Tag: Banking

 

Prepaid vs. Debit Cards: Here’s Which One You Should Choose

In 2003, Americans put less than $1 billion on reloadable prepaid cards. In 2012, they put $65 billion on them.  

By 2020, the Consumer Financial Protection Bureau (CFPB) expects that number to grow even further: to $116 billion. 

But what, exactly, are prepaid cards? How do they differ from debit cards? And which one is better for you? Keep reading for all the answers to your prepaid card questions. 

What is a prepaid card?

At first glance, prepaid cards seem just like debit cards. And they do have their similarities.

As Korrena Bailie, senior editor for Wirecutter Money, explains: They both provide a way “to make cashless payments without getting a line of credit.” Because of that, you should also note that neither prepaid nor traditional debit cards will help your credit scores; for that, you’ll need a credit card or credit builder loan. 

The purchasing process is almost identical, too. Once you’ve loaded money onto a prepaid card, you can swipe it anywhere its payment network is accepted — whether that’s at a restaurant, movie theatre, or online store. You can also use prepaid cards to withdraw cash from an ATM. 

But don’t be fooled: Prepaid cards and debit cards are not the same thing. 

Whereas debit cards are connected to your checking account, prepaid cards only let you spend the amount you’ve loaded onto them. 

In fact, that’s what many people find appealing: A 2014 survey from Pew Charitable Trusts discovered that most Americans use prepaid cards to “gain control over their finances.” 

Others might use prepaid cards because they don’t qualify for a traditional bank account, have concerns about identity theft and privacy, or want an easy way to teach their children about budgeting. Something to note: If you think you can’t get a checking account, second chance banking may change your mind.

How prepaid cards work

Curious about how to get a prepaid card and how these cards work? 

You can buy them online or at a variety of retailers, including most supermarkets, big box stores, and drugstores.

You decide how much cash you want to load on the card, and voila, you’ve got the convenience of paying with plastic. There aren’t any credit checks, and if you’re purchasing the card from a store, you won’t even need to share any personal information. 

If you try to buy something that costs more than the balance remaining on your card, your purchase will be declined — which is why some people use prepaid cards as a way to stay under budget and avoid overdrafting. (Some prepaid card suppliers do allow you to sign up for “overdraft protection,” but we don’t think the high fees are worth it.) 

When you’re ready to reload your card with more cash, you have a variety of options. Here are some popular ones: 

  • Set up direct deposit with your employer (cards come with routing and account numbers)
  • Transfer money from a bank or PayPal account
  • Deposit money at an affiliated bank or participating retailer
  • Virtually deposit a check through your card’s mobile app
  • Physically deposit a check at an ATM

Another thing to know about these cards: Some employers offer prepaid “payroll cards” in lieu of paychecks, and the government also offers benefits on prepaid cards. Yet, it’s important to note that if an employer offers you a prepaid card, you have the right to ask for other methods of payment instead, like direct deposit.

Are prepaid cards safe? 

Until recently, prepaid cards had very few protections. If your card was lost or stolen, it was like cash, and you were out of luck.  

But in April 2019, a new CFPB prepaid cards rule went into effect. Among other things, this made fees more transparent and offered recourse in case of loss or theft. To qualify for these protections, you must first register your card on the issuer’s website. Registering will also make you eligible for FDIC insurance, which protects you if your bank fails. Note: If a card doesn’t offer FDIC insurance, it must say so on the packaging.

Once your prepaid card is registered, your liability will be limited to the following amounts, depending on when you report the card’s loss: 

  • Within two days: up to $50 
  • Within 60 days: up to $500
  • More than 60 days: no limit 

If the investigation will take longer than 10 business days, the CFPB also states that card providers are generally required “to credit the disputed amount to your account while investigating the problem.” 

Two reasons a debit card is better than a prepaid card

Although the new CFPB rule makes prepaid debit cards much more secure, we’d still say that traditional debit cards rule the roost. 

David Bakke of Money Crashers agrees. He says that “true debit cards are almost universally a better choice over prepaid debit cards.” 

Translation? Instead of wondering “what is the best prepaid debit card?” you might want to consider a traditional debit card instead. 

Here are two major reasons why. 

1. Lower fees

The majority of prepaid debit cards come with a barrage of fees for everything from withdrawing cash to reloading the card to using the card. Some even charge for calling customer service.

With the popular Green Dot Prepaid Visa, for example, you might pay: 

  • $1.95 to purchase the card
  • $7.95 per month
  • $5.95 to reload the card
  • $3 to use an ATM

So, in one month, if you bought the card, reloaded it twice, and withdrew cash three times, it would cost you more than $30! 

Most debit cards, on the other hand, will cost you less than this. The average checking account fee, for instance, is less than $6 per month — and debit cards don’t require “reloading” or charge in-network ATM fees. Plus, if you bank with Chime, you’ll pay no fees.  

2. Wider usage

Want to book a hotel? Or rent a car? With a prepaid debit card, this might be a problem. 

Loren Sweigart of Supporting Strategies discovered this the hard way. 

I went to a U-Haul rental that accepts debit cards,” she says, “so I tried to use my prepaid debit but they wouldn’t accept it.” 

That’s not unusual. Vendors who need to put a hold on your card may be reticent to accept one that’s prepaid — especially if it doesn’t have a name or expiration date. 

An alternative to prepaid cards 

If you’re ready to leave the fees and hassle of prepaid debit cards behind, look no further than the Chime debit card. It’s a fantastic – and FREE – prepaid card alternative. 

We won’t even check your credit when you apply. All we ask is that you’re 18 or older, and a citizen or permanent resident of the United States. 

The Chime debit card offers a slew of sweet perks and features, including: 

  • No unnecessary fees, ever
  • Free overdrafts with SpotMe
  • The option to freeze your card or order a replacement from within the app
  • More ATMs than the top three biggest banks combined (over 38,000!)
  • The ability to round up your change into a separate account
  • EMV chip technology for convenience and security
  • Connection to the Visa network, the most widely accepted worldwide
  • FDIC insured up to $250,000

What are you waiting for? Get started with the Chime debit card today.

