Cash Back Archives - Dinosaur-Replicas

January 16, 2021

Can you send money with a credit card?

Sending cash to friends and family? Before you reach for that credit card, grab a calculator. Itâs time to do a little math.

With most everything you purchase online or through apps, credit cards have the edge. With plastic, you have chargeback rights. If youâre overcharged or receive the wrong item, broken merchandise or nothing at all, your card issuer will make it right. And if you use a rewards card, you collect points or miles, too. Win-win.

But itâs different story when youâre sending money through peer-to-peer platforms. Many of them (like Google Pay, Popmoney and Zelle), donât allow consumers to use a credit card to send cash.

Others (like Cash App, PayPal and Venmo), allow credit cards but also charge a fee for the privilege â often about 3%.

See related: How to choose a P2P payment service

The hidden costs of using credit cards to send money

Choose a credit card to send money and you might also end up paying additional fees to your card issuer. Thatâs because the combination of some peer-to-peer apps with certain cards are coded as cash advances, rather than purchases.

For many cards, that cash advance code triggers a higher interest rate that kicks in the moment you make the transaction, as well as a separate cash advance fee thatâs often $10 or 5% of the transaction â whichever is higher. (Currently, the average interest rate for cash advances is 24.8%, while the average APR for purchases is 16.05%.)

So the combination of peer-to-peer service fees, credit card cash advance fees and that higher interest rate (with no grace period) could make sending a few hundred dollars a bit more costly than youâd planned.

No chargeback rights with credit cards

The real kicker: Unlike other venues, you donât have chargeback rights when you use credit cards to make peer-to-peer money transfers.

When you present your credit card in an online or brick-and-mortar store, thereâs a merchant involved â and the law provides chargeback rights for your protection in case you donât get what you were promised in the deal. But in a peer-to-peer money transfer, thereâs no merchant, so currently the laws donât give consumers any chargeback rights, says Christina Tetreault, manager of financial policy for Consumer Reports.

âThe chargeback right requires a merchant,â says Tetreault. âOne of the hoops a consumer has to jump through is to try and work it out with the merchant.â

If you use a peer-to-peer service and send the wrong amount or send the money to the wrong person, most platforms advise that the only way to get it back is to contact the recipient and ask them to return it. And thatâs often the same whether you use a credit card, debit card, bank account or funded account on the platform.

âBe doubly sure when youâre sending the money that youâre putting in the correct information,â says John Breyault, vice president of public policy, telecommunications and fraud for the National Consumers League. âItâs still a buyer beware world when it comes to peer-to-peer.â

The solution

If youâre sending money and want to use a credit card, it pays to do a little sleuthing first. Check out the peer-to-peer site. Does it allow users to send money with a credit card? If so what, if any, fees does it charge?

On some platforms (PayPal is one), you could see similar fees for using a debit card â while sending from a bank account or funded account on the platform is free.

The good news is that many peer-to-peer platforms clearly disclose it when thereâs an extra charge to use a credit card, says Tetreault. With Venmo, for example, youâll get a pop-up message.

Harder to decipher: Will credit card transactions on the platform be treated as a cash advance? If your preferred platform doesnât post this information, you might need to contact customer service. (And how quickly and easily you get an answer can tell you a lot, too.)

Ask your card issuer the same question: Are peer-to-peer money transfers on the platform youâve chosen treated as a cash advance? If they are, whatâs the interest rate, and whatâs the cash advance fee?

âWhat I would suggest is to ask that question, via email, of your financial institution,â says Tetreault. âIt may be in their FAQs. And you want to save that email. If you have it in writing, if thereâs an issue later, youâre better positioned to contest that fee.â

But âthe hard truth is you may not be able to find out ahead of time,â she says.

Another solution: Opt to use a credit card issued by a credit union.

âWith credit unions, the APR is usually the sameâ for purchases and cash advances, says John Bratsakis, president and CEO of the Maryland and District of Columbia Credit Union Association.

Likewise, with American Express cards you pay your regular interest rate and no cash advance fees on peer-to-peer transfers, says Elizabeth Crosta, vice president of public affairs for American Express.

And credit cards from U.S. Bank register peer-to-peer money transfers as regular purchases â with no cash advance fees or cash advance APRs, says Rick Rothacker, spokesperson for the bank.

See related: How do credit card APRs work?

Whatâs your reason for using a credit card?

Take a good look at the reason youâre using a credit card, too. If you want chargeback rights, thatâs not an option. If youâre doing it for the rewards, will the value of those points or miles be eaten up by extra fees or a higher interest rate you have to pay to use the card?

And if youâre using a card because you donât have the cash, that might be a good reason to rethink the idea of sending money in the first place.

Thatâs a huge red flag, says Bruce McClary, vice president of public relations at theÂ National Foundation for Credit Counseling.

âThe need to convert credit into cash is what really gets my attention â because that hints at a lack of savings,â he said. âItâs a reality a lot of people are facing, especially now.â

Cash advances arenât as expensive or risky as payday loans and car title loans, but they should be among your last resorts. If you’re looking for short-term relief, you could ask your credit card issuer for help, or find out if you qualify for a personal loan. You could also borrow from a family member or trusted friend, but be wary of the potential relationship toll if you can’t pay them back.

