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Tag: Checking Account

Posted on March 2, 2021

What Is a Cash Advance & How Do They Work?

There comes a time in most people’s life when they say to themselves, “I could really use a bit more cash.” Life can be expensive. In the event of an unexpected cost, such as a medical bill, a legal expense, or an auto repair, sometimes you simply don’t have enough. 

If you’re looking to secure more money in a short amount of time, a cash advance can be the right solution for you. A cash advance is a short-term loan taken out against your credit line, with a limit offered by your credit card issuer. A cash advance can be instant, or it may take a few days. Read on to learn all about cash advances, or use the links below to jump to a section of your choosing.

What is a cash advance? 

A credit card cash advance is a short-term loan that gives you cash by borrowing from your credit card’s available line of credit. Imagine if you could use your credit card to purchase cash, and then pay off the balance of that cash at a later date. That is, in essence, a cash advance. Here’s how a cash advance works: you can insert your credit card into an ATM, enter a PIN, and withdraw cash. While a debit card pulls from existing money in your bank account, a cash advance pulls from the available balance on your credit card. 

Much like anything else purchased with your credit card, a cash advance must be paid back at the end of each month, or else it is subject to an interest rate. However, the cash advance interest rate is not the same as your standard credit interest rate. In most cases, the cash advance is many times higher, averaging over 21% for most credit issuers. 

How much cash can you withdraw using a cash advance? 

Because a cash advance pulls directly from your credit balance, you can’t pull any more than your monthly credit limit for a cash advance. So, if you have a monthly credit limit of $3,000, it’s guaranteed that $3,000 is the maximum cash advance you could withdraw. It’s also based on your available remaining credit balance for that month. If you’ve already put $300 on your credit card that month, it’s guaranteed that $2,700 is the maximum cash advance you could withdraw that month. That said, most credit issuers set their cash advance limit much lower than your monthly credit limit. 

To determine the maximum cash advance available to your credit card, all you need to do is call your credit card issuer. Oftentimes, it’s also posted on your credit card statement or online credit card portal. 

Cash advance terms 

A cash advance certainly puts an oftentimes significant amount of cash into your hands quickly, but it does so at a handsome cost. Cash advances have many terms, and with many terms come many fees. Let’s review the terms of a cash advance. 

Credit card cash advance limit 

As mentioned earlier, a cash advance limit will never be larger than the available balance on your credit. However, in most cases, it will be significantly less—sometimes only 20%. 

Credit card cash advance APR 

According to usa.gov, an APR is an annual percentage rate. Every type of loan has an APR, from home mortgages to credit cards. An APR is an interest rate from a yearly perspective. It’s the percentage of your total loan amount that you’ll end up paying in interest, charges, and fees over the course of a year. Your cash advance APR is not the same rate as your credit card APR, but many times higher. For instance, if you have a cash advance loan of $1,000, for which you’ll end up paying $100 in fees throughout the course of a year, your loan has a 10% APR. 

Credit card cash advance fee 

At the time of issuing your cash advance, most credit issuers will tack on a fee of 3%-5% for the withdrawal. For your $1,000 cash advance, you may end up paying $50. 

Credit issuer service fee

As with many bank or financial transactions, there may be a service fee associated with your cash advance. 

Minimum monthly credit payment 

While there are no requirements in terms of how long it takes you to pay back your cash advance, you will still need to make your minimum monthly credit payment each month. 

Pros and cons to cash advances 

The most significant selling point to a credit card cash advance is its speed. A cash advance can get you a lump sum of cash in a few days max. And many times, you can get that chunk of change on the spot. It’s also simple. There’s no need to go through third party lenders or meet with a loan representative. You simply need to see a teller. And if your credit card has an associated PIN, you may be able to do the whole thing through an ATM. 

The cons of a cash advance are, of course, the fees. As we’ve mentioned, cash advances are very, very expensive. The average APR for cash advances is just above 21%, while the average credit purchase APR is only 15.7%. And unlike a credit card APR, a cash advance APR is unavoidable. Standard credit card purchases have a grace period for interest accrual; you won’t be charged interest unless you fail to pay off your balance at the end of each month. If you’re the type of person who pays off your total credit balance at the end of each month, you’ve probably never paid a single percent in your credit card APR. With cash advances, on the other hand, you start accruing interest the minute the cash advance is received. Even if you pay the entire cash advance back at the end of the month, you’ll still be liable for interest on the time between the day the cash advance was received and the end of the month. 

Does a credit card cash advance impact my credit score? 

The act of taking a cash advance has no impact on your credit score. It does not drop because you need a cash advance. Of course, paying your credit balance in a timely manner will result in stronger credit, and late payments will lower your credit score, and your credit card cash advance is included in this balance. However, where a cash advance can have a significant affect is with your credit utilization ratio. 

Your credit utilization ratio is a measure of how much of your total available credit you utilize each month. For instance, if your credit limit is $1,000, and you have a $300 balance, your credit utilization ratio is 30%. If you have a $1,000 balance, your utilization ratio is 100%. A high utilization ratio can negatively affect your credit score. That’s because credit issuers see high utilization as an indication of a credit risk; it’s possible you’ll owe more than you can pay. 

Alternatives to a credit card cash advance 

According to consumer.gov, a credit card cash advance is better than a payday loan, but not significantly. The moral of the credit card cash advance story is that it can be used as a last resort, but you should try to exhaust all other options first. Before choosing a credit card cash advance, consider the following alternatives: 

  • Is there a family member or friend you are comfortable asking for a loan from? 
  • Have you checked with your local charities or non profit organizations to see if there are funds or grants that you are eligible for? 
  • Can you take out a personal loan from your bank? These often have much lower interest rates. 
  • What are the fees associated with overdrawing your checking account? This isn’t a great practice, but could be used in an emergency situation. 

Looking for help to manage your income? We’re here for you. We can teach you how to budget, best practices for saving, and more. 

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Posted on March 2, 2021

How to Stop Living Paycheck to Paycheck

November 8, 2017 Posted By: growth-rapidly Tag: Financial Advice

Living paycheck to paycheck means, in simple terms, that you are always running out of money before your next paycheck arrives. As any financial advisor would tell you, living paycheck to paycheck is incredibly stressful and can impact your financial well-being.

When you are living paycheck to paycheck, it is nearly impossible to get ahead financially. You don’t have any extra money to save or to create an emergency fund. Sometimes you end up borrowing  money to make ends meet and get into more debt.

For most of us, it is just not feasible. We are just not making enough money. If this is the case, something needs to be changed.

This article will discuss how to stop living paycheck to paycheck. It will first discuss the various signs that suggest that you might be living paycheck to paycheck. It will also discuss the reasons why you would want to stop living paycheck to paycheck. If you’re serious about ending the cycle of living paycheck to paycheck, it makes financial sense to work with a financial advisor to come up with a financial plan.

One main reason why you would want to stop living from paycheck to paycheck is that you want to attain financial independence.

Find out now: 6 Reasons You Will Never Reach Financial Independence.

To be financially independent requires that you have a lot of money. We all have heard the saying that money can’t buy happiness or that money can’t buy love. Don’t get me wrong—there is some truth to this. For example, a millionaire, just as a poor person, can be very unhappy in life.

He or she can be sad, depressed, suicidal despite having a lot of money. But one thing we know for sure about being rich is that money can buy hard goods.

Money gives us options and protection. It can buy you better physical and emotional health. Money can buy a beautiful beach house in Hawaii. Money can give you peace of mind knowing that your kids’ college education is covered; and knowing that you and your family are protected after retirement. Having a lot of money can give you the freedom to put your mind to more positive things.

Here’s what being rich can give you: a home, owning rental properties, a vacation home, early retirement, private school for your children, financial independence, large bank account, freedom to travel the world, membership in country clubs. Who would not want these things!

Another reason why you need to stop living paycheck to paycheck  is to protect yourself in case of a financial disaster.

Living paycheck to paycheck also means that you are relying on your job/employer for your income and you always run out of money. The problem with that is that you are in deep trouble when an emergency comes.

You could lose your job. If you lose your job, not only you won’t have a paycheck to cover your monthly expenses, but also you have no cash reserves. You need an emergency fund to help carry you over possible short-term loss of income.

You could also be sued for damages if you are in a car accident. These things happen every day. Avoiding the vicious cycle of living paycheck to paycheck, thus having lots of money can protect you from these hazards.

