Countries as diverse as Japan, Germany, and the United Kingdom have postal banks. Their citizens can pick up mail, send packages, and order postage at the post office. Plus, they can perform a whole range of basic financial tasks Americans can do only at a bank branch or ATM.
Americans today, that is. For more than 50 years in the 20th century, the United States had a limited postal banking system that accepted savings deposits and paid interest. The United States Postal Savings System was a lifeline for rural and low-income workers with limited access to the traditional banking system. At its peak in 1947, it held more than $3 billion in assets, or about $45 billion in today’s dollars — enough to crack the top 50 biggest banks in the United States.
The Postal Savings System stopped accepting deposits in 1967 and liquidated a few years later. Few nonhistorians remember it today. But as account fees rise and bank failures call the private banking system’s stability into question, public interest in postal banking is growing once more. Maybe its time has come again — or maybe its inherent limitations are too much for modern consumers.
What Is Postal Banking?
Postal banking means that the national postal service provides financial services through its existing network of post offices. Post offices effectively serve as bank branches that accept deposits, cash checks, change currency, and perform other basic financial transactions.
Postal banking is common throughout the world. It’s also quite popular. Some countries’ postal banks rank among their biggest homegrown financial institutions. Japan Post Bank and the Postal Savings Bank of China are among the 20 largest banks in the world.
Although their business models and service menus vary from place to place, postal banks generally focus on retail financial services rather than investment banking or high finance. But many nonetheless offer an expansive range of services. For example, Deutsche Postbank, Germany’s postal bank, is one of Germany’s biggest housing lenders.
Postal banks aren’t limited to providing banking services through post offices only. Like most private banks and credit unions, modern postal banks generally offer online and mobile banking. This helps them compete with private banks for customers who increasingly expect to be able to bank from anywhere with an Internet connection.
Postal banks can be wholly government-owned, partially government-owned, or wholly owned by private shareholders. Most are part-owned by the national government and part-owned by private shareholders.
Deutsche Postbank is a notable example of a postal bank where the national government has no ownership stake at all. However, its parent bank (Deutsche Bank) is a systemically important private bank that the German government considers too big to fail and has bailed out in the past.
History of Postal Banking in the United States
The United States never had a dominant postal bank like Japan and China do today. And since it only ever provided limited financial services that relied heavily on existing private banks, some argue that the United States Postal Savings System wasn’t a true postal bank.
What’s not up for debate is that between 1911 and 1967, most Americans could walk into their local post office branch and deposit or withdraw cash — with interest.
Origins of the United States Postal Savings System
For the first 140 years of American history, deposits in U.S. banks were protected only by the faith and credit of the banks themselves. Banking customers could (and often did) lose their life savings in bank failures, which is why bank runs were so common back then.
After a spate of bank failures now known as the Panic of 1907, political momentum built for a durable solution. Some advocated for a national deposit insurance system, while others argued for a national bank that leveraged the existing post office system. The debate largely broke down along partisan lines, and pro-postal bank Republicans’ victory in the 1908 election settled the question.
Congress authorized the U.S. Postal Savings System in 1910. The first branches opened the following year. From the start, those most likely to be impacted by bank failures or underserved by traditional banks — rural folks, low-income workers, and immigrants everywhere — were most likely to use the system.
Services & Limitations
Policymakers envisioned the U.S. Postal Savings System as a sort of safety net bank that wouldn’t have an unfair advantage over private banks, which were already a powerful political force. They set it up with some important limitations:
Limits on banking services. The U.S. Postal Savings System took deposits from the public but didn’t hold onto them and didn’t use them to fund loans. Instead, postal bank branches redeposited customers’ funds into private banks in the same state. This provided those private banks with critical liquidity but ensured the Postal Savings System would never be a full-service financial institution.
Limits on interest payments. By law, the Postal Savings System paid 2% interest on deposits. This was intentionally lower than the going rate for private banks (around 3.5%) in the early 1910s. A lower interest rate ensured the Postal Savings System wouldn’t undercut private banks. It also encouraged in-state private banks to take Postal Savings System deposits by allowing those banks to pay below-market rates on them. This seemed like a win-win at the time, but it caused problems later on.
Limits on deposits. Congress initially set the deposit limit at $500 per account, or about $14,000 in today’s dollars. The deposit limit increased to $2,500 per account in 1918 (about $48,000 today). That’s a lot of money, but not quite enough to make the post office a one-stop bank for wealthier people.
The system had some other, more technical limitations as well. One that turned out to be important later on was a ban on redepositing funds with savings and loan banks (S&Ls). At the time, S&Ls made most of the country’s mortgage loans, so this restriction prevented Postal Savings System deposits from flowing back into the housing market.
Growth During the Great Depression
Through the 1910s and 20s, the Postal Savings System remained a relatively small player in the U.S. financial system. As its creators envisioned, it was mostly a safety net bank for lower-income industrial workers, farmers, and immigrants with limited access to traditional financial institutions.
This changed during the Great Depression. Hundreds of S&Ls and many more small, independent banks failed between 1929 and 1934. Interest rates crashed as well. Seeking safe haven (and a now-competitive yield) for their money, many more Americans opened Postal Savings System accounts. Total system deposits swelled past $1 billion in 1930 dollars.
However, even as it grew, the Postal Savings System’s weaknesses began to show.
Once an incentive for participating private banks to take system deposits, the interest rate cap became a liability as interest rates crashed. Private banks began to refuse postal deposits.
But more money than ever was flowing into the system in search of higher yields. So its administrators began buying public bonds, which paid higher interest rates. Ironically, this starved struggling banks of the capital they needed to make loans and may have worsened the depression.
Decline & Closure
In 1933, Congress authorized the Federal Deposit Insurance Corporation (FDIC), the United States’ first national deposit insurance system. The FDIC guaranteed private bank deposits up to $2,500, then $5,000. Safety-wise, this put private banks on the same footing as the Postal Savings System and reduced the pressure on both systems.
Money continued to flow into the system amid lingering fears around bank safety and above-market interest rates on deposits. Total deposits didn’t peak until 1947. But by then, the seeds of the Postal Savings System’s decline were already sown:
Consumers eventually got comfortable with the FDIC, which prevented millions in banking losses during the 1930s and 40s
The federal government vastly expanded bond sales in the 1940s to fund the World War II effort, creating a safe alternative to high-yield savings accounts at the post office
Private banks stepped up lobbying efforts against the system in the 1940s and 50s
Private banks expanded coverage and services, strengthening their appeal relative to the Postal Savings System’s more limited menu
Privacy concerns grew around the system’s practice of fingerprinting depositors, despite assurances that it wouldn’t share fingerprint records with law enforcement
Deposits declined through the 1950s and 60s. By 1967, when it officially stopped taking deposits, the total system balance was just $50 million.
Recent Developments in U.S. Postal Banking
Even after the Postal Savings System shuttered, the United States Postal Service continued to issue and cash money orders. The USPS put out reports in 2014 and 2015 that envisioned how it might layer other financial services atop this foundation:
Payroll check cashing
Domestic and international money transfers
Bill payment services
The idea was to reduce low-income America’s reliance on predatory financial services providers, such as payday lenders and check-cashing shops, while reducing incidental banking and money transfer fees for everyone else.
The American Postal Workers Union strongly advocated for more post office-based financial services and got USPS management to agree to a small check-cashing pilot at a few locations in the eastern United States. But the poorly publicized pilot was a bust, and more substantive action would require an act of Congress.
In 2022, Congress took the first tentative step toward expanded postal financial services, if not quite a second U.S. postal bank. After removing a federal budget line item that would have expanded the USPS pilot, three Democratic senators introduced a standalone bill that went beyond the USPS’s recommendations. In addition to check-cashing, money transfer, bill payment, and ATM services, it authorized post offices to offer:
The bill didn’t even get a vote. Republican lawmakers were unified in opposition, and USPS management was lukewarm at best. Advocates can and probably will try again in the future, but it’s not clear the political will exists to make a modern U.S. postal banking system anytime soon.
