites and apps such as Mint.com and Personal Capital will let you aggregate your accounts into a single view. These sites let you see everything from bank accounts to investment portfolios, loans, and even college savings accounts. Did you transfer money from your checking account to your brokerage account? Did you pull money from your online savings account to make an extra mortgage payment? These sites don't miss a thing.

6. Use Quicken or similar programs

If you still want to feel directly engaged with your finances by entering transactions, you can do so on the computer online through any number of accounting programs. Quicken may be the most popular, but there are other tools such as GnuCash and You Need a Budget that have similar capabilities.

7. Avoid checks if possible

One of the key reasons people have balanced checkbooks manually in the past is that it allowed them to keep track of checks that had not yet cleared. But if you never use checks to pay for things, this is not as much of an issue. Nowadays, you can use credit or debit cards for many purchases, or use services such as PayPal or Venmo that allow for instant transfers of cash.

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

5 Personal Finance Tasks That Aren't as Hard as You Think

Dan Rafter — Thu, 10 May 2018 09:00:11 +0000

The thought of making a budget or preparing your own taxes makes you want to collapse on the couch and binge watch your favorite TV show. It's understandable: Most people don't consider personal finance to be a fun way to pass an afternoon.

But the truth is, most personal finance tasks aren't nearly as difficult or time-consuming as you think they are. And if you muster up the courage to finally take them on, you can generate a nice financial boost for yourself.

These personal finance tasks aren't as tricky as you think. Give them a go. You'll feel a lot less guilty when you waste three hours streaming old episodes of Battlestar Galactica.

1. Writing a household budget

Drafting a budget is the first step toward making good financial choices. The problem? Making a budget sounds dull and difficult.

The good news, though, is that it doesn't take nearly as much time or effort as many people assume it does. Simply list your monthly expenses that never change — everything from your mortgage or rent payment, to your car payment and insurance costs. Next, list those costs that change each month — such as your utility bill, transportation costs, and grocery spending. Put down an estimate for how much you think you'll spend on these items every month.

From there, list the expenses that are more discretionary, such as eating out or going to the movies. Create a maximum spend for these items each month.

Finally, list the money that comes into your household from salaries, overtime, bonuses, settlements, investments, and any other source that pays out each month. Compare your expenses to your income. Now you know how much leeway you have in your monthly budget and how much you can devote to savings. Best of all? Doing this doesn't have to take more than an hour. (See also: Build Your First Budget in 5 Easy Steps)

2. Building an emergency fund

Financial experts recommend that you have six months' to a year's worth of daily living expenses saved in an emergency fund. That way, if you face an unexpected financial emergency — anything from a $1,000 car repair bill to a job loss — you'll have money set aside and won't have to resort to credit cards.

Building such a large emergency fund sounds intimidating. But if you take it in small steps, you'll find that building this fund isn't nearly as hard as you think.

Start with whatever you can spare each month. If you can only devote $100 a month to your emergency fund, start with that. After a year, you'll have $1,200 saved. If you can save $200 a month, you'll have $2,400 at the end of a year.

The key is to continue depositing whatever you can in your emergency fund. If you do, you'll be surprised at how quickly it grows. (See also: 5-Minute Finance: Start an Emergency Fund)

3. Making a will

Drafting a will not only sounds complicated, it's also not much fun to think about. No one wants to consider their own death. But if you own property and assets, you absolutely need a will to make sure those assets are passed on to your loved ones according to your wishes after you die.

How to do it? Start by titling a blank document with the words "Last will and testament." Then, state your name and write that you are of sound mind and legal age (this is usually 18).

Name the executor of your will — the person who will carry out what your will states after you die — and name a legal guardian to take care of your children if you should pass away.

Your will should include the names of any beneficiaries, the people whom you want to inherit your assets. Usually, this will be your children or spouse. But you can also name friends, charities, other relatives, or organizations.

Finally, list your assets and whom they should go to. This can include your home, your savings, your car, or any other possessions.

Sign the will in front of at least two witnesses. Check with your state; in some, your witnesses can't be beneficiaries. Write down these witnesses' names and addresses. Make sure they sign your will, too. (See also: Here's What Happens If You Don't Leave a Will)

4. Paying your taxes

It can be tempting to hire an accountant or tax pro to do your taxes for you. The truth, though, is that most of us can do our taxes on our own.

Taxes for most people aren't overly complicated. Things only get messy if you rely heavily on freelance income, write off part of your home as an office, or have plenty of deductions that you want to claim. Most taxpayers don't fall into that category. They can file their taxes on their own, especially with the help of easy-to-follow tax preparation software.

So before you spend $600, $700, or more on a professional tax filer, consider doing this on your own. It'll usually take you less than an afternoon. (See also: 12 Things You Should Know About the New Tax Law)

5. Changing your bank

Your bank just closed the only ATM and branch near you. Its online banking function is sluggish and frequently offline. You're ready to make a change — but you don't want the hassle of closing accounts and opening new ones. Here's the good news: Changing your bank doesn't have to be a hassle.

You will have to do the research, of course. You'll have to find a new bank that has branches and ATMs close by. You might even decide to go with an online-only bank. Once you've analyzed your choices and selected a new bank, it's time to open an account. You might be able to do this online, but some banks require you to visit their office in-person. You'll usually need to make a deposit to start your new account.

Once your account is open, you can transfer money from your old bank — hopefully you can do this online — into your new account. But don't close your old account too early: You want to make sure that any checks you've written recently have been cashed before you close that account.

You'll also want to change all your automatic payments before closing your old bank account so that the payments are withdrawn from your new account. Many people have everything from their mortgage payments to their auto loan payments set up as automatic deductions from their checking accounts. Make sure you've switched all of these before closing your old account. And if your paychecks are direct-deposited to your old bank account, you'll have to make that switch, too.

Finally, if you rely on online payment systems such as PayPal, be sure to connect these services to your new bank. If you're lucky, you should be able to set up a new bank account, make these switches, and close your old account mostly from your computer. (See also: Switch to a Better Bank in 5 Easy Steps)

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

How to Use Bucket Budgeting to Overhaul Your Finances

Emily Guy Birken — Wed, 21 Mar 2018 09:30:16 +0000

You know the drill: You're supposed to save up at least three to six months' worth of expenses in an emergency fund. That way, you're covered in case of a job loss, an expensive car repair, or another "life happens" moment. You've set up an automatic transfer into your savings account to make sure you don't have to rely on your own inconsistent memory to fill it up. You should be all set.

So why is it that you never seem to have more than a couple hundred dollars in your savings account, despite making all the right moves?

It's likely that your savings account doesn't have a specific purpose, which makes it much easier to make withdrawals for nonessentials. That's where bucket budgeting (also known as targeted savings) comes in.