Signs that you are living paycheck to paycheck

Living paycheck to paycheck is not hard to identify. Here are some signs that might suggest you are living paycheck to paycheck.

1. If your checking account always drop below zero before your next paycheck rolls around, then you are living paycheck to paycheck.

2. If you haven’t saved enough money for retirement or your children education than you are living paycheck to paycheck.

3. You are living paycheck to paycheck when you have no insurance whatsoever, whether it is car insurance, home insurance, health insurance, or life insurance.

4. You can’t pay your bills every month.

5. You have no savings.

6. You rely on credit cards to cover your expenses until the next payday.

7. Your salary is not enough to keep you from going into debt. I f you see yourself borrowing money from friends, family, to make ends meet, no matter how much you try to save and even if you are not spending money, then you are living paycheck to paycheck.

How to Stop Living Paycheck to Paycheck

1.Create a Budget

You are living paycheck to paycheck because you are not budgeting or are not making enough money to cover your expenses. The first step to stop living paycheck to paycheck is to create a budget. A budget helps you understand where the money goes. It shows you if you are spending more than you can afford. It helps you direct your money where it matters the most.

2. Cut Cost or Spend Less

Once you create a budget, you need to start to cut cost or spend less. This will allow you to have some extra money at the end of the month. For example, you might want to get rid of cable TV, which normally costs you around $130 a month. You might consider bringing lunch to work instead of eating out. You might want to making your own coffee instead of spending $100 a month on coffee at Starbucks.

This extra money can help you to pay off debt fast. Once you pay off your debt, you can start putting some money into an emergency fund.

3. Save Money After Each Paycheck

The main reason why you are living paycheck to paycheck is because you have no money saved up. So the key to avoid living paycheck to paycheck is to put aside in an emergency fund some money after each paycheck, no matter how little.

Even putting aside $50 after each paycheck can make a difference and can relieve worry and pressure. Having an emergency fund is the key to end the living paycheck to paycheck cycle.

Start saving your money by opening a savings account.

4. Obtain a Part-time Job

A part-time job can help you save more money, help pay off debt faster, thus breaking the living paycheck to paycheck vicious cycle.

There are some side hustles you can do to bring home extra money.

  • Start a blog. If you’re interested in starting a blog that makes money fast, I created a step-by-step guide that will help you start a blog of your own for cheap, starting at only $3.95 per month (this low price is only through my link) for blog hosting. In addition to this low price, you will receive a free blog domain (a $15 value through my Bluehost link if you purchase at least 12 months of blog hosting.
  • Take Surveys.  If you want to make extra cash, I suggest that you take surveys online. I recommend, Pinecone Research (earn minimum $3 per survey), InboxDollars ($5 sign up bonus + get paid to take surveys), Ebates (earn up to $40 cash back). See this blog post for a complete list. 
  • Sell your stuff on Decluttr. Do you have CDs, DVDs, Blu-rays, old cell phones and games you don’t want anymore? Then sell them through Decluttr! Decluttr is the fastest and easiest way to make extra cash by selling your unwanted CDs, DVDs, and more.
  • InboxDollars pays you in cash to watch fun videos, take surveys, play games, shop online, search the web and more.. They’ll also give you a $5 bonus for free just to give it a try. By spending just 5 to 10 minutes on your free time, you can earn $50 to $70 a month with InboxDollars.
  • Sign up for a website like Ebates where you can earn CASH BACK for just spending like how you normally would online. Also, when you sign up through my link, you’ll receive a free $10 gift card bonus to stores like Macys, Walmart, Target, etc.
  • Sell your photos on shutterstock. Do you like to take photos for fun? Why not get paid for it? Shutterstock is a marketplace that allows you to sell your photos.
  • There are many other side hustles listed in my post 16 Proven Ways to Make Money Fast.

5. Pay Off Debt

Another way to stop living paycheck to paycheck is to get out of debt. The more debt you have, the more likely you are living paycheck to paycheck. That means you cannot have any extra cash because it all goes to pay off debt.

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Source: growthrapidly.com

Posted on March 1, 2021

How to Move Your Money to an Online Checking Account

Switching bank accounts isn’t as tedious as it may seem. Here’s how to simplify the process.

Do you remember the last time you walked into a physical bank branch? If you can’t, or a bank visit is a rare occurrence, you may be pleased to know there are alternatives if you’re looking to replace your brick-and-mortar checking account. Enter online banking.

“Increasingly, our clients tell us they rarely go to bank branches anymore,” says Andrew Wang, managing partner at Runnymede Capital Management, a financial management firm based out of Mendham, New Jersey.

Wang’s observation is also backed by research. According to a 2018 study by PwC, an accounting services firm, 20 percent of consumers prefer to bank online, another 15 percent prefer to bank from their mobile device and 14 percent prefer to use a combination of both online and mobile banking.

Replacing your brick-and-mortar checking account may make sense if you are already using online and mobile features, like mobile check deposit.

Even if research shows consumers are trending toward digital-only banking, you might still be wondering if online banking is right for you. Learning how to switch banks may feel like a time-consuming process on top of your already packed schedule.

Good news: It’s actually quite easy to move a checking account to a new bank, including to an online bank. And regardless of how simple it is to replace your brick-and-mortar checking account, there are plenty of perks that come with making the switch to online banking that could be worth your while. The digital age has made it pretty straightforward to do things like set up a direct deposit and switch bill pay to a new bank.

If you’re asking, “What are the steps to move my checking account to an online bank?”, consider the following:

Choose the right account and get started

First things first: Why do you want to move your checking account to a new bank? Identifying why you’re making the switch in the first place will help you find an online checking account that meets your needs.

Maybe you want a higher interest rate. Or maybe you want rewards—an account like Discover Cashback Debit lets you earn 1% cash back on up to $3,000 in debit card purchases each month.1 If you’re looking to replace your brick-and-mortar checking account, you’ll also want to consider any potential fees and if your new account has FDIC insurance.

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Once you’ve decided which online checking account to open, you’ll need to fill out an application. You may be asked to provide a few basics—like your address and Social Security number—and you can provide a starting balance and fund your account by transferring money from an existing one. You should also find instructions for setting up your online and mobile account access.

From there, it’s time to move on to other aspects of financial management.

Enroll in direct deposit

If you’re determining how to switch banks, consider other features that could help you manage your checking account and budget. Automating your finances, for example, can be an easy way to stay on track toward your financial goals. It helps put systems in place that can all but eliminate human error.

Wondering how to switch banks? Do your research to find a new bank with the features that matter most to you

“Systems beat out human beings when it comes to consistency. They don’t get tired or sick or lose motivation,” says Tiffany Aliche, founder of The Budgetnista, a financial education website. “Systems also don’t make irrational financial decisions based on emotion,” she adds. If you have your employer directly deposit your paycheck into your checking account, you don’t run the risk of losing a check (where’d that thing go?) or forgetting to make the deposit on your own.

Sold? Making sure you have direct deposit when you move a checking account to a new bank is easy, whether you’re new to direct deposit or have been using it for some time. You may have to notify your employer and give them an authorization form with your new banking information, including your account and routing numbers. You can get this authorization form from your new bank. Your employer may also have their own form for you to fill out.

Set up bill pay

When you move your checking account to a new bank, you’ll also need to switch bill pay to your new bank so recurring expenses don’t slip through the cracks.

Log into your current checking account and view all of the recurring bill payments you have scheduled. If these have been running on autopilot, it could be easy to forget some of those smaller payments that come out of your checking account on the reg. Next move over to your new online checking account and find the bill pay option, and follow your account’s instructions to set up bill pay for each of your expenses.

Online bill pay is something financial advisor Susan Jensch does with her own accounts.

“Setting up online bill pay has been really beneficial for me because it helps control my cash flow,” she says.

When moving your checking account to a new bank, you'll find it's also easy to switch bill pay to your new bank

Instead of randomly scheduling her bill payments and running the risk of an overdraft, she makes sure to schedule them right after bi-weekly deposits hit her checking account. This way, she knows there is enough money in the account to cover them.

“It works out that my mortgage and car are paid when the first paycheck hits. My credit card and some other bills come out two weeks later, since those payment dates are more flexible,” Jensch adds.