Arguments for Postal Banking in the United States
Arguments in favor of establishing a new postal banking system in the United States focus on its potential to reduce the chronically underbanked population while providing a low-cost alternative to private banks for everyone else.
Straightforward, low-cost banking services. A U.S. postal bank would focus on providing basic banking services at low or no cost. Think free checking and savings accounts, fee-free ATMs, and maybe low-interest loans or lines of credit.
Real-world convenience. The USPS has nearly 20,000 post offices around the country. Many rural communities without physical bank branches (or much else in the way of physical retail) have their own post offices.
Alternative to predatory financial services providers. Payday lenders and check-cashing shops charge triple-digit interest rates for their services. But many users don’t realize this because they deal in relatively small amounts of money over short periods of time. A U.S. postal bank could reduce or eliminate low-income folks’ reliance on these predatory companies.
Builds on an existing foundation. It’s not like the USPS has no recent experience in financial services. Millions of people already use its money order services for transactions where cash, personal checks, or credit cards won’t do. Postal banking isn’t as radical a shift as you might think.
Arguments Against Postal Banking in the United States
Opponents of a U.S. postal banking system argue that it would cost billions to set up and scale a system that could have an unfair advantage over private banks and credit unions.
Could take years and cost a lot to set up. It might not be a radical change in direction for the USPS, but a modern U.S. postal bank would still take years to set up and cost hundreds of millions or even billions of dollars upfront. There’s also no guarantee it would ever turn a profit, especially if it focused on keeping account costs and loan interest rates low.
No modern history of U.S. postal banking. At this point, the USPS has no institutional memory of postal banking. Everyone who worked for the United States Postal Savings System is retired or dead. So the modern version would essentially start from scratch — not that it couldn’t poach employees from the private sector.
Could undercut private banking. This is certainly private banks’ big fear of postal banking: that it would be successful enough to take significant market share from them. Depending on your perspective, that could be a good thing, but private banks do have powerful friends in Washington.
Financial access is increasing without postal banking. Public access to basic financial services has increased in recent years thanks to rapid growth in online banking and mobile finance apps. Millions of American adults remain underbanked, but the problem is less dire than 15 years ago.
For more than 50 years in the 20th century, the United States Postal Savings System provided ordinary Americans with a limited range of financial services. Though it never grew into a dominant bank or threatened the private banking system, it had billions in deposits at its peak and probably helped some customers avoid financial ruin in the days before deposit insurance.
But it’s fair to say that the Postal Savings System never lived up to its potential. The reasons are complex, but the system’s built-in limitations and weaknesses likely prevented the sort of success postal banks have seen in places like Japan and China.
Looking ahead, it’s unlikely we’ll see a new U.S. postal bank anytime soon. If and when we do, let’s hope its founders learn from their predecessors’ mistakes.
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Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.
This guest post from Ian is part of the “reader stories” feature at Get Rich Slowly. It’s the extended version of the story he shared in his prize-winning entry to this year’s GRS video contest. Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes.
It dawned on me in college, having experienced several different summer jobs, that I really didn’t like being employed. Sure, the money is nice — but it’s just no fun at all to spend your days working to reach some boss’s plans or goals. I’m sure there are some folks out there who find a 9-to-5 job fulfilling, but that sure ain’t me. There’s too much fascinating stuff out there to learn and do to spend 40 years in a cubicle. The mere thought makes me shudder, and I wanted nothing to do with a career.
Most of the financial advice out there is geared towards building up a big account to retire on. I figured that I would enjoy taking a different route — reducing the total income I needed to live on. With a significant reduction in expenses, it becomes feasible to live very comfortably on a part-time income, or even just income from hobbies. How do you reduce your expenses that much? Live off the grid.
By “live off the grid”, I don’t mean abandoning all your possessions to live in a shack in the woods. I mean taking control of your necessities and providing them yourself instead of relying on other to do it for you (and paying them to do so). Going offgrid requires a greater up-front payment, which is rewarded by great benefits in the long term (sound familiar?). Building a house yourself is a huge investment in time, sweat, and cash — but it allows you to enjoy freedom from rent or mortgage for decades. Like cooking at home instead of going out, but writ large (hundreds of thousands of dollars large).
Note: My decision to follow this path was not purely a financial one — I simply am happiest out in the boonies. There are too many people in the city, and it’s just not enjoyable for me. I want some space. You may be different — and probably are.
The more I looked at the offgrid option, the more financial advantages I saw in it. By choosing an earth-bermed home design, I could minimize heating and cooling expenses, as well as exterior maintenance. Having my own well and septic system eliminate the water bill, and having my own photovoltaic system for electricity cuts out another bill. My consumable fuels for the home are limited to some wood for winter heating (easily collected from the property) and propane for cooking (for which a couple hundred gallon tank is nearly a lifetime supply). Add some food production on the land, and you can also reduce grocery expenses.
Does this mean intentional poverty? Absolutely not. It means that I can have great quality of life, make $10,000 per year with a part-time or online gig, and have more disposable income than most middle income debt-ridden wage slaves.
At the time I put this notion together, I was in the middle of getting a fancy engineering degree from a fancy university. I had been losing interest in engineering as a field to work in, and opted to jump to a more hands-on field of study and get the fastest two-year degree I could. I judged that it would be better to leave with some sort of diploma than drop out altogether.
At the same time, I started looking for affordable rural land. I had a small inheritance from a great grandparent that I had been saving for something significant and meaningful, and a piece of land seemed like the perfect use for it. I eventually found a 40 acre parcel in the Southwest for less than $500/acre. I ditched school for a week to camp out on it, and fell in love. It had a good southeast facing slope for my passive solar house plan, and everything else I wanted in a parcel.
Ian’s parcel of land
On the third day, I signed a bill of sale, wrote a check for the price (10% off since I wasn’t financing it) and made it mine. And then (sadly) headed back to school. A year later, I came out with my degree and a $35,000 bill from Sallie Mae. That student loan was my only debt, and it meant a monthly payment of something like $250. Not bad at all, by most standards.
I packed all my belongings into my truck (a paid-for beater of a 1970s Chevy) and embarked to find a job in the little windblown town nearby and build my house. Jobs were sparse, though, and I wound up making less than minimum wage as a commission mechanic. That $250 loan payment was a massive chunk of my income, and it became clear that I wouldn’t make any progress unless I changed my situation. So I packed up again, and moved to the big city (ugh). Not what I wanted to do, but it was necessary. After a couple false starts, I landed a bartending job that paid pretty darn well. Now that I was finally making more than I needed to just scrape by, I set about making some real progress.
Saving was immediately gratifying, because I brought home my day’s earnings in cash every night. I budgeted out what I needed to live on (rent, gas, food), and put that much in my living expenses envelope each evening. The loose change (a couple bucks worth usually) became my “fun” spending money, and everything else went into the student loan envelope. Every time the envelope crossed the $1000 threshold, I took it down to the Post Office and sent a money order to Sallie Mae. I didn’t eat out, I didn’t go to bars, I replaced my big beater truck with a little beater truck that got much better gas mileage, I didn’t have a TV, and I split an internet connection with a neighbor in my apartment block. I grabbed every extra shift at the bar that I could manage. It paid off. In 53 weeks, I zeroed out that student loan. (I have the closure notice from Sallie Mae framed.)
Then came a big moment of truth. I’d been focusing intensely on paying off that debt, and the house plan was a bit of a nebulous thing that I would do later, after the loan. Well, now the loan was gone, I had the good-paying job, and I was used to living on not very much. I could go do anything now! I could buy a slick new car, or a bunch of cool gadgets, or anything I wanted. Or I could make the earth-bermed, offgrid house a reality. It didn’t take much reflection to conclude that the house was what I really wanted. So I replaced my “Loan” envelope in the closet with a “House” envelope and went right on with the same budget. Soon the envelope filled up, and I replaced it with a shoebox. Eventually the pile of cash in the shoebox started making me a bit nervous, and I got a safety deposit box at my bank.