Getting cash from credit cards

Fifty-two percent of Americans report that the pandemic has damaged their finances, according to a recent survey by the NFCC. More than a fifth of those had to tap savings for everyday expenses, while 16% increased their credit card spending.

And thatâs a sign of financial stress, says McClary. âIt means that, in some situations, they have run out of savings.â

There are ways you can use your card to get cash, though.

Cashing in rewards

Some rewards cards from issuers such as Chase, Bank of America and US Bank let you deposit cash-back rewards directly to your bank account.

And Wells Fargo also will let you deposit its Go Far Rewards directly into another Wells Fargo customerâs account, says Sarah DuBois, spokesperson for the bank.

Gift cards

Many credit cards let you convert rewards into retail gift cards. So a pile of points can help a friend or family member buy much-needed groceries or a few holiday presents.

Or simply âbuy a gift card for someone,â says Bratsakis.

Retailer-specific gift cards and gift cards issued through local and regional retail associations and malls often come with no fees â meaning every dollar you spend goes toward your gift.

Convenience checks

While you can get a cash advance or use convenience checks from your card issuer, both those options often come with fees and higher interest rates. Not a smart money move, especially in the current economy.

While some lenders may offer convenience checks with deferred interest, thatâs not the same as âno interest,â says Bratsakis. Also, if you donât pay the loan in full, will you owe the full interest retroactively?

âThatâs where consumers have to be careful,â he says. With a convenience check or even a cash advance, âthatâs usually where consumers can get themselves into trouble if they canât pay it off and get hit with deferred interest.â

See related: What is deferred interest?

Bottom line

When it comes to peer-to-peer payments, cash really is king. You can then put it into a funded account with the money transfer platform or your bank account. And most peer-to-peer platforms let you do this for free.

âThe safest way to use these services is to send money person-to-person and be diligent about getting all the details correct so it doesnât go to the wrong person,â says Tetreault.

Only send to people you trust and know in real life, she says. âAnd before sending money make sure you understand what, if any, fees you might incur.â

Source: creditcards.com

January 16, 2021

Should You Help a Family Member in Debt? – SmartAsset

Tap on the profile icon to edit
your financial details.

Watching loved ones struggle with their personal finances is never fun, especially when you’re doing relatively well yourself. But before you rush to the aid of your mother, your brother or your favorite cousin, it’s a good idea to consider how that might impact your own financial situation. Check out some of the pros and cons of loaning money to a family member in debt.

Check out our personal loans calculator.

The Pros

Being able to support a family member who’s facing a financial difficulty can make you feel good about yourself. You’ll have the opportunity to work together to implement good financial strategies and in the process, you might learn something that can help you manage your own money more effectively. And since you can never be completely sure about your own financial future, helping your relative get back on track might provide you with a safety net that you can rely on if you need help from that same relative later down the line.

It’s important to take the time to sit down with your relative and discuss what has worked well for you financially in the past. You can help him or her create a tighter budget (with loan repayments to you built in) and connect him or her with a professional financial advisor or credit counselor if need be. The more comfortable your family member is with talking about money, the better the experience is likely to be.

The Cons

When it comes down to it, helping family members out of debt is a big deal financially speaking. Before you make that move, it’s best to think about how it could affect your relationship. You run the risk of turning your personal relationship into a business transaction, and you might feel like money is all you talk about. Eventually, it might create tension or lead a serious disagreement.

You could also make yourself financially vulnerable by lending a family member a portion of your wealth. If you choose to let someone borrow your money, keep in mind that you don’t want to lend any amount that could get you into trouble.

Related Article: 5 Tips for Lending Money to Friends or Family

Important Questions to Ask Yourself

As you weigh the advantages and disadvantages of lending money to a relative, there are several things you’ll need to clear up. Will this be a temporary situation or an ongoing arrangement? A gift or a loan? Can they afford to pay you back at some point? What will you do if they can’t?

You’ll also have to consider whether providing someone with a loan is a good use of your money. Instead of relying on you, could your family member turn to debt management, debt settlement or bankruptcy? Are there other ways you can help?

Related Article: 4 Signs It’s Time to File Bankruptcy

Final Word

Deciding how to assist a family member in need isn’t easy. As an alternative to becoming your relative’s sole source of financial support, (or turning down his or her request) you can always offer to fund part of the debt repayments. Managing your expectations and finding a happy medium that won’t jeopardize your chances of achieving financial success are key.

Photo credit: ©iStock.com/Ocskaymark, ©iStock.com/Christopher Futcher, ©iStock.com/SoumenNath

Liz Smith Liz Smith is a graduate of New York University and has been passionate about helping people make better financial decisions since her college days. Liz has been writing for SmartAsset for more than four years. Her areas of expertise include retirement, credit cards and savings. She also focuses on all money issues for millennials. Liz’s articles have been featured across the web, including on AOL Finance, Business Insider and WNBC. The biggest personal finance mistake she sees people making: not contributing to retirement early in their careers.

Read next article

Source: smartasset.com

January 16, 2021

The Millennial Guide to Getting a Personal Loan

The Millennial Guide to Getting a Personal Loan – SmartAsset

Tap on the profile icon to edit
your financial details.

