Mortgage lenders have come a long way in the past decade. They used to approve loans without the need for income, asset, or employment documentation, and now they can verify all those things in seconds.
Yes, that was half a joke about the recent crisis and half a jab at the mortgage industry for continuing to reside in the Stone Age when it comes to underwriting and approving mortgages.
But it appears the sea change we’ve all been waiting for is well underway. Instead of printing out stacks of paperwork and faxing in documents, mortgage borrowers can now verify many key items digitally.
Perhaps this will shrink the average mortgage application from 500 pages to something a little more manageable. Maybe just 450 pages?
It could also speed things up, as Experian notes some loan approvals can take as long as 70 days. Oh, and let’s not forget the $42 billion price tag to process all these mortgages each year.
Experian Teams with Finicity to Automate Mortgages
In an effort to speed up mortgage applications
And make them less susceptible to fraud
Experian and Finicity launched a real-time Verification of Asset (VOA) Report
Along with a Verification of Income (VOI) Report to complement credit reports
The latest step forward in this department comes via a partnership between credit bureau Experian and real-time financial data-sharing company Finicity.
Together, we get Experian’s new “Digital Verification Solutions,” which among other things, will allow for asset and income verification. So instead of having to e-mail/fax your bank statements, paystubs, and tax returns, you can just provide access to such information with the click of a few buttons.
You simply authorize retrieval of your financial data and the company is able to gather, analyze, and send a verification report to your lender, all within minutes.
Their real-time Verification of Asset (VOA) Report gives lenders access to your checking, savings, 401(k) and brokerage accounts.
It contains important details such as average balance, minimum/maximum balance history, flags large deposits and withdrawal transactions, and verifies the account owner.
Their Verification of Income (VOI) Report provides data for up to 24 months, including average monthly income, frequency of income deposits, and income trends.
These automated reports are both more secure and less onerous for the consumer, and safer for the lender because it means less fraud and a lower chance of buybacks.
Ideally, it also means loan officers can spend more time originating mortgages, as opposed to chasing down customers for their latest bank statement, including ALL pages. And there’s no need for second requests because they have access to the data whenever they need it.
So far, their technology covers 80% of all financial institution accounts in the country, meaning you’ll probably be able to use this service whilst applying for a mortgage.
With this technology in place, Experian hopes to get the loan approval process down to as little as 10 days, maybe.
The credit bureau also hopes these new methods of verification will make it easier for those with limited or no credit history (~25% of the U.S. population) to get approved for a mortgage.
The idea is that most consumers have checking and savings account, along with payment obligations such as rent/utility/cell phone bills, which when verified (more easily) can demonstrate the ability to repay a mortgage.
Technology May Make It More Difficult to Get Approved for a Mortgage
While this new technology should make it quicker and easier to get a home loan
It will also lead to more loan denials for those unable to document their finances
At the moment borrowers can circumvent some rules thanks to outdated practices
But that’ll get a lot tougher once the data can’t be disputed or manipulated
Whenever you hear about these “disruptive” technologies, such as Rocket Mortgage from Quicken, it sounds like it’ll be quicker and easier to get approved for a mortgage.
The quick part makes sense, but the easier part is questionable at best. In reality, lenders and underwriters are still doing their typical diligence, just in a different manner or via new processes.
Now imagine if lenders were able to do a “deep dive” into your income and assets using technology, instead of just asking for bank statements from the past two months (which can easily be manipulated)?
Perhaps they’d be able to look at balances over time and income fluctuations and so forth, and then make assessments based on that more intricate data.
In short, technology could actually make it more difficult to fool the lender. We’ve already seen credit reports get an upgrade through the use of trended data, and if innovations like these catch on, it’ll be harder to game the system.
Of course, that’ll be a good thing for mortgage lenders and the housing market. Hopefully more good borrowers will be able to get mortgages while bad borrowers are kept out, a shift that may help us avoid another major crisis.
So you’ve been using the same outdated title production software for years and feel like you’re no longer getting the most bang for your buck. As your business grows, you need efficient software that can grow with you, but some questions hold you back. The four most common questions we hear from title professionals about their concerns with switching their software are:
What are the benefits of switching?
How will our team know how to use a new system?
Will our data be safe?
How much will it cost?
Follow along below for tips on addressing each of these questions and making a potential software transition as smooth as possible.
What are the benefits of switching?