Schedule automatic transfers

When moving a checking account to a new bank, you may want to consider setting up automatic transfers to your savings account. Aliche, the founder of The Budgetnista, encourages her audience to create multiple savings accounts—one for each goal—and then to set up automatic transfers into each. You may have one automatic transfer into your savings account for your emergency fund, for example, and another transfer set up for your savings account earmarked for vacation expenses.

You can set up your automatic transfers by logging into your online checking account. You’ll need to select which account should receive the transfer, the amount of the transfer and the cadence for the transfer (think weekly, after each paycheck, or monthly).

Replacing your brick-and-mortar checking account

With the streamlined processes that online banks provide, learning how to switch banks is simple. Both Wang and Aliche agree, online banks can provide perks and flexibility that help you automate your finances and reach your financial goals.

1 ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal™, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries. Venmo and PayPal are registered trademarks of PayPal, Inc.

Source: discover.com

Posted on March 1, 2021

5 Creative Budgeting Ideas for People Who Hate Budgeting

Budgeting not your thing? These 5 tips will help simplify the process—and make it fun.

If living on a budget sounds like the ultimate restriction, you’re not alone. It’s easy to think that a budget only has room for practicality, and the things you enjoy just for fun don’t belong. However, if you haven’t been tracking your income and expenses, it may be difficult to know where to start.

So how do you make a budget if you hate budgeting? Avoid thinking of it as a test with only one right answer. “A lot of people hate budgeting because they think of it as something you either pass or fail,” says Bola Sokunbi, certified financial education instructor and founder of Clever Girl Finance.

If you’ve been resistant to budgeting but are looking to reshape your finances, consider these creative budgeting ideas to simplify money management and make it more enjoyable:

1. Don’t call it a budget

If you’re trying to make a budget when you hate budgeting, try naming your budget after something that excites you. Something you can get behind. “You can call it a ‘wealth building plan’ or something fun or inspiring that will keep you motivated to use it,” Sokunbi says.

To make a budget when you hate budgeting, don't think of it as a budget—try naming it after something that excites you.

If you’re looking for creative budgeting ideas, consider labeling your budget with the specific financial goal you are working toward. Is your financial plan centered around buying a new home? Maybe “dream home plan” would be more appealing.

2. Start with the basics

Joshua Schumm, financial coach at Kansas Financial Coaching, recommends a strategy called “four walls budgeting” to help clarify your needs and wants if you’re trying to make a budget when you hate budgeting.

“Four walls budgeting is where you start making a budget by looking at your true needs to survive and keep a job,” Schumm says. “The four walls of your budget are housing (including utilities), transportation, food (not including eating out) and clothing.” Paying off debt should also be considered when you’re focusing on how to budget when you hate budgeting.

If you’re feeling overwhelmed by all of your regular expenses, creating a basic four walls budget can provide a simple, manageable way to prioritize. “It should reduce the emotions of budgeting for wants,” Schumm says. “If you don’t give yourself a simple place to start, you’ll never get started,” he adds.

“The four walls of your budget are housing (including utilities), transportation, food (not including eating out) and clothing.”

– Joshua Schumm, financial coach at Kansas Financial Coaching

3. Focus on saving

So you’ve got the basic expenses covered. Great. Now it’s time to factor in saving. And no need to stress, even if you’re learning how to budget when you hate budgeting. When it comes to saving for your financial goals, “it does not have to be an overly stressful situation,” says financial professional Richard E. Reyes.

Reyes recommends a simple creative budgeting idea to prioritize saving: pay yourself first, then spend what is leftover. Determine how much you want to save each month or each paycheck, and then deposit that amount into a savings account before you spend it on anything else. You can even remove the temptation to spend by setting up a recurring automatic transfer from your checking account to savings.

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Once you get in the habit of saving regularly, you can start to direct that energy toward specific financial goals. For example, Reyes recommends setting aside at least 10 percent of your monthly income in a retirement account.

4. Make room for fun

That’s right, fun! Your budget doesn’t need to be limited to the “four walls” and savings. When considering how to budget when you hate budgeting, you should also make room for the things you enjoy.

After adding up the costs of their basic expenses, Schumm encourages his clients to build out the rest of their budget by adding in other expenses and obligations, including any fun “wants”—non-necessities like entertainment. Remember that, as long as you’re paying your bills on time and saving for long-term goals, spending money on what you love isn’t a detriment to your financial health.

Reyes agrees that fun is an important part of any budget. “Life is sometimes short and yes, it’s OK to do something cool with your money, like take a trip, stay at a nicer hotel or eat at a nice restaurant,” he says.

5. Reward yourself

Remember the part about feeling like living on a budget is restricting? It really doesn’t have to be. As you consider how to budget when you hate budgeting, find room in your budget to reward yourself for making financial progress. If you’ve made headway toward a big financial goal, celebrate!

Tracking your progress is a key part of making a budget when you hate budgeting, and Schumm recommends doing this with charts, graphs and even a “thermometer.” One creative budgeting idea is to draw a large thermometer on a piece of poster board (or create a digital representation), add marks for different milestones and color it in as you get closer to your goal. Then, decide when to reward yourself. Once the chart shows that you’ve paid off 50 percent of your debt, for example, treat yourself. Maybe ordering takeout from your favorite local restaurant or streaming the newest release for movie night?

Rewarding yourself for progress is a creative budgeting idea that can help you stay on track.

Your budget is your best tool

If the word “budget” has negative connotations for you—if it makes you feel anxious or overwhelmed, like you’re focusing too much on what you can’t afford—try thinking of your budget as a guide to help you build a better future. It is possible to make a budget when you hate budgeting.

Articles may contain information from third-parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.

Source: discover.com

Posted on March 1, 2021

The Debit Card Dangers College Students Need to Know About

For many students, going to college marks the beginning of financial adulthood. But figuring out where to start isn’t easy. Credit cards, cash, debit cards — what makes sense for someone learning how to live and manage money independently for the first time?

“People right around this time — all year long, but specifically around this time — ask ‘What kind of card do I send my kid to college with?’” Alex Sadler, managing editor of the personal finance site Clark.com, said.

It makes sense that consumers bring those questions to the company’s various “Ask Clark” channels. “Clark” is Clark Howard, a consumer expert, who has been committed to spreading his “save more, spend less” knowledge ever since he retired at the age of 31 in 1987.

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Given Americans’ dismal savings habits, the thought of retiring comfortably in your 60s is enough to make anyone giddy. So when someone finds a way to retire at 31, naturally people want to know that person’s secrets. Hence the large community of consumers asking Clark (and his team) about financial tools for college students.

Which brings us back to the question: With all the options out there — credit, debit and prepaid cards, in addition to cash — what makes the most sense for college students to use? (We have an expert guide to credit cards for students here.)

We’re hosting a Twitter chat on that topic with Clark.com on Aug. 18 at 3 p.m. EDT (more details below), but today we’re going to focus on just one of those products: debit cards. We asked Sadler what college students need to know about using them at school. Here are her answers, edited for length.

Let’s start with the positives: What makes debit cards a good choice for students?

A lot of people go to college with debit cards because of the same reasons that make them attractive to people in general: With a debit card, it’s easier to track your spending. You can’t spend money you don’t have. Post-recession, debit cards became really popular because of that. Students are carrying debit cards because they don’t want to spend more than what’s in their checking accounts.

In general, what are the risks of using a debit card (regardless of whether you’re a student)?

Fraud. Using [a debit card] to pay at the pump at gas stations, because skimmers are so common — same thing at grocery stores, skimmers are common. And we’ve seen the same thing at restaurants. You may not know the restaurant employee from Adam, and it’s easy for them to take the card and write down the numbers. Independent ATMs — there’s a much higher risk for ATM skimmers being on there (than on a bank-affiliated ATM). Online shopping if you’re using public Wi-Fi — those are hotspots for criminals.

And the problem with debit cards is they’re linked to your checking account.

If you don’t take the right steps (after debit card fraud), you won’t get your money back. If you report it within two days, you could lose $50. If you report it within 60 days, you could lose up to $500, but not any more. If you don’t report it within 60 days … you’re out of luck. Credit cards — if your card is stolen, you’re not responsible for more than $50 if you report it at all.

So what makes debit cards risky for students?