Personal loans have made something of a comeback over the last few years thanks to the rise of online lending. According to TransUnion, the number of consumers who are using personal loans jumped by 18% between Q3 2013 and Q3 2015. Millennials, in particular, are increasingly relying on them to consolidate debt or finance big purchases. Here’s a rundown of what 20-somethings need to know about applying for a personal loan.

Online Lenders and Traditional Banks Aren’t the Same

In the past, if you needed to borrow money you had to head to a brick-and-mortar bank to do it. The online personal loan industry has changed all that and millennials have more choices when they need loans. There are, however, some differences to keep in mind.

Because online banks tend to have fewer overhead costs, they can often afford to offer the most credit-worthy borrowers lower interest rates than traditional banks. They may also charge fewer fees. With a regular bank, however, you’ve got the advantage of dealing with a loan officer face-to-face, which may come in handy if you have a question or a problem later on.

Many online lenders also take a different approach when it comes to underwriting. Upstart and SoFi, for example, cater to millennial borrowers and both consider not just your credit score and your income but your long-term financial outlook when making lending decisions. With a traditional bank, your personal merits are less likely to factor into whether or not you’re able to get approved.

Check Your Credit Before You Apply

Even though online lenders may be a bit more flexible, they’re still going to take a look at your credit score when you apply. Considering that some online lenders charge interest rates as high as 36%, you need to know what kind of deal you can expect to get.

Take a look at your credit report from each of the three credit reporting bureaus – Equifax, Experian and TransUnion – to make sure your accounts are being reported properly. If you see an error, it’s best to dispute it as soon as possible. Otherwise, it could pull your score down and you could end up with a higher interest rate on a personal loan.

If you’re still in your 20s and you don’t have a substantial credit history yet, you might face an uphill climb to getting a loan. Paying your student loans and other bills on time each month and applying for a secured credit card with a low limit are two effective ways to establish credit. Payment history accounts for 35% of your FICO score so it’s a good idea to focus on that area if you’re aiming to get a personal loan with the best rates.

Crunch the Numbers on the Payoff

Personal loans aren’t open-ended, which means you have a fixed amount of time to pay them back. Depending on the lender, the loan term may last anywhere from one to five years.

If you’re in your 20s and you’re not making a lot or you’re balancing student loan payments, you need to be sure that you can afford the monthly personal loan payments. Missing a payment could do serious damage to your credit. Doing the math is also important where the interest is concerned.

For example, let’s say you want to borrow $5,000 to consolidate credit card debt. Bank A offers you a 3-year loan with a 12% simple interest rate while Bank B is offering you a 5-year term at a 10% simple interest rate. On the surface, the lower rate seems like the better deal but if you go with Bank B, you’ll end up paying at least $700 more in interest.

If you’re on the lookout for a loan, using our personal loan calculator can help you figure out the true cost of borrowing.

Photo credit: ©iStock.com/Lorraine Boogich, ©iStock.com/filo, ©iStock.com/GlobalStock

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.

Read next article

Source: smartasset.com

January 15, 2021

The Best Cities for Motorcycle Owners – SmartAsset

Tap on the profile icon to edit
your financial details.

According to the U.S. Department of Transportation, as of 2012 there were at least 8.4 million registered motorcycles in the United States (a number that has likely risen in the past four years as the economy has strengthened and auto sales have ballooned). That’s a lot of hogs – about one for every 37 people in the U.S.

Need a boost to get that bike? Find out what loan options are available to you.

In some states, the concentration is even greater. South Dakota, for example, has one registered motorcycle for every 11 residents.

There are numerous factors that might make some places better for motorcyclists than others. Weather is an obvious one. Going for a ride is a lot more pleasant if it isn’t pouring rain.

Likewise, frigid temperatures can push even the most die-hard motorcycle owner to consider an alternate means of transportation. For many motorcyclists, access to the open road is also important. A few hours of traffic can suck the fun right out of an afternoon joyride.

So what are the best cities for motorcycle owners? To answer that question, SmartAsset analyzed data on every U.S. city with a population of at least 150,000. Along with the weather and traffic congestion in these cities, we also looked at such metrics as the state max speed limit on highways and the number of registered motorcycles per capita. (Read our full methodology below.)

Try SmartAsset’s personal loan calculator to find out how long it would take you to pay off a personal loan.

Key Findings

Best rides out west. With its many natural wonders and its long stretches of open road, the American West is something of a playground for motorcycle enthusiasts. It probably comes as no surprise that seven of the top ten cities in SmartAsset’s analysis are out west.
Southern California has best motorcycling weather. Seaside cities like Oxnard and Chula Vista have weather that is warm and dry year round. Incredibly, San Diego records zero days a year in which the average max temperature is less than 40 or higher than 90.

1. Fort Collins, Colorado

Why is Fort Collins the best city in the U.S. for motorcycle owners?

First, take a look at the location. Along the Front Range of the Rocky Mountains and 40 miles south of the Wyoming border, Fort Collins is surrounded by breathtaking scenery and opportunities for great rides. For instance, a loop through the Roosevelt National Forest, up to Laramie, Wyoming, and back down to Fort Collins would cover 220 miles of mountains and valleys in about four and a half hours.