New technology is changing the title industry at lightning speed. With a simple transition to new software, you can have all the tools you need to operate in this modern environment at peak efficiency. Some of the most sought-after benefits of the industry’s state-of-the-art technology are:
Out-of-the-box solutions that meet your immediate needs on day one
Customizable systems (with customizable prices) that can grow with your business as your needs expand
Automated processes to avoid repeating actions throughout the title process
Easy access to online tools like RON, eSign and secure wire transfers
Connections to all of your closing, title and escrow vendors in one place
If you’re considering making a switch to a different title production system, it’s important to determine if they have the technology and features you need to make your office more productive. And while the benefits of these added features may speak for themselves, you may still wonder about the process of actually switching and learning the new system. Follow along for more insight into how to make the transition process quick and easy.
How will our team know how to use a new system?
It may seem daunting, but getting to know your system can be broken down into three easy steps. The most important step toward mastering your new software system is gathering the input of your entire team to determine what tools and features everyone needs to succeed. Once your team makes those critical decisions, your software provider should create an easy roadmap for you to become an expert in no time.
Decide
There are many exciting decisions to make while switching or upgrading your software. It is essential for the entire team — from top managers to frontline employees — to be involved in the decision-making process. Taking the time to decide on the right features, tools and add-ons creates endless possibilities for your business. Though with the right software provider, there shouldn’t be any pressure to make every decision upfront, as you should always be able to add customizations down the road.
Learn
Once you decide what tools and features you need, it’s time to learn how to use them like a pro. Your software provider should have as many training opportunities as possible for you to be a pro on your first day using the new system. Studies show that in-person training is the most effective, but you should also have the option to participate in virtual sessions, especially if you need to accommodate remote employees in multiple locations.
Test
Testing your new software system is the final step before it goes live. Your new software should allow you to use sample files to test the new system before launching the real thing. This way, if you run into any problems during the test phase, you can fix them without interrupting your work.
These steps should allow you to overcome any learning curve before going live. Your customers and team members will only notice how much more efficient the process is rather than any bumps in the road.
Will our data be safe?
Title companies make extraordinary efforts to keep their client’s data safe. Your title software provider should place the same emphasis and importance on data security. But with outdated software, your client’s data may be vulnerable. Updating your software will give you access to the critical internal security measures that every software provider should have. These include:
Encrypted methods to transfer all data
Secure internal folder locations so only employees working on your account can access your information
Secure online meeting applications to communicate banking information
Ability to permanently delete any email containing sensitive information from the software provider’s system
A system of secure file transfers to move sensitive data internally
How much will it cost?
When switching software providers, the cost will heavily depend on:
The size of your organization
The number of states in which you operate
The number of employees who will use the software
Whether you complete both commercial and residential transactions
It’s a good idea to find a software provider that will allow you to start out with a standard framework that you can build on over time, especially if cost is a concern. Start small and make sure the software allows you to add more customized solutions later as your business grows. With a reputable software provider, you should never be surprised by hidden fees, sudden unreasonable increases or changes to the pricing structure of your title and escrow production system.
There should be no goodbye
Once your new system is fully implemented, you might think your software provider’s job is done. Not when you use SoftPro. We’re with you side by side the entire time you use our products. We’re your partners long after your implementation is complete to offer you any support you need. As your business grows, we’re here to grow with you. We take pride in building strong relationships with our customers and providing the best service in the industry. But don’t take our word for it, our customers speak for themselves. As your business grows, we’re here to grow with you.
If you’re ready for a new software partner or want to bring your SoftPro system to the next level, contact us or give us a call at 800-848-0143 today.
For a deeper look into all of the questions and answers above, click here to read SoftPro’s blog.
Wouldn’t it be nice if your mortgage lender could gather your income, asset, and employment information from a single digital document, similar to a credit report?
And instead of asking you to send over bank statements (all pages, even the blank ones!), recent pay stubs, two years of W-2’s, and employment information, simply asked you to verify a single bank account.
That’d probably make it a lot easier to get a mortgage, right? And perhaps a lot less frustrating too.
Single Source Validation Can Make Getting a Mortgage a Lot Easier
A new technology called Single Source Validation
Makes it faster and easier to verify borrower data
Such as income, assets, and employment
That look and feel similar to credit reports
Well, Fannie Mae has actually rolled out this technology via “Single Source Validation,” which as the name suggests, allows lenders to validate a variety of borrower attributes from one data source.