Here's what you need to know about bucket budgeting and how it can improve your finances.

What is bucket budgeting?

Bucket budgeting is similar to the old-fashioned envelope budgeting system, where you would set aside cash in different envelopes labeled with their purpose. For instance, under the envelope system, if you budget $400 per month for groceries, you would put $400 cash in an envelope marked "groceries" each month, and only spend that particular money when you went shopping at the supermarket. With bucket budgeting, however, instead of setting aside cash in envelopes for regular spending, you set up targeted savings accounts for various savings goals.

For instance, let's say you've had to take money from your savings account several times over the last year to help pay for a car repair, a leaking water main in your house, summer camp for your kids, and your anniversary trip with your spouse.

Even though each of these purchases may be perfectly valid reasons to dip into savings, it's tough to know if you're making good choices with your money if it's all in one place. That's why bucket budgeting would have you create five sub-accounts for your savings, each with a different savings goal:

Emergency: $1,000
Car repairs: $500
Home repairs: $500
Kids' camp fees: $650
Anniversary trip: $350

With this system, you have a better sense of how much is available to spend. In addition, it's much easier to scale down your anniversary trip expectations from "a week in Mexico" to "a weekend at a local bed-and-breakfast" when you realize what you'd be taking the extra money from.

Bucket budgeting and motivation

The other aspect of bucket budgeting that can really kick your finances into high gear is the motivational aspect of it. We are much more likely to feel excited about saving money if we have a specific goal in mind.

This increased savings motivation stems from our mental accounting, which is our tendency to value money differently depending on how it is physically and mentally labeled. You might feel no compunction about "borrowing" $500 from your general savings account for that getaway with your spouse, but taking that money from your kids' camp fund would hurt. (See also: What Happens When We're Not Logical With Money)

In addition, it's a lot more fun to see a savings account with a specific purpose grow over time than it is to see a general fund get bigger. Seeing money transferred from your checking account to your savings account can be dull and painful, but seeing money go from your checking account to the account where you're saving for a dream vacation or a new car can be downright enjoyable.

How to create your buckets

There are any number of goals you could be setting money aside for, so how do you determine which goals should get their own bucket? In general, there are four types of bucket categories you will want to create sub-accounts for: emergency expenses, irregular expenses, big-ticket items, and dreams. (See also: Reach Your Money Goals Faster With a Simple Naming Trick)

Emergency expenses

These are the urgent expenses that you have no way of predicting before they crop up. These include things like car repairs, home repairs, or medical needs. These needs can each have their own buckets, in addition to a separate emergency fund that you keep at least $1,000 in.

Why have separate funds for these emergency expenses when you could have just one emergency fund? Having separate buckets for the various emergencies you might encounter can help you weather those times when everything seems to break all at once. That way, if you need to take care of a car repair, fix a broken window, and get an emergency root canal all in the same month, you will still have some emergency money to fall back on just in case something else goes wrong. (See also: 7 Easy Ways to Build an Emergency Fund From $0)

Irregular expenses

Irregular expenses are the ones that are predictable, but don't come as part of your regular monthly budgeting. They include annual, biannual, or quarterly bills, membership dues, and taxes. Any expenses that you kick yourself for having forgotten are excellent candidates for bucket budgeting.

For instance, how many times have you been surprised by an annual bill? Without bucket budgeting, it's easy for the annual car insurance bill to slip your mind until it's staring you in the face and you're scrambling to pay it.

How much to put in emergency and irregular buckets

To figure out how much to put in each of your emergency buckets and your irregular expense buckets, go back over your expenses for the past few years and determine about how much you spend per year on each type. Divide each expense total by 12, and set up automatic monthly transfers to the specific accounts. That way, when an emergency occurs and when an irregular expense comes due, you'll have money already set aside to deal with it.

Big-ticket items

Your laptop, your phone, and your car are all items you use everyday that have a limited life span. Bucket budgeting can help you be prepared to replace any of these items should something happen to them. Setting aside a little money each month is a lot easier than trying to find hundreds or thousands of dollars all at once.

In terms of saving for a car replacement, consider transferring the equivalent of your car payment to your "new car" sub-account once you've paid off your current car. For your laptop and phone, divide the cost of a replacement model by 24 and put that amount in each sub-account per month, so that you'll have enough for a replacement within two years — and hopefully you won't even need it.

Dreams

Bucket budgeting is also a great tool for helping you to realize your dreams. Whether you want to buy a house, travel, or learn how to brew beer, you'll be in a much better position to follow those dreams if you're saving for them. Having separate, targeted accounts for each one of your future goals means that you are always working toward those goals. It's a lot tougher to forget to save for a goal if you have a specific account named for it — and it's a lot harder to borrow money from your dreams than it is to borrow from an unnamed savings account.

Where to put your buckets

Both online and traditional banks have gotten into the sub-account savings game. You can start with your regular bank, although it can be a good idea to have your buckets in a different bank. Not only does that lessen the temptation to dip into your savings accounts unnecessarily, but you can also take the time to shop around for the best rates, since your money might as well be working for you.

Bucket budgeting for the win

Putting a name to each one of your savings goals not only helps you save more and spend less, but it can also help you to be more prepared for potential financial problems — and feel more relaxed when they do occur.

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

5 Alternatives to a 401(k) Plan

Tim Lemke — Mon, 18 Dec 2017 09:30:10 +0000

The status of 401(k) plans has been in the news a lot recently, as part of the wider discussion about tax reform on Capitol Hill. While it does appear that tax benefits for the popular employer-sponsored retirement plans will remain unchanged for now, even the prospect of change has left some people feeling unsettled about what to do with their money moving forward.

To be clear, a 401(k) plan remains a very powerful tool to help you save for retirement, especially if your company is generous in matching contributions. But if you are feeling confused or are not happy with what your current 401(k) plan offers, there are some other options available to help you build a retirement fund. Here's the skinny on a handful of 401(k) alternatives.

1. Roth IRA

A Roth Individual Retirement Account (IRA) is a popular option among people who don't have access to a 401(k) or other retirement plan through their employer. With a Roth, you can contribute up to $5,500 annually ($6,500 if over age 50), and since you contribute with post-tax dollars, the gains on those investments can be withdrawn tax-free when you retire. Roth IRAs are popular due to the flexibility to choose your own investments. It's also possible to use the account for certain emergency costs, such as medical bills or a home threatened by foreclosure, and you can even use it as a college savings account, though there may be penalties and taxes if you withdraw gains before age 59 ½. (See also: Using Your Roth IRA as an Emergency Fund — Ever a Good Idea?)