Next, check out the traffic (or lack thereof). Motorists in Fort Collins spend an average of less than 20 hours per year sitting in traffic, making it one of the 20 least-congested cities in SmartAsset’s analysis. Colorado also has some of the lowest gas taxes in the country, with a state tax of just 22 cents per gallon.

2. Sioux Falls, South Dakota

South Dakota, which is one of the top states for an early retirement, may also be the best state for motorcyclists. Drive along I-90 on any summer day and you are sure to see numerous packs of motorcycles zipping along. The state is home to what may be the world’s largest annual gathering of motorcycle owners, the Sturgis Motorcycle Rally, which in 2015 drew an astonishing 739,000 people.

While that rally is located across the state from Sioux Falls, there are plenty of reasons motorcycle owners will be happy in South Dakota’s largest city. (Sturgis and nearby Rapid City were not included in SmartAsset’s study as their population is less than 150,000.)

The average motorist in Sioux Falls spends just 15 hours per year in traffic, ninth-lowest among the cities we analyzed. Likewise, given the city’s strong economy and low housing costs, motorcycle owners should have some spare income to spend on the upkeep and improvement of their motorcycle collection.

3. Boise, Idaho

Located in central Idaho’s Treasure Valley, Boise is within a day’s ride of many of the country’s most beautiful regions. It is less than eight hours from Yellowstone National Park, less than eight hours from Lake Tahoe and less than eight hours to Oregon’s Cannon Beach. Utah’s Arches National Park is about eight hours and 15 minutes away from Boise.

4. Santa Clarita, California

Santa Clarita is located in Los Angeles County, but unlike in the City of Angels, traffic in Santa Clarita is not a major problem. In fact the average commuter in Santa Clarita spends less than 15 hours per year sitting in traffic. (LA motorists, in contrast, spend 80 hours in traffic.)

While bypassing the bad traffic, motorcycle owners in Santa Clarita still get to enjoy Southern California’s scenic mountain roads and warm weather. The city averages just 23.9 days per year in which precipitation exceeds 0.1 inches.

5. Overland Park, Kansas

Overland Park is the second largest city in the state of Kansas. Of the 171 cities in SmartAsset’s analysis, it has the 14^th highest income after housing costs (like mortgage payments and insurance). That means motorcyclists should have spare money to spend on motorcycle repairs and improvements.

Overland Park also has the 16^th lowest property crime rate of the cities in SmartAsset’s analysis. There were just 279 auto thefts in the city in 2014, 1.5 for every 1,000 residents.

6. McKinney, Texas

McKinney is about 30 miles north of Dallas, but when it comes to traffic it is a world apart. In fact, the average motorist in McKinney spends just nine hours a year in traffic congestion, according to the Texas A&M Transportation Institute. That is lowest of any city in our study. For motorcyclists, it means less time waiting for the car ahead to move and more time on the open road.

Thinking about borrowing money? Here are a few things you should and shouldn’t do.

7. Santa Rosa, California

Located in the heart of one of America’s top wine regions, Santa Rosa is surrounded by beautiful scenery. Motorcyclists have numerous options, whether they want to go for a quick afternoon joyride or take a longer weekend tour. Potential destinations include the Pacific Coast Highway, which is less than an hour away, and Redwood National Forest, which is about four hours away.

8. Oxnard, California

If you love the beach and love your motorcycle, Oxnard may be the place for you. It is located along the Pacific Coast, west of Los Angeles. The city’s weather is stunning. Average maximum temperatures never fall below 60 or exceed 80. In fact, on average the city has just one day a year in which the temperature gets over 90 degrees.

9. Cary, North Carolina

This North Carolina city is the number one city on the East Coast for motorcycle owners. Like the rest of the East Coast, it is wetter than most cities in the west, averaging 76 days per year in which it receives at least 0.1 inches of rain. On the other hand, the climate in Cary is fairly temperate. Maximum temperatures fall below 40 degrees an average of 15 days a year, and rise above 90 degrees an average of 33 days per year.

The area is not lacking for beautiful routes. For instance, the Blue Ridge Parkway, “America’s favorite drive,” is located about three and a half hours from Cary. The North Carolina coast is less than three hours away.

10. Chula Vista, California

Take a ride through the Sonoran Desert or down the Coast of Baja California. Check out Cleveland National Forest or Joshua Tree National Park. All of these destinations are just a few hours from Chula Vista. The city also has some of the best motorcycling weather of any city in the U.S. It ranked in the top 15 cities in our study for both its limited rainfall and lack of extreme temperatures.

Methodology

To reach these results, SmartAsset analyzed data on 171 U.S. cities with a population of more than 150,000. Specifically, we looked at the following seven metrics:

Precipitation: the average number of days per year in which precipitation exceeds 0.1 inches.
Temperature extremes: the number of days per year in which average maximum temperatures are either lower than 40 degrees or higher than 90 degrees.
Traffic: the average hours per year lost to traffic congestion for auto commuters.
Property crime: the annual number of property crimes (including but not limited to auto theft) per 100,000 residents in each city.
Discretionary income: the median income after typical housing costs in each city.
Maximum speed: the maximum speed limit on highways of the state in which each city is located.
Motorcycle registrations: the number of residents per registered motorcycle for the state in which each city is located.

We ranked each of the 171 cities in our analysis according to those seven metrics. (For state-level metrics, cities in the same state received the same ranking.) We then averaged those rankings, giving half-weight to the two measures of weather and full weight to all other metrics.