They’ve partnered up with a vendor called Finicity, a Salt Lake City-based company that can generate asset verification reports within Fannie Mae’s Desktop Underwriter (DU).
Another company called FormFree has also linked up with Fannie, and has a similar product called AccountChek, which facilitates the transmission of bank, retirement and investment account data.
These asset reports are then used to automatically verify three important items: income, assets, and employment.
Aside from being a lot easier on borrowers, this single source of data will also increase efficiency for mortgage lenders and speed up the loan process.
One early participant in the pilot program is Quicken Loans, which claims those who import income and asset documents can reduce the average length of the mortgage process by 12 days.
The company already offers the ability to digitally import financial documents, but this goes a step further by using asset data to identify employment and income information.
Put simply, it relies upon direct deposit information found in bank statements to pull income and employer info. And the assets are there too, so all the dots are connected automatically.
Quicken is offering this enhancement to all borrowers, not just those who applied via Rocket Mortgage.
A second participant, United Wholesale Mortgage (UWM), is offering this new capability to mortgage brokers who submit loans to the wholesaler.
This means all shops, whether big or small, will be able to streamline the cumbersome mortgage process going forward.
Source Data Can Reduce Fraud, Mistakes, and Turn Times
Aside from speeding things up and making it easier for borrowers
Single Source Validation should also reduce fraud and underwriting mistakes
Because borrowers will have a harder time fudging the numbers
Or not disclosing certain things in an effort to fool mortgage lenders
Aside from the convenience factor, the single source of data should eliminate fraud and mistakes, and reduce turn times.
As it stands now, a borrower has to upload bank statements, paystubs, and tax returns separately. Then the lender has to manually verify employment. This can lead to a lot of questions and confusion, and a lot of second and third requests for paperwork.
With a “Verification of Assets Report” from Finicity, which the borrower authorizes by granting access to certain bank account data, all of that information can be merged into a single report.
This should make it harder for borrowers to fudge the numbers and submit false paperwork, and it should reduce any inputting errors made by processors and/or underwriters.
Additionally, it might reduce mortgage delinquencies by ensuring borrowers are truly qualified for the mortgages they apply for.
Take a look at the sample report above, which provides a really detailed snapshot of a hypothetical borrower’s financials.
You get their name, address, asset information, 2-month and 6-month average daily balances of assets, asset totals by account, and transaction history in those accounts, broken down by category.
It looks a lot like a credit report, except instead of credit history it documents income, asset, and employment history.
This information can also be integrated into Fannie’s automated underwriting system to ensure it is inputted correctly.
That means lenders won’t have to worry about loan defects related to income, assets, and employment. And you never know, those cost savings could be passed onto consumers in the form of a lower mortgage rate.
Now imagine applying for a mortgage in the not-too-distant future, whereby you fill out an application online (or on your phone) and simply provide credentials so all your financial data can be accessed, merged, and analyzed.
And when combined with a credit report, could result in a real approval within minutes, assuming nothing mucks up the process.
It probably won’t be that easy for all borrowers, but for the plain vanilla W-2 borrower with one or two bank accounts working the same job for several years, these two reports could get them pretty far along in the process.
Throw in an appraisal waiver and you’ve got a mortgage in a week, if not days.
Assuming the pilot goes well, this new feature should be available to all Fannie Mae customers sometime in 2018.
Today we’ll check out “Own Up,” a new technology company that wants to be your mortgage co-pilot.
By that, they mean help you comparison shop for a home loan without having to jump through hoops or get badgered by salespeople. And stick with you every step of the way.
Aside from making the process faster and easier, they can apparently save you some serious dough too – to the tune of $27,102 in interest over the life of the loan (on average).
How Own Up Works
Complete an online profile on the Own Up website in about five minutes
Schedule a call with a dedicated home advisor to discuss your mortgage goals
Compare rates and fees from partner lenders on their platform and select the one you like best
Fill out the lender’s application and they’ll process, underwrite, and fund your loan
Instead of going to a bank or calling a lender to get a mortgage, you begin by creating a profile on the Own Up website.
While they refer to themselves as a tech company, they’re technically a mortgage broker, just on a larger scale, as opposed to a mom and pop shop.
They seem to be similar to Credible, the Fox-owned brokerage that operates a comparable mortgage marketplace for homeowners.
What this means for you is that Own Up acts as an intermediary between borrowers and mortgage lenders.