 

How to Finally Stop Overdrafting (And Avoid Fees!)

Raise your hand if this sounds familiar: You head to dinner with friends and charge $30 to your debit card

But little do you know that a bunch of bills were auto-drafted from your checking account this morning — and you only have $25 in your bank account

Yikes. You’ve just overdrafted

Most banks charge an average fee of $35 for this tiny mistake, costing Americans $34 billion in 2017. (Here’s more on how overdraft fees work.)

If you’re wondering how to avoid overdraft fees, keep reading. We’ll reveal 5 tips for nixing this costly habit — followed by how to join a bank that doesn’t charge any overdraft fees, ever. 

1. Monitor your balance

When it comes to debit card purchases (the most frequent cause of overdrafts), the median overdraft-causing transaction amount is just $24, according to the Consumer Financial Protection Bureau

Since it’s pretty easy to spend $24, one of the best ways to avoid overdrafting is to get intimately acquainted with your balance. Download your bank’s mobile app, and set a reminder to check it every Friday morning — that way, you’ll know exactly what you can spend over the weekend and following week. 

Alternatively, you can connect your bank account to an AI-powered budgeting app like Charlie, or you can try a no-frills, straight-to-the-point app like Daily Budget.

If you’d prefer to go super low tech, ask your bank for a checkbook register. 

“Each time you authorize an item or debit from the account, record it in the ledger and maintain a running balance,” suggests Adam Marlowe, the principal market development officer for Georgia’s Own Credit Union

Call it old school, but forcing yourself to write out each expenditure is a good way to stick to your budget and (hopefully) avoid another overdraft.

 2. Cancel overdraft protection

While removing the protection to prevent overdrafting may sound counterintuitive, overdraft protection can actually be detrimental.

Despite the fact more than two-thirds of overdrafters would rather have their purchases declined than pay a fee, many consumers don’t know they can opt out of this so-called benefit, according to Pew. If, up until a few seconds ago, you were one of them, call your bank ASAP — or just switch to a bank that doesn’t charge fees.

Here’s why you should do this. When you sign up for this “protection,” your bank will “let” you overdraw your account — and then smack you with an average fee of $12.30. (One exception: If your bank draws from a linked savings account to cover your purchase, the charge may be lower or even free.

How kind, right? Although $12 is less than a $35 overdraft fee, we think no fees are best of all. 

“Legally, banks must allow you to opt out of overdraft protection and simply get denied for the purchase when you don’t have enough money,” Michael Outar, founder of Savebly, explains. 

“That will prevent you from paying any ridiculous fees.”

3. Create account alerts

Your phone notifies you whenever someone follows you on Instagram, and whenever your favorite makeup brand goes on sale… why not when your bank account dips to risky levels? 

To keep herself from overdrafting, Marissa Sanders of Simple Money Mom signed up to get an automatic notification if her balance dips to $100 or less.  

Setting up a $100 alert will give you time to institute a spending freeze, as well as check for recurring charges that will be debited before your next paycheck.

“If you know in advance that you are having certain bills drafted, contact the creditor and ask them to delay payment for a few days,” suggests Roslyn Lash, an accredited financial counselor. 

While your utility company, for example, may charge a late fee, Lash says it’ll usually be “considerably less” than what your bank would charge for overdrafting. 

And, here’s a tip: if you often find yourself squeezed between paychecks, consider getting paid early with Chime.

4. Avoid putting holds on your debit card

Got a vacation coming up? You might want to pack your credit card rather than your debit card. 

As David Bakke of Money Crashers explains: “Try to not use your debit card when renting a car, staying at a hotel, or purchasing gas. Oftentimes, with these types of purchases, there’s a hold placed on your account for more than the actual purchase amount.” 

Lightbulb moment, right? When you check into a hotel, it puts a “hold” — often to the tune of several hundred dollars — on your card. Worse, with debit cards, the hold sometimes doesn’t appear as debited from your account (and could thus make you think you have more to spend than you do). 

The best solution, of course, is to pay with a credit card. But if you only have a debit card, enter your PIN. That will process your transaction as debit rather than credit, forcing the money to come straight out of your account. Just make sure you have enough to comfortably cover the entire hold, as it could take several days after check-out before it is returned.   

5. Get overdraft fees waived

Fine, fine, so this isn’t a preventative measure — but if you hit a rough patch and accidentally overdraw your account, it’s important to know how to get overdraft fees waived. 

The good news: It’s easier than you might think. 

“When overdrafts do happen, we encourage our members to contact us if they have fallen on bad times and need a little help,” says Marlowe of Georgia’s Own Credit Union. 

“Financial institutions will often refund the fees as long as it is not a normal occurrence. After all, everyone makes mistakes.” 

As soon as you spot an overdraft fee charged to your account, call your bank. If it’s your first time in a while (or if you mention switching banks), the agent may be sympathetic to your cause. 

Are there banks without overdraft fees? 

While it’s always a good idea to take better control of your finances, wouldn’t it be nice to find a bank that had your back when you slipped up? 

As Lash, the financial counselor notes, “It’s difficult to find a bank that doesn’t have overdraft fees, but if you can, by all means do so.” 

Luckily, if you’re reading this, the hard part is over; you’ve already found that bank. At Chime, we’re proud to have fee-free overdrafts. (And fee-free everything else, too!)

 

The Real Life Impact of Overdraft Fees

When you’re low on funds and waiting on your direct deposit to hit your bank account, you’re in no place to pay a hefty overdraft fee. Yet, because many big banks charge an average of $35 per overdraft, a measly five dollar charge can easily balloon into $40. Yikes.

If you’ve had to pay overdraft fees, you’re not alone. According to the FDIC, big banks with over one billion dollars in assets collected more than $11.45 billion in overdraft and non-sufficient funds in 2017. 

To get a handle on how these fees can negatively impact your financial situation, we talked to several people who gave us the low-down. Read on to learn more. 