When my second year on the budget netted me as much as the first, I crunched some numbers and concluded that a third year would be enough to get me enough money to build the house. I informed my manager at the bar that I would be leaving on May 31st of the next year, when it had warmed up and I deemed that building season was in full swing.
During that third year, I started spending some of my savings to pay for some initial infrastructure that I had to hire out, like the installation of my well and septic system and the kit for my house (purchased from Performance Building Systems — a company I highly recommend). When I finally quit the bartending job (on exactly the day I’d selected a year earlier), I headed back to the property with a wad of about $40,000 in cash and a sturdy pair of work boots.
Ian has his work boots on
I spent that summer living in a neighbor’s barn and building. The house I’d decided on was a monolithic concrete arch, 24 feet wide and 36 feet deep. It came to 800 square feet total, and would be covered with 2-4 feet of earth when finished. The sides would be completely underground, and the front wall would be fully exposed, with a lot of glazing to let in light and warmth (you can see photos of a bunch of these homes at earthshelter.com). I first needed to dig into my hillside and lay a slab foundation, then construct the framework of the the house, build the front wall with concrete block, and then have the main framework shotcreted (concrete sprayed with a high pressure air hose, to form rounded structures). Once the shotcrete set, I began building wall framing inside, and running water and electrical lines.
It’s not finished yet — some things cost more than I’d expected, and by the time winter really set in, I had a lot of interior work still left to do and had run out of savings. So I moved back to the city to find another job, and I continue to work on the house on my weekends.
However, the house is complete enough that I could live in it if I had to. I’m working my current job (I leveraged my offgrid experience into a position in the solar power industry) because of a conscious decision that the income is worth the time, and I have an alternative option should I decide that I really dislike the employment. That option makes a big psychological difference.
I can reflect on my job and know that I’m working it for a specific goal. I already have enough saved up again to finish the house interior, and what I’m doing now is saving up to build and stock a good workshop. With a good selection of woodworking, metalworking, and automotive tools I will be able to indulge in fairly technical hobbies. I can easily live on the proceeds of custom niche machine work, or have fun restoring and selling an antique vehicle from time to time. In addition, things like building my own furniture and maintaining my own vehicles will save a lot of money, and be more rewarding than hiring others to do the work for me.
Thanks to the planning and hard work, I will retire by the age of 30 — if not sooner. That doesn’t mean I’ll spend my time watching TV and playing golf, it means I will be able to actually live life instead of sacrificing all my time to a job making money.
Questions About the House
Living off the grid isn’t what many people expect. With the dramatic recent reduction in solar power costs, you can really have every modern convenience without a power pole. You really can’t tell an offgrid home from the inside. The keys to doing this effectively are putting more attention into efficiency, and choosing the right power sources. Electric heat, for example, is extremely inefficient. Propane is a far cheaper way to cook, and a wood stove is a great inexpensive, renewable source of heating. Thoughtful home design to utilize solar exposure, prevailing wind currents, and other environmental factors can significantly reduce the amount of artificial heating and cooling needed in the first place. Modern efficient appliances and lighting further reduce electrical needs.
Because of my high altitude and sunny climate, I chose to use a solar hot water heater instead of an electric or propane type. It’s a simple system with an 80-gallon tank (which should be able to supply comfortable hot showers through 3 days without sun), and it reduces my propane needs to just cooking. Internet can be provided by either satellite or wireless broadband (my cell phone reception is iffy at the house, but my Blackberry can get a pretty decent signal).
What about my social life? Am I going to be some sort of loner hermit? The answer is definitely not.
I’m not someone who needs constant social interaction, but you get plenty of it in the boonies. It’s clear from both my own experience and talking to other folks living in similar situations, that there is much more community socialization when there aren’t many people than when there are lots. I’ve never known more than one or two neighbors when I’ve lived in a city with dozens of people within shouting distance. But when there are only five families in a square mile, you know all of them, and their dogs, and often their friends and relatives who occasionally visit. It’s true for my house now — there are a few permanent residents and a few weekenders and we all socialize regularly.
The other question I always get is about family. The short version is that I have no desire for marriage or children. The house isn’t big enough for a family, and it wouldn’t be feasible to put on an addition. If I wake up one morning and suddenly can’t live another day without offspring, I’ll just have to build a new house. But I don’t envision that happening.
If you’re considering doing something like this, I’d like to offer a couple quick tips from my experience. Just as a good financial decision now can have magnified implications down the road, time spent planning a house can prevent huge problems in construction. An hour spent fixing something in the foundation can prevent a day’s work in construction or a week’s work in finishing.
My other suggestion is to not let the traditional rule your decisions. If you’re putting this much work into a place to live, you clearly plan to be there for a long time. So don’t worry about building a house that will be easy to sell — build the house you really want to live in. My bedroom is minuscule by most folks’ standards, because I like the idea of a cozy sleeping space. (I also ran a small water line and drain to the bedside table, so I don’t have to get out of bed for a drink of water at night.) The pantry is huge, though, because I will be growing and preserving food. I’m building a house to live in, not to sell, so I don’t care if it appeals to a real estate agent or bank loan officer.
Most of all, if you have a dream, you should do it. Stop fantasizing and start planning. No matter how many years it might take, it won’t ever happen until you start. And once you do start, you’ll be amazed at what perseverance and dedication can do for you. There’s no better feeling in the world than deciding how you want to live and making it happen.
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When you are trying to tighten down the hatches on your spending, you are doing everything possible to stick to your budget.
You are determined to stick to your budget this time around. But, you always hear that budgeting can be hard.
Well, here are some quick budgeting tips that will make sure to stick to your budget.
As most new budgeters learn, they struggle to stick to a budget for their monthly expenses. It is a natural process everyone goes through.
Budget, if you are looking for an easy button, then learn which payment type is best if you are trying to stick to a budget.
Especially if you spend a lot of time on social media, studies have shown you are more likely to overspend. So, you must learn which payment type will have you stick to a budget.
Then, you may be wondering and wanting help deciding which payment type is best for you.
The Optimal Solution Payment Type Solution
The most efficient payment type is something that is instantaneous and there are no fees associated with the transaction.
Cash is the most efficient payment type: Cash payments are usually the most efficient and convenient way to pay for goods or services.
Credit cards can be a less favorable option: Credit cards tend to have high-interest rates and can lead to financial disaster if used irresponsibly.
Debit cards are a great way to keep your spending within your budget: Debit cards should be considered a top priority for budgeting because they keep you within your spending limits.
Developing a budget will help you avoid financial disaster: A budget helps you stay organized and make informed decisions about which payment method works best for you.
Today, there are so many options on which payment type to use in today’s online world.
Cash is a payment type that can be used to reduce debt spending. It is versatile and can be used for a variety of expenses, such as groceries, medical bills, and gym memberships.
Cash is an excellent choice for people just starting to budget and save.
It is more restrained than credit or debit cards. The envelope method of cash budgeting can be used to train your brain to reduce spending. Cash is the most traditional payment method and has the fewest drawbacks. However, you need a safe place to store your cash, and some stores may not accept it.
Benefits of Cash:
Cash is an excellent payment type when your financial goals are to reduce debt spending.
Cash is a finite payment method that prevents you from overspending.
You have a set amount of money to spend each month, so there’s no chance of overspending.
Easy to track with the envelope method: Utilizing the envelope method ensures that you are tracking your spending (i.e groceries, gas, medical bills) and making sure that you aren’t overspending.
Cash is a quick and easy way to pay for goods and services.