People aged 20 to 29 are more likely to be victims of identity theft and fraud than any other age group, so obviously it’s a big problem on college campuses. When you fall victim to a criminal using free wifi, sharing too much information to social media, leaving your card in your dorm room and not locking it, writing your PIN on your card — college students are one of the biggest targets for identity theft because of the typical behaviors of a college student and being unaware of the risk.

What do you tell people who ask what kind of card is best for students?

Prepaid cards are a great option. It’s still a way to control your spending. It doesn’t offer the protection of a credit card, but it still limits your risk, as long as you don’t put all your money on it. Even using cash — if your cash is stolen, that’s not cool, but at least it’s not your entire bank account.

And for people who still want to use debit cards or can’t get a credit card?

Check your accounts every single day. If you see anything suspicious, just call the bank. If you don’t report it … it could do a lot of damage. Minimize your risk: Don’t write your PIN down anywhere, don’t share your debit card PIN with anyone, don’t let anyone use your card. If you didn’t take the right steps (to protect your card) … if someone takes your card out of your dorm room and you didn’t lock it, you could be responsible (for unauthorized purchases).

We’ll discuss credit cards, debit cards and prepaid cards for college students in our Twitter chat on Thursday, Aug. 18 at 3 p.m. EDT, using the hashtag #AskClark. You can send us (@CreditExperts) or the Clark.com team (@ClarkHoward) questions in advance on Twitter, ask in the comments or email smadmin@credit.com.

Image: Christopher Futcher

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Source: credit.com

Posted on March 1, 2021

Guide To Having A Frugal DIY Christmas: Low Cost Gifts, Decorations, Activities And More

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For many of us Christmas is one of happiest times of year.

We celebrate the birth of Jesus Christ, and the wonder of His birth.

It’s a magical time of year for the kids, but for adults, it can become one of the most expensive.

According to the American Research Group, Inc, families planned to spend an average of $983 for gifts in the 2017 holiday season. That’s almost $1000!

Shoppers around the country say they are planning to spend an average of $983 for gifts this 2017 holiday season, up from $929 last year according to the 33rd annual survey on holiday spending from the American Research Group, Inc. Planned gift spending for 2017 is $54 above spending in 2016.

Instead of being part of that trend, this year it might be a good idea to plan ahead, save for the gifts you are going to buy.

Get creative about the gifts, decorations and activities you engage in – in order to make your Christmas a bit more frugal and meaningful.  It’s time for a frugal DIY Christmas!

guide to a frugal DIY Christmas

guide to a frugal DIY Christmas

Join me and Tom Drake of the Maple Money Podcast as we talk about having a frugal Christmas!

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a Christmas budget!

So how much should you spend on Christmas gifts?

One rule of thumb that I’ve read says that you should never spend more than 1 week’s salary for your Christmas gifts.

So if you’re making $50,000, for example, divide that by 52 and you shouldn’t be spending more than $950 on Christmas gifts.

Honestly, unless you have an extremely large family that you have to buy gifts for, I think even that is probably too much. I’d probably cut that number in half, making it about $500 for the average family.  Think about $100 per person.  If times are tough in a given year, cut it back to $50-60 or less if need be.

Whatever number you decide on, add a line item to your family’s budget, and start saving for that expense.

At our house we use You Need A Budget and Tiller Money to keep track of our finances, and we have added a line item in our budget for “gifts”.

Setting Up Automated Transfers

Once you’ve got a budget set, and a line item added to your software, how should you save?

You can either just setup some automated transfers to your savings account that happen throughout the year, or if you want to try something a little more fun you can use an automated savings app to regularly make small incremental transfers into a savings account, so that by the end of the year you have enough saved to pay for Christmas.

Banks and apps that can automate saving for a goal:

We use or have used a combination of the following banks over the years to automate our savings.

  • Chime Bank: This bank account will allow you to setup automated transfers, and roundup your purchases to put in savings. Get this free account and then use the roundups for your Christmas gifts!
  • Qapital: This account will allow you to save based on just about any trigger you want, from rounding up spending, scheduled transfers, to saving every time your favorite team wins a football game.
  • Dobot: A free account that will allow you to save to a goal based savings account. Either let the app choose how much to save, or set a scheduled amount to save. Add to your savings regularly and at the end of the year you’ll have enough for gifts!
  • Capital One 360: We have several accounts with Capital One 360 where we setup goal based accounts. One account for taxes, one account for Christmas gifts, and one for the new patio we’re planning on building.

So get a savings account that allows you to automate saving money, create a savings goal, and setup your accounts to save automatically.

Then at the end of the year you’ll be ready to buy your gifts, with cash in hand!

Ways To Save On Christmas Gifts

There are things you can do to cut back on how much you spend on gifts.  Be more frugal with your Christmas gifts!

  • Shop at a bricks and mortar store:  The American Research Group, Inc, found that people who shop online for Christmas gifts end up spending on average 9% more than those who shop at brick and mortar stores.  So do your shopping at the stores, and be willing to shop around for the best price!
  • Shop earlier in the year: They also found that people who start their shopping earlier in the year, even as late as November, tend to spend quite a bit less than those who shop in December. Do one better, wait until after Christmas this year, and buy a bunch of gifts when they’re on clearance. Then save them and gift them the following year!
  • Stack your discounts: Don’t forget to save money when shopping by using cash back sites (Rakuten, Swagbucks), coupons and coupon codes (Honey Extension), and shopping when things are on sale or at the best price. Stack the discounts you get through all those things to save the most!

Don’t think the spirit of Christmas is about “stuff.” You can have a giving spirit without having a negative checking account. Don’t forget the reason for the season. – Dave Ramsey

With all that said, there are a lot of frugal gifts that you can put together that will be a big hit. You don’t have to spend a ton to give a great gift!

Frugal DIY Christmas Gifts

At our house, we like to give gifts that help to create a shared experience, that help to strengthen a relationship, or that acknowledges a person’s personal tastes.  I’ll list a few of the types of gifts we like to give, that don’t cost an arm and a leg.

Christmas Gift Packs & Themed Baskets

We love to give this type of gift because you don’t have to necessarily buy a big ticket item, but you can bundle several smaller ticket items into a nice package that someone will still really enjoy.

  • Put together themed gift baskets with inexpensive items: One year I gave a movie night gift basket with a recent movie, some movie candy, popcorn and a popcorn bucket.  Relatively inexpensive and fun!
  • Book and movie packs:  Buy someone a movie, and the book the movie is based on!
  • Home baked goods: Homemade bread, pastries, cookies and more are almost always appreciated.
  • Outdoorsman gift pack: Put together a gift pack with a Leatherman Micra, a pair of choppers, and an aluminum water bottle (or your choice of other outdoor gear)
  • Craft Kit: Put together a crafting kit with things like markers, glitter, scissors, clay, crayons, glue, paper, etc.

Personalized Christmas Gifts

Personalized gifts are great because they are personal, they show that you’ve been thinking of that person individually.  They can be personalized either with the person’s name or initials, personalized by giving a nod to something that person likes, or by giving a nod to memories that are shared with that person.

  • A memory jar: One year someone in the family asked everyone to write their favorite memory with a person, and then put them all on slips of paper in a jar. When the person wanted to they could pull out the jar and read a treasured memory.
  • Hand make something: One year my wife made blankets for people, choosing the fabric based on a favored sports team or interest. Relatively inexpensive, but people loved them!
  • Decorated handprint plate: one year my son and I made a decorated handprint plate for my wife. She loved it, and it provided a memory she cherishes.
  • Personalized calendar with you and the gift recipient: Take a bunch of photos of you and the gift recipient together, and create a personal calendar.
  • A memory photo book: Pull together photos of the gift recipient over the years on big trips, family gatherings, and more – and then print a photo book from Shutterfly or another service.
  • All of my favorite things gift: Buy a person’s favorite things and package them together. Favorite candy, favorite food, favorite artist’s CD, etc.

Christmas Gifts To Create Community

We love to give gifts that will help to create a sense of community in the family, or that will give us things to do together.

  • Board games: buy a board game, a gift that gets the family together and keeps on giving all year long! Even better, if you can find some board games at garage sales or on ebay, create a themed game night gift basket (see above)!
  • Tickets to an event for you both: Buy tickets to a play or other local event.  My grandfather used to take the grandchildren to see the Nutcracker Suite every year!
  • Books to read at bedtime: Give a set of books to read at bedtime – creating time to spend with your child.
  • An annual “letter to you” book:  My wife and her godmother do this every year where one of them originally gave a gift of a leatherbound journal, and they then take turns writing a letter to the other person talking about what’s going on in their lives. They’ve been doing it for years.