Unfortunate events happen in threes 

When a glitch caused Ruby Escalona’s credit card bill — which was set on autopay — to be paid twice, he was dinged with three $35 overdraft fees from his bank, totaling a whopping $105.

Because Escalona had put four airline tickets on that month’s cycle, to the tune of a few thousand dollars, those overdraft charges put his bank balance in the negative. Escalona called the bank and explained the situation. 

“While the bank still deemed it was ‘my fault’ for the IT issue, the bank did waive two other overdraft fees because of the debacle,” explains Escalona, who is the founder of A Journey We Love. 

When you don’t track your expenses 

When Jerry Brown was in college, he was terrible at managing his money. He was essentially living paycheck to paycheck.

“Since I didn’t keep track of my expenses, I ended up charging my card when I didn’t have the money in my account to cover the expense,” says Brown of Peerless Money Mentor. 

One semester it got so bad that he was dinged with $200 in overdraft fees. That was quite a bit for a struggling college student.

Now, however, he avoids overdraft fees by tracking his expenses (you can do so with a money app), and setting up an emergency fund. 

When three $5 items end up costing $120 

When Riley Adams and his brother were in college, they stopped by a fast food joint on their way to the movies. Adams’ brother initially didn’t want anything to eat, so Adams ordered a single combo meal for himself. Naturally, his brother got hungry and wanted to order something as well. So, they bought another combo meal. Next, the pair had a hankering for dessert. 

Talk about an avalanche of bank fees. Those three five dollar transactions each incurred a $40 overdraft fee, adding up to $120. As it turned out – due to a holiday – Adams’ paycheck hadn’t hit his bank account yet. The direct deposit went through the next day and the bank forgave the overdraft fees.

“We ended up having all the fees waived after contacting the bank and informing them of the situation,” says Adams, who is a 30-year-old financial analyst at Google and founder of Young and the Invested. 

To avoid this from happening again, Adams reached out to his bank to establish an overdraft protection line of credit. Anytime his checking account balance falls below a certain threshold, there’s an automatic transfer from his savings account. 

Note: If you’re a Chime Bank member, you can sign up for direct deposit and get paid up to two days early. 

When rent is due 

When Michael Lacy was living paycheck to paycheck, he wrote a check to cover his rent. But, he forgot about a few purchases he made the day before: filling up his tank with gas, renting a Redbox movie, buying a hoagie, and picking up a few things at the grocery store. The charges were still pending. 

His bank cleared his rent check first, but the other charges were all hit with overdraft fees. The total damage? A hefty $128. He had enough in his account to cover the smaller purchases, so if his bank cleared the transactions in the order they were made, he would’ve only incurred a single $32 overdraft fee for the rent check. 

These days, Lacy takes 30 minutes to plan all his spending at the beginning of each month.

“Every dollar has a destination, whether that’s spending, saving, or investing,” says Lacy, a personal wealth coach and founder of Winning to Wealth

Working for a big bank

When GP (that’s her pen name) worked at a national bank right after college, she witnessed some customers who were regularly racking up overdraft fees, while others would get dinged for an occasional one. 

The worst case? When a regular customer came in to the branch to see what could be done about her overdraft fees. When GP pulled up her account, the balance was negative, and there were tons of overdraft charges.  

“At the time it happened, the bank would process large transactions first — with the thought that it would ensure mortgage and car payments had priority,” says GP, who blogs at Entirely Money

“The only problem with this is that all the subsequent small transactions would then each be hit with an overdraft fee.”

In total, the overdraft fees that hit this customer’s account added up to over $200. As the bank manager would only give a one-time courtesy credit for a few of the fees, the customer was still stuck with more than $100 in overdraft fees. 

A cluster of ill-timed events

When an overpayment and a direct deposit issue happened at the same time, Jason Vitug’s funds dropped lower than the automatic bill payment that hit the account. 

What’s more, because his bank overdrew his account with the largest amount first, it caused the three smaller payments to be overdrawn. He ended up paying $120 for four overdraft fees. 

“Basically, the bank stated I overdrew my account four times in one day, even though three of those withdrawals would’ve been covered,” says Vitug, founder of Phroogal

To avoid this from happening, Vitug suggests attaching a savings account or line of credit for overdraft protection. Or just stop banking with that bank. 

“Simply choose a bank that won’t overdraft your account, and just refuse payment,” says Vitug. 

To avoid these headache-inducing, frustrating scenarios, avoid bank fees altogether. FYI: Chime never charges fees of any kind. Never ever. 

 

How to Pay Off Debt in Collection: A Guide to Saying Goodbye to Credit Collectors

You’re in debt and you have no idea how you’re going to pay it off. 

The due date passes by. You want to pretend your debt doesn’t exist. As the days and months go on, you’re delinquent on your loans and they end up in collections. Your credit is shot. The menacing calls begin and all you want is for them to stop. 

Yet, while this is indeed a difficult situation, it’s one you can take control of and fix with the right actions. In this guide, we offer up ways you can pay off debt in collections. Take a look.

What is a Collection Agency and Why are Debt Collectors Calling?

First, let’s discuss the cast of characters involved with debt collections. 

There is the collection agency or credit collection service, which is a third-party company hired by a lender to collect an outstanding balance from a borrower. The collection agency then hires debt collectors, who are the actual people doing the dirty work and calling borrowers to get the money back

Credit card debt, student loans, medical bills, utility bills and more can all go to collections. Business debt isn’t eligible for debt collections. 

While debt collectors can take certain actions like call you at work, there are restrictions so that the hounding doesn’t become an abusive practice. For example, debt collectors can only call you during certain hours, in many cases between 8am-9pm.

How to Find out Which Debt Collection Agency You Owe Money to 

If you want to get out of debt collections, you need to pay money to the credit collection services agency. 

But how do you know exactly who to pay and who the debt collection agency is? In some cases it might be clear but if not, here are ways to find out which debt collection agency you owe money to: 

  • Contact the Original Creditor 

If you know what bill is in collections, contact the original creditor for more information about your collections account. You can then ask which debt collection agency they are using and get the contact information. Then, contact the debt collection agency and ask how to proceed to get your payment in good standing. 