The overall index was calculated based on that average ranking. The city with the best average ranking received an index score of 100, while lower average rankings correspond with lower index scores.

Data on temperature and precipitation comes from the National Oceanic and Atmospheric Administration. Data on traffic congestion comes from the Texas A&M Transportation Institute. Data on maximum speed limits comes from the Governors Highway Safety Administration. Data on the number of motorcycle registrations comes from the U.S. Department of Transportation. Data on property crime rates comes from the Federal Bureau of Investigation and local law enforcement agencies. Data on discretionary income comes from the U.S. Census Bureau.

Questions about our study? Contact us at blog@smartasset.com

Photo credit: ©iStock.com/pick-uppath

Nick Wallace Nick Wallace studied Economics at the University of Washington. He enjoys getting people thinking about finances by looking at the numbers. Nick is a freelance journalist and data analyst living in Michigan. He still lends his economic and analytic expertise for SmartAsset’s studies.

Read next article

Source: smartasset.com

January 15, 2021

The Best Cities for Motorcycle Owners

The Best Cities for Motorcycle Owners – SmartAsset

Tap on the profile icon to edit
your financial details.

Need a boost to get that bike? Find out what loan options are available to you.

In some states, the concentration is even greater. South Dakota, for example, has one registered motorcycle for every 11 residents.

There are numerous factors that might make some places better for motorcyclists than others. Weather is an obvious one. Going for a ride is a lot more pleasant if it isn’t pouring rain.

Try SmartAsset’s personal loan calculator to find out how long it would take you to pay off a personal loan.

Key Findings

Best rides out west. With its many natural wonders and its long stretches of open road, the American West is something of a playground for motorcycle enthusiasts. It probably comes as no surprise that seven of the top ten cities in SmartAsset’s analysis are out west.
Southern California has best motorcycling weather. Seaside cities like Oxnard and Chula Vista have weather that is warm and dry year round. Incredibly, San Diego records zero days a year in which the average max temperature is less than 40 or higher than 90.

1. Fort Collins, Colorado

Why is Fort Collins the best city in the U.S. for motorcycle owners?

2. Sioux Falls, South Dakota

3. Boise, Idaho

4. Santa Clarita, California

5. Overland Park, Kansas

Overland Park also has the 16^th lowest property crime rate of the cities in SmartAsset’s analysis. There were just 279 auto thefts in the city in 2014, 1.5 for every 1,000 residents.

6. McKinney, Texas

Thinking about borrowing money? Here are a few things you should and shouldn’t do.

7. Santa Rosa, California

8. Oxnard, California

9. Cary, North Carolina

10. Chula Vista, California

Methodology

To reach these results, SmartAsset analyzed data on 171 U.S. cities with a population of more than 150,000. Specifically, we looked at the following seven metrics:

Precipitation: the average number of days per year in which precipitation exceeds 0.1 inches.
Temperature extremes: the number of days per year in which average maximum temperatures are either lower than 40 degrees or higher than 90 degrees.
Traffic: the average hours per year lost to traffic congestion for auto commuters.
Property crime: the annual number of property crimes (including but not limited to auto theft) per 100,000 residents in each city.
Discretionary income: the median income after typical housing costs in each city.
Maximum speed: the maximum speed limit on highways of the state in which each city is located.
Motorcycle registrations: the number of residents per registered motorcycle for the state in which each city is located.

The overall index was calculated based on that average ranking. The city with the best average ranking received an index score of 100, while lower average rankings correspond with lower index scores.

Questions about our study? Contact us at blog@smartasset.com

Photo credit: ©iStock.com/pick-uppath

Read next article

Source: smartasset.com

January 15, 2021

Consider This Before Getting a Personal Loan – SmartAsset

Tap on the profile icon to edit
your financial details.

It’s a new year and if one of your resolutions is to get out of debt, you might be thinking about consolidating your bills into a personal loan. With this kind of loan, you can streamline your payments and potentially get rid of your debt more quickly. If you plan on getting a personal loan in 2016, here are some key things to keep in mind before you start searching for a lender.

Check out our personal loan calculator.

1. Interest Rates Are Going Up

At the end of 2015, the Federal Reserve initiated a much anticipated hike in the federal funds rate. What this means for borrowers is that taking on debt is going to be more expensive going forward. That means that the personal loan rates you’re seeing now could be a lot higher six or nine months from now. If you’re planning on borrowing, it might be a good idea to scope out loan offers sooner rather than later.

2. Online Lenders Likely Have the Best Deals

The online lending marketplace has exploded in recent years. With an online lender, there are fewer overhead costs involved, which translates to fewer fees and lower rates for borrowers.

With a lower interest rate, more money will stay in your pocket in the long run. Lending Club, for example, claims that their customers have interest rates that are 33% lower, on average, after consolidating their debt or paying off credit cards using a personal loan.

Related Article: How to Get a Personal Loan

3. Your Credit Matters

Regardless of whether you go through a brick-and-mortar bank or an online lender, you likely won’t have access to the best rates if you don’t have a great credit score. In the worst case scenario, you could be denied a personal loan altogether.