DIY Christmas Gifts

When it comes to gifts that you make yourself, finding ideas is as simple as heading on over to Pinterest. Pinterest has a myriad of different things that you can make that people would love to get, just do a search for “DIY Christmas gift” or something similar.

Here are some Christmas gifts you can make yourself that anyone would love to get.

  • Write a monthly letter to a friend: In this day and age of instant communication, take the time to write a friend a monthly letter – giving them the first one at Christmas.  Be as creative as you want – but make it fun for the giftee!
  • Make some baked goods: Are you known for your amazing chocolate chip cookies?  Bake some and give them as gifts at Christmas!
  • Create a DIY cookbook of family recipes: If your family is known for cooking, put together a nice family recipe book.  There are a bunch of sites that can create a nice spiral bound cookbook for low cost.
  • DIY weekly family menu board:  Make a family menu board a frame with a glass front, patterned scrapbook paper, dry erase markers and a sharpie.
  • Bath bombs: Make bath bombs, like these DIY peppermint bath bombs made using baking soda, citric acid, essential oil, carrier oil, and a silicone mold.
  • Make a custom DIY key hook: Make a customized key hook to hang by the door.
  • Make ceramic photo coasters: These ceramic photo coasters can be made relatively inexpensively using 4×4 white tiles from lowe’s, some 3.5×5 photos and some clear acrylic spray.
  • Glowing photo luminaries: Get a glass jar, vase or other glass container from the dollar store.  Print some of your favorite photos on velum, and make a photo luminary.  Very cool.
  • Custom gold design coffee mug: Buy a cheap plain white ceramic coffee mug at the dollar store, spray a design or letters in gold paint and clear sealer for ceramic, and you’ve got a cool custom gold coffee mug!
  • Reindeer beer: Get a 6 pack of your family member’s favorite beer or soft drink, and then add a red nose, googly eyes and antlers made from brown pipe cleaners.  I’d love this in a Guinness reindeer please!
  • DIY coffee mug holder: With a few wood scraps and  a few brass hooks you can create a cool coffee mug tree.
  • Framed picture  – with family or the giftee: Buy a nice looking frame at a thrift store, and have a photo printed to insert into it.

Frugal DIY Christmas Decorations

If you’re like the Griswolds in National Lampoon’s Christmas Vacation you could find yourself spending hundreds on Christmas lights and other decorations.  You don’t have to spend that much, however, to have a festive holiday. Forgo the expensive store bought decorations, and have some fun making your own with stuff you have around the house!

frugal christmas decorations

frugal christmas decorations

Here are links to a few DIY Christmas decorations that you can make yourself to save a little bit of money on decorating!

  • Hand and footprint reindeer Christmas craft: This cute reindeer wall hanger made by the kids will be sure to bring up fond memories for years to come.
  • Dollar store Christmas trees: Make cute Christmas tree decorations for under $5 using things you can find at the dollar store. Examples include spoon Christmas trees, ornament trees, garland trees and peppermint candy trees!
  • DIY letter wreaths: Use fresh rosemary, wire hangers, pliers, wire cutters and floral wire to create cool looking Christmas letters to hang on your wall. Create whatever word you want!
  • Iced branches: Create whimsical iced branches using tree branches, tacky glue, colorfill diamond vase filler. They look very cool!
  • Tin can snowman: Use 3 empty tin cans (of varying sizes), some paint, buttons, a hot glue gun and twigs to create these cute snowman decorations.
  • Glass jar centerpiece: Take a large glass bowl or jar and add some pine cones, holiday themed ornaments, leaves and berries, ribbons and other embellishments. The result is a beautiful Holiday themed centerpiece!

Have your own ideas for frugal DIY Christmas decorations? Tell us about it in the comments!

Frugal Christmas Activities

Christmas doesn’t have to be all about the gifts or decorations. Really the most important thing at Christmas is to be spending time with our loved ones, enjoying each other’s company and building new memories.

frugal christmas activities

frugal christmas activities

Here are a few frugal Christmas activities your family can do together this holiday season, beyond smiling, to have a little cheap family fun!

  • Going sledding: We used to go sledding at a big park near our house. One particularly steep hill was called “Suicide Hill” because it was so dangerous. We had a lot of fun!
  • Christmas light viewing: Just about every year my family maps out a route, piles into the car and then drives around our area to see large Christmas light displays. One display near our house is sponsored and has a tent up where families can get free hot chocolate and make a Christmas craft! Use Christmas Light Finder to map your route!
  • Building gingerbread houses:  At our house we’ve always made the gingerbread houses using graham crackers. It’s a ton of fun! Just try not to eat too much of the frosting and candy decorations!
  • Caroling: My family sings and plays instruments, so some years we would walk around a local nursing home to sing for the residents. They really appreciated it, and it was fun!
  • Read Christmas stories and drink hot cocoa by the fire: Snuggle up by the fire, grab a Christmas cookie and some cocoa, and lay back for a fun winter tale!
  • Make Christmas cookies: We all have fond memories of sneaking off to steal one of Grandma’s Christmas cookies that were cooling on the stove.  Make some new memories making cookies with your family.
  • Have a Christmas movie watching party:  Watch old favorites like White Christmas, How the Grinch Stole Christmas, Elf or Miracle on 34th Street.  Make some white chocolate Christmas popcorn to eat while you watch!
  • Make Christmas pizzas!: Make a snowman pizza, a Christmas holiday wreath or a Christmas tree pizza!
  • Make a “What do you want for Christmas” video: Ask everyone what they want for Christmas this year, and watch last year’s video of the same question.
  • Do an annual Christmas picture – in the same spot – everyone standing in the same position: Take an annual Christmas picture with the family – in the same spot, in the same outfits, or something along those lines. Compare photos over the years.
  • Volunteer together at a local charity: Our family likes to volunteer at a charity called Feed My Starving Children where we pack meals for needy kids.  It’s a lot of fun, and you’re giving back at the same time!
  • Put on a concert, or a play: Get all of the members of the family that want to participate, especially kids, and put on a simple play for Christmas!
  • Pack a shoebox for operation christmas child: Set aside some time and supplies in order to pack a shoebox for Operation Christmas Child. Give a child in need a Merry Christmas!

Celebrate Christ’s Birth, And Spend Time With Family This Christmas

Christmas in American culture can quickly become very commercial, with it becoming more about the toys, decorations and gifts, and less about the important things – like faith and family.

While it’s great to celebrate the day, and partake in holiday traditions, don’t let the busyness and consumerism of the season rob your joy in the true meaning of Christmas.

Merry Christmas!

Have your own holiday traditions, frugal gifts or decorations that you care to share? Leave a comment!

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Source: biblemoneymatters.com

Posted on March 1, 2021

Plan an Exciting New Future: 4 Ways to Manage Your Finances After a Divorce

Learn how to get your finances in order and chart a new course after divorce.

Like so many single parents, Emma Johnson, 40, founder of WealthySingleMommy.com, worried about rebuilding financially after divorce and what the financial future would look like for her and her children, who were 2 and under 1 at the time.

“I was terrified that my kids and I would be living out of our car,” she says, “or that I would have to sell my home and move far from our community.”

Single father spending time with young son

Rather than continuing to see the prospect of managing finances after divorce as frightening, Johnson decided to use the life-changing 2010 event as an opportunity to re-evaluate her plans and create an exciting new future. She resumed working as a journalist and started her blog. This ultimately led to brand partnerships, speaking engagements and a book deal with Penguin Random House, not to mention new financial goals, including saving enough to retire by the time her children go to college.

“It is very scary to start out on life anew and without a partner,” she says. “Harness this fear to forge a new, exciting path that is free from an unhappy marriage. Your Plan B or C or Q can be far, far more fulfilling than you imagined.”

From separating joint bank accounts after divorce to revamping your financial plans, here are four things you can do to get your finances in order and chart a new course after divorce:

1. Update your budget

Getting divorced can come with financial costs and changes. From attorney’s fees to the tax consequences of selling assets, you may face some short-term financial expenses that could put a strain on your budget. For many people, managing finances after a divorce means spending less because you’ll only have your own income to draw on, and you might have to pay child support.