After you complete your anonymous online profile, you’ll be assigned a dedicated home advisor who will discuss your needs/goals, along with what to expect during the loan process.
You’ll then be able to compare lenders on the Own Up network and see loan offers (mortgage rates) from partner lenders in real-time.
They’re able to deliver personalized offers without requiring your social, and they only perform a soft credit check so your scores aren’t affected.
If you like what you see, simply fill out the corresponding lender’s digital mortgage application to formally apply.
The lender you select will then process, underwrite, and close the loan in typical fashion, with your Own Up home advisor standing by if and when you need them.
Why Use Own Up to Get a Mortgage?
As to why you would employ two companies instead of one to obtain your home loan, the answer appears to be savings.
Whether you’re buying a home or refinancing an existing mortgage, their customers save an average of $27,000 over the life of their loan.
They say they’re able to save customers money by charging much less than what the typical salesperson earns per loan.
Own Up charges participating lenders a flat 0.40% (40 basis points) of the loan amount, which is only due after the loan closes. They do not charge customers anything directly.
This compares to the industry average of 1.15% that the company says is typically charged by banks and lenders.
And because Own Up is able to streamline the origination process and effectively lower costs for its partners, they claim many of their lenders reduce their rates for their customers.
In other words, it might be possible to get your mortgage from the same exact company but obtain a lower mortgage rate via Own Up.
They negotiate terms with their lender network so you don’t have to, and because all lenders pay the same exact fee every time, they show you every offer exactly as they see it.
What Types of Loans Does Own Up Offer?
Because they act like a mortgage broker, they’re able to offer just about any type of home loan that their partner lenders originate.
This means you can get a home purchase loan or a refinance loan, along with a fixed-rate mortgage or an ARM.
You can get financing on a single-family home, condo, townhouse, or multi-unit investment property.
Similarly, you can choose from a variety of down payment options, including no- and low-down payment loan programs like FHA loans, VA loans, and so on.
They also claim to offer the industry’s first automated pre-approval letter, which allows you to generate updates on-demand from any device like your smartphone.
So if you’re shopping for a home, you can update any necessary information on the fly in minutes and present the listing agent with a tailored approval to strengthen your offer.
Which Lenders Does Own Up Work With?
As to who Own Up partners with, they say they handpick mortgage companies that are “reputable and financially secure.”
To ensure that, lenders must undergo what they refer to as a “rigorous screening process,” while agreeing to Own Up’s service level standards.
Additionally, they share all customer feedback and reviews with their lenders to improve performance going forward.
Since they offer a turnkey digital solution for lenders, their partners might include companies that aren’t as technically savvy, yet still want an online presence to target Millennial and Gen Z home buyers and homeowners.
This means you might get additional lender options that you may otherwise wouldn’t have considered.
That’s a good thing because more lender choice means the potential for a lower interest rate and/or reduced closing costs.
At the moment, Own Up is only available in a select number of states, including Colorado, Connecticut, Florida, Georgia, Maine, Massachusetts, Michigan, New Hampshire, Pennsylvania, Rhode Island, Tennessee, and Texas.
Should You Use Own Up?
The company’s goal is to save you time and money, and make it easier to get a home loan. Those are admirable goals and if they can accomplish them, they could be worth using.
But it should be noted that Own Up does not actually take formal mortgage applications, make credit decisions, or originate loans.
Rather, the information you submit to them acts as an inquiry to be matched with a lender that does the aforementioned things.
This isn’t necessarily a good or bad thing, but you should know what you’re getting.
Assuming you do find a lender using their service, you’ll need to complete a formal application and go through the typical home loan process. That’s pretty much unavoidable.
The good news is that their service, at a minimum, seems to allow you to comparison shop without much heavy lifting, similar to how a mortgage broker works.
The difference is that you can shop anonymously with Own Up and simply decide not to use any of their partners if you don’t like what you see.
Aside from the built-in comparison shopping, you also get a loan guide who can provide unbiased guidance and feedback without the usual sales pitch.
Additionally, even if you already have a loan offer or two, they say they’re able to negotiate better terms with your lender. I’m not sure how they do that, but it sounds pretty good.
In summary, Own Up might be a good choice for someone looking for multiple mortgage quotes who doesn’t want to put in all the work or get bombarded with emails and phone calls.
I wrote a while back that more than half of consumers switched mortgage companies when obtaining a subsequent home loan.