No Fees. No maintenance fees or interest rates as credit cards. Cash is just plain cash – printed paper of currency.
You can avoid high fees associated with card transactions: There are no associated fees when paying with cash, making it the cheapest option overall.
Cash discounts may be available. Since you are paying with cash many small businesses offer a cash discount of 2-5%.
You can use cash at any store: No need to carry around extra cards or checks.
It’s easy to get cash: You can easily get cash and make extra cash.
There’s no need for bank account details: No need for bank account details means you’re free from identity theft risks and other inconveniences that come with having a bank account.
Cash allows you to skirt some financial regulations: Because cash payments don’t fall under the purview of many financial regulations, businesses can take advantage of loopholes in the law that allow them to charge higher interest rates on loans or engage in shady business practices. (highly recommended to stay above book)
Cons of Cash:
Possibility of losing or stolen cash: Keep your cash in a safe place!
You need a safe place to store your money: Another disadvantage of using cash is that you may need a safe place in which to keep it – some stores don’t accept it as a payment method.
Why Choose Cash?
Total control over your money, so there’s little chance of unexpectedly running out of funds.
Cash is a great way to stay on budget, as you can easily track your spending and see where you need to cut back.
Unpleasant to spend money with cash, which can help train your brain to reduce spending.
Cash is a quick and easy way to pay: Using cash eliminates the need for banks, credit cards, or other forms of payment.
Verdict: Paying with cash is the best method for budgeting and saving.
Overall, cash is a great payment type when it comes to budgeting. You can immediately see how much money you’ve spent and what needs to be cut back.
You can’t make impulsive buying decisions with debit cards or credit cards.
With a finite amount you can spend, cash is an excellent choice to prevent overspending. According to research, paying with cash can feel unpleasant, which can train your brain to reduce spending as much as possible.
2. Credit cards
Credit cards offer a number of benefits, including convenience, cash back, and the ability to make large purchases or pay bills in case of emergency. However, credit cards also come with credit card debt and can lead to overspending and financial problems if not used carefully.
For many, credit cards are the easiest way to blow your budget because you don’t have control over how much money you spend.
It is possible to overspend with credit cards if you are not mindful of what you charge.
On the flip side, this is a preferred method as many credit cards also offer rewards programs that give you cash back or points for purchases. If you make the conscious decision to use credit cards, you must make payments on time to avoid penalties.
Benefits of Credit Cards
Credit cards are convenient: Convenient to use and don’t have to worry about losing cash.
Use a credit card if you are disciplined and have strict spending habits: If you are disciplined and have strict spending habits, then using a credit card can work well for budgeting purposes.
Flexibility on larger purchases: Some benefits that come with having a credit card include more cash flow as well as being able to make larger purchases.
Credit cards provide support in times of crisis: Many credit cards offer extended services that can help like 24-hour fraud protection, lost wallet services, traveler’s insurance, and many other benefits – check each issuer for details.
$0 Liability on Unauthorized charges: Your credit card company will not be held responsible for any charges that were not authorized by you. This means that if you did not authorize a charge in person, online, or otherwise, you will not be responsible for it.
Fraud protection: Check your credit card issuer, but many offer fraud protection.
New card introductory APR is helpful to pay down debt: The introductory APR for the new card may not last long.
Payments on balance transfer should be manageable: Make sure that the payments on your balance transfer are manageable.
Points: You can accrue points along with your spending which can be a great perk.
Credit card interest rates are significantly lower than payday loans: Interest rates on credit cards are usually much lower than payday loans.
Due Date is After your statement closes. Since your bill cycle is at least another 21 days between the closing date for your statement and the due date, it gives you flexibility. Personally, I still account for the credit card bill in the same month that it was accrued.
Cons of Credit Cards
Potential for credit card debt: When using a credit card, be aware of your credit limit and the interest rate that you will have to pay on your debt. Also one of the categories of debt.
Credit limit often leads people to spend money: The credit limit often leads people to spend money by giving them a false sense of security, when they should stick to a budget and pay attention to their credit card statement and the billing cycle.
Credit card overspending can lead to debt: Consider the purchase if it is essential or delay it if possible.
Ability to easily purchase something you cannot afford. Buying something that you don’t have the money saved up for will cost you interest fees associated and maybe even with a credit card balance transfer.
There are a number of fees associated with a balance transfer: Transfer fee, interest on new purchases charged to the card.
Your introductory APR may not be valid if you make too many payments late: If you fall more than 60 days behind on payments your introductory APR might be canceled and you may face higher interest rates.
Credit score can suffer from debt: When you carry a credit card balance or don’t pay your monthly bills on time, you will lower your credit score.
Avoid carrying a balance: Pay your statement in full each month to avoid paying interest and maximize your grace period.
Key Takeaways on Credit Cards
Make sure to pay attention to the dates: Don’t spend more than you can afford, and make sure you’re making your minimum monthly payments on time so that your debt doesn’t increase over time.
A credit card can be used for budgeting only if you’re very disciplined: If you know that overspending is NOT an issue and you pay the credit card’s monthly balance in full, then using a credit card is fine.
Credit card transactions usually take several days to register in the feedback system: Something to look out for!
You can step back into debit cards or cash if needed: If credit cards are not for you, there are other options available such as debit cards or cash
3. Debit cards
Debit cards are a good option if you want to stick to a budget because the predetermined amount of funds can help you stay within your means. Additionally, debit cards are more convenient than cash and just as accepted as credit cards in most places.
A debit card works more similarly to cash than to credit cards.
They provide an easier way to track your spending and avoid having to carry a lot of cash.
Pros of Debit Cards:
No Need to Carry Cash: A debit card is better than cash because you don’t have to carry a lot of paper money and change around, and they’re also safer.
Debit cards are faster and easier to use: Debit cards work just like credit cards – withdrawing cash, making purchases, and paying bills – but they are linked directly to your bank account, so there is no need to carry around a separate cash envelope wallet or purse for them.
A debit card is a good option if you want to stick to a budget: Debit cards come with a predetermined amount of funds that you can spend from your bank account just like cash.
Tracking payments is easy with debit cards: Your debit payments will appear on your issuer’s dashboard, which you can monitor anytime from any location.
Convenience: Debit cards are more convenient to use and faster than needing to write a check or carry around cash. Plus they don’t add to your debt.
Shopping online is easy. You can use your debit card to make online purchases with your bank account, and digital banking tools make tracking your spending easy.
Points: Some debit cardholders can earn points for spending on their cards, which can be redeemable for rewards such as cash back or gift cards. This is new to compete with credit cards.
Fraud protection is typically offered for free with most debit cards—meaning if your card is stolen or used without your permission, you can get your money back.
No impact on your credit report. When you use a debit card, the funds are actually withdrawn from checking or savings accounts so there is no credit reporting occurring.
Cons of Debit Cards:
An overdraft on a debit card can happen when a purchase exceeds the amount of money in the checking account, leading to overdraft fees.
Funds on hold with fraudulent charges. If your account gets hacked, your losses will be limited since most banks protect their users against fraudulent charges and online purchases with their accounts. However, those funds will be held while they investigate and you may be liable for $50.
No chance to improve your credit score. Since you are not borrowing money, you are unable to improve your credit score.
Debit cards are a great way to keep your spending within your budget and avoid overspending which can lead to many detrimental issues.
Regardless of the overdraft fee, debit cards are still better than cash because they’re safer and easier to carry around.
Checks… do people still write checks? Why yes they do!
Checks offer a few benefits as a payment method, even though they are slowly being replaced by more modern options.
This can help you keep track of your spending and make sure you do not overspend. Additionally, if you ever need to dispute a charge, having a check can be helpful in proving what you paid for.
What is a check?
A check is a written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer from the check writer’s account. The date is usually written in month/day/year format. The signature of the check writer is usually on the line below “Pay to the order of.”