Jackie Pilossoph, 51, founder of Divorced Girl Smiling, got divorced in 2008 and found that getting a detailed understanding of what she was spending and what she was bringing in was critical. It helped her find places in her budget where she could cut back.

“I called all my utility companies and had the bills lowered, either through cutting plans or getting a better deal. I put a cap on Starbucks and allotted myself a weekly amount,” she says. “I also stopped buying bottled water, refinanced my home, stopped getting my nails done and basically didn’t buy myself a stitch of clothing for about two years.”

Mother and daughter baking together

Other ways to trim costs and manage finances after divorce might include finding opportunities to save on attorney’s fees or making budgetary changes like downsizing your home, eating at home more often or even scaling back your children’s extracurricular activities.

While these changes can be difficult to make, Johnson, of WealthySingleMommy, believes that you need to be open to a new lifestyle after a divorce in order to create a future on firm financial footing.

“Let go of trying to maintain the lifestyle you had while married,” she says. “You don’t need the stress associated with being over-leveraged on a home, living in debt, penny pinching or living paycheck to paycheck.”

“The good thing about divorce is that you are solely responsible for your financial future from this point forward. When you start seeing financial success from your own plan and your own job, there is no better feeling.”

– Jackie Pilossoph, founder of Divorced Girl Smiling

2. Evaluate your accounts

Just because you had certain kinds of banking and investment accounts as a couple doesn’t mean they’re necessarily right for you now as you rebuild financially after divorce.

“For both practical and emotional reasons, you need to evaluate every part of your financial picture during and after divorce,” Johnson says. “You now have to plan for a life without a spouse and invest appropriately based on your new lifestyle, goals and dreams.”

Woman deciding what do to with her joint bank accounts after divorce

She suggests asking your accountant about your new tax situation, your financial planner about college, emergency savings and retirement planning and your attorney about estate planning. You could even explore finding an investment adviser who specializes in managing finances after a divorce.

Take the time to understand the details of your various accounts, such as how much you’re paying per month in fees, how many no-fee transactions you get and how much you’re earning (or paying) in interest. Perhaps you don’t need the pricier checking account that includes so many transactions. Or maybe your bank requires a high minimum balance to waive the monthly fee on your savings account, and now you’re looking for an account that has no monthly fee for maintenance. Maybe you do need a new credit card since your old one was a joint account shared with your ex.

If you’re taking stock of your joint bank accounts after divorce and close any credit accounts, pull your credit report to make sure all joint accounts are closed. If you want to ensure that new credit accounts aren’t opened in your name, you could consider putting a credit freeze on your report by contacting the three national credit reporting agencies: Equifax, Experian or TransUnion.

When thinking about joint bank accounts after divorce, you may also consider removing your ex-spouse as a beneficiary on retirement accounts, life insurance policies and from your will.

Rebuilding financially after a divorce often starts with a budget

3. Define your goals and priorities

Just because you and your former spouse wanted to retire to Hawaii doesn’t mean that’s still your dream now.

“One of the saddest things about divorce that I hear from men and women is that the dream they always had is gone,” Pilossoph says, explaining that feeling is often only temporary. “What happens over time is that the dream just changes, and honestly, most of the time, it changes for the better.”

For Pilossoph, that’s meant that she’s developed dreams of retiring and moving to a warm Southern state, which she hopes to achieve alone or with a different partner.

She believes that rebuilding financially after divorce is a great time to rethink what you want to do professionally as well. Maybe you would rather stay home with your children, switch careers, find a better work-life balance or go back to school.

“Divorce is a great time for soul searching,” she says. “Divorce often makes people re-evaluate life and explore what is really going to make them happy.”

4. Sit down with a financial planner

Rebuilding financially after divorce and setting up a new financial plan can help you feel better prepared for life after your marriage ends. Although Pilossoph wanted to continue to stay at home with her children, who were 3 and 5 at the time, her financial planner helped her realize that wasn’t a good financial decision over the long term.

“It took a really good financial planner to get me to sit down and face reality. They forced me to look at what I was spending every month and what I was bringing in,” she says. “They made me see the deficit I was dealing with, and seeing the numbers on paper made me realize I had to make some changes.”

In addition to cutting back on expenses, she decided to return to work. She wrote a book, launched her blog and took a job with a newspaper.

A financial planner can be a critical resource when managing finances after a divorce, helping you turn your new short- and long-term financial goals into realities. They can clarify what you need to earn, how you need to save for retirement or your children’s futures and how your newly single status affects your taxes.

Divorcee meets with a financial planner to discuss his joint accounts after divorce

Stay focused on the positives

While divorce is undoubtedly an end to something important in your life, it is also a new beginning. If you look at it from that perspective, you may find it easier to focus your attention on rebuilding financially after divorce, rather than mourning the changes in your financial situation.

“The good thing about divorce is that you are solely responsible for your financial future from this point forward,” Pilossoph says. “When you start seeing financial success from your own plan and your own job, there is no better feeling. Looking in the mirror and being proud of your accomplishments and the way you live your life is very powerful.”

Source: discover.com

Posted on March 1, 2021

Best Small Business Loans for 2021

Good Financial Cents
business loans, finding the right one may be your biggest challenge.

Let’s take a closer look at some of the leading possibilities out there, ranging from peer-to-peer lending to short-term lines of credit.

Funding Circle: Business Loans With Less Red Tape

funding circle loans reviews

funding circle loans reviewsFunding Circle is a peer-to-peer lender. The platform connects your application with investors who would like to earn money on your loan repayment.

But don’t confuse Funding Circle with basic crowdfunding. Though it’s funded by investors and not a traditional bank, your experience will be similar to the process of getting a Small Business Administration loan. But, you can access the funds much more quickly — usually within 10 to 14 days. Your business will also need a proven track record of at least two years to qualify, and the applicant should have a credit score of at least 620.

If approved, you’ll have a term loan up to $500,000 for six to 60 months. You can avoid a lot of red tape compared to the SBA process, but your interest rate will be higher, too. Funding Circle loans range from about 11 to about 40 percent APR.

Those rates actually come in lower than some online lenders as we’ll see below. Ideally, your business can pay off this debt quickly and avoid a lot of these finance charges. Funding Circle doesn’t charge prepayment penalties. 

Funding Circle Pros:

  • Speed
  • No prepayment penalty
  • Simplicity

Funding Circle Cons:

  • Not for startups
  • Higher rates than SBA loans

Learn More

Lending Tree: A Great Comparison Tool for Business Loans

lending tree mortgage logo

lending tree mortgage logoLending Tree doesn’t loan money, but the site will connect your business to a variety of lenders which could make your shopping process much more efficient.

If you like to compare loans, you’ll probably like Lending Tree which starts by asking you a series of questions about your business: its revenue and years in operation, for example. Then, you can see a list of lenders who could meet your needs. You can either continue the process of applying through Lending Tree or simply allow the different lenders to contact you.

One of the knocks against Lending Tree over the years — the site has been in operation for more than two decades — has been the way the service interacts with your credit report. When you enter your Social Security number on Lending Tree, multiple lenders can pull your credit almost simultaneously, and each hit could lower your score.

My advice here is to not enter your digits. When you don’t share your Social Security number, Lending Tree can still generate a list of lenders and show you their rates and terms. Then you can choose whether to apply. It’s more legwork for you, but it’s worth it to control who pulls your credit.

In other words: you can use Lending Tree to build a shopping list, but you’re still doing the shopping. You will still get phone calls and emails from a lot of lenders, however.

Lending Tree Pros:

  • A great tool for comparing loans
  • Service stocked with quality products

Lending Tree Cons:

  • Potential for multiple credit score runs
  • Potential for unwanted phone calls from lenders

Learn More

Kabbage: When You Need a Business Loan Tomorrow, or Today

kabbage small business loans logo

kabbage small business loans logoIf your business needs money right away, a Kabbage loan can deliver up to $250,000 as a line of credit. 

Often, you can access this money within a day via PayPal or your existing business checking account. You can also get a physical Kabbage card in the mail within a couple of weeks. One reason Kabbage delivers money so quickly: It doesn’t run your credit as a traditional lender would. So if you have a rough credit history, you can still get financing. (You will need to have a year in business and $50,000 in annual revenue to apply.)

