Tag: Debit Cards

 

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.

 

Overdraft Protection: What to Know & How to Avoid Fees

Have you ever swiped your debit card and worried that you might not have enough money in your bank account? If this sounds like you, you might want to consider signing up for overdraft protection to save you from such a predicament.

On the surface, overdraft protection may seem like the perfect solution, but the details and reality of the optional banking services leave many banking customers wondering if it’s actually worth it. Explore our handy guide to learn all about overdraft protection, and overdraft fees, and how you can clean up your finances to avoid them altogether.

What is overdraft protection and how does it work?

Overdraft protection is a safety net that helps you avoid overdrawing your account. In short, it’s a type of financial protection that will help float you money if you have insufficient funds. So if If you swipe your debit card or try to get cash out of an ATM, you may be able to do so even if you technically don’t have enough money in your account. It does this by pulling in money or credit from the account that you linked to your checking account when you set up overdraft protection with your bank.

Generally, if you make a purchase with your debit card and don’t have enough funds in your checking account, the purchase won’t go through. This is typically called an overdraft, and signifies that your account balance has dipped below zero and into negative territory. This situation can be embarrassing for you, as well as awkward for the person behind the cash register. It also can be highly inconvenient if you need whatever you’re purchasing now.

This is where overdraft protection comes in. Overdraft protection essentially protects you from overdrafting. So, instead of getting your card declined and leading to an uncomfortable situation, your card will go through like normal – even if you don’t have enough money in your account to cover that purchase.

But overdraft protection comes at a price, specifically, in the form of overdraft protection transfer which can add up quick. So, while overdraft protection, on the surface, can seem like a great solution to a temporary problem, it’s not always all it’s cracked up to be.

If you are interested in this protection, you’ll want to talk to your bank and enroll in the program. Additionally, it’s important to know all the upfront costs such as overdraft fees, credit line limits, etc.

Pros & Cons of overdraft protection

The main pro of overdraft protection is convenience. Overdraft protection allows purchases to go through, even if you don’t have enough funds in your checking account. This can save you embarrassment, inconvenience and time. You don’t have to deal with your card getting declined in public or being unable to access cash when you really need it.

However good overdraft protection seems in theory, it can cost you in the long run. The fees can vary from bank to bank and your financial institution decide what to charge, and you’re usually hit with more than one charge. You can continue getting hit with overdraft fees if your account is overdrawn for an extended period of time. These new fees are called extended overdraft fees and some are charged daily.

We found that consumers can get hit with four to six overdraft fees per day. In some cases, that number can be as high as 12. What’s more, : C consumers who frequently overdraft end up paying more fees than those who do not opt into overdraft protection. In fact, The Consumer Financial Protection Bureau (CFPB) found that frequent overdrafters who opt into this coverage pay nearly $450 more in fees.

On top of that, if you accrue enough overdraft fees and stay in the negative, you’re at risk of account closure. Having your account closed by your bank is a major inconvenience. Just think about all the bills that are connected to that account, or not having access to your money for a period of time.

All of these are major cons of overdraft protection and should be considered carefully.

How Do You Use Overdraft Protection?

If you want to use overdraft protection, first make sure it’s something you’re signed up for. As noted above, your bank must get consent from you first to enroll you in overdraft protection.

Once you are enrolled, see if you have to link another account or a credit card to complete the process. Each bank may have different policies and procedures.

When it’s set up, overdraft protection will be in place if you overdraw your account. But remember: The hope is that you never have to use it! If you do, this means you’ve run out of money in your account, which is no fun.

Overdraft Fees Are Costing Americans Big Time

Overdraft fees – by and large – are a big business for many banks. In fact, the average overdraft fee is around $35. In 2017, consumers paid 34.3 billion dollars in overdraft fees in 2017, a number which has been on the rise since the Great Recession.

Even credit unions, which are often thought of as more community-minded and consumer friendly have jumped on the overdraft fee bandwagon. Overdraft fees at credit unions have nearly doubled from $15 in 2000 to $29 in 2017.