There are three main types of checks:
A cashier’s check is a check guaranteed by a bank, drawn on the bank’s own funds, and signed by a cashier.
A certified check is a personal check for which the bank has verified that there are sufficient funds to cover the payment.
A personal check is one that you write yourself and that is not guaranteed by the bank.
Pros of Checks
Checks are still a payment option: Checks are one of the traditional payment methods, but it is slowly dying out because of modernization.
Physical written record. It can be helpful to have physical copies of checks in addition to digital records through the bank.
You need to make both digital and physical copies of the check: Save check stubs but also transfer the information to a budgeting system.
Cons of Checks
Saving check stubs is helpful, but you still need to transfer the information to a budgeting system: Useful for tracking spending, but you’ll likely want more detailed records than just check stubs.
Not as convenient as credit or debit cards.
5. Apple Pay or Apple Cash
Apple Pay is easy to use and convenient since you only need to connect your smartphone to your cards and bank accounts via the app.
It is easy to use since you just hold your phone up to the reader and wait for the payment screen to appear.
You can even get cash back with apple pay.
Pros of Apple Pay:
Apple Pay is easy to use and convenient: You only need to connect your iPhone to your cards and bank accounts via the app.
You don’t need to carry any extra cards or cash: No need for additional cards or cash when you’re out and about
You can use Apple Pay on different devices: You can use Apple Pay on your iPhone, iPad, and Mac.
Transactions are secure: Your transactions are secured with Touch ID or a passcode.
Set up Spending Limits for each user. This way you can make sure you (or others with authorized access) are not spending more than you intended. Learn how.
Protection of Data during transactions. Your actual credit card number is changed to a different digital number, which allows limits your card number’s exposure.
Cons of Apple Pay:
Not widely accepted (yet). This method of payment is 100 percent guaranteed. While many stores offer apple pay, not all do quite yet.
The same rules apply if you load apple pay with a debit or credit card drawbacks include late fees, interest rates, and overspending: Keep that in mind when choosing Apple Pay as your payment method.
6. Mobile wallets like Google Pay, Samsung Pay, Venmo, or Zelle
Mobile wallets are digital payment systems that allow you to pay for items with your smartphone. Many people find mobile wallets are very convenient and becoming a traditional method of payment (such as credit cards).
With mobile wallets, you are making digital payments without having to carry around cash or cards using just your smartphone.
Mobile wallets are easy to use and provide instant payment convenience, making them perfect for shopping online.
Pros of Mobile Wallets:
Mobile wallets use credit cards and debit cards: Connect your smartphone to your bank accounts and use it for digital payments.
Mobile wallets are easy to use and convenient: Instant payment convenience makes them perfect for shopping online as well.
No need for cash or cards: No need for cash or cards.
Strong secuirity features provide privacy and security features that ensure your personal information is safe from data breaches and unwanted charges.
You can make purchases without having to show your identification: You can make purchases without having to show your identification.
Additional Layer of Security. Additionally, mobile wallet data is protected with verification, such as fingerprints.
Cons of Mobile Wallets:
With Zelle and Venmo, it is easy to send money to the wrong person or add an extra zero and send more money from planned. More often than not, it is difficult to recover your money.
You need to be disciplined when using a mobile wallet: Pay attention to late fees and interest rates, as well as the amount you spend in a month.
7. Prepaid Cards or Gift Cards
A prepaid card or a gift card could be right for you. The advantage of these is the mere fact that you reached the limit is enough to deter overspending.
It can make you think twice about whether you need to purchase an item or not.
Pros of Prepaid Cards and Gift Cards
Easy to use: Prepaid and gift cards are easy to use and manage your finances with.
The mere fact that you reached the limit is enough to deter overspending: It can make you think twice about whether you need to purchase an item or not.
No strings attached: No need to worry about any fees associated with the prepaid card once activated.
Privacy: The prepaid card does not track your spending or use any personally identifiable information.
Credit Score Doesn’t Matter: Your credit score does not matter when obtaining a prepaid card.
Cons of Prepaid Cards or Gift Cards
Losing a prepaid card is not a fun experience. Contact the prepaid card issuer right away to protect the funds on the prepaid card.
Fraud protection: Consider whether your prepaid card issuer offers any theft or fraud protection, as not all providers offer this feature.
Prepaid cards have limits on how much money you can load onto them, which can be frustrating if you need to make a large purchase.
PayPal is a very convenient way to pay for items online or in person. It is widely accepted and used by many people.
PayPal is a digital payment service that offers convenience and ease of use. You can use them to send money to people or pay for online purchases.
However, because these services can only be used online, they should not be relied on as your sole method of budgeting and tracking expenses. Instead, consider Paypal in combination with another budgeting tool, like a spreadsheet or app, to get a fuller picture of your spending.
Pros of PayPal:
PayPal is one of the most popular online payment methods: Widely accepted and used by many people.
You can use them to send money to people or pay for online purchases: Help you review your spending prior to purchase.
Cons of Paypal:
EasyTarget for phishing scams. A phishing scam is when someone tries to trick you into giving them your personal information, like your password or credit card number. They might do this by sending you an email that looks like it’s from PayPal, but it’s not. Or they might create a fake website that looks like PayPal. If you enter your information on these sites, the scammers can then use your account to make purchases or send money to themselves.
Reputation for poor customer service. This is evident in their customer service ratings, which are some of the lowest in the industry. The majority of complaints against PayPal revolve around poor service received when asking for assistance with fund freezes and account holds.
9. Cryptocurrency (ie: Bitcoin)
Cryptocurrencies offer a new and innovative way of handling payments. They’re not yet widely accepted, so there’s potential for businesses to get in on the ground floor with this new technology.
However, because cryptocurrencies are so new, it’s uncertain if they will be regulated or not. This could pose a challenge for businesses down the road.
Pros of Crypto
Not subject to the same regulations as traditional currency, which makes them appealing to those who want to avoid government intervention.
The valuation of Crypto changes rapidly. If you are smart with crtyple this is a great way to spend your crypto coins.
Cons of Crypto
Cryptocurrencies are not accepted everywhere: Cryptocurrencies are not accepted by most organizations yet, which it makes it difficult to use them in day-to-day life.
It’s unclear if cryptocurrencies will be regulated: It’s uncertain if cryptocurrencies will be strictly regulated or not. This poses a challenge for those who want to use them as a payment method.
Bitcoin and other cryptocurrencies are still in their infancy: Bitcoin and other cryptocurrencies have only been around for a few years, so they may still face challenges in the future.
Here are the most popular budget apps today:
Other Payment Methods:
ACH Payments is an excellent way to pay bills and other financial obligations: You can easily set up a billing cycle for recurring payments, making it safe and convenient.
Fewer people are aware of your transactions when using ACH payments, reducing the chances of fraud or theft.
Fewer people know about your transactions when using ACH payments, reducing the chances of fraud or theft.
Your checking account information is not shared or accessed by the system in any way.
You can quickly pay bills and other expenses with ACH payment: Financial institutions offer this as part of their deals.
When setting up recurring bills with ACH payment, you are aying your bills on time is important for maintaining a good credit score.
Pay attention to your check account balances: Make sure you have enough funds in your check account to avoid paying overdraft fees.
A money order is a document that orders the payment of a specified amount of money. Money orders are convenient because they can be bought at many locations, including post offices, banks, and convenience stores.
To get a money order, you will need to fill out a form with the payee’s name, the amount of the payment, and your contact information. You will then need to purchase the money order with cash or a debit card.
To cash a money order, you will need to take it to a bank or post office. You will need to show identification and sign the back of the money order. The teller will then give you the cash for the payment.
More secure than cash: Money orders are more secure than cash because they don’t require a bank to make the transaction.
Less convenient: money orders are less convenient because you must purchase them in person.
Able to trace. They are also more secure than cash because they can be traced if lost or stolen.