Kabbage is super convenient. Of course, your business would pay for this convenience through high-interest rates. By high, I mean your APR could range from about 24 to 99 percent. Kabbage does not charge a prepayment penalty. So, theoretically, you could get an emergency loan, pay it off quickly, and avoid these exorbitant interest charges.

Not so fast, though: Kabbage’s accounts front-load your interest in a way that takes away much of the incentive for an early payoff. 

If your business has an emergency, Kabbage can be a lifesaver, especially if you have shaky credit. But a Kabbage loan isn’t your best bet for more strategic business borrowing.

Kabbage Pros:

  • Superfast access to cash
  • Credit scores don’t affect eligibility
  • The convenience of PayPal, ACH

Kabbage Cons:

  • Expense
  • Complex payback structure 

Learn More

Other Small Business Loans to Consider

The loans above can be easy to secure, and they offer a pretty wide variety. The next loans I’ll mention cover some of the same territories but in different ways. 

OnDeck: Another Super Convenient Option

ondeck small business loans

ondeck small business loansOnDeck presents another form of alternative business borrowing. It works a lot like Kabbage, except OnDeck is more suited for expansions and other one-time expenses.

Your business would need $100,000 in annual revenue, and the applicant would need a credit score of at least 600, and preferably 650 or so.

These qualifications are more stringent than Kabbage’s. In exchange for meeting these requirements, you may qualify for friendlier loan terms:

  • Interest Rates: OnDeck’s lines of credit top out around 65 percent APR, which is still considerably higher than you’d pay to an SBA lender but lower than Kabbage’s max of 99 percent. OnDeck’s term loans can range from 9 to 99 percent APR depending on your qualifications and loan amount.
  • Maximum Loan: OnDeck offers up to $500,000 in term loans for up to 36 months. Its lines of credit top out at $100,000.
  • Prepayment: Like Kabbage, OnDeck does not charge prepayment penalties. However, unlike Kabbage, you can save more by paying off your loan early because of OnDeck’s more conventional fee structure. 

OnDeck is best suited for short-term funding, but a well-qualified applicant could use the service for capital investments or opening a new location.

OnDeck Pros:

  • Quick and easy application process
  • Options for a term loan or credit line

OnDeck Cons:

  • More stringent eligibility guidelines
  • Rates high compared to traditional lending

Learn More

BlueVine: Nice Online Invoice Factoring Option

bluevine small business loans

bluevine small business loansThe business has a rhythm: Incoming revenue pays outgoing expenses which require more incoming revenue. It’s kind of like inhaling and exhaling. If your business gets off rhythm — which can happen because of unexpected expenses or the seasonal nature of your trade — BlueVine can help through invoice factoring.

BlueVine will “buy” your invoices that haven’t come due yet. You get your cash now, and then BlueVine collects on your invoices later, keeping the money to satisfy your loan. Of course, all this convenience comes with a cost. Your company’s APR would range from 15 to 68 percent depending on your qualifications and the amount you factor.

Loans can vary in size from $20,000 to $5 million, and the longest loan term is 13 weeks — basically one quarter in your fiscal year. 

BlueVine Invoice Factoring Pros:

  • Speed and convenience
  • Rates can be competitive

BlueVine Invoice Factoring Cons:

  • Your customers will know you factored their invoices
  • You will lose part of your business revenue in loan costs

SmartBiz: Access SBA Loans More Quickly

smart bix small business loans logo

smart bix small business loans logoLong before P2P and other online lending came along, the federal government created the Small Business Administration to help businesses access capital without putting their futures at too much risk.

The SBA continues to be a stabilizing force for small businesses that need to borrow funds even though the application process is tedious.   Enter SmartBiz, a new service that can help you access an SBA loan more quickly and easily if you have an established business with $50,000 or more in annual revenue and at least two years of continuous operation.

These loans work especially well if you’re buying real estate for your business or opening a new location.  SBA rates are tough to beat. Qualified applicants (675 or higher credit score) can get large term loans in the 10 percent range and real estate acquisition loans in the range of 7.5 percent.

And, rather than taking months to cut through all the red tape, you could have the loan in place within a week. You’ll still have to go through a strenuous application process — uploading documents, sifting through paperwork — but SmartBiz cuts out a lot of the waiting.

SmartBiz Pros:

  • Access SBA stability quickly
  • Low rates for business loans

SmartBiz Cons:

  • Not for startups or new firms
  • SBA documentation still required  

Other Niche Lenders to Consider

Some of my other favorite lenders for businesses with specific needs include:

  • Fundbox: Great for applicants with low credit
  • Accion: An option for startups
  • Kiva: Excellent choice for microloans ($10,000 or less)

Some Final Business Loan Thoughts

As a business owner, you have options. The market is wide open for business loans which means you can get the funds you need without spending weeks or months making it happen. Business owners in previous generations didn’t have this kind of freedom.

But remember what Eleanor Roosevelt (and Spiderman’s Uncle Ben) said: Great freedom requires great responsibility.  In this case, the freedom of borrowing requires the responsibility of working the new debt service into your future business plans. 

So no matter how much you borrow or why you’re borrowing, make sure you’re planning for the added expense of repaying the loan over the coming months and years.  That way your loan can open up new horizons without limiting your ability to prosper from the new possibilities.

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Good Financial Cents, and author of the personal finance book Soldier of Finance. Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.

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Source: goodfinancialcents.com

Posted on March 1, 2021

How Does Being An Authorized User Affect Your Credit Score?

Whether you’re looking to lengthen your credit history or increase your credit score, becoming an authorized user can help establish better personal credit. And anyone with a credit card may have an authorized user added to the account, making it an easy process.

father and son

However, several responsibilities come with being an authorized user, and they should not be taken lightly. If you’ve been asked to become an authorized user or you want to become one on someone else’s credit card account, it’s helpful to know the exact impact it could have on your credit score.

Definition of an Authorized User

An authorized user is a person who has access to someone else’s credit card but is not an actual owner of the account. You may be added as an authorized user on a credit card, checking account, or other financial accounts. This means you have access to the money or the credit card, but you aren’t liable for any payments.

If you’ve granted someone authorized user status to one of your accounts, your credit card issuer may allow you to limit the authorized user and how much of the money they have access to.

Other accounts may give them equal access to your funds. In either case, the primary account holder receives the bill and is required to make the payments regardless of who used the account.

Why Become an Authorized User

There are two basic reasons you might become an authorized user on someone else’s credit card account. The first reason is to gain access if the other person should need them to take over or obtain funds for some reason.

An example of this is when adult children are added to their parents’ financial accounts. If the parent becomes unable to use the account, either obtaining the funds or paying the bill, the adult child who is on the account is able to manage the account on their parent’s behalf.

Adding Your Teenager as an Authorized User

For parents with teen or young adult children, they may add them so they have access to funds in an emergency. This often happens when the child goes off to college.

The student may even be the owner of the account with the parents added as authorized users. This allows parents to add money as well as debit the account.

Building Credit

The second reason people become authorized users is to build credit. In the example where parents add their young adult child as an authorized user on their credit card, this account will show up on the child’s credit report.

For someone just starting out with no credit history, being added as an authorized user can give them an exceptional advantage. In fact, if the primary account holder has excellent credit, the authorized user will also have an excellent credit score without ever having had an account on their own. The credit card shows up from the original date it was opened with the parent, not when the child was added.

How Being Added as an Authorized User Can Benefit Your Credit Score

If you have no credit history at all or even a poor history, being added as an authorized user can help you build some positive information. The account will be listed on your credit report, showing on-time payments and a history of whatever time the account has been opened.

Any positive information helps to improve your credit score even if you’re only an authorized user. It also encourages other creditors to offer you a credit card. You may be able to get approved for your own card that you wouldn’t otherwise have access to.

This would enable you to continue building credit on your own. Just remember to always use credit cards responsibly, and never charge up more than you can afford to pay off.

How Being Added as an Authorized User Can Hurt Your Credit Score

Just as your credit score is affected by the primary user’s positive history, it’s also affected by any negative activity. For instance, if the primary account holder fails to make a payment, maxes out their credit limit, or otherwise engages in negative behavior, the authorized user’s credit score will also be affected.

While it will most likely hurt them more than you, it still damages your credit rating. If you’re trying to build or rebuild credit, you could potentially end up doing more harm than good.