You can check your credit score for free. And each year, you have a chance to get a free credit report from Experian, Equifax and TransUnion. If you haven’t pulled yours in a while, now might be a good time to take a look.

As you review your report, it’s important to make sure that all of your account information is being reported properly. If you see a paid account that’s still showing a balance, for example, or a collection account you don’t recognize, you’ll need to dispute those items with the credit bureau that’s reporting the information.

4. Personal Loan Scams Are Common

As more and more lenders enter the personal loan arena, the opportunity for scammers to cash in on unsuspecting victims also increases. If you’re applying for a loan online, it’s best to be careful about who you give your personal information to.

Some of the signs that may indicate that a personal loan agreement is actually a scam include lenders who use overly pushy sales tactics to get you to commit or ask you to put up a deposit as a guarantee against the loan. If you come across a lender who doesn’t seem concerned about checking your credit or tells you they can give you a loan without doing any paperwork, those are big red flags that the lender may not be legit.

Related Article: How to Avoid Personal Loan Scams

5. Not Reading the Fine Print Could Cost You

Before you sign off on a personal loan, it’s best to take time to read over the details of the loan agreement. Something as simple as paying one date late could trigger a fee or cause a higher penalty rate to kick in, which would make the loan more expensive in the long run.

Photo credit: ©iStock.com/DragonImages, ©iStock.com/Vikram Raghuvanshi, ©iStock.com/MachineHeadz

Read next article

Source: smartasset.com

January 15, 2021

3 Things Startups Should Know About Using P2P Loans

3 Things Startups Should Know About Using P2P Loans – SmartAsset

Tap on the profile icon to edit
your financial details.

Starting a new business requires a certain level of commitment. You’ll also need to have access to plenty of money. Startups often have a hard time qualifying for business loans. But peer-to-peer (P2P) lending could be a financing option worth considering if you can’t get funding elsewhere. Here’s what you need to know about using P2P loans to kickstart a business.

Check out our personal loan calculator.

1. You May Have to Apply for a Personal Loan

Getting a personal loan to support a business isn’t the same thing as getting a business loan. That’s something to keep in mind since borrowing limits for personal P2P loans may not be as high as they are for business loans.

Lending Club, for example, lets you borrow up to $40,000 for a personal loan. But the maximum borrowing limit for business loans is $300,000. If you want a business loan, your company needs to be at least two years old and you need to have at least $75,000 in annual sales.

If you can’t qualify for a business loan, you may need to take out more than one personal loan. But by taking on more debt, it may take longer for your business to become profitable.

2. Lenders Will Look at Your Personal Credit History

When you’re trying to get a personal loan through a P2P lender, your odds of being approved hinge solely on your personal credit history. Every P2P lender has its own credit rating system for borrowers. Finding someone who’s willing to loan you money may be difficult if you have bad credit.

Get your free credit score now.

Before you start shopping around for a loan, it’s best to learn about the credit requirements that different P2P lenders have. Then you can check your credit reports and scores to see how you measure up. If your score is lower than you expected it to be, you might want to put off launching your business. The higher your credit score, the more appealing you’ll be to P2P loan investors (and you’ll probably have access to better loan terms).

3. You’ll Be Personally Responsible for What You Borrow

Getting a personal loan to fund your new business will be one challenge. Another will be paying back what you borrow. If your business doesn’t do as well as you’d hoped, that won’t change your responsibility to the P2P lender or the investors who funded your loan.

If you default on the loan, your lender may sue you. And your personal assets could be seized (depending on the way your business is structured). Before you commit to a P2P loan, you’ll need to know exactly what you’ll be risking if things don’t work out.

Related Article: How to Get a Personal Loan

Final Word

As you’re comparing P2P lenders, it’s important to pay attention to interest rates and fees. Compared to banks, peer-to-peer loans often come with higher rates, which increase the cost of borrowing. If you want the best deal on a loan for your new business, it’s best to shop around.

Read next article

Source: smartasset.com

January 15, 2021

What Is Cash Back?

What Is Cash Back? – SmartAsset

Tap on the profile icon to edit
your financial details.

Cash back is a rewards benefit that many credit cards offer to cardholders. By taking advantage of it, you’ll receive back a prespecified percentage of certain purchases you make. Many credit card companies will provide higher cash back rates on certain types of purchases, such as airfare, gas, food and more. Cash back is just one way that credit cards offer rewards, as mileage and points are some alternatives.

Before you spend too much money with your credit cards, make sure you have a financial plan in place. Speak with a financial advisor today.

What Is Cash Back?

The most commonly recognized style of cash back is what you have likely seen advertised as cash back credit cards. This specifically refers to earning a certain percentage of your credit card purchases back as cash rewards. However, cash back rates vary widely, as do the categories that they apply to.

You usually won’t see credit card cash back rates higher than 5%, while 1% is the typically minimum you will earn. Cash back categorization is significantly more complex though, with a merchant category code (MCC) system being the main organizing force.

MCCs run the entire cash back industry, as they ultimately decide how each purchase you make is classified. These designations coincide with cash back rates set by the issuer of your card. For example, you could use your card for a $50 dinner at a steakhouse, which has a “restaurant” code. If your card offers a 2% cash back rate on all spending at restaurants, you’d earn $1 cash back.