A Roth IRA is a good alternative to a 401(k) for those who don't have access to one. Even if you do have a 401(k), sometimes a Roth IRA is a better option, such as in cases when an employer does not offer matching contributions, or the fund choices are expensive or limited. (See also: 401(k) or IRA? You Need Both)

Roth IRAs are also useful because you can contribute as long as you have earned income; other retirement plans require you to begin making withdrawals by age 70 ½.

2. Traditional IRA

A traditional IRA is similar to a Roth IRA, but the tax advantages are more in line with a 401(k). In this case, any contributions to the account are deducted from your taxable income up front; you will be required to pay taxes on the gains when you retire.

It's entirely possible and sensible to have both a traditional IRA and a Roth IRA in order to get tax advantages both now and later. Note that with a traditional IRA, you must start taking required minimum distributions starting at age 70 ½.

3. Taxable brokerage account

There are no tax advantages to opening a good old-fashioned, regular, taxable brokerage account. But you do get flexibility that can't be offered by a 401(k) or IRA. With a regular taxable account, you can invest in whatever you want and buy and sell whenever you want without any early withdrawal penalties, though you will pay taxes on any gains. This type of brokerage account is great if you want to buy dividend stocks to boost your income, or use the investments for something other than retirement.

4. Peer-to-peer lending

This is a relatively new investment option that allows people to connect online with borrowers and collect interest income. Through peer-to-peer lending sites such as Lending Club and Prosper, you become a lender and loan money to someone in need of cash, profiting from the interest on that loan.

With peer-to-peer lending, lenders can earn considerably more than what they might earn from interest from the bank, and may even outpace stock market returns, depending on the riskiness of the loans they buy. But there is always some risk that the borrower will default. And keep in mind that interest from peer-to-peer lending is taxed as normal income, rather than investment gains. (See also: Everything You Need to Know About Peer-to-Peer Investing With Lending Club)

5. Stick your money in the bank

Putting your money into a savings account is always an option, though not the best one on this list. These days, interest rates are so low that in many cases the growth of your savings will barely outpace inflation. You may be able to find better-than-average rates at some online banks or by opening a certificate of deposit, but there's no chance you'll be able to match the returns of the stock market over the long term. It's fine to use a bank account for your emergency fund, but for long-term savings, look elsewhere.

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

How to Earn Money With Your Emergency Fund

Dan Rafter — Thu, 19 Oct 2017 09:00:06 +0000

Life is full of unexpected and often unpleasant financial surprises. That's why it's so important to have an emergency fund. An emergency fund provides you the cash to cover everything from a blown water heater to a leaky roof to a bout of unemployment. Ideally, you should have enough dollars in your emergency fund to cover three to six months' worth of daily living expenses. (See also: 4 New Reasons You Need an Emergency Fund)

There's one problem with an emergency fund, though: You need your funds to be liquid so you can quickly get at your dollars when you need them. You also need your fund to be safe and stable. You don't want a blip in the stock market to drain those emergency funds.

Because of this, you'll most likely stow your emergency fund in a savings account that pays out a tiny amount of interest. This is unfortunate; it'd be nice if the cash sitting in your emergency account was actually earning some money of its own.

Here's a bit of good news: There are two good options for people who want to earn money from their emergency funds. The key, though, is to remember that the primary goal of your emergency fund is to act as a financial safety net. Earning a higher amount of interest is a secondary goal.

The problem with traditional savings accounts

If your emergency fund dollars are sitting in a traditional savings account, they're probably not earning much interest at all. Most banks today pay about .05 percent interest on their savings accounts. This is tiny.

To put it in perspective: If you have $20,000 in your emergency fund, at 0.05 percent interest, that amount would grow to just $20,010. That's right, that .05 percent interest rate would earn you $10 in one year. Hardly inspiring.

Try a high-yield savings account

A better option might be to hunt for a bank offering what is known as a high-yield savings account. As the name suggests, such accounts offer higher interest rates.

The rates with these accounts still aren't particularly impressive. Most high-yield savings accounts come with interest rates of about 1 percent. That won't make you rich, but it is better than .05 percent. A high-yield savings account also meets the main requirement of an emergency fund — it's not volatile.

Just be careful to read the rules of your high-yield savings account. Some might require a minimum balance. If your balance drops below this figure, you might get hit with a fee, cutting into your savings. Make sure, too, that the money in your high-yield account is truly liquid. You want to be able to access it quickly whenever you need it.

Short-term bond funds

Another option is to invest your emergency fund in a short-term bond fund. The benefit of these funds is that they are far less risky than traditional mutual funds or stocks. At the same time, they enjoy much better annual returns than you'd be able to get by leaving your emergency fund in a savings account. You can find short-term bond funds offered by investment companies such as Fidelity and Vanguard.

These funds are also liquid. You can withdraw dollars from them whenever you'd like, which is ideal for an emergency fund.

Annualized returns will vary, but you can expect your money to earn from 1.7 percent to 3.6 percent every year, according to a recent analysis from Investopedia. Again, this is a much better return than what you'd get from that interest rate of .05 percent with a traditional savings account.

There is some risk, though, even with short-term bond funds. Again, your annual returns might fluctuate. If you want more certainty with your emergency fund, stashing your dollars in a savings account might be a better choice for you.

No matter where you invest your emergency fund money, remember that stability and quick access remain the keys. Safety matters the most with an emergency fund. Sure, you'd have the potential to earn much more on your emergency fund if this money were invested in a mutual fund, but you'd also have the potential to lose this money. Don't let your quest for more earned interest lead you to investment options that are too risky for an emergency fund.

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

9 Signs Your Identity Was Stolen

Carrie Kirby — Tue, 03 Oct 2017 08:00:08 +0000

If you get mugged, you know immediately that you're the victim of a crime. But with identity theft, you can be victimized for years before you realize what's happening. And the longer the criminal uses your name, Social Security number, and credit, the more damage is done. (See also: 18 Surprising Ways Your Identity Can Be Stolen)

With the recent Equifax breach exposing the personal information of as many as half of Americans, we could be in for an identity theft epidemic. Keep alert for these signs that your identity has been stolen, so you can stop the damage before it goes too far. (See also: How to Protect Your Credit After the Equifax Breach)

1. Strange bills or statements arrive

It's very important to always open your mail, even if it doesn't look important. A bill or statement from an unfamiliar service provider or credit account can often be the first sign of identity theft.

"You may think it's just junk mail, but you might discover it's an invoice for a surgery in a state where you don't live," warns Ann Patterson, program director of the Medical Identity Fraud Alliance. "That is a very good indication that you've been a victim."