The message was pretty clear – there’s not much loyalty in the mortgage business.
Ultimately, it’s hard to be loyal if there’s a better deal to be had elsewhere, or if someone else is offering to treat you better.
In an effort to combat that, and improve customer retention in the homes loans business, lenders are beginning to take things a lot more seriously.
Homebot Engages Past Customers with Real Data
For example, last year Guild Mortgage partnered with Homebot to deliver regular, customized home financing digests to its existing customers.
Their automated marketing platform allows loan officers to present past customers with relevant data, economic insights, and other market intelligence.
Most importantly, it helps them stay connected with homeowners long after the mortgage has funded.
As part of that agreement, Guild Mortgage’s 1,100+ loan officers have access to Homebot’s “Lender Base” software to serve its ongoing customer retention initiative.
Many other mortgage lenders have also partnered up, including Planet Home Lending, Citywide Home Loans, and Cherry Creek Mortgage.
HouseCanary’s ComeHome Wants Your Customers to Come Back
In late 2019, HouseCanary launched ComeHome, a proprietary platform used to attract, retain and even convert customers.
It creates an ongoing relationship with the homeowner that focuses on what’s probably their largest asset.
The ComeHome solution allows lenders to inform homeowners of “opportunities,” such as the ability to refinance, or tap home equity via a line of credit (HELOC).
Most importantly, it makes it easier for mortgage lenders and their originators to engage their customers more frequently using technology as opposed to cold calls and direct mail.
And it’s not just ballpark estimates or generic copy, but rather real data backed by HouseCanary’s automated valuation model.
For example, customers can be informed that certain home improvements may increase their home value by X, using cash from known available equity in the property.
Customers also get a direct path to the loan officer when they’re ready to take action, another important consideration.
Ultimately, the software is in place to ensure you are the homeowner’s first choice for refinancing a mortgage, taking out a home equity loan, or even financing a next home purchase.
Because sometimes simply being first is good enough. The path of least resistance is usually the path taken.
Clearly that’s better than sending your client a notepad with your name on it, or a postcard in the mail with a joke on it.
Quicken Loans’ Cyclops Sees You
Then we have “Cyclops,” a mortgage servicing customer relationship management (CRM) software built by none other than Quicken Loans, the nation’s largest retail home loan lender.
The company developed the Cyclops software in 2016 at its Detroit headquarters, and recently sold the source code to Black Knight.
Like the aforementioned solutions, it provides “highly personalized information about loans, homes and neighborhoods” to existing customers.
For example, a loan originator can use the property’s current value to present refinance and home equity opportunities to borrowers.
It provides an omni-channel customer experience where the borrower can interact with the lender or loan servicer however and whenever they please, which may also increase customer retention.
But Still…Shop Around and Be Prudent
While all this new technology sounds awesome, and is awesome compared to a flyer that winds up in your recycle bin, a few words of caution.
First, don’t take these cool data visualizations as an invitation to refinance your mortgage every six months.
While there’s a good chance you’ve got some equity in your home, it doesn’t necessarily need to be tapped. There are other ways to pay for home renovations.
It may also not be in your best interest to fiddle with your mortgage, even if presented with a really compelling case using artificial intelligence.
Additionally, just because a lender contacts you first doesn’t mean you should use them, or feel any obligation to do so.
While they might have put the idea in your head, still do your due diligence and take the time to shop around with other lenders to see what they have to offer.
It’s pretty shocking that just 2% of consumers choose a mortgage lender for the best interest rate. And that’s exactly why these keeping-in-touch products will work.
Whether you’re looking to take your real estate business to the next level or are ready to start thinking about retirement, this episode is for you. On today’s podcast, Stephanie Heiser interviews Jessica and Justin Ball about succession planning for real estate agents. Tune in and learn more about one of the best lead sources in the business. In addition to talking about inheriting another agent’s book of business, Jessica and Justin explain why all agents should have a succession plan of their own.