  • Check Your Credit Report 

If you know you’re in debt collections but are unsure of which loans are not in good standing, you’ll want to get your credit report. Your credit report is a document that contains your full credit history, including outstanding loans that may be in debt collections. 

Many debt collection agencies report to the three major credit bureaus — Experian, TransUnion and Equifax. You can access all three of your credit reports once a year at AnnualCreditReport.com

Make sure you check all three as some debt collection agencies only report to one credit bureau, not all of them. 

  • Answer the Phone When Bill Collectors Call You

In some cases, your debt collection fees won’t appear on your credit report. And sometimes, the debt can be passed onto other debt collection agencies, leaving you wondering who to contact.

In this case, you will likely have to wait until the debt collector calls you to get more information. It’s not fun and no one wants to deal with debt collectors on the phone. But if you’re unsure of who the debt collection agency is, answer the phone, get the information and ask how to get your loan in good standing. You’ll also want to get a debt verification letter and check your records to make sure you’re not overpaying as debt collectors can make mistakes too.

Three Ways to Pay Off Debt Collectors 

If you want to get out of collections and repay your debt, there are a number of routes you can take. Some of them may require negotiation and whatever you do, get everything in writing. Here are three ways to pay off debt collectors:

1. Negotiate a Settlement With Your Debt Collector

In some cases, you may be able to negotiate a settlement with your debt collector. A settlement is typically less than the amount owed and is used in exchange for deleting the account from your credit report. 

You’ll need to get a letter in writing about the settlement terms before making your first payment. Make sure you understand your rights and responsibilities, and that you know the terms of the settlement. 

2. Pay Off the Debt In Full 

If you have a small bill that is outstanding and in collections, you can choose to pay off the debt in full. Under this option, the good news is that your debt will be paid off. The bad news is that the collection account will remain on your credit report. 

3. Create a Debt Repayment Plan

If you can’t negotiate a settlement or pay the debt in full, you can talk to the debt collection agency about a debt repayment plan. 

In this case, it’s important to make all of your payments on time and in full to get your loan in good standing. 

What Happens if You Don’t Pay a Collections Agency?

If you have debt collectors hounding you, you might want to bury your head in the sand. Unfortunately, if you aren’t paying off collections, your problems will only get worse. Here’s why:

  • Your Credit Score Will Take a Hit 

The debt collection agencies report to the major credit bureaus. So, if you ignore them, your credit score may go down. This can make it more difficult to get approved for loans and may result in higher interest rates if you do get approved. 

In some cases, you may be able to negotiate the mark off your credit report. If not, the negative entry will remain on your credit report for seven years. And remember: This can have a sweeping impact on every area of your financial life. 

  • You May Have Late Fees, Making the Debt Harder to Pay Off

If your debt is in collections, it’s not just the outstanding balance you have to worry about. There could be additional late fees tacked onto your balance. All of the extra fees can add to the total cost of your loan, making it even harder to pay back. 

Deal with Your Debt

Debt collectors have one job — to collect your debt. In order to do that, they will call you many times until they reach you. This can be stressful and annoying.

So, answer the phone and face the issue head on. Talk to your debt collector about your options, whether that’s a settlement, payment plan or paying it off in full. Make sure you get everything in writing.

It’s not fun and can be tough to deal with, but getting out of collections will help you breathe easier and free up stress. Once you do this, you’ll be able to focus on other financial goals like saving money and investing. 

 

4 Things You Could Afford If You Didn’t Have to Pay Bank Fees

As consumers, we accept pesky — and exorbitant — bank fees as a regular part of our everyday lives. To many of you, these fees are as commonplace as paying “service” fees when purchasing concert tickets.

So, why exactly do big banks charge fees? Besides trying to turn a major profit, banks charge fees to cover operating expenses — paying employees, developing technology, and covering other overhead costs. Yet, here’s a truth bomb: While bank fees are oftentimes considered the cost of doing business, big banks are profiting big-time off these fees. In fact, according to a 2017 analysis by CNNMoney, the three biggest banks — Wells Fargo, Bank of America and JP Morgan Chase — earned more than $6.4 billion in ATM and overdraft fees. Another sad truth: It turns out that eight percent of customers pay 75% of overdraft fees, per the Consumer Financial Protection Bureau

Just imagine what you could do with your hard-earned money if you didn’t have to pay bank fees. But first, let’s take a closer look at exactly how much the big banks are raking in. From there, we’ll look at all the awesome, amazing things you could do with that staggering sum instead.  

The Top 10 Biggest Banks in the U.S.

While there are about 5,800 banks in America, just 0.2% hold more than two-thirds of the industry’s assets

Ready for another jaw-dropping statistic? The 15 largest banks collectively hold a total of 13.7 trillion in assets. Here’s the breakdown

  1. JPMorgan Chase & Co.: $2.53 – $2.62 trillion in assets 
  2. Bank of America Corp.: $2.28 – $2.34 trillion in assets 
  3. Wells Fargo & Co.: $1.87 – $1.95 trillion in assets 
  4. Citigroup Inc.: $1.84 – $1.93 trillion in assets 
  5. Goldman Sachs Group Inc.: $917 – $957.19 billion
  6. Morgan Stanley: $852.86 – $865.52 billion
  7. U.S. Bancorp: $462.04 – $464.61 billion
  8. TD Group US Holdings LLC: $380.65 – $380.91 billion
  9. PNC Financial Services Group Inc.: $380.08 – $380.77 billion
  10. Capital One Financial Corp.: $362.91 – $365.69 billion

What Kinds of Fees Do Big Banks Charge Consumers?

While you most likely are familiar with ATM and overdraft fees, you might find it surprising to know that you could get dinged with other kinds of bank fees. Lest you get blindsided, here are 10 ways banks make money off you: 

1. Overdraft fees

You’re charged an overdraft fee when the amount of your transaction is greater than your bank balance. When you have overdraft protection, the bank will cover the shortfall, and charge you a fee for doing so. The most common amount for an overdraft fee is $35. 