In short, overdraft fees are the bread and butter for many financial institutions. They give banks a way to make money off consumers by positioning overdraft protection as a useful service.

Does Overdraft Protection Hurt Your Credit?

As noted above, in some cases your bank may offer you a line of credit or link your overdraft protection to a credit card. If linked to a credit card, you could end up paying more. Why? Because some card issuers might consider the overdraft a form of “cash advance,” which has its own set of fees, not to mention higher interest rates.

How Do You Avoid Overdraft Protection?

Before 2010, many consumers were unaware that they were being “opted in” to overdraft protection programs. However, starting in 2010, federal regulations shifted and required that banks get consumers’ consent to opt into overdraft protection.

To make things simple, however, you can avoid overdraft protection by not signing up for it with your bank. If you’re currently enrolled in this service, you can cancel it. This way, if you don’t have enough in your account, your purchase or transaction will get declined. While you won’t be able to make the purchase, you also won’t be hit you with an overdraft fee.

Another option is to open a bank account at Chime, which has no overdraft fees.

Lastly, to avoid this problem altogether, keep a buffer of money in your checking account. This can help you avoid dipping into the negative. Check your account balances daily and monitor your bill due dates and auto-drafts. This way you’ll know when money is coming out of your account.

Final word

There are certainly pros and cons with overdraft protection.

It can be convenient, yet costly. It can save you embarrassment and time, but also take a bite out of your hard-earned money. So, weigh these pros and cons carefully.

Final tip: If you never want to worry about an overdraft fee again, consider switching to a bank that offers fee-free overdraft.

 

These Facts About Overdraft Fees Will Shock You

In the All Things Pesky universe, overdraft fees rank right up there with mismatched socks and next-door neighbors who vacuum in the dead of the night.

However, these bank fees are not just minor annoyances. They can put a serious dent in your pocketbook. Not only can overdraft fees be expensive, but they can potentially impact your credit. (FYI: Chime doesn’t ever charge its members overdraft fees. Never ever.)

Here are 5 shocking facts about overdraft fees that will send you reeling (don’t say we didn’t warn ya):

1. Americans pay more than $300 in bank fees every year

According to data from BankFeeFinder.com, Americans pay an average of $329 in bank fees annually. What’s worse, one in 10 pay a whopping $1,000 a year in fees. This includes fees for non-sufficient funds (NSF), monthly maintenance fees, ATM fees, overdraft charges and more. Just think: This money could go toward your living expenses, emergency fund, that awesome vacay—anything is better than paying your bank for holding onto your money.

2. Overdraft fees have been on the rise since the recession

Based on recent data released by the FDIC, the 10 largest banks in America collected $11.45 billion in overdraft and NSF fees from American consumers in 2017. What’s more, a recent survey by Moebs Services reveals that consumers paid a whopping $34.3 billion in overdraft fees in 2017 (this includes overdraft fees from big banks, smaller banks, and credit unions). This is the highest since the Great Recession in 2009, and a three percent increase from 2016.

With that much money going toward mere overdraft fees, you may think twice before reaching for your debit card to make transactions. In our age of money micro-transfers, a small misstep can oftentimes result in a series of overdraft fees. I know because this has happened to me. For instance, you can get dinged financially for not having enough in your checking account when an automatic investment hits, or even when you buy groceries at the market.

According to Moebs Services, the median overdraft fee in 2000 was $18. It’s now at $30 (most of the big banks charge an average of $35.) And credit unions aren’t much better. In 2000 credit unions charged a median price of $15; in 2017 that fee is up to $29. It’s a sad reality when credit unions, typically known for lower fees, aren’t cutting consumers any slack when it comes to overdraft fees.

3. Big banks still engage in abusive practices

According to analysis from the non-profit Center for Responsible Lending, at least one of the top 10 big banks do the following: charge extended overdraft fees on top of per-transaction overdraft fees, use high-to-low transaction processing for some forms of debit transactions, and allow five or more overdraft fees to be charged per day to its customers. Indeed, some of the big banks are still manipulating transactions to wrangle as much money in fees from you as possible.