Listen to today’s show and learn:
Commercial and residential real estate compared [3:48]
About The Jessica Ball Team [4:15]
Succession planning for real estate agents [7:00]
How Jessica and Justin wrote Succession Planning for Real Estate Agents [9:43]
Inheriting another agent’s sphere of influence [11:51]
About Jessica and Justin’s book on succession planning [13:47]
Why broker owners should know the ins and outs of succession planning [16:38]
Jessica and Justin’s experience inheriting other agents’ business [17:54]
How to find the right successor [26:22]
Jessica Ball’s start in real estate [31:00]
Co-marketing and co-branding [33:52]
Why all agents should consider a succession plan [34:54]
Bringing different skill sets together for a successful business [37:40]
Getting over the fear of growth [40:34]
Jessica and Justin’s goals for the future [49:19]
Where to learn more from Jessica and Justin Ball [51:45]
Jessica and Justin Ball
Jessica Ball is a Realtor, the president and team leader of The Jessica Ball Team – RE/MAX Traders Unlimited (BALL HOMES LLC) in Peoria, Illinois, a speaker at national conferences, and has worked through several succession plans with seasoned real estate agents to transition and monetize their books of business as they retire from actively selling real estate. Throughout the first succession plan, Jessica and her team were able to improve on the succession plan that her partner had gone through 15 years earlier when he had done a succession plan with another retiring agent. The planning for this succession is what really started this book as she realized the lack of information for other real estate agents, their successors, retirees and others in similar positions in the industry.
Justin Ball is a Realtor, a commercial broker with The Jessica Ball Team RE/MAX Traders Un-limited (Ball Homes LLC), and serves as a Vice President of Bradley University. His background in customer relationship management (CRM) systems, marketing, lead generation, and sales funnels supports the team as it continues to grow and as the industry of real estate changes faster than it ever has with the introduction of new technology. He contributes to succession planning most di-rectly in helping to facilitate co-branding and co-marketing efforts, as well as valuing the book of business for beginning to craft an initial succession plan contract.
Related Links and Resources:
Thank You Rockstars! It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email. -Aaron Amuchastegui
Now, AI is not the future of the mortgage industry – it is the present. Shannon Johnson (pictured), product manager at Tavant, has worked in the mortgage industry for almost 35 years, starting as a loan processor, and has seen how much the field has changed technologically over the decades. “When I started in the … [Read more…]
David Walker is well aware that large language models such as ChatGPT, which was trained on the entire internet, can hallucinate. They can even make up historical events that never happened.
“They can tell lies, they can make up information,” said Walker, who is chief technology officer of Westpac, in an interview. “They’re incredibly powerful.”
The bank, which is based in Sydney and has more than 12 million customers, can’t afford to let a public version of ChatGPT make up or hallucinate answers for customers or employees who use a virtual assistant. GPT (generative pre-trained transformer) models are artificial neural networks that are pre-trained on large data sets of unlabelled text, and able to generate humanlike content.
But Walker does want to give employees and customers the ChatGPT experience of humanlike answers to their questions — if it can be done safely, with assurance the answers are accurate.
The bank is working with Kasisto to test its Kai-GPT, a large language model trained only on conversations and data in the banking industry.
“Hallucination in public AI models is unavoidable and can get pretty bad,” said Zor Gorelov, CEO of Kasisto, in an interview. This is why banking GPTs need accuracy, transparency, trust and customizability, he said.
This is also why banks like Westpac will focus on internal use cases for generative AI — giving it to front-line bankers, contact center agents and mortgage workers, Gorelov said. Westpac will train Kai-GPT on its proprietary content, and thereby dramatically reduce the risk that the system will hallucinate, Gorelov said.
Walker hopes to provide more complete and more conversational help to customers and staff, for instance, in the mortgage lending process.
“When people apply for a home loan, they have to fill in lots of forms,” Walker said. “We need to know who you are, we need to know all kinds of things about you. This is going to aid us in checking the quality of information coming in, so it’s going to stop us having to go backwards and forwards to our customers. It’s going to streamline the process. It’s going to help our customers, it’s going to help our lending staff, and it’s going to make things much more straight through and seamless.”
Other banks are likely to do similar experimentation over the next two years, according to Peter Wannemacher, principal analyst, digital banking at Forrester.
“Specialist tools built on top of a large language model will be launched by vendors, traditional financial institutions and fintechs,” Wannemacher said. “Most traditional financial institutions will start by focusing on employee-facing generative tools, rather than exposing a chatbot built on top of a large language model directly to the end user.”
But he also thinks banks will proceed with caution.
“Large language models have suddenly become both better and widely utilized, but they still fail spectacularly and can even generate totally wrong, even fraudulent outputs,” Wannemacher said. “Money is a highly sensitive area of people’s lives, and traditional banks will rightly resist launching anything customer-facing until they have a much better sense of what can go wrong and how to address it.”