FYI: The US Bank overdraft fee is $36 if the amount of the overdraft is greater than five dollars. The Wells Fargo overdraft fee is $35 per transaction, and you can be charged up to three times a day. Yikes.

2. ATM fees

This is a fee that banks charge for using an ATM. For example, your bank might charge you a fee if you use an out-of-network ATM. This fee can be anywhere from two dollars on up to six dollars if you’re making a withdrawal from a non-network international ATM.

Here’s a closer look at what the big banks are charging: Bank of America’s ATM fees are $2.50 and five dollars for international transactions, while Chase ATM fees are also $2.50 and five dollars respectively. Wells Fargo ATM fees are $2.50 for non-network withdrawals in the U.S., and five dollars for international ATMs. 

3. Maintenance fees

A bank might charge you a monthly fee if you don’t meet certain criteria. For instance, some banks charge fees if your bank balance drops below an amount or you fail to make the minimum number of transactions on your debit card. Bank of America and Chase both have a monthly maintenance fee of $12. In 2017, Americans spent 3.5 billion in monthly maintenance fees alone. 

4. Returned deposit charge

If there’s not enough money in your account to cover a transaction, the bank might “return” the item — usually a check — and you’ll in turn be dinged with what’s known as a returned deposit charge. The average charge is $35 per item. 

5. Lost card fee

Misplace your debit card? You might need to pay a fee to get it replaced. For instance, Bank of America charges its customers five dollars to get a replacement card, and $15 if you’d like it rushed.  

6. Minimum balance charge

If your type of bank account requires a minimum balance and you don’t meet the threshold, you could end up paying a fee. Wells Fargo charges a $10 monthly fee if you don’t keep a minimum of $1,500 in your account. 

7. Foreign transaction charge

If you’re traveling out of the country and swipe your debit card, there might be a foreign transaction charge. 

8. Inactivity fee

If your account is idle for a set amount of time (i.e., you haven’t made any deposits, withdrawals or transactions), you might need to pony up a monthly inactivity fee.  

9. Paper statement fee

If you prefer to get paper statements, you may need to pay a monthly fee. US Bank charges two dollars a month to receive statements via snail mail. IMHO, this feels like a trap. Many people are cool with receiving digital statements. They just don’t know about the paper statement fee, or forget to opt out.

10. Account closing fee

If you’re over your bank and want to close out your account, you might be dinged a fee. 

4 Things You Could Buy With Fees Instead of Paying Big Banks  

Here’s the fun part: Imagine what you could buy with the crazy high amount big banks rake in from bank fees. 

To keep things simple, let’s play around with the $64 billion that big banks made in ATM fees alone. These fees could fund a number of extravagant purchases, solve national debt problems, and achieve the unachievable. 

Here are a few examples: 

1. Student Loan Debt

According to the Federal Reserve Bank of New York, as many as 44.7 million Americans are burdened with student debt. That’s one in five Americans. As of the end of 2018, the student loan debt had climbed to a staggering $1.47 trillion. 

That cool $64 billion that banks make in ATM fees could handle 43% of the student debt crisis. 

2. Household Incomes

Per the U.S. Census Bureau, the median yearly household income in 2017 was $61,372. With those $64 billion in ATM fees, you can cover the annual income of 104,282 households in America. 

3. Avocado Toast 

We wanted to point out that millennials can have their toast and, well, save on bank fees too. Avocado toast is the latest “whipping boy” as to why millennials don’t have as much in savings and retirement as they should.

Let’s throw it back to whoever came up with this ludicrous statement, shall we? If the average cost of avocado toast is $12, ATM bank fees can pay for $5.3 million plates of avocado toast. 

4. Lattes 

Who doesn’t like a sweet beverage from Starbucks? With the average cost of a Starbucks latte at $3.45, you can buy more than 18.5 billion lattes. With 7.7 billion humans on planet earth, you can pay for each person — man, woman, and child — to enjoy 2.4 lattes. 

How Much Can You Save When You Switch to a Bank With No Fees?  

Let’s say your bank charges a monthly maintenance fee of $15, and you get dinged with an overdraft fee three times a year at $35 each. This tallies up to $285 a year. 

Here’s the good news: There are banks that don’t charge fees. That’s right. No monthly bank fees. Zip. Zilch. Nada. 

With your saved $285, you could pay off credit card debt, stash it toward an emergency fund, or put it toward something you really want.

No-Fee Banking When You Switch to Chime 

Here’s a side-by-side glance at how much fees can cost at some of the big banks:

Chime  JP Morgan Chase Wells Fargo  Bank of America 
Minimum balance requirement (to waive the monthly maintenance fee)  $0.00 $1,500  $1,500  $1,500 
Monthly maintenance fee $0.00 $12  $10 $12
Overdraft fee  $0.00 $34 $35 $35 
ATM fee (non-network, within the U.S.)  $0.00 $2.50  $2.50  $2.50 

When you bank with Chime, you’ll be a member of a bank with no fees. What’s more, we offer a handful of nifty features to help you save money. No, we’re not a unicorn bank. We’re just doing what we think should be the status quo, not the exception. 

 

What I Learned After Getting Hit with Fraud

About a month ago, I was going through my credit card statement and saw a purchase from Amazon that I didn’t make. I also got a suspicious email that included some of my personal information.

I immediately contacted my credit card company to report fraud. My card was frozen and I was reissued a new one. While this process was annoying, what happened after that was eye-opening.

Here’s what I learned after getting hit with a fraudulent charge.

We give everyone our information

I have one credit card – Chase Sapphire Preferred – which I use for everything. This card scores me rewards for dining out and travel, my top two discretionary expenses. When my card was canceled and I received the new one, I had to update my payment information on all of my accounts.

I use auto-pay for almost everything as this way I never forget to pay a bill or get hit with a late fee. So, I had to comb through all my credit card expenses and take an inventory of all the accounts associated with that card.