Wire transfers are a more secure way to transfer money than traditional methods like checks and cash. These are sent through the banking system and are usually processed within two business days.
Typically, wire transfers are used when sending and receiving large sums of money (over $10000).
More secure than cash: Wire transfers are more secure than cash as the bank verifies there is enough money to make the wire transfer.
Fees involved with using a wire transfer. Most institutions charge for handling a wire transfer.
What method of payment is best?
Cash is the most widely accepted form of payment, but debit and credit cards are very popular.
The payment method that is best for you depends on which one helps you to stick to your budget and spend less money. The goal is to be financially stable.
What method is best for sticking to a budget?
There are several different types of budgeting methods that people use in order to manage their finances. Many people focus on using the 50/30/20 method, in which each percent corresponds to a different category of expenses.
There are plenty of budgeting tools available today to make sure you stick to your budget.
You need to find what works best for you. At the end of the month, you want to spend less than you make. That is the winning combo!
1. Budgeting App
There are many budgeting tools available online, which can be helpful as it can be easier to track your progress and budget over time.
You can use various popular budgeting apps like Quicken, Qube Money, or Simplifi.
These apps can help you track your spending, set goals, and stay on track with your budget.
2. Paper and Pen or Simple Spreadsheet
Some people find that they prefer using a simple spreadsheet or paper budget. This may be due to personal preference or because they find it easier to understand and use.
Additionally, using a paper budget may help you stay more organized as you can physically see where your money is going.
Options to get you started include our own budgeting spreadsheets or using an automated system like Tiller.
3. Envelope budgeting method
The cash envelope system is a good way to stick to a budget because it is rigid and based on envelopes and cash. You can’t get more money until your cash payday. So, this system helps you track your spending and budget better.
However, using only cash can have drawbacks as having large amounts of cash on hand can be risky.
The envelope method gives you a sense of control over your spending and makes it more tedious to write down your transactions. If you find writing down your transactions tedious, the envelope method may be too much for you.
4. Know Your Budget Categories and Track expenses
Tracking expenses is essential to move ahead financially: Knowing what you have spent in each category will help you make better financial decisions.
Be specific with your budgeting categories. Don’t make it too complicated. Always remember to include household items, clothing, and groceries when tracking expenses.
5. Prioritize your Budget Plan
A budget can provide a realistic picture of your finances, help reduce stress related to money matters, and guide you toward achieving your goals.
Creating a budget can help ensure that you are able to meet your financial obligations and still have money left over for savings and other goals. A budget can also help you track your spending so that you can make adjustments if necessary.
Make a budget plan: This will help you stay on track and make sure that you are spending your money wisely.
You decide where to spend money: A budget helps you set future goals and achieve your financial goals.
Creating a budget can help reduce stress: If you tend to get stressed about money matters, creating a budget can give you peace of mind.
A budget has other benefits beyond financial ones: If you want to achieve something in life, creating a budget can help guide you in the right direction.
See where to cut back spending. You can also look at your past spending habits to see where you can cut back. Sometimes it may be necessary to save more in order to achieve long-term goals, like buying a house or having a wedding. Always be mindful of your budget when making payments and spending money.
It’s a three-step process that involves basic math: Making a budget is simple and requires only basic math skills.
Stay on track: Making a budget plan will help you stay organized and keep track of your expenses.
A budget plan will help you stay on track and make sure that you are using the best payment type for your budget.
Making a budget is an easy way to save money. By following a few simple steps, you can keep track of your expenses and make sure that you are spending your money wisely.
Which type of payment is best for sticking to a budget?
One of the main pros of using cash as a method of payment is that it is the most efficient way to keep track of your finances. This is because it is very easy to budget when you are only dealing with cash.
However, many people prefer debit or credit cards are the best type of payment. They are more convenient than cash and can help you keep track of your spending. However, if you have a bad credit history or a low credit score, credit cards may not be the best option for you.
Cash payments are the most efficient: Most convenient and easiest to keep track with cash envelopes.
Credit cards allow you to accrue points along with your spending: These are a great benefit and one that can be a perk if handled well as part of your budgeting process. As long as pay them off in full each month to avoid credit card debt, high-interest rates, and other negative consequences.
Debit cards are also a good option for sticking to a budget. They can be used like credit cards but with less risk of debt.
Cash-based payments are a newer option and are more reliable: May not have as many negative consequences as other payment methods such as credit cards or loans.
What Not to Use when you are Trying to Stick to a Budget
You need to steer clear of these types of payments if you want to be financially stable person.
Personal loans are a risky way to budget. However, if you need the money for an emergency or unexpected expense, a personal loan can be a lifesaver.
There are many risks to consider and other ways to lower your spending before resorting to a personal loan.
Loans can cause budgeting problems: Loans can mess up your budget and make it difficult to stick to spending plans.
Taking out a personal loan just for the sake of having money can disrupt your budgeting: Consumers often borrow money in order to pretend they’re doing better financially than they really are.
Borrowing money is usually not a good idea: When you borrow money, you may find that you cannot handle seeing low checking account balance, which can lead to deeper debt problems.
Payday loans are a bad option for someone looking for a long-term solution. They are expensive, and there is a high chance that the person will not be able to pay back the loan.
The interest that is charged is also high, and it can add up quickly.
Write bullet points about what happens with a payday loan
Payday loans can trap people in a cycle of debt, as they are often unable to pay back the loan in full on the due date.
When someone takes out a payday loan, they are borrowing money from a lender in a short amount of time, usually two or three days.
Payday loans are often expensive, with interest rates that can be above 300%.
Debt Consolidation Loans
Debt consolidation can be a good way to manage your debt because it can result in a lower monthly payment and extended payments may impact your financial plan. You can use a debt consolidation calculator to estimate how much debt you can afford before taking out a consolidation loan.
Debt consolidation loans also provide convenience because they have lower interest rates than payday loans. However, be careful when consolidating your debt because it is possible to overspend and lose your introductory APR.
You may be able to pay off your debt with one monthly payment: A consolidation loan often results in a much lower monthly payment than all of your previous monthly payments combined.
Extended payments may impact your financial plan: Take a look at how these extended payments will impact your financial planning.
You can estimate how much debt you can comfortably afford: use this tool – Tally .
It is possible to overspend with debt consolidation: If you spend more money than you planned on your day-to-day expenses, this could increase your debt. Consider if the purchase is necessary or if it can be delayed.
You may lose your introductory APR: If you fall more than 60 days behind on payments, you will likely lose your introductory APR and may even trigger a penalty interest rate.
You need to be careful when transferring a balance: Transferring a balance can also forfeit your grace period and you’ll need to pay interest on new purchases charged to the new card.
What type of payment method is best for sticking to a budget?
There are a variety of payment methods available, and each has its own benefits and drawbacks. It’s important to choose the payment method that’s best suited for your business and budget.
A payment method that allows you to stick to a budget is the best option.
There are three main types of payment methods: cash, debit cards, credit cards, and cash-based payments.
The envelope budgeting method is a simple way to create a budget. You will need envelopes and divide your money up into the different categories that you spend money on. You will then put the corresponding amount of money into each envelope. This method can be helpful if you have a hard time sticking to a budget.
The zero-based budgeting method is a more methodical way to create a budget. With this method, you track every penny that you earn and spend. This can help you to see where your money is going and make adjustments accordingly.
A debit card is a plastic card that is linked to a checking account. Customers can spend money by drawing on funds they have already deposited. An overdraft on a debit card can lead to overdraft fees, which have high-interest rates.
A credit card is a plastic card that allows customers to borrow money up to a certain limit in order to purchase items or withdraw cash. Using a credit card can help build credit or improve your credit score.
There are a few different ways to use a credit card. You can use it to check your balance and review your spending history, which can be helpful in staying accountable.