To prevent Kai-GPT from answering a question based on information from another bank that doesn’t pertain to Westpac, Walker is using what he calls layering. One layer of the model is trained on data and conversations from many banks. Another layer is trained on information specific to Westpac, such as its policy documents, forms and websites and recordings of conversations in the bank’s contact centers.
“As it formulates an answer, to work out the intent of the question, it will draw on that industry layer,” Walker said. “It’s got the knowledge of all those conversations from all those banks and it’ll be smarter because of that. But it’ll draw even deeper down into the Westpac-specific model when you’re talking about terms of a home loan or a deposit interest rate. Those layers work together to formulate these really rich, wonderful answers, but in an accurate and concise way.”
Using as much data as possible gives a richness and precision to answers, Walker said: “It’s still a matter of identifying what you want to train on and what knowledge you need the GPT engine to understand.”
The bank is moving slowly for now to ensure the new technology fits within its responsible AI policy and “how we think ethically about protecting our staff and our customers,” Walker said. “We want to make sure that we don’t run ahead too fast and throw something out there that could do harm. We have the principle ‘do no harm.’ It’s sort of fundamental.”
The first go-live of Kai-GPT at Westpac will be in mortgage operations. Over the next few months, the bank will workshop the use of the technology in the loan application process to help borrowers know what forms they should use and what information the bank needs to receive, which should help speed up the process for the bank.
Once Walker’s team feels confident about Kai-GPT’s ability to help employees and customers and do no harm, he thinks he’ll be able to quickly deploy it to other areas of the bank.
The key advantage of a large language model over earlier generations of chatbots in use at Westpac is the richness of the answers it can provide, Walker said.
“It provides an answer in a way that’s more like a human talking to a human, so customers or employees feel like they’re getting the information they need rather than just sharp one-liners,” he said. “We think this is quite a game changer when it comes to this next generation of working with artificial intelligence.”
Westpac already uses Kasisto’s Kai software as an orchestrator of other chatbots the bank uses in areas like service management, human resources and risk management. If an employee can’t remember which bot to go to for information, he or she can go to the orchestrator and get routed to the right chatbot.
“We thought that that was a very powerful way to handle conversation and we’ve found that really useful,” Walker said. “It’s a one-stop-shop entry point.”
Kai-GPT was trained on Kasisto’s own data, data from other banks Kasisto works with and information gleaned from financial websites, SEC filings and other sources.
“Our goal is to create the best large language model in the world designed for banking and financial services and achieve what we call artificial financial intelligence,” Gorelov said. “We feel that our job is to help our customers of all sizes to have the highest performing large language model that is designed and built for banking that provides accurate responses and knows more about banking than most bankers do.”
Kai-GPT is transparent, Gorelov said, in terms of the data and methodology used for its training.
“It is trusted, because we’ve worked with banks over the past 10 years,” he said. “We know how precise they are, how demanding they are when it comes to personally identifiable information and proprietary content.”
The program is also customizable, so banks can inject their own content and make it work better on their own data sets.
The bigger the data set and the more questions a large language model is capable of answering, the more important and difficult to enforce guardrails become.
“The world went from prescriptive AI, where every intent, every response needed to be designed manually to generative AI, where you no longer need to anticipate every user’s question and retrain the model when something new comes up,” Gorelov said. “It’s a different world we live in and we’re quite excited about it. But guardrails and the AI protection, transparency, visibility of sources, those issues become more and more important.”
Generally speaking, value stocks are shares of companies that have fallen out of favor and are valued less than their actual worth. Growth stocks are shares of companies that demonstrate a strong potential to increase revenue or earnings thereby ramping up their stock price. The terms value and growth refer to both two categories of stocks and two investment “styles” or approaches of investing in stock.
Each style has pros and cons. When value investing, investors can buy shares or fractional shares of a company that has strong fundamentals at bargain prices. However, investors must be careful not to fall in a “value trap”—buying stocks that appear cheap, but are actually trading at a discount due to poor fundamentals.
What Are Value Stocks?
When investors hunt for value stocks, they are looking for stocks that are relatively cheap, unfashionable, or that they believe aren’t receiving a fair market valuation. Value investors try to identify value stocks by examining quarterly and annual financial statements and comparing what they see to the price the stock is getting on the market.