4. Banks leave customers in the dark about overdraft protection programs

Many customers who incur overdraft fees aren’t well informed about how overdraft protections work, according to a recent study by Pew Research. As It turns out, many consumers aren’t aware that if they don’t have enough funds to cover a transaction, they can actually decline the purchase and not have to pay an NSF fee.

The same Pew Research study also showed that banks ineffectively communicate with consumers about overdraft protection programs. What’s worse, even among customers who had a straight-up convo with their bank, their understanding of exactly how overdraft programs work was pretty low. This cloud of confusion can result in even higher bank fees.

Case in point: Per the Pew research on overdraft programs, one in three of those who overdrafted treat these overdraft programs as a type of loan. For example, when they don’t have enough funds in their bank account to pay for those groceries, they use overdraft programs as way to borrow small amounts of cash.

5. Those who opt-in to overdraft protection pay more in fees

Indeed, overdraft programs are not loans and they don’t save you money. As it turns out, people with overdraft protection usually pay $450 more in bank fees, per a recent study by the Consumer Financial Protection Bureau (CFPB).

It’s no surprise that many of those who frequently incur overdraft fees are also financially vulnerable – meaning they tend to have lower credit scores and account balances than those who don’t overdraft as often.

No overdraft fees with Chime

If you want to avoid overdraft fees entirely, look toward Chime. Chime’s fee-free structure means you won’t ever have to incur bank fees. You won’t have to pay overdraft fees, monthly maintenance fees, foreign transaction fees, or minimum balance fees. Plus, you can enjoy ATM withdrawals sans fees from over 38,000 MoneyPass ATMs.

Overdraft terminology 101

To help you better understand the lingo, check out this basic overdraft fee glossary:

Overdraft

An overdraft occurs when you don’t have enough funds in your account to cover a transaction. In turn, your financial institution (i.e. bank or credit union) pays for that transaction. A fee may be charged for this service. You can overdraw your account by paying for bills, writing checks, withdrawing money from ATMs and shopping online.

Overdraft protection

In the case that your bank account balance falls under zero, overdraft protection provides a guarantee that your debit card transaction will clear. When you opt-in to overdraft protection, the financial institution takes money from a linked account to cover the transfer. A fee is often tacked onto the transaction.

Non-sufficient funds

Non-sufficient funds (NSF) is a common banking term that means you don’t have enough money in your checking account to cover a check, online bill payment, or debit card transaction.

 

Why Do Americans Overdraft?

Sad truth: Americans are spending more on overdraft fees than ever.

In fact, the 10 largest banks in the U.S. collected $11.45 billion in overdraft and non-sufficient fund (NSF) fees in 2017, according to recent data released by the FDIC. Staggering? You bet. So why are we overdrafting, and what types of expenses tend to cause the most overdraft fees?

Let’s dig in to see why you may incur overdraft fees in the first place, and how you can prevent these charges. Read on to learn more.

Bills, Bills, Bills

That’s right. You’re probably not overdrafting because you spent too much on a pair of YSL boots. (And if you are doing this, we need to talk.) Based on a survey conducted by Pew Charitable Trusts, three out of four overdrafters had trouble paying their monthly bills in the past year – everything from rent, to Internet service to other utilities. If this sounds like you and you’re short on funds, look out for overdraft fees.

Ideally, you should have enough money in your bank account to cover your bills each month. But if you’re falling short, consider calling your billing companies to explain your situation, and see what promos or discounts they can offer to you. I aim to do this at least once a year. You can also research competitor rates and put on your negotiating hat.

Eating Out

According to the Bureau of Labor Statistics (BLS), from 2015 to 2016, Americans spent more moola on bars and restaurants ($54.857 billion) than on groceries ($52.503 billion). While there’s no direct evidence that this leads to overdraft fees, a night out bar-hopping or fine dining when your pocketbook can’t handle it can result in non-sufficient fees. Keep in mind: It’s much harder to control how much you’re spending when you’re enjoying a night of revelry than when you’re cooking at home.