Credit cards also offer online tools which make the analysis of your spending easier which can be helpful in tracking your budget.
Finally, you can use a credit card to rebuild your credit score by using it responsibly and paying off the balance in full each month.
Which payment type can help you stick to a budget?
When it comes to choosing a payment type that will help you stick to a budget, there is no one-size-fits-all solution.
The best payment method for you will depend on your specific needs and preferences.
When you are creating a budget, it is important to consider which payment type will help you stay on budget. Different payment types work better for different people, so it is important to experiment and find the one that works best for you.
As I stated for me, I have learned how to use credit cards to maximize cash back. But, I learned how to budget with cash when first starting.
Please pay attention to your budget and how it changes over time, as different payment types may work better at different stages of your life.
Consequently, I hope that this guide has given you a better understanding of the different payment types available and helped you narrow down your options. There are a variety of payment types that can help you stick to a budget, so it’s important to research each one carefully.
I highly recommend using an app to track your expenses and know where you spend your money. By developing a budget and choosing the right payment type, you can stick to your financial goals.
Know someone else that needs this, too? Then, please share!!
Money orders are a form of payment that are sometimes very useful if you need to transfer funds to someone. They can be obtained from various outlets, at typically a low fee, and can be a good way to move cash when a person doesn’t have or doesn’t want to use a bank account.
Here, you’ll learn more about what money orders are, how they work, when to use them, and what alternatives to money orders exist.
What Is a Money Order?
Think of a money order as a paper check that can never bounce because it has been prepaid by the sender. It can be cashed or deposited just like a check, but it offers a few benefits over checks beyond never bouncing.
For one thing, if for whatever reason you don’t have a bank account, that isn’t a problem. You don’t need a bank account to get a money order, cash one, or even use money orders to pay bills.
To send a money order, here’s the protocol of the U.S. Postal Service:
1. Take cash, a debit card, or a traveler’s check. You cannot pay with a credit card.
2. Fill out the money order at the counter with a retail associate.
3. Pay the dollar value of the money order plus the issuing fee.
Recommended: Can You Buy a Money Order With a Credit Card?
Where to Get a Money Order
Many of the biggest banks offer money orders and often require that they be purchased at a branch. There can be a $5 to $10 fee when buying a money order worth up to $1,000 (though the fee may be waived for premium accounts).
Sometimes the money order fee is also waived for members of the military. However, many banks require that you already have an account with them to purchase a money order.
Money orders are also issued at places like Walmart (with a maximum fee of $1, and the exact fee varying by location), convenience stores, credit unions, and the Postal Service.
Postal Service fees for money orders are based on the dollar amount: $1.45 for a money order of up to $500, $1.95 for one from $500 to $1,000 (which is the maximum amount for a single money order), and 50 cents for postal military money orders issued by military facilities.
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Advantages of a Money Order
Money orders may be safer than some other forms of money. For example, while a check contains sensitive personal information like your home address, phone number, and bank account and routing number (plus the name of anyone else on the account), a money order usually only contains the names of the payer and payee.
So a money order is usually a more anonymous and therefore a potentially more secure method of payment than a check, although some money order issuers may require an address. That’s usually in case the check’s payee needs to contact the sender about the payment.
Sometimes both halves of the transaction may have to include this information. If you’re unsure, the best bet is to just ask.
Here are a few of the cons of money orders:
• Fees. While you can pay bills with money orders, the small fees can add up if you’re relying on them for that purpose.
Check cashing stores may charge a flat fee of $2.99 per money order, while some might charge around 4% to 5% to cash a money order. Many banks usually will do it for free. Also note that there are banks that will deposit a portion of the order and then after a couple of days release the rest.
• Payment limits. Usually $1,000 is the ceiling for most money orders.
• Inconvenience. The fact that many banks require your presence to process a money order may make putting money orders you receive into use less convenient.
The cap on a money order’s value also means there’s a time investment if, say, you need to pay $2,000 to someone — that’s two money orders, two fees, and twice as much time spent getting them issued.
In addition, not all businesses may accept money orders. If you are trying to use one to pay a bill, check with the payee first. Every now and then, you may encounter someone who accepts only, say, online bill paying.
• Use in scams. A big strike against money orders overall — and this is why banks can be somewhat cautious in accepting them — is that they can be used in banking scams. Money orders are perceived as a safe way to receive payments, and that is true when they are legitimate.
But the news can share stories about counterfeit money orders that revolve around suspicious prizes, employment opportunities, classified ads, and so on. Because money orders are not checks, it can make them harder to trace. It’s a good idea to keep your receipt for a money order until you are sure the order has been received and cashed.
Alternatives to Money Orders
Sometimes vendors or recipients aren’t able to accept a check, and a money order might make sense. But there are digital age options like peer-to-peer payments or P2P transfers.
P2P platforms are often a free service offered by financial institutions that lets users send and receive money, usually in minutes.
And P2P transfers are generally quick, as fast as a few seconds. Examples of services people use for P2P payments are PayPal and Venmo, as well as Zelle which moves money in a slightly different way, from bank account to bank account, but is usually mentioned in the same breath with the others.
Also, many banks now offer ways to transfer money from one bank to another as part of their services, making it easy to move money between your own accounts and to other individuals and businesses.
Recommended: Pros and Cons of Electronic Banking
Money orders are a paper financial tool, which, like a check, can move funds. They have the added benefit of being able to be used even if you don’t have a bank account, and the fees involved in getting one can be quite low. However, there is typically a $1,000 cap on the amount of a money order, and it can take some time and energy to get one.
If you’re looking for a simple way to move money from your bank account to another person at any time, consider a SoFi Checking and Savings online banking account. You’ll be able to send funds to a recipient, whether or not they bank with SoFi.
What’s more, a SoFi Checking and Savings Account offers a competitive annual percentage yield (APY) and charges no account fees, which can help your money grow faster. And you get to spend and save in one convenient place.
SoFi Checking and Savings: The smart and simple way to bank.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners. SOBK0523023U
The First Access Visa® Credit Card is an option for those who are looking to build credit but would prefer an unsecured credit card without a security deposit. The card, issued by The Bank of Missouri, is widely accepted at retailers.
However, there are some serious drawbacks that make other cards for bad credit or no credit more appealing options. The First Access Visa® Credit Card piles on a laundry list of fees, and should you get into debt, it charges an astronomical interest rate. Though you can earn cash back on your spending, it’s a pittance compared with the annual cost of carrying this card.
Here are five things to know about the First Access Visa® Credit Card.
1. It’s an unsecured card for credit building …
For the most part, credit cards for those with bad or no credit are secured cards, which require a security deposit upfront. That deposit becomes your credit limit, and it’s eventually refunded to you when you establish or shore up your credit scores and graduate to an unsecured card.
But that security deposit can set you back the moment you get a secured card, sometimes by $200 or more. The First Access Visa® Credit Card doesn’t require a security deposit, but other costs associated with carrying this card might make a security deposit seem more palatable, especially if you can qualify for a card with a relatively modest deposit requirement. With the Capital One Platinum Secured Credit Card, for instance, you may be eligible for a $200 credit limit with a security deposit as low as $49.
The First Access Visa® Credit Card does report your payment activity to the three main credit bureaus — Experian, Equifax and TransUnion — which can help you build credit over the long term with careful use, such as paying your card bill in full and on time every month.
2. … But it charges a flurry of fees
The First Access Visa® Credit Card charges a surprising amount of pricey fees, while other credit-building options cost substantially less. Here’s what you’ll pay as a cardholder:
Program fee: You must pay this one-time $95 fee within 60 days of your application getting approved. Once you do, you can activate and begin using your card.
Annual fee:$75 for first year, then $48.
Monthly servicing fee: This fee is waived for the first year but then costs $8.25 per month, or $99 per year.
Additional card fee: Adding cards for authorized users will cost $29 per card, per year.