Investors will also look at a number of valuation metrics to determine whether the stock is cheap relative to its own trading history, its industry, and other benchmarks, such as the S&P 500 index.
For example, investors often look at price-to-earnings (P/E) ratio, which is the ratio of price per share over earnings per share. Some experts say that a value stock’s P/E should be 40% less than the stock’s highest P/E in the previous five years.
Investors may also look at price-to-book, which is the price per share over book value per share. A stock’s book value is a company’s total assets minus its liability and provides an estimate of a company’s value if it were liquidated.
Value investors are hoping to buy a quality stock when its price is in a temporary lull, holding it until the market corrects and the stock price goes up to a point that better reflects the underlying value of the company.
What Could Make a Stock Undervalued?
There are a number of reasons that a stock could be undervalued.
• A stock could be cyclical, meaning it’s tied to the movements of the market. While the company itself might be strong, market fluctuations may temporarily cause its price to dip.
Recommended: Cyclical vs Non Cyclical Stocks
• An entire sector of the market could be out of favor, causing the price of a specific stock to dip. For example, a pharmaceutical company with an effective new drug might be priced low if the health care sector is generally on the outs with investors.
• Bad press could cause share prices to drop.
• Companies can simply be overlooked by investors looking in a different direction.
What Are Growth Stocks?
Growth stocks are shares of companies that demonstrate the potential for high earnings or sales, often rising faster than the rest of the market. These companies tend to reinvest their earnings back into their business to continue their company’s growth spurt, as opposed to paying out dividends to shareholders. Growth investors are betting that a company that’s growing fast now, will continue to grow quickly in the future.
To spot growth stocks, investors look for companies that are not only expanding rapidly but may be leaders in their industry. For example, a company may have developed a new technology that gives it a competitive edge over similar companies.
There are also a number of metrics growth investors may examine to help them identify growth stocks. First, investors may look at price-to-sales (P/S), or price per share over sales per share. Not all growth companies are profitable, and P/S allows investors to see how quickly a company is expanding without factoring in its costs.
Investors may also look at price-to-earnings growth (PEG), which is P/E over projected earnings growth. A PEG of 1 or more typically suggests that investors are overvaluing a stock, while PEG of less than one may mean the stock is relatively cheap. PEG is a useful metric for investors who want to consider both value and growth investing.
Investors jumping into growth stocks may be buying a stock that is already valued relatively high. In doing so, they run the risk of losing a potentially significant amount of money if an unforeseen event causes prices to tumble in the future.
How Are Growth and Value Strategies Similar?
While growth and value investing are two different investment strategies, distinctions between the two are not hard and fast — there can be quite a bit of overlap. Investors may see that stocks listed in a growth fund are also listed in a value fund depending on the criteria used to choose the stock.
What’s more, growth stocks may evolve into value stocks, and value stocks can become growth stocks. For example, say a small technology company develops a new product that attracts a lot of investor attention and it starts to use that capital to grow its business more quickly, shifting from value to growth.
Investors practicing growth and value strategies also have the same end goal in mind: They want to buy stocks when they are relatively cheap and sell them again when prices have gone up. Value investors are simply looking to do this with companies that are already on solid financial footing, and hopefully, see stock price appreciation should rise as a result. And growth investors are looking for companies with a lot of potential whose stock price will hopefully jump in the future.
Using Growth and Value Strategies Together
The stock market goes through natural cycles during which either growth or value stocks will be up. Investors who want to capture the potential benefits of each may choose to employ both strategies over the long term. Doing so may add diversity to an investor’s portfolio and head off the temptation to chase trends if one style pulls ahead of the other.
Investors who don’t want to analyze individual stocks for growth or value potential can access these strategies through growth or value funds. Because of the cyclical nature of growth and value investing, investors may want to keep a close eye on their portfolios to ensure they stay balanced — and consider rebalancing their portfolio if market cycles shift their asset allocation.
The Takeaway
Growth and value are different strategies for investing in stocks. Investing in growth stocks is considered a bit riskier, though it also may provide potentially higher returns than value investing. That said, growth stocks have not always outperformed value stocks.
As a result, some investors may choose to build a diversified portfolio that includes each style so they have a better chance of reaping benefits when one is outperforming the other.
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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.
1. Cash
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.
4. Checks
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.
8. PayPal
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
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.
Key Facts:
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.
Money orders
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
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
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
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.
FAQs
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.
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