2. Bills stop arriving

On the flip side, make sure you are receiving all bills and statements you normally receive. If one falls off, it could be that a criminal has changed the address on that account, which could help them establish other accounts going to a different address.

If your mail dries up altogether, that's a sign that a thief may have filed a change of address request at the post office — they could be getting all your mail with all the sensitive information found there.

3. Odd charges on credit accounts and checking accounts

Credit card companies have gotten good at alerting customers to fraudulent attempts to make charges, but they can't catch 'em all. Keep a keen eye on your credit card and bank statements. The first charge an identity thief makes may be small, because they're testing to see whether the card is active. There are also scammers out there who make their money by processing many small charges on many credit accounts.

4. Your find yourself getting rejected for things

Your health insurance company rejects your claim because you're over your annual limit — but this was your first claim. You're turned down for a new credit card or your charges are denied at the store. You apply for life insurance and are charged a higher rate due to a pre-existing condition that you don't have. The ATM won't give you any money.

Don't brush off any of these events. It could be a fluke, or it could be a sign that something sinister is going on.

5. You receive suspicious phone calls

A neighbor of mine recently received a phone call that purported to be from her bank. The caller read back a list of recent transactions, which set her mind at ease that the call was legit, even though she knew that caller ID numbers can be spoofed. She was then tricked into sharing a PIN with the caller.

What might be happening if you get a call like that? You may already be a victim of identity theft, with the criminal already accessing your bank account. They may use the information they already know to trick you into giving them more information, or the access they need to start stealing money.

6. You receive strange texts or emails

If you are smart, you've set up two-factor authentication on important accounts. This means that you have asked your bank or other service providers to email or text you before allowing you to sign onto your account or take other actions, such as transferring out money. The text may provide you with a one-time code that you need to type into the website to log in, for example.

If you receive a text or email with a PIN when you didn't request one, this is a big red flag that someone has your login credentials and is trying to take control of your account. Contact the company immediately through the phone number on your statement. And change your password.

7. Creditors and collections agencies start calling you

You got a call from a car dealership warning that your payment is late. The only problem is you didn't recently buy a car, and you have no current car payments. This is a huge red flag. Do not simply write off such calls as errors or wrong numbers.

8. You don't receive your tax refund, or the IRS notifies you that you filed two tax returns

The Department of Justice reports that people have stolen billions of dollars from the U.S. Treasury by filing tax returns using stolen identities, and pocketing the refunds. Just make sure it's really the IRS contacting you, instead of a scammer posing as the IRS. (See also: Beware These 6 Phony IRS Calls and Emails)

9. There are accounts you don't recognize on your credit report

If any of the above warning signs occur, you should definitely request a free copy of your credit report and study it carefully. If there are any credit accounts listed there that you didn't open, your suspicions will be confirmed.

Even if you didn't experience any warning signs, you should check your report regularly, especially in light of the Equifax breach. You can request a free report from each of the three agencies once a year at AnnualCreditReport.com, so if you request one every four months, you'll be able to stay pretty on top of things. (See also: Don't Panic: Do This If Your Identity Gets Stolen)

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

Money a Mess? Try This Personal Finance Starter Kit

Emily Guy Birken — Tue, 22 Aug 2017 09:00:05 +0000

I recently joined a meal delivery kit service, which has completely changed my cooking game. Every week, I receive a couple of boxes of pre-chopped and presorted fresh ingredients, along with a step-by-step recipe that helps me get a meal on the table in under 30 minutes. (See also: Are Meal Prep Subscription Boxes Worth It?)

As I put together one of these meals last week, I started wondering why we haven't applied this concept to money yet. Where is the deliverable personal finance starter kit that will make handling your finances as easy as putting a quick and delicious meal on the table?

Since we probably won't be seeing any "Hello Cash" or "Green Apron" boxes arriving in our homes anytime soon, I figured I could take matters into my own hands and create such a starter kit for adult-level finances. Here are the specific "ingredients" you need to go from broke to bank.

What you need: A checking account

Opening a checking account is the first step to conquering your adult-level finances. That's because having a bank hold onto your money is the safest and least expensive way for you to access and spend it. Putting your money in a checking account gives you several benefits:

Security and protection of your money: Up to $250,000 of your money is FDIC insured by banks and NCUA insured by federal credit unions, meaning you do not have to worry that your money will be wiped out if the banking institution fails. State-chartered credit unions are backed by private insurers. (See also: Here's the Difference Between a Federal and Non-Federal Credit Union)

Free check cashing: Without a checking account, it is nearly impossible to cash a check without having to pay a fee, and those fees can take up to 3 percent of the value of the check. It's tough to get ahead financially if you have to pay to access your own money.

Free bill pay: A checking account gives you access to paper checks and online bill pay. Without such an account, you will have to pay your bills with money orders, which also cost as much as $1 per money order. (See also: 5 Reasons Paper Checks Are Still Relevant)

Access to a debit card: We live in a digital world, and it can be very difficult to handle your finances without a debit card or credit card. The majority of checking accounts these days come with a check card, which allows you to use your debit card like a credit card. (See also: Debit or Credit? Which One Should You Choose at the Checkout?)

To find the best checking account for you, consider your needs ― do you need an account with a low minimum balance, or do you plan to keep a high balance and want to earn some interest? Will an online bank cover all of your needs, or do you need a local branch? How often will you need to access the ATM? (See also: 8 Ways to Make Sure You Never Pay an ATM Fee)

Taking the time to find a checking account and bank that will fit your financial needs will help you keep more money where it belongs ― in your account and in your wallet.

What you need: A savings account

The next financial ingredient you need is a savings account. While the interest rates on savings accounts are still depressingly low, that does not change the fact that an FDIC or NCUA-insured savings account serves as the foundation for financial planning for the future. Here's why.

It makes it easier to pay yourself first: It's very hard to save money without a place to put it that is separate from your checking account. Opening a savings account gives you a more difficult-to-access spot for your money to grow. (See also: 4 Easy-to-Fix Reasons Your Savings Account Isn't Growing)
It can serve as your emergency fund: Financial hiccups, mistakes, and emergencies can hit anyone at any time. The difference between a financial emergency just being a nuisance and it becoming a catastrophe comes down to whether or not you have an emergency fund. Without one, you will be left scrambling to find money. With one, your emergency fund can simply absorb the cost of the emergency without affecting your usual spending. (See also: Where to Turn for Help When You Don't Have an Emergency Fund)

While it may be easy to open a savings account with the same bank where you already have a checking account, you might want to consider an account at a different bank. This can help keep the money out of your reach if you're likely to spend it, and could possibly get you a better interest rate, especially if you're willing to put your savings into an online bank. (See also: The Pros and Cons of Keeping All Your Accounts in One Bank)

Of course, opening a savings account is not enough. You need to actually use it regularly. The trick to getting the most out of your savings account is to set up regular, automatic transfers into it, so that your savings will grow without you having to think about it. (See also: Earn More Interest by Reducing Savings Friction)

What you need: A simple budget

Once you have a checking account, a savings account, and automatic transfers into savings, then you are ready for the next ingredient: your budget.