Credit limit increase fee: You must have the First Access Visa® Credit Card for a year before you can potentially qualify for a credit limit increase. If you do, you’ll pay a fee of 20% of the credit limit increase, which eats into your overall credit limit. So if you’re granted an increase of $100, you pay a $20 fee and get an actual increase of only $80.
Premium plastic card design fee: Pay up to $10 for a “premium” card design.
If you just pay those first three fees and skip adding cards, requesting a credit limit increase or opting for a snazzier card design, the First Access Visa® Credit Card will cost you $170 in the first year and $147 per year after that. Unlike a security deposit for a secured card, that’s money you won’t get back.
3. You can earn cash back, but with caveats
Rewards aren’t a main priority when you’re building credit, but the First Access Visa® Credit Card does earn 1% cash back. Still, there are several things to note about the card’s rewards program.
First, unlike with most other rewards cards, you earn cash back not by making purchases with the card but rather by making payments on your card bill. Second, you have to wait six months before you can redeem any rewards for a statement credit. And finally, you must redeem in increments of 500 points, or $5.
If you’re open to a secured card, some no-annual-fee options also earn cash-back rewards that are much more straightforward. The Discover it® Secured Credit Card earns 2% cash back at gas stations and restaurants on up to $1,000 in combined spending each quarter and 1% cash back on all other purchases. There’s no waiting period to redeem, either. You can redeem your rewards at any time, in any amount. New cardholders can qualify for a sign-up bonus, which Discover phrases like this: INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
If you’re seeking rewards but want to avoid an upfront security deposit and an annual fee, some “alternative” credit cards can tick all those boxes. These types of cards consider financial factors beyond credit scores, like your income, when you apply.
4. Beware of the sky-high interest rate
The ongoing APR is 35.99% Fixed APR, which is staggeringly high, even compared with other cards for bad credit. Making on-time payments of at least the minimum amount due will help you establish credit, but if you don’t pay your bill in full, it can lock you into a cycle of expensive debt that can take years to get out of.
5. A checking account is required
You must have a checking account to qualify for the First Access Visa® Credit Card, which can present a challenge to anyone who wants to build credit but is unbanked.
An alternative is the OpenSky® Secured Visa® Credit Card, a secured card with a $35 annual fee. You can fund your security deposit with a check if you’re able, but you can also do so with a Western Union transfer or money order.
In today’s fast-paced world, it’s crucial to understand the variety of financial services available to you, including cashier’s checks. This guide will explore the ins and outs of obtaining a cashier’s check at Walmart and help you navigate your financial options with ease.
What is a cashier’s check?
A cashier’s check is a guaranteed form of payment issued by a bank or credit union. It’s a popular option for large transactions, such as purchasing a car or making a down payment on a home, due to its security, trustworthiness, and speed. When you request a cashier’s check, the financial institution withdraws the funds from your bank account and guarantees payment to the recipient, making it a safer option than personal checks.
Financial Services Offered by Walmart
Walmart offers a wide range of financial services through its MoneyCenter to help customers manage their finances conveniently. Some of the services available include:
Walmart Check Cashing Services
Walmart cashes various types of checks, such as payroll, government, tax refund, insurance settlement, and retirement disbursement checks, for a fee. This service is available at the customer service desk or at the Walmart MoneyCenter.
Walmart sells MoneyGram money orders, which can be used as an alternative to cashier’s checks for smaller transactions. You can get a money order at the customer service desk or at the Walmart MoneyCenter.
Bill Pay Services
Walmart’s bill pay services allow customers to pay their bills directly from the store. This service is available at the customer service desk and can be a convenient way to manage your finances without visiting your bank or credit union.
Prepaid Debit Cards
Walmart offers various prepaid debit card options that can be loaded with cash and used for purchases, bill payments, or to withdraw cash from ATMs.
Walmart Credit Card
The Walmart Credit Card allows customers to earn rewards for purchases made at Walmart and other participating retailers. Cardholders can also take advantage of special financing options and other benefits.
Tax Preparation Services
During tax season, Walmart partners with tax preparation service providers to offer convenient tax filing options for customers. These services are available at select Walmart locations.
Walmart MoneyCenter allows customers to send money domestically and internationally through MoneyGram and other money transfer services. This service provides a convenient way to transfer money to friends and family, pay bills, or cover other financial needs.
Can I get a cashier’s check at Walmart?
Unfortunately, Walmart does not issue cashier’s checks. However, they do offer a range of alternatives, such as money orders and bill pay services.
Customers can purchase MoneyGram money orders as a substitute for cashier’s checks when dealing with smaller transactions. These money orders can be obtained at the customer service counter or the Walmart MoneyCenter.
Walmart’s in-store bill payment services may be another option to consider. This service enables customers to settle their bills directly, and offers a hassle-free method to handle your finances without the need for a bank account.
Can I cash a cashier’s check at Walmart?
Yes, you can cash a cashier’s check at Walmart. As part of their check cashing services, Walmart accepts various types of checks, including cashier’s checks, at the customer service desk or Walmart MoneyCenter.
Keep in mind that fees will apply, and the maximum amount you can cash may be subject to limitations. Make sure to bring a valid, government-issued photo ID to verify your identity and complete the transaction.
See also: Where Can I Cash a Cashier’s Check?
Where can I get a cashier’s check?
Although cashier’s checks aren’t available at Walmart, there are several places you can get one:
Traditional Banks and Credit Unions
Most brick-and-mortar banks and credit unions offer cashier’s check services to their customers. To get a cashier’s check from a financial institution, you’ll need to have a bank account with that institution. Simply visit your bank or credit union in person to request a cashier’s check.
Many online banks also provide cashier’s check services. These banks often have lower fees and more convenient processes, as you can request a cashier’s check through their website or mobile app without visiting a physical branch. The cashier’s check will then be mailed to you or the recipient.
Non-Bank Financial Service Providers
Some non-bank financial service providers, such as check-cashing stores or money service businesses, may offer cashier’s checks. However, these establishments typically charge higher fees for their services than traditional banks or credit unions. Be sure to research the legitimacy of these providers before obtaining a cashier’s check from them.
Specialized Apps or Financial Technology (Fintech) Companies
Certain Fintech companies or mobile banking apps may provide cashier’s check services to their users. These services might be convenient and accessible through their platform, but availability may vary, and fees might apply. As with non-bank financial service providers, always verify the legitimacy of the FinTech company or app before requesting a cashier’s check.
See also: How to Get a Cashier’s Check
Comparing Cashier’s Checks, Money Orders, and Personal Checks
Each form of payment has its advantages and disadvantages, so it’s essential to understand when to use each type.
Cashier’s checks are ideal for large transactions, as they provide a higher level of security and trustworthiness. The funds are guaranteed by the financial institution, making it difficult for the recipient to dispute the payment.
Money orders are suitable for smaller transactions and can be purchased at various locations, including Walmart, convenience stores, grocery stores, gas stations, and the postal service. Money orders are less expensive than cashier’s checks but have lower maximum limits.
Personal checks are a convenient way to pay bills and make everyday purchases. However, they lack the security of cashier’s checks and money orders, as they can bounce if there are insufficient funds in your account.
Fees and Costs Associated with Cashier’s Checks
Fees for cashier’s checks vary depending on the financial institution. Traditional banks and credit unions often charge a fee for issuing a cashier’s check, while online banks may offer them for free or a lower fee. Walmart charges a maximum fee for money orders, which is generally less than the cost of a cashier’s check.
Although you cannot obtain a cashier’s check at Walmart, there are still many financial services available, including Walmart check cashing services, money orders, and bill pay. By understanding your financial options, you can make informed decisions about how to manage your money, whether that’s through a bank, credit union, or retail store like Walmart.
For further information about cashier’s checks, money orders, and other financial transactions, consult with your financial institution or explore additional resources available online.
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