If you’re dining out, set a limit on how much you want to spend. Take out cash as necessary, and spend only that much. You can also set alerts on your debit and credit cards. And, if you’re using credit to pay for dining out and you’ve gone overboard, you may be able to temporarily freeze your card. Of course, you can also consider eating out less frequently. Another option: a meal kit delivery service. These services often run introductory deals and can be a fun way to eat at home and save money on those expensive nights out.

Not Checking Your Balance

Sometimes you may get dinged with an overdraft fee simply because you’re not paying attention. I once overdrafted because I spent too much on my credit card in a given month, and forgot to transfer money to cover the higher-than-usual balance. Whoopsies.

If you’re treading financial hot water—or close to it—check your bank account balance religiously. I check mine every morning. This way I can keep close tabs, and if I’m running dangerously low on funds, I can tighten my spending or transfer funds. You can easily do this too with a bank or money management app. It takes only a couple of minutes to possibly prevent an expensive overdraft fee.

Not Saving for a Shortfall

You’ve heard the classic personal finance rule: You need an emergency fund. But easier said than done, right?

If anything, aim to save a couple hundos as a money cushion. According to research by EARN, a non-profit that helps low-income folks save, $250 to $500 was enough to cover a financial shortfall in a given month. That’s likely also enough to cover your bills when you’re having a lean month.

So, make it a priority to have a bit of padding. The easiest way is to auto-save. If you’re a Chime Bank member, you can set up a rule to auto-save a portion of your paycheck. So if your take home pay every two weeks is $1,500 and you commit to saving just two percent, that’s $30 every two weeks, $60 a month, or $720 a year. You can do this simply by brown-bagging it to work a couple days a week, or skipping a latte during your afternoon break.

You can also stash extra cash by saving a portion of your annual tax refund, a bonus from work, or “extra cash,” such as a gift from your Aunt Janet for your birthday or Christmas.

Not Having Enough Around Payday

Does this sound like you: You overdraft because you look at it as a way to borrow money when you’re short on cash. Yet, nothing can be further than the truth.

Overdrafting is not a loan. If you’re feeling financially pinched before payday, consider changing due dates for your bills so they coincide right after you get paid. This way you’ll be in the flush and can afford to cover your bills. Whatever is left over can be used for discretionary expenses—food, gas, personal items, clothing, entertainment and other costs.

If you’re a gig economy worker, you can even align your bills with payments from certain clients. So, if you rake in $500 a week as a rideshare driver, designate that particular paycheck toward your rent and main bills. Money you rake in from other gigs can go toward other spending. Get it?

Are You Ready to Stop Overdrafting?

Now that you have a better understanding of why so many people overdraft and how easy it is to repeat this cycle, it’s time to make a concerted effort to change your habits. Luckily for you, Chime has your back in helping prevent overdraft fees from even happening. Additionally, Chime provides real-time alerts for each transactions, so you always know where you stand with your account balance.

 

Chime Debit Card vs. Prepaid Debit Cards

By now you may have heard of Chime, a bank account with no hidden fees that helps you manage your money on the go and save automatically. Pretty awesome, right?

But did you know that Chime members also get a Chime Visa Debit Card, designed to help you save more money?

You may be wondering how a debit card can help you save money. Plus, you might be thinking you don’t need another debit card as you already have a prepaid card or two in your wallet. You may also be wondering if there are any reloadable prepaid debit cards with no fees. But, once you learn more about its benefit, we think you’ll be trading in those prepaid cards for a brand new Chime debit card.  

What’s the difference between a debit card and prepaid card?

Before we go any further, it’s important that you understand the main difference between a debit card and a prepaid card. It boils down to this: A Chime debit card is linked to your bank account and a prepaid card is not.

So, if you use your Chime debit card, your purchases are deducted from your Spending Account. A prepaid card, on the other hand, is not connected to any bank account and it’s up to you to load money onto it in advance. Typically, you can use your prepaid card until your loaded up funds run dry.

5 Key Differences Between the Chime Debit Card & Popular Prepaid Bank Cards

To make it easier for you to understand other differences between Chime debit cards and prepaid cards, we took a closer look at four of the most popular prepaid cards: Netspend, RushCard, Brink’s and Bluebird by American Express. We then compared the Chime debit card to these prepaid cards in terms of five key categories: fees, mobile apps, ATM access and fees, early direct deposit and security. Here’s what we found.