What I realized was astonishing. I had thought that maybe the credit card was associated with a few subscriptions. But to my surprise, I paid for tons of things automatically with this card. Think Lyft, Amazon, Starbucks, Chewy, Postmates, Quickbooks, my electric bill, my gym, Internet service, health insurance, and more.

As a millennial, I enjoy the convenience of apps, and I don’t think twice about handing out my credit card information. But when you think about it, when companies have your credit card information, you’re more vulnerable to theft and fraud. It’s no wonder data breaches are at an all-time high.

I’m spending more than I thought

One thing this case of fraud taught me is that I’m spending more than I thought on Lyft, Starbucks and other services. As I was forced to manually add my new credit card information to all of these subscriptions and services, I saw exactly how much I was spending.

It gave me a reason to pause. These apps make it so convenient to spend money without thinking about it. Yet, when you use apps to pay, you don’t even swipe! You press a few buttons and are totally removed from the payment process. That psychological disconnect can easily lead to overspending.

There’s more to manage

It took me more than an hour to manually log into all of my accounts and update my payment information. Even then I was paranoid I missed something and would be hit with a returned payment fee if one of the auto-pay subscriptions didn’t go through.

Let’s just say it took up a good half a day to manage everything. It was a pain and it made me realize that as much as I practice minimalism, maybe I wasn’t a financial minimalist. Had I sacrificed minimalism for convenience? In some ways my life is easier with all of these apps and subscriptions. In other ways, my spending has gone up and my information is out there.

I realize now that every time I give my credit card to a new app, subscription or service, it’s one more thing to manage. Even if I don’t get hit with fraud again, my current card will expire eventually. Then I’ll get a new card and have to go through the same process I just did.

What I’m doing going forward

The fraudulent charge on my credit card was annoying and a hassle. But that was actually the easiest part to deal with. Updating all of my payment information was the big eye-opener that made me realize just how vulnerable we are. It made me realize how simple it is to spend when you’re not attached to the money or the card.

As I was going through the list of items I needed to update, I assessed whether I really needed them or not. Postmates? Delete.

In the future, I am going to be more mindful of giving out my financial information. I know that data breaches are rampant and we can’t control everything, but being cautious is a good thing.

I’m also going to be more mindful of how these apps and services add to my spending and eat away at my potential savings. I’m all for convenience but I also don’t want to fall into a trap where I’m spending mindlessly when I could be saving more.

So, while this instance of fraud was a hassle, it taught me where my money is going. I also learned about how to better manage and track my finances, as well as just how vulnerable we are when it comes to using credit cards to automate your financial life.

The moral here: Stay cautious and mindful folks.

 

The Financial Benefits of Same-Sex Marriage

Since the Supreme Court legalized gay marriage in 2015, more than a million same-sex couples have tied the knot.

Yet, love and marriage comes with much more than a day filled with vows, dancing and cake. It comes with a lifetime of financial considerations for the future. For example, this may be only the beginning of saving toward your retirement as a couple, setting up a joint bank account, and working toward your other money goals.

If you have questions about how to best navigate your finances as part of a same-sex married couple, you’re not alone. For example, typical questions include: Can you save money by getting married? Will your tax rate plummet once you tie the knot?

To answer your money questions, we turned to Robert Castillo, an investment advisor and accredited domestic partnership advisor at Gerber Kawasaki, an investment management firm based in Santa Monica, Ca.

Castillo talked us through the money-related aspects of married life for same-sex couples. Read on to see how walking down the aisle could affect your financial future.

Taxes

“There’s been a study done, and about a third of same-sex couples who have married between 2015 and 2018 still have questions about their taxes—whether to file joint or single, or how to file,” says Castillo.

Castillo cautions against the assumption that marriage always means lower income taxes, which he says is one of the biggest misconceptions about matrimony.

“There’s something called a marriage penalty. If two people are high-income earners, they actually end up paying more taxes than if they were single,” Castillo says.

Thankfully, the so-called marriage penalty doesn’t apply to all spouses. If one partner earns considerably less than the other, this usually leads to overall tax savings for the married couple, Castillo says.

Indeed, you shouldn’t let a tax increase deter you from getting married. There are still other financial perks of your nuptials that can make up for the uptick in income taxes, he says.

“There are over 1,100 federal benefits allotted to married couples,” Castillo says.

Retirement Planning

First, here’s the bad news: If two high-income earners get married, they may not qualify for a Roth IRA with their combined income.

A Roth IRA is a type of retirement plan that allows you to contribute money after taxes and withdraw your earnings tax-free upon your retirement. With a traditional IRA, on the other hand, you contribute pre-tax earnings, yet you won’t be taxed on any of your investment gains until you withdraw funds. For both types of IRAs, the contribution limit per person in 2019 is $6,000 if you’re under 50. However, with Roth IRAs, there are limitations on what high-income individuals can contribute. For example, married couples filing jointly cannot make Roth IRA contributions if their combined income exceeds $203,000.

Here’s something else to know: If you have both a traditional IRA and an employer-sponsored 401(k) plan, you can’t deduct traditional IRA contributions from your taxes after a certain income limit. For married couples filing jointly, that limit is a combined income of $123,000.

Now, the good news: Marriage makes it easier for one spouse to pass retirement savings to the other if one passes away. If you’re the surviving spouse, you have the option to absorb your deceased spouse’s 401(k) into your own or claim your partner’s traditional IRA as your own. If your spouse had a Roth IRA, you can also claim it as your own if you’re the sole beneficiary.

All told, marriage makes it easier to deal with the unexpected and still have a comfortable retirement nest egg, Castillo says.

Pensions and Social Security

Marriage offers big-time benefits to the spouses of pension holders. A pension is a type of retirement plan where an employer does all the contributing and investing on behalf of an employee (although some plans allow for optional employee contributions). The employee then collects payments monthly or in a lump sum upon retirement.