This is often the portion of financial adulting that makes the fainthearted run screaming into the distance. But budgeting is really about organizing your money so that you can spend it on the things that matter and scrimp on the things that don't.

The basis of budgeting is keeping track of your income and expenses. There are several ways to do this without having to break out a spreadsheet. You can use sites like Mint.com to track your spending for you and declutter the financial information coming in to you so that it's easier to track. (See also: Build Your First Budget in 5 Easy Steps)

When you have a decent idea of what you bring in and what you spend, then it's time to start managing your funds so that you spend less than you earn. How you manage your money is up to you, but the main idea is to save your splurges for the things you really value, and cut back your spending everywhere else. (See also: How to Manage Your Money — No Budgeting Required)

What you need: A Roth IRA

Your financial life is really starting to look good at this point, so it's time to add the next ingredient: a Roth IRA. This tax-advantaged retirement account is a great way to save for your future.

Roth IRAs are funded with post-tax dollars, which means you will not get a tax break when you make a contribution ― but any investment gains can be withdrawn tax-free anytime after age 59½. Since it's very likely that you'll be in a higher tax bracket by then, this makes the Roth IRA a great deal for newly-minted financial adults. You may contribute up to $5,500 per year to your Roth IRA, and there is no age limit on contributions since you will never be forced to take minimum required distributions on this account, unlike traditional IRAs and 401(k)s. (See also: Which Retirement Account Is Right for You?)

In addition, you can access up to $10,000 of your earnings penalty-free from your Roth IRA to put toward buying your first home. You may also access your principal at any time without having to pay a penalty, which is not possible with traditional IRAs and 401(k)s.

That being said, if you do have access to a 401(k) retirement savings account at work and there is an employer match for your contributions, you will want to make sure you contribute up to the full employer match before funding your Roth IRA. The employer match is free money, after all. (See also: 7 Retirement Planning Steps Late Starters Must Make)

The best way to make sure you max out your Roth IRA contributions is to make them completely automated, just like your savings.

The optional garnish: A rewards credit card

At this point, your adult-level finances should be working well and taking good care of you. The next level of financial expertise is to start using your regular spending to help you achieve more of your financial goals. You can do this with a rewards credit card that rewards you for your regular spending. With savvy use of such cards, you can earn anything from flights to hotel stays to plain old cash back.

But, there is a reason why this is an optional garnish, rather than one of the main ingredients of financial adulthood. Banks and credit card companies don't offer rewards cards to be nice to their customers ― credit card rewards can make even the most frugal financial grown-up forget their budget limitations. If you are able to pay off your credit card in full each month and just reap the free rewards, then a rewards credit card can be a delicious topper to your financial adulthood. (See also: How to Escape Reward Card Spending Traps)

If, on the other hand, you know that you will struggle to pay off your balance every month, then feel free to enjoy your financial adulthood sans rewards credit card. It's not a necessary part of your financial starter kit ― it just makes for a nice addition. (See also: 6 Smart Reasons to Pay Your Credit Card Bill Before It's Due)

Whipping up a financial adulthood

While it would be convenient if you could order a financial adulthood starter kit to show up at your doorstep, it's actually pretty simple to put together one of your own. Just know the basic ingredients you need, find the ones that work best for you, be consistent ― and, voilà! You'll go from broke to bank before you know it.

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

Build a Secure Future Starting With Your Next Paycheck

Mikey Rox — Mon, 21 Aug 2017 08:00:06 +0000

If you've been putting off the inevitable with your money — finally getting your finances in order — now's your chance. Take advantage of that next paycheck coming in, and make these smart money moves.

1. Increase your savings and debt repayment, even by a little

Ideally you've been portioning out your paychecks to cover your monthly expenses, throw a little into savings, and pay down whatever consumer debt you've racked up. On your next payday, it's a smart move to increase (even by a small amount) the percentage you allocate toward savings and debt repayment. Every little bit will help provide you with more of a rainy-day cushion and chip away at nagging debt.

If you have credit card debt, focus on your highest-interest card first, and go from there. This strategy, also known as the avalanche method, will save you the most money in the long run on interest payments. (See also: The Fastest Method to Eliminate Credit Card Debt)

You may have to cut a discretionary item from your budget — like a night out with your pals — to afford this responsible increase. You're an adult, and it's time to start managing your money like one.

2. Investigate your life insurance options

There are plenty of cases to make for taking out a life insurance policy, but the most important one is so your spouse and children can get through the first few years after your untimely death. This is not a fun subject to think about, but it's a necessity. If you should suddenly pass away, you will want to leave your family as well taken care of as possible.

If you're single without a mortgage, life insurance probably doesn't need to be a priority when you can put your money somewhere more useful — like a 401(k). But heads of households absolutely need to have this money move on their radar, if not at the top of their list. (See also: 5 Reasons Why Life Insurance Isn't Just for Old People)

3. Set up new accounts for automated savings

In all likelihood, you have a single savings account — but if you have a hard time managing your money, perhaps one isn't enough. In fact, Kevin, creator of Financial Panther, goes so far as to suggest multiple accounts to which you can automate your savings. By putting this concept into practice, he was able to pay off $87,000 of student loan debt in two and a half years.

"If people have a matching 401(k) for work, they should try to put as much as they can into that right off the bat, and try to increase it little by little each paycheck," Kevin says. "From there, I like to set up multiple accounts where I can send my money to. I have accounts for short-term savings goals, long-term, and a Roth IRA, which I contribute money to since I max out my 401(k) each year. I also have micro-savings apps working for me, which take out extra money from my checking account based on algorithms they have … and stores that money in a separate account."