Similarly, your actions in using the credit card also impact the account holder. If you charge a bunch of stuff to your credit card, they are ultimately the one responsible for paying the balance.

You may not even be aware of the balance or the impact of your credit card spending spree because the statement goes to the primary account holder rather than you as the authorized user.

Adding an Authorized User to a Credit Card Account

Anyone can become an authorized user as long as the primary account holder approves it and submits a request to the creditor.

Be careful who you allow to add you to their account. What they do has an impact on your credit, and it could strain your relationship as well. You want to know for sure that they make their payments on time, and they’re responsible enough not to do anything that causes damage to their credit score or your own.

Authorized Users vs. Joint Accounts

There are responsibilities and privileges for both. As an authorized user, you are allowed to use someone’s account.

As a joint account holder, you are equally responsible for the account as the other person. While this means you have more authority and abilities to make changes to the account, you are also held just as liable for payments.

Total Debt & Debt Utilization Ratios

One area where you can see the difference is in relation to total debt and debt ratios.

As an authorized user, the credit card account doesn’t count against you when lenders calculate how much debt you owe to be approved for a loan. With a joint account, the payments and balance count against you and could reduce the amount you’re approved for.

Credit Check

Another way the two are different is in the approval process. As an authorized user, the creditor won’t do a credit check or even require an application in most instances.

The account holder just needs to give a name and social security information for the person to be added. For a joint account, the person has to go through the complete approval process. It’s like the person is applying completely on their own.

Removing an Authorized User

If becoming an authorized user helps your credit score by giving you a new account with positive information, you may wonder what will happen if you are removed. Not surprisingly, this action also impacts a person’s credit score, but just how much depends on several factors.

Once you’re removed as an authorized user, the account will be cleared off your credit report. This will most likely result in a negative impact, but the result depends on other information on the credit report. The two areas it will bear the most impact are the length of credit history and debt utilization. Let’s take a look at some examples.

If you were added to an account as an authorized user several years ago and you just recently got your own first credit card, expect your credit history to drop by quite a bit. But overall, length of credit history only plays a small role in your credit score, so the change might not be dramatic if your other areas are strong.

Debt Utilization

A bigger impact is felt based on your debt utilization. If you have other credit cards and they are all maxed out, your debt utilization rises if the card didn’t carry a large balance. Creditors look at your total available credit against your balances to see how much you utilize your credit.

For example, say you have two credit cards with a credit limit of $1,000 each. You are an authorized user on another credit card with a limit of $1,000. Your two cards are completely maxed out but the other one has a zero balance.

Right now, you are using two-thirds or about 66% of your credit. Take away that card where you’re an authorized user and your utilization goes up to 100%. And your credit score takes a hit because credit utilization accounts for about a third of your credit rating.

What to Consider When Becoming an Authorized User

You should first consider your reasons for being an authorized user. If your goal is to build credit, you should work towards building your own credit and only use this as a stepping stone. Make sure you handle your own credit and that of the primary account holder responsibly.

Look at the account as temporary assistance rather than counting on it for the long term. It will have less of a negative impact when you’re removed if you have built up your own credit profile.

Make sure you know the person well and trust them before being added to their account. Set ground rules about your role. Are you responsible for making payments or will you be expected to pay off the balance as it comes due? Both of you should be on the same page as to how you will handle credit.

Becoming an authorized user on an account is one way to help a person begin to build their credit history. However, it is not without some risks and challenges. Be prepared to deal with these so that you can reap the benefits.

Posted on February 28, 2021

How Frugality Can Cost You Money: 5 Tips to Guide Smart Spending

You typically celebrate being frugal. But there are times when it may not be the best financial decision.

You watch your spending. Maybe you’re even a self-proclaimed bargain hunter, celebrating your latest deep discount or crazy good coupon. But have you ever asked yourself: Can being frugal cost me money?

While very well-intentioned, there are times when the cost of being frugal can outweigh potential savings. From spending too little on items that should last to passing up ways to get rewarded for money you’d spend anyway, here are five ways being frugal can cost you money:

1. Buying low-quality products

Are the things you’re buying built to last? If not, your frugality can cost you money if you’re frequently dishing out for replacement products.

Being frugal can cost you money when you buy low-quality products that need to be replaced regularly.

“Being overly focused on price rather than quality could make you spend more in the long run to replace cheap goods that keep falling apart,” says consumer savings expert Andrea Woroch. For example, a black pair of pants is a standard wardrobe staple for many professions. Grab the least expensive pair you can find, right? If a $20 pair only lasts you three to four months, you’re spending between $60 to $80 per year to keep those pants in circulation. You may be able to find a more expensive, higher-quality pair that lasts longer and is less than your yearly replacement cost.

Besides clothing, being frugal can cost you money with other items that come with inexpensive price tags and potentially low quality, including electronics, kitchenware and linens. Spending a little more on quality can mean replacing that frying pan once every 10 years instead of once every year.

Chelsea Knapp, a financial advisor, recommends investing a little more in staple items. “Having a wardrobe filled with key, quality-made pieces instead of a closet packed with cheap, poorly made clothes will not only look better, but often saves you money in the long run,” Knapp says.

“Being overly focused on price rather than quality could make you spend more in the long run to replace cheap goods that keep falling apart.”

– Andrea Woroch, consumer savings expert

2. Overlooking credit and debit card rewards

Those with an eye toward frugal living might try to avoid credit cards to prevent overspending and instead favor cash (envelope budget, anyone?). However, this is another way frugality can cost you money. Woroch says there are numerous rewards waiting for savvy spenders who only charge what they can afford to pay off in full each month.

rewards checking account. With Discover Cashback Debit, named NerdWallet’s 2020 Best Checking Account Overall, for example, you can earn 1% cash back on up to $3,000 in debit (yep, debit!) card purchases each month.1

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3. Cutting corners on health

Being frugal can cost you money—and perhaps even your health—by skipping medical appointments to avoid co-pays and delaying treatments or procedures thinking they won’t be covered by your health care plan. Take the time to fully review your health benefits (think medical, dental and vision) to avoid leaving paid-for benefits untapped.

“Many people neglect regular checkups and dental cleanings,” Knapp says. Even if you don’t have coverage and have to pay out-of-pocket for a visit, that cost will likely be much lower than a medical emergency down the road. Knapp, for example, has seen dental implants and custom dental work easily cost up to $10,000.

Going to your dentist or doctor only when there’s a sickness or emergency is a big cost of being frugal—especially if you are missing out on full or partial benefits you’ve already paid for in your monthly medical premiums.

4. Sticking by DIY

For many people, there’s joy and reward in the do-it-yourself approach. But when it impacts quality and productivity, DIY frugality can cost you money.

If you own a home, there might be times when DIY keeps money in your pocket and saves you the cost and hassle of hiring help—and sometimes not. Sure, you can patch your own drywall in your bathroom. However, you could be covering up a bigger problem that a pro would have spotted.

“The desire to save on outsourcing can greatly sabotage your financial progress and growth,” Woroch says, one cost of being frugal that is definitely not worth it. “It’s better to spend money and outsource services others can do so you can focus on areas that truly need your time and attention.”

The next time a DIY situation comes up, consider if frugality can cost you money. Ask if you truly have the skills necessary to do the job right and in a reasonable amount of time. If you decide to bring in a professional, you can still save on project costs by buying the materials yourself so you only have to pay for labor.

5. Being inefficient with your time

Another way being frugal can cost you money is spending too much of your own time trying to save a buck. Is it worth it to spend hours and hours bargain hunting? Is it worth it to tackle that hardwood flooring installation yourself? While you might save money in both instances, the time lost could be considerable and impact your quality of life.

Sometimes the cost of being frugal isn't just monetary. It can also cost you time.

To avoid this cost of being frugal, financial advisor Knapp encourages people to get in the habit of asking what their time is worth. “I like to consider time as a currency,” Knapp says. “People work with me because the time it would take them to learn how to do what I do could be time spent with their families, on their professions or on other passions.”

Learning the right frugal behavior

These strategies can help you avoid some of the costs of being frugal and help you stay on a better spending path. Avoid learning your lesson the hard way and remember this: It pays to know that less expensive choices may not always be the best financial decisions.

1ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal®, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the US and other countries. Venmo and PayPal are registered trademarks of PayPal, Inc.

Source: discover.com

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