Familiar alternatives to cash back include point- and mile-based programs, though many cardholders are partial to cash back. Cash back affords cardholders an independence that is ideal, since you can redeem it for nearly anything.

Popular Cash Back Credit Cards

Discover, American Express, Mastercard and Visa all have cash back rewards credit cards available for prospective cardholders. Each abide by their own set of regulations, though card issuers decide on cash back rates, promotions and bonuses. Chase, Wells Fargo, Citi and Capital One represent some of the most active card issuers on the market today.

Below are a few examples of what you can expect to earn when looking for a cash back credit card:

Cash Back Credit Cards
Costco Anywhere Visa Card by Citi	4% cash back on eligible gas up to $7,000 per year, 3% cash back on eligible travel and restaurants, 2% cash back in-store and online with Costco and 1% cash back elsewhere	None
Bank of America® Cash Rewards credit card	3% cash back in a category of your choosing, 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases (up to a quarterly cap of $2,500 in combined grocery/wholesale club/choice category purchases)	$200 bonus cash back for spending at least $1,000 over your first 90 days
Capital One® Quicksilver® Cash Rewards Credit Card	Unlimited 1.5% cash back everywhere	$150 cash back bonus when you spend $500 during your first three months
Citi Double Cash Card	1% cash back on your purchases and another 1% cash back when you pay your bill	None
Capital One® Savor® Cash Rewards Credit Card	Unlimited 4% cash back on dining and entertainment, 2% cash back on groceries and 1% cash back elsewhere	$300 cash back bonus for $3,000 spent over your first three months
TD Cash Visa® Credit Card	3% cash back on dining, 2% cash back at supermarkets and 1% cash back on everything else	Earn $150 cash back when spending $500 within the first 90 days (See Terms)
USAA Preferred Cash Rewards Visa Signature	Unlimited 1.5% cash back on everything	None
Blue Cash Everyday Card from American Express	3% cash back on up to $6,000/year at U.S. supermarkets (then 1%), 2% cash back at U.S. gas stations and select U.S. department stores and 1% cash back on other purchases	$150 bonus cash back for spending $1,000 over your first six months

Getting Cash Back at Retailers

Picture this: you’re buying some groceries on a Sunday morning, but know you’ll need $40 cash to fill up your car with some gas later. You could swipe your debit card at the supermarket and then head over to the ATM. Or you could ask for cash back right from the cashier, eliminating the extra errand.

The above situation represents the alternative definition of cash back. It’s ultimately the use of a cash register as if you were swiping your debit card at the ATM. When you request cash back from a cashier, your bank account will be charged the amount you asked for. This enables the funds to be pulled from your account so the cash can be placed in your hand.

Although this generally only applies to debit cards, there are a few exceptions for credit cards. Discover® allows cardholders to ask for cash back at more than 50 large retail stores without a transaction fee.

Bottom Line

There are many benefits to utilizing credit card rewards programs. But spending money that technically isn’t yours will always involve some level of risk. If you’re in good financial shape, though, cash back and other types of credit card rewards can help you take more vacations, save money on purchases and more.

Credit Card Tips

Managing your credit cards and any debt you accumulate using them is a major part of your long-term financial outlook. Consider working with a financial advisor to make sure you’re managing your money with your goals for the future in mind. SmartAsset’s free matching tool can connect you with up to three advisors in your area. Get started now.
If you’re someone who wants freedom when spending credit card rewards, you may prefer cash back to a points- or mileage-based reward system. However, keep in mind that cash back rates are sometimes less than those in point-centric programs.

Chris Thompson, CEPF® Chris Thompson is a retirement, savings, mortgage and credit card expert at SmartAsset. He has reviewed hundreds of credit cards and loves helping people find the one that best matches their financial needs. Chris is a Certified Educator in Personal Finance® (CEPF®) and a member of the Society for Advancing Business Editing and Writing. He graduated from Montclair State University where he received the Journalism Achievement Award. Chris’ articles have been featured in places like Yahoo Finance, MSN and Bleacher Report. He lives in New Jersey and is a Mets, Jets and Nets fan.

Read next article

Source: smartasset.com

January 14, 2021

The Dos and Don’ts of Borrowing Money – SmartAsset

Tap on the profile icon to edit
your financial details.

Taking on debt is a thorny subject. Signing on an affordable mortgage is one thing. Racking up credit card debt on unnecessary purchases? Quite another. Any time you borrow money, you put your finances at risk. That’s why it’s important to do your research before committing to new debt. If you’re not sure whether to borrow money, read our list of dos and don’ts. And if you need hands-on help managing your financial life, consider linking up with a financial advisor.

Do: Comparison shop when deciding where to borrow

Thinking of borrowing money? Don’t just go for the first credit source you can find. Look around for a loan that meets your requirements and leaves you with monthly payments you can actually afford. If you’re not happy with what lenders are offering you, it may be best to take the time to build up your credit score and then try again.

Don’t: Just look at the interest rate

Comparing loans is about more than searching for the lowest interest rate you can get. Look out for red flags like prepayment penalties. Stay away from personal loans that come with pricey insurance add-ons like credit life insurance. These insurance policies, particularly if you decide to finance them by rolling them into your loan, will raise the effective interest rate on the money you borrow. Approach payday loans and installment loans with extreme caution.