The money Kevin is left with is what he considers his "true" income. His multiple savings account method creates barriers for him to access his money, in turn making it harder to spend on frivolous things. (See also: Build Savings Faster With a Multiple Account Strategy)

4. Invest in self-improvement

Fact: You can earn more money in your career when you have more relevant skills. Thus, investing in yourself is just as important as saving or paying off debt. The return on investment can be exponential if what you're learning is valuable and you put it to work for you. This can be as simple as brushing up on networking, or taking continuing education courses at your local community college. (See also: 11 Ways a Professional Association Can Boost Your Career)

5. Get that emergency fund back on track

Maybe you've recently had a crisis and you needed to pull money from your emergency fund. Or, maybe you've just had more important and costly bills to pay in the meantime that have disrupted your savings. Whatever the case, start building this fund again, even if it's just small contributions here and there. You owe it to yourself to be prepared for the unexpected, and you don't want to have to reach for a high-interest credit card to bail yourself out of a problem. (See also: 6 Fast Ways to Restock an Emergency Fund After an Emergency)

6. Switch banks if yours isn't the best place for your money

One of the worst financial habits is sticking with the same bank, even if it's not the best choice for your money. If you've been contemplating switching institutions recently, use your next paycheck to give the move serious thought. Maybe your savings can earn more elsewhere, and if you're lucky, you can find a high-yield checking account and other incentives — like a couple hundred dollars in free money — just for making the move. (See also: How to Switch Banks)

7. Make a move to get ahead

If you're lamenting on a regular basis that you never have enough money for this or that, sit down next payday and consider your options. How can you increase your income? How can you bump up your savings and retirement contributions? If this isn't possible with your current take-home pay, it's probably time to weigh your options.

Should you start looking for a new, higher-paying job? Should you go back to school to learn a new skill? Do you have time to add a side-gig to your schedule, like driving for Uber or Lyft, or pet sitting via Rover.com? These are all options you have; you just have to want them bad enough. (See also: 14 Best Side Jobs for Fast Cash)

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

Boost Your Savings by Making Your Money Harder to Spend

Emily Guy Birken — Mon, 19 Jun 2017 08:00:09 +0000

When I left for my freshman year of college, I brought the graduation gift money I'd received with me. It was about $1,000, and I was carrying it in cash, intending to open a checking account. The cash never made it to the bank, however.

It wasn't stolen, nor did I lose it. In fact, I tucked the envelope of twenties away in a secure location in my dorm room — but I neglected to protect the money from myself.

From trips to the coffee shop to late night pizza delivery, I let that money flow through my fingers without paying any attention to where it was going or how quickly I was spending it. By the time I finally decided to open an account, there was less than $100 left.

My experience is hardly unique. Most people have a similar story of squandering money because it was too easy to access the cash.

The trick to being more careful with money is finding ways to make it harder to spend. If I had placed that cash in a checking account as soon as I got to campus, I would have had to walk to the ATM to make my unnecessary purchases — which would have been more than enough to prevent most of my spending.

These days, simply depositing cash in the bank is not enough to make money harder to spend. The availability of mobile banking, debit and credit cards, and one-click online shopping makes money even easier to spend than it was when I was a first-year college student. That's why it is so important to productively reduce access to your money. Here are five ways you can protect your money from your own worst spending impulses. (See also: 7 Bizarre Ways to Stay on Budget (That Actually Work))

1. Stop carrying credit or debit cards

Going out sans credit or debit card can feel weirder than going about your day naked, but it can be a very effective way to curb your spending. On most days, you probably don't actually need to have a card with you — it's just there in case you need it. Unfortunately, we then often "need" to stop for lunch, or in a favorite store, or meet everyone after work for happy hour rather than save the card for a legitimate need.

To make sure you are covered in case you need to fill up your tank on the way to work, or you encounter another true spending need, get in the habit of carrying $20 or so while leaving your plastic at home. This helps limit your ability to buy things while still giving you access to a little money in case you need it.

2. Move your savings to another bank

Trying to build an emergency fund or reach another savings goal can be difficult if access to your money is too easy. Having a savings account linked to your checking account in the same bank can often be too much of a temptation. It's so easy to dip into that savings account whenever your checking account is running dry or there is an incredible sale.

For many people, just making it slightly more difficult to access savings can be enough to stop this behavior. For instance, you can move your savings account to a different bank and establish a link between the two banks. While it's possible to move money between accounts in different banks, it generally takes two to three business days for the money to transfer, which can be inconvenient enough to foil your spending impulses.

3. Put your money in a restrictive savings vehicle

For some people, the inconvenience of separate banking institutions is not quite enough to stop them from accessing their savings when they shouldn't. Restrictive savings vehicles — accounts or assets that penalize you for early access — can be a great way to protect your money from yourself in that case.

Depending on your time frame, there are a couple of different types of savings vehicles you might choose.

Certificate of deposit (CD)

This is a savings vehicle that requires you to commit to keeping your money in the account for a set period of time. If you withdraw the funds earlier, then you will be penalized. You can generally expect to pay three-to-six months' worth of accrued interest if you access the money early, although some CDs also take a percentage of the principal.

Traditional individual retirement accounts (IRAs)

Traditional IRAs offer tax advantages, which means there are penalties for dipping into them before you reach age 59 ½. Specifically, you will have to pay taxes on both the distribution, as well as 10 percent of the amount of the distribution, to Uncle Sam.

4. Enlist an accountability partner

While it's pretty easy to break a promise to yourself, it's harder to break one you have made to another person. One method of making your money harder to spend is to enlist a friend or loved one as your accountability partner, to whom you will set up a credit card or bank statement alert. Many banks offer automated alert systems that will email or text you when your available credit dips below a certain amount or when a large transaction clears.

This information is useful to the cardholder, but it can be a great way to keep you from spending money if you send that information to your accountability partner. Knowing that your partner will immediately know that you have broken your promise can be enough to keep you from whipping out your wallet.

5. Remove your payment information from online retailers

It is far too easy to buy something without really thinking about it when online retailers "helpfully" store our credit card or bank information for us. The minor inconvenience of having to get up and find your wallet is generally enough time for you to reconsider your purchase.

When you can go from not knowing an item exists, to coveting it, to buying it in under 30 seconds, having just a little bit of time for a gut check on whether or not you need this purchase is crucial. Because if you want to buy something, but getting up to find your wallet doesn't feel worth it, then it's probably not a great use of your money.

Save your money from yourself

You are not the same person at every hour of the day. You contain multitudes, and often your goals and your impulses cause you to contradict yourself. Making your money harder to spend will ensure that the high-roller part of yourself doesn't bankrupt the saver part of yourself. You'll thank yourself later. (See also: 9 Simple Ways to Stop Impulse Buying)

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

4 Ways Your Credit Union Is Changing — for the Better

Janet Alvarez — Mon, 22 May 2017 22:06:53 +0000

Most of us understand the advantages offered by banking with credit unions, including better interest rates and customer service compared to their major bank peers. But even the savviest among us can learn new tricks, and to that end, CO-OP’s 2017 THINK Conference highlighted some of the critical ways in which the credit union industry is changing — for the better. We also caught up with financial experts like Jean Chatzky and Bobbi Rebell at the conference, where they shared some key insights into the types of transformations you might be seeing soon at your local credit union.