Pensions are rarer now than they were a generation ago, but if you’re a teacher, government employee, work in law enforcement or work in other particular professions, you may still be able to reap the benefits of this type of retirement plan. And, if your spouse has a pension and were to pass away, that pension may go to you. What does this mean? It means that you, as the surviving spouse, may be eligible for a lifetime of payouts, depending on the plan. What’s more: This benefit is not available to non-married couples in a domestic partnership.

Here’s another financial perk of marriage: It can boost your social security payments. Social security is a topical subject as many have predicted the demise of this government program. However, American workers in all industries still receive credits for every $1,260 they earn, up to four credits per year. As it stands now, upon retirement, you can start receiving monthly social security payouts. Here’s an online calculator where you can see an estimate of your future monthly social security checks. If you’re married, you stand to receive 50 percent of your spouse’s social security payments or 100 percent of your own, whichever is higher.

Writing a Will

If writing vows seems more appealing than writing a will, you’re in luck: Marriage lessens your need for a will.

In community property states like California, all assets accumulated during the marriage belong equally to both spouses. If one spouse passes, then the assets automatically go to the surviving spouse.

“If a couple isn’t married, they absolutely need not just a will, but also a living trust. It’s not cheap, but it definitely saves a lot in probate taxes later on,” Castillo says.

An Individual Choice

The financial benefits of marriage are clear, but even so, not every couple needs to rush to the altar.

“I don’t try to convince my clients to get married or not. I just give them the numbers,” Castillo says.

With the information above, you’ll have an easier time deciding whether marriage is a smart financial choice for you and your partner. But, no matter what you decide to do now or in the future, we can all celebrate marriage equality. Happy pride!

 

8 Ways to Get One Month Ahead On Your Expenses

As you can probably imagine, most Americans live paycheck to paycheck. This means they spend money as they earn it.

In fact, more than one-third of American millennials (34%) say they could not come up with $2,000 in the next month to handle an unexpected expense.

But, what if you could cover all your expenses at the start of the month – before you even get paid? Then, when you get paid, imagine how much more organized and financially prepared you’d feel. You wouldn’t actually need that money for another 30 days and it could sit in your bank account.

Getting one month ahead on your expenses is a cool concept. Here are 8 things you can do to make this happen.

1. Add Up All Your Monthly Expenses

First, you’ll want to get a good idea of how much your monthly expenses are. So, go through your budget and track your spending to make sure you don’t miss anything.

Be realistic about how much you comfortably spend in a given month. Sometimes, what you actually spend doesn’t match the amount you budgeted for. Make sure you go back to your budget and enter in how much things really cost. For example, once you know you’re spending a set amount per month, you’ll know how much you need to have in order to get one month ahead and save for the following month.

2. Use Lump Sum Payments and Windfalls

If you get windfalls like a tax refund, inheritance or a bonus at your job, you can use this money to cover your expenses for the month.

Then, you can save whatever you earn during this time for the following month. Before you know it, you’re one month ahead and no longer living paycheck to paycheck.

3. Give Up a Vacation

The average vacation can cost a family more than $1,000. It may be no fun to forego a trip, but doing so will allow you to save up the money you need – fast.

But you don’t have to sit home and do nothing. Consider taking a staycation and planning low-cost or free activities during your week home from work. Then, take all that money you would have spent traveling and sock it away into your bank account.

4. Eat Through Your Pantry

If you spend hundreds of dollars on groceries each month, see if you can challenge yourself to cut that amount in half.

This may be difficult, but you can do it by getting creative and encouraging your family to use up food in your pantry and freezer. You can also shop the sales at your local supermarket and buy generic brands. Then, eat at home for 30 days and see how much money you can save.

5. Cancel Subscriptions

Try cutting out subscriptions in order to temporarily save money. This can include things like your gym membership, cable, streaming services, subscription boxes and so on.

Consider cheaper alternatives or do without for a few weeks – or more. For example, you can likely exercise outside or at home without having a gym membership.

Once you get a month ahead on your expenses and you’re into a good rhythm of saving money, you can consider adding back in your favorite subscriptions.

6. Sell Stuff From Your Home

You may have a lot of unused items lying around your house. Stop telling yourself that you’re going to fix them or use them again someday. You know that’s probably not true.

So, sell these items on eBay, or local sites like OfferUp and the Facebook Marketplace. Go all in with decluttering your home and you can earn extra cash.

7. Try Saving Half of Your Partner’s Income

If you have a two-income household, consider saving half of one of your incomes. This may sound like a stretch, especially if you’ve struggled with saving money in the past.

However, you can achieve this with dedication and the right plan. Start by committing to save half of the lower income in the family. For example, if your partner brings home $2,000 and you bring home $3,500 a month, commit to saving half of his income which would be $1,000/month.

You may have to make several cuts, like not dining out as much, finding free and cheap entertainment, reducing your utility use, driving less to save on gas, getting new quotes for lower insurance rates, and finding a cheaper phone company. Remember: All of these changes can be temporary.

8. Hustle Like Crazy

This is an option you can consider once you’d made a solid effort to reduce your expenses. Making extra money can help you meet your goals faster without sacrificing your lifestyle for an extended time.

For example, see if you can pick up more hours at work, get a part-time job or start a flexible side hustle. You can donate plasma, apply for focus groups and panel studies, walk dogs, babysit, edit resumes, clean cars, or offer your services as a graphic designer. The sky’s the limit.

Anything extra you can do to earn more money will get you closer to your savings goal.

Focus On Big Wins

Getting one month ahead on your expenses can be intimidating. So, try to focus on big wins and make sacrifices for a short period of time.

For instance, if you need to save up $4,000 to cover one months’ worth of expenses, setting aside only $50 per month will drag out the process and you can lose motivation before you reach your goal.

Instead, go after big wins that will allow you to save larger chunks of money in a shorter period of time. For example, cutting out four subscriptions, curbing your dining out habit, and not taking a summer vacation can result in thousands of freed up dollars over just a couple of months. From there, you’ll quickly get one month ahead, which will improve your cash flow and allow you to pay for surprise expenses.