Do: Go for “good debt”

Good debt is debt you can afford that you use on something that will appreciate. That could be a home in a desirable neighborhood or an education from a reputable institution that will help your future earning power. Of course, you can’t be 100% sure that your home will appreciate or your advanced degree will pay off but you can take leaps based on thorough research.

Don’t: Go overboard with consumer debt

Consumer debt is generally considered bad debt. Why? Because it’s debt taken out for something that won’t appreciate. You’ll spend the money and get fleeting enjoyment but you’ll be making interest payments for months or years. In other words, it’s generally better to save up for that new tablet or vacation than to finance it with consumer debt.

Do: Keep a budget

Real talk: Anyone who has debt should be on a budget. Budgets are great for everyone, but those who owe money to lenders are prime candidates for a workable budget. Start by keeping track of your income and your spending for one month. At the end of that month, sit down and go over what you’ve recorded. Where can you cut back? You can’t be sure you’ll be able to make on-time payments unless you’re keeping track of your spending – and keeping it in check.

Don’t: Be late

Speaking of making on-time payments: Making a late payment on a bill you can afford to pay is not just careless. It’s also costly mistake. Late payments lower your credit score and increase the interest you owe. They can also lead your lender to impose late-payment penalties and increase your interest rate, making your borrowing more expensive for as long as it takes you to pay off your debt.

Do: Seek help

If you’re having trouble keeping up with your debt payments or you’re not sure how to tackle a handful of different debts, seek help from a non-profit credit counseling organization. A credit counselor will sit down with you and review your credit score and credit report. He or she will help you correct any errors on your credit report. Then, you’ll work together to set up a debt repayment plan. That may mean you make payments to your credit counselor, which then pays your lenders on your behalf.

Don’t: Throw good money after bad

Why a non-profit credit counselor? Well, there are plenty of people and companies out there that want you to throw good money after bad. They may offer counseling or they may try to sell you on bad credit loans. At best, they’ll charge you an arm and a leg for advice about debt repayment that you could be getting for free. At worst, they could lead you further into debt.

Do: Automate

If you have debts to pay off then automation can be your friend. Setting up automatic transfers for your bills and your loan payments will remove the temptation to overspend, to make only the minimum payment or to skip a payment altogether. If you can afford it, set up automatic savings while you’re at it. The sooner you start saving for retirement the better. Just because you’re still paying off your student loans doesn’t mean you should defer your retirement savings until middle age.

Bottom Line

Most of us will borrow money at some point in our adulthood. These days, it’s easier than ever to borrow money online and take on debt quickly. The choices we make about when, how and how much to borrow? Those can make or break our finances. Before you take on debt, it’s important to ask yourself whether that debt is necessary and how you will pay it back. Happy borrowing!

If you want more help with this decision and others relating to your financial health, you might want to consider hiring a financial advisor. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with top financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.

Amelia Josephson Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia’s work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.

Read next article

Source: smartasset.com

January 14, 2021

5 Things to Consider Before Getting a Personal Loan

Consider This Before Getting a Personal Loan – SmartAsset

Tap on the profile icon to edit
your financial details.

Check out our personal loan calculator.

1. Interest Rates Are Going Up

2. Online Lenders Likely Have the Best Deals

The online lending marketplace has exploded in recent years. With an online lender, there are fewer overhead costs involved, which translates to fewer fees and lower rates for borrowers.

Related Article: How to Get a Personal Loan

3. Your Credit Matters

4. Personal Loan Scams Are Common

Related Article: How to Avoid Personal Loan Scams

5. Not Reading the Fine Print Could Cost You

Read next article

Source: smartasset.com

The hidden costs of using credit cards to send money

No chargeback rights with credit cards

The solution

Whatâs your reason for using a credit card?

Getting cash from credit cards

Cashing in rewards

Gift cards

Convenience checks

Bottom line

The Pros

The Cons

Important Questions to Ask Yourself

Final Word

Categories

Online Lenders and Traditional Banks Aren’t the Same

Check Your Credit Before You Apply

Crunch the Numbers on the Payoff

Categories

Key Findings

Methodology

Categories

Key Findings

Methodology

Categories

1. Interest Rates Are Going Up

2. Online Lenders Likely Have the Best Deals

3. Your Credit Matters

4. Personal Loan Scams Are Common

5. Not Reading the Fine Print Could Cost You

Categories

1. You May Have to Apply for a Personal Loan

2. Lenders Will Look at Your Personal Credit History

3. You’ll Be Personally Responsible for What You Borrow

Final Word

Categories

What Is Cash Back?

Popular Cash Back Credit Cards

Getting Cash Back at Retailers

Bottom Line

Credit Card Tips

Categories

Do: Comparison shop when deciding where to borrow

Don’t: Just look at the interest rate

Do: Go for “good debt”

Don’t: Go overboard with consumer debt

Do: Keep a budget

Don’t: Be late

Do: Seek help

Don’t: Throw good money after bad

Do: Automate

Bottom Line

Categories

1. Interest Rates Are Going Up

2. Online Lenders Likely Have the Best Deals

3. Your Credit Matters

4. Personal Loan Scams Are Common

5. Not Reading the Fine Print Could Cost You

Categories

Whatâs your reason for using a credit card?