It's instituting mobile apps

You might’ve already noticed your local credit union instituting new technologies, such as mobile apps enabling remote deposits and mobile payments. This is part of an industrywide push to provide more customer-centric solutions utilizing the latest in mobile technologies. Expect more additions to mobile offerings in a bid to make your experience more efficient.

It's going digital to be more agile

Financial expert, author, and TV host Bobbi Rebell noted that, in addition to instituting mobile apps, credit unions are taking additional steps to create a digital-first platform for customers. But unlike big banks, which have a history of older, legacy customer platforms, credit unions are smaller and more agile, enabling them to build customer-focused digital experiences from the ground up.

“Digital transformation isn’t just about implementing digital experiences here and there,” says Rebell, “It’s really about rethinking the entire customer experience so that digital technologies improve their overall experience.”

It's promoting more women

Samantha Paxson, executive vice president and chief marketing officer of Co-Op Financial Services, notes that this lean, agile mentality not only enables credit unions to provide better customer service, but it also allows more women into leadership ranks.

“Credit unions are one of the few areas of the financial industry where women are represented in significant percentages in leadership. That’s because key elements of female leadership — such as empathy and strong communication skills — are essential to the success of credit unions in the community.”

It's staying true to your community

One of the personal finance world’s biggest luminaries, Jean Chatzky of Today Show fame, was on hand to help host the THINK Conference, noting the importance of credit unions to the lives of so many people in communities across the country. And perhaps that’s one of the biggest take-aways here: mobile apps, new digital platforms, and other innovations you can expect from your credit union are all designed to get closer to your needs. Credit unions aren’t losing their local focus, nor will their digital innovations present a less human experience for their customers. Unlike other segments of the financial industry, credit unions are trying hard to stay true to their roots: you.

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

4 Ways Your Money Can Support Your Values

Emily Guy Birken — Tue, 25 Apr 2017 08:30:08 +0000

Giving to charity is an important line item in my family budget — but it's only one line. There are far more charitable organizations that I want to support than I can possibly give money to.

But what if there were a way to support your values without having to free up more money to give to charity? In fact, there is a way. You can do the same things you always do with your money — bank it, invest it, spend it on utilities, and shop — all while providing important financial benefits to the causes you care about.

Socially responsible robo-investing

I'll never forget the stricken look on my financial adviser's face when I told him I was uncomfortable with big oil, tobacco, or firearms as investments in my retirement portfolio. He took a deep breath and told me that I would probably have to be a little flexible about that if I wanted to maintain my passive investment strategy. The only other option would be to individually choose the investments I wanted so that my money was aligned with my values. Not only would that be expensive and time consuming (someone would have to do the stock picking), but it would not necessarily grow my money.

Passive investors like me now have the option of investing in funds that only go to companies we approve of. The new robo adviser OpenInvest offers investors the ability to personalize the specific issues they care most about. You simply create an "issue profile" that narrows down the types of companies you would either like to invest in or steer clear of. The robo adviser's algorithm then creates a basket of about 60 stocks that match your values and should match the returns of the broader market.

Your money grows just like it would with any investment, but you are supporting companies that reflect your values. (See also: 5 Stocks to Buy If You Love the Earth)

Cellphone activism

It's hard to imagine life without your cellphone — which makes it an excellent tool to help support your values. Simply changing your cellphone provider can make paying your bill part of your activism.

Whether your politics align left or right, you can switch to an activist cellphone carrier that will use a portion of their profits to fund important causes. Credo Mobile is a mobile and long distance provider that has donated $83 million to various progressive nonprofit groups since its inception in 1985. On the right, Patriot Mobile offers conservatives the opportunity to choose the organization that a portion of their monthly phone bill will be donated to.

In both cases, the mobile carrier allows you to keep your phone and phone number when you make the switch. You are already paying for your cellphone usage; why not have the money fund causes you care about?

Shop your values

Amazon has become the most convenient way to handle shopping in the modern age, but did you know it can also be the most convenient way for you to donate to charities you love?

AmazonSmile is exactly like the Amazon store you already know, with the exact same prices and fees, and the exact same login you already use. But when you sign on with AmazonSmile, you are allowed to choose any one of over a million 501(c)(3) charitable organizations to benefit from your shopping. Each time you make a purchase, AmazonSmile gives 0.5 percent of the purchase price to your charity.

While not all purchases are eligible for AmazonSmile, the vast majority are. In addition, there are occasionally limited-time special promotions that increase the donation percentage.

Once you have signed up with AmazonSmile, just make sure you start any Amazon shopping from that page to keep your donations going to your favorite charity whenever you shop.

#BankBlack revitalizes communities

You might remember seeing the rapper Killer Mike on MTV in 2016 asking 1 million people to open a savings account with a black-owned banking institution. That helped start the #BankBlack movement, which is credited with bringing $50 million in new deposits to black-owned banks over a six-month span in 2016, according to the Huffington Post.

But banking with a black-owned financial institution is more than just a hashtag. These institutions were once the only places where African Americans could expect fair treatment when discrimination was rampant in the banking industry. Nowadays, black-owned banks offer access to necessary banking services in distressed neighborhoods, while also providing economic revitalization.

Since black-owned banks specifically market to the African American communities that are disproportionately unbanked or underbanked — meaning they rely on check cashing services and pawnshops for their banking needs — opening an account with a black-owned bank is an excellent way to put your money to work for social justice.

The Blackout Coalition offers a map of black-owned banks and credit unions across the United States, so you can find one near you. Alternatively, if you are not in an area with a local black-owned bank, OneUnited is an online bank that is also the nation's largest black-owned bank.

Put your money where your values are

Not everyone has money in the budget to support the social programs they are most passionate about. But making a few tweaks to how you bank, invest, call, and shop will allow you to make the world a better place without spending any more money. You'll feel good about how your money represents your values, and your favorite causes will benefit from your choices. It's a win-win.

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

4 Big Business Accounting Tools Every Side Gig Needs

Kat Tretina — Fri, 21 Apr 2017 08:30:15 +0000

While side gigs are becoming an increasingly common way for Americans to bring in extra income, many people do not understand how that additional income can affect their taxes. If you're not prepared, freelancing or working on the side can lead to serious issues with the IRS, costing you thousands in penalties and fees.

If you plan on taking business deductions for expenses, you'll need some tools to manage your reporting and minimize your tax headaches. Treat your side hustle like a small business. Below are four business tools you should use to keep your side gig from overwhelming your finances. (See also: 6 Signs It's Time to Make Your Side Gig Your Career)

1. Business bank account

If you have a side business, you should seriously consider opening a dedicated business bank account. It will make tracking your expenses and profits so much simpler, which makes tax time simpler as well.