 

8 Ways to Protect Your Personal Information While You’re Banking

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While banking security has certainly improved over the years, thieves, scammers and hackers still find ways to steal your personal information and gain access to your hard-earned funds.

In fact, according to a 2018 online survey by The Harris Poll, almost 60 million Americans have been affected by identity theft. And, in 2017, $16.8 billion was stolen from 16.7 million victims of identity theft, according to the 2018 Identity Fraud Study by Javelin Strategy & Research.

So, what can you do to safeguard your identity and finances against unscrupulous types? Here are eight steps you can follow to keep your money safe.

1. Change your passwords often

Keeping the same passwords across each of your bank, credit card, and email accounts for too long increases the risk of hackers accessing your information.

So, change your passwords frequently. Doing this at least once a month is recommended to keep your accounts safe and secure. If you find it hard to remember your passwords, try using a password generator/scrambler like Dashlane to create and organize your passwords. You can also store your passwords on a secure browser extension like LastPass.

Here’s another tip: Don’t store your passwords on your mobile device or laptop, says Nathan Grant, a credit industry analyst. While it may be convenient, if your device is stolen, your password is right there for a thief to use without having to lift a finger.

“Also, be careful not to enter any passwords or financial information on websites if the URL doesn’t have a secure lock symbol or https in the web browser address bar, especially on public networks,” says Grant.

2. Avoid using public WiFi and shared computers

Speaking of security, be careful before connecting to WiFi in a public place, say experts.

“Public WiFi is great for browsing the web, but you shouldn’t use it to log into your personal accounts and mobile banking apps,” says Adele Alligood of EndThrive.com.

“Doing so can make it easy for someone to intercept your login information and steal your financial data.”

Likewise, avoid sharing your computer or using a public shared computer (like one in a library) if you’ll be conducting banking or financial transactions. If you must do this, log off after your session is over — and, depending on your device, enable two-factor authentication when logging is.

How to tell if your connection is secure? There will be an image of a padlock next to the WiFi address or before the URL on your Web browser. And, if you have to access your bank app? Make sure the app you’re using is security encrypted — especially if you’re making payments.

3. Download anti-virus software

A computer virus is an inherent risk when using public WiFi. But even in private, you may be at risk if you don’t have a good antivirus software installed on your laptop or desktop.

“With a little research, you can choose which antivirus software is right for your computer,” says Justin Lavelle, a spokesman at BeenVerified.com.

“Antivirus software makes sure malicious software is detected and removed from your computer,” says Lavelle.

4. Use caution at the ATM

You can never be too careful at an ATM — even if you guard your debit or credit card carefully.

Lavelle says you should be mindful of criminals who use credit card skimmers. These are devices that can record your card’s information to then use that information to make unlawful purchases.

“Whenever you use a credit card reader, it is smart to inspect the device first,” he says.

“Look at the machine for scratches, ill-fitting parts or seals. Jiggle the machine as well as the PIN pad, or credit card insert. Most gas pumps, ATMs or vending machines are manufactured to be secure. Broken seals or loose parts may be an indication that the machine has been breached, and a skimmer has been installed.”

Lavelle says that most skimmers use Bluetooth technology, so one way to detect a skimmer is to use your smartphone.

“Turn on the Bluetooth pairing, and then see how many odd things pop up. It might just alert you to a skimmer.”

5. Watch out for “sidlers”

You should also exercise caution at busy public points of sale, since this is where thieves known as “shoulder surfers” are known to use stealthy methods to get the digits off your card.

“If another consumer is crowding you in line to pay, don’t be shy to ask them to please back up and give you space,” says Jim Angleton, president of AEGIS FinServ Corp.

“Yes, it seems a bit harsh; however, the vast majority of ‘sidlers’ are purposefully inching up to pretend to use their smartphone to look at email when they are really taking cellphone video of you entering your card and inserting your PIN.

Once they have the perfect photo, they go to their car and use a laptop and portable printer to create a blank card that looks just like your card. They can then go online and purchase a five dollar item to see if the card works. Once they have confirmation, they can then sell the fake card with your valid credit card number, explains Angleton.

Want to know how you can avoid this problem? Opt for merchants that accept mobile payments straight from your phone.

6. Never reveal your personal information

Guarding your bank account numbers or debit card digits isn’t just about hiding your details physically or behind passwords. Sometimes, ID theft involves revealing info to the wrong people.

“Emails and phone calls may seem official and important, but you should never give out your personal details unless you can verify, without a doubt, that it’s safe,” says Lavelle.

“Most retailers make it clear that they will never ask for your password, social security number, or other sensitive information by phone or email.”

Pro tip: Make sure your bank account offers added protection against hackers. Chime’s debit card, for example, comes with an instant block function to prevent unauthorized use of your funds. You can simply disable transactions through the Chime app.

7. Destroy your documents

In the event you want to get rid of old receipts and sensitive banking information, don’t just dispose of this in the trash. Thieves know no shame and will happily dumpster dive to find each piece of a torn-up document.

Instead, invest in a paper shredder that makes any document unsalvageable and unreadable. You can also bring your documents to a UPS, Staples or other local office supply store that offers low-cost document shredding services.

8. Check your credit report

When was the last time you checked your credit report?

Checking your credit report and score is essential so that you know where you stand with your credit. Getting a copy of your credit report will also reveal any erroneous information that could negatively impact your credit.

So, scour your report — everything from the spelling of your name, the amount of your loans and your credit accounts (both open and closed). If you find an inaccuracy, each of the three credit bureaus (Experian, TransUnion and Equifax) have simple steps you can take to dispute anything unfamiliar on your report.

And, here’s another layer of protection: Switch to a bank account that will send you real-time alerts each time a transaction is made.

Stay Safe and Secure

Using these eight steps, you’ll be well on your way to safeguarding yourself and your finances in any scenario — whether you’re banking from your laptop at home, getting cash at an ATM, or shopping on your mobile device.

Banking Services provided by The Bancorp Bank or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card is issued by The Bancorp Bank or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. The Chime Visa® Credit Builder Card is issued by Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see back of your Card for its issuing bank.

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