Keeping your business and personal finances separate is not just easier, it's also important. Should the IRS ever take a closer look, you want them to see a clear distinction between personal and business expenses, as well as all of the business income you've earned. Jumbling this together with your personal banking is a recipe for confusion and possible contention.

Having a business bank account lends you more professional credibility, too. Asking a client to write a check to your business, for example, feels much more legitimate than having them make it out to your name.

All of the business income you earn doesn't have to stay in your business bank account. You can pay yourself the appropriate amount after considering taxes and expenses. Simply transfer that money to your personal account, and leave the rest in your business account.

2. Business credit card

Similarly, it's a good idea to have a separate credit card you use solely for business expenses. (See also: When You Should Get a Business Credit Card Over a Consumer Card)

By having a card solely for your side gig, you will be able to manage your business deductions quickly and accurately. When you do your taxes, or if you work with a tax professional, you just need your credit card statements to get an accurate picture of your expenses and deductions. Some business cards even offer special reporting tools that automatically itemize your spending for you. This can greatly streamline your accounting process and save you some trouble come tax time.

Many business credit cards offer other unique benefits, such as extended warranty protection and rewards targeted specifically for business-type purchases. They also tend to come with higher limits than personal credit cards. If you need to make a substantial business expense but don't want to dip into your own savings or take out a business loan, these higher limits can be a huge help. They're also a great way to build credit for your business, should you ever need a loan or other financing down the road. (See also: The 5 Best Credit Cards for Small Businesses)

3. Invoicing system

While you can find free invoice templates online and create your own in Microsoft Word or Google Docs, it's a good idea to use a professional invoicing system. Invoicing software tracks clients, invoice numbers, and your profits. They are more accurate than something you create on your own, and they look more professional than the do-it-yourself approach.

And you don't have to spend a lot of money to create polished invoices. There are a number of free and low-cost bookkeeping programs out there that are designed specifically for freelancers and side hustlers. PocketSuite, Freshbooks, and Wave are excellent and no-cost options that can help streamline your business management.

4. Tax professional

While many people opt to do their own taxes, when you add a side business to the mix, a tax professional can be a huge asset. When you're self-employed or freelancing, even on a part-time basis, you owe self-employment taxes, which can be complex and confusing. You'll receive forms 1099-MISC from any clients that have paid you more than $600 during the tax year. If you receive a 1099-MISC, you have to pay self-employment taxes. Not to mention if you add expenses in the mix, you'll want to make sure you are claiming the proper deductions.

Tax professionals can help you navigate paying estimated quarterly taxes, or calculate how much money you need to withhold from your main job's salary to avoid paying quarterly taxes. They can also identify deductions and credits you may be eligible for, such as a home office or education deduction. These are substantial tax breaks that no self-employed individual should overlook. You want to be sure you're claiming any deductions or credits accurately in order to receive the maximum benefit possible. A tax pro can help you do this.

By working with a professional, you'll have overall peace of mind and avoid any surprises at tax time.

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

5 Tricky Interview Questions Successful CEOs Always Ask

Damian Davila — Tue, 04 Apr 2017 09:00:13 +0000

If you're vying to get an exciting job run by a brilliant CEO, you may have to answer some pretty tough questions. If you want to stand out you'll have to have your response as polished as your suit. Here's a list of tricky interview questions some of the most successful CEOs ask.

1. "Tell me the story of your life"

The business acumen of serial entrepreneur Elon Musk is so impressive, it became the inspiration for Robert Downey Jr.'s big-screen portrayal of Iron Man's Tony Stark. The CEO of Tesla and SpaceX, and Chairman of SolarCity, is known for having job applicants explain their thought process behind solving a problem. But that isn't all he's interested in learning. While he does throw in questions about space travel and car manufacturing, he has revealed in several interviews one other very detailed interview question: "Tell me the story of your life, and the decisions that you made along the way, and why you made them, and also tell me about some of the most difficult problems you worked on and how you solved them."

Sound like a long conversation? Well, better have your life story all squared up! Previous job applicants recall that interviews with Musk are highly conversational.

2. "What is your favorite property in Monopoly, and why?"

According to renowned board game designer Philip Orbanes, Monopoly teaches players of any age an understanding of the concept of diversification and offers practical training in managing money. (See also: 11 Fun Games That Make You Smarter, Too)

So, that's why Ken Moelis, founder and CEO of investment bank Moelis & Co., loves asking this question during interviews to recent MBA graduates seeking midlevel positions. Why? Moelis strongly believes that to attract top talent, the investment and banking industry needs to update its hiring practices.

"Through innovation and creativity we need to actually underwrite the exceptional experience we are promoting," says Moelis. And with this question, he seeks to infuse that creativity into the process of assessing risks and rewards of financial assets.

3. "If you had 10 years left to live, would you take this job?"

Talk about commitment! But that's exactly what Airbnb CEO Brian Chesky is looking for in his job applicants. If you think this is a bit of an extreme, think again.

"Whatever you want to do in those last 10 years you should just do. I really want you to think about that, that was enough time for you to do something you really cared about and the answer doesn't have to be this company," explains Chesky. Given that he interviewed the first 300 Airbnb employees and his company was valued at $30 billion in 2016, this CEO may be onto something about requiring that level of commitment from his employees — or at least that level of self awareness.

4. "What didn't you get a chance to include on your resume?"

When you're knighted by the Queen of England for your "services to entrepreneurship," you probably know a thing or two about running a business and hiring the right people. Known for his extreme antics, Founder of Virgin Group Sir Richard Branson is no stranger to thinking outside of the box.

"Obviously a good CV is important, but if you were going to hire by what they say about themselves on paper, you wouldn't need to waste time on an interview," Branson wrote about his favorite interview question in his book The Virgin Way: If It's Not Fun, It's Not Worth Doing.

He added in a LinkedIn post why he looks beyond qualifications: "I only look at them after everything else. If somebody has five degrees and more A grades than you can fit on one side of paper, it doesn't necessarily mean they are the right person for the job."

5. "Sell me this pen"

Some CEOs don't just want you to talk the talk, they want you to walk the walk. And that's precisely what Jordan Belfort, former CEO of brokerage firm Stratton Oakmont, would ask his job applicants to do.

While the real life "Wolf of Wall Street" isn't the best example of business ethics, there's no denying his master salesmanship. Even after spending four years in federal prison and being mandated to restitue $110 million to his victims, Belfort was still able to command up to $75,000 for a speaking fee in 2014.

His classic interview question has been adopted by several recruiters beyond just the sales industry. Why? This question tests your ability in value-added sales skills ("This pen has refillable ink cartridges so you never need to buy a new one") and solution-based sales skills ("What color pen are you in the market for?").

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