1. Fees

Chime: There are no hidden fees associated with Chime’s debit card. This is important as the average U.S. household pays more than $329 in bank fees every year. Chime, however, is on a mission to change this with no overdraft fees, no monthly maintenance fees, no monthly service fees, no minimum balance fees, and no foreign transaction fees when you use your debit card. In short, a Chime Spending Account is virtually free to use.  

Prepaid cards: All of the four prepaid cards that we analyzed charge fees for certain services, including, ATM withdrawals and transferring funds. 

2. Mobile App

Chime: The Chime app has 17,000+ 5-star reviews. Whoa. Offering the best mobile banking experience, Chime’s award-winning mobile app helps you track your spending and savings, pay friends and relatives, transfer money, send and deposit checks, and pay bills. You can accomplish all of this from any smartphone.

Prepaid cards: These cards all offer mobile apps that allow you to manage many financial tasks, like depositing checks, paying bills and viewing your transaction history. But, none of them offer extensive features like Automatic Savings or Pay Friends. Why? Prepaid cards are not tied to full service bank accounts, which ultimately limits your overall banking experience.

3. ATM Fees

Chime: How does easy access to money sound? With a Chime account, you can use your debit card to get cash at more than 38,000 ATMs – for no fees. Period.

Prepaid cards: With all four prepaid cards on our list, you can withdraw money from ATMs. However, there are fees involved.

  • Netspend – $2.50 per domestic withdrawal
  • RushCard – $2.50 per out of network withdrawal
  • Brink’s – $2.50 per domestic withdrawal
  • Bluebird – no fees for MoneyPass withdrawals and $2.50 per non MoneyPass withdrawal

4. Early Direct Deposit

Chime: Chime members can get paid up to two days early with direct deposit, as well as enable the option to automatically save a percentage of every paycheck. That’s right. No more waiting for your money or worrying about lost paper checks. Chime gets you paid faster and helps you save money.

Prepaid cards:  All four of the prepaid cards also offer an early direct deposit option, allowing you to get your funds two days early. But unlike Chime, these cards are not tied into your savings account, leaving your personal savings up to you.

5. Security

Chime: Security is a priority at Chime, and this includes keeping your information and money safe. Deposits of up to $250,000 are insured through Chime’s partner, The Bancorp Bank, Member FDIC. Chime also uses 128-bit AES encryption to make sure your cash is parked safely. Here are some of the other security features you’ll get with a Chime account:

  • You can instantly block your Chime debit card. This means that if your debit card is missing or stolen, you can block all transactions right from the app.
  • Chime sends you real-time, instant transaction alerts. This way you can stay informed about your money at all times.
  • You can shop worry-free at millions (yes, millions) of merchants. That’s because the Chime debit card is protected by the Visa Zero Liability Policy, which ensures that you won’t be responsible for unauthorized charges.
  • Your privacy is important, which is why Chime requires two-factor authentication.

Prepaid cards: These cards do offer some security features. For example, Brink’s allows you to add your picture to your card. RushCard, in turn, offers One Touch Access, allowing you to use your fingerprint to access your account. And, because Bluebird is part of the Amex family, you’ll get purchase and fraud protection.

But at the end of the day, none of these four prepaid cards are bank accounts and therefore do not offer the full scope of security features found at Chime.

Switch to Chime For No Hidden Fees

There are many differences between prepaid cards, and Chime’s debit card. As you can see, Chime is not a prepaid card – far from it. Plus, the Chime debit card offers a lot more perks and benefits than prepaid cards.

If you’re looking for a singular card that wins across all categories, Chime takes home the trophy. What are you waiting for? Sign up for a Chime account today and start saving money now. 

 

Why You Should Spend With Your Debit Card vs. Credit Card This Holiday Season

The holiday season is approaching and you know what that means — spending money. Whether it’s buying gifts for loved ones or booking flights to travel home, the holiday season typically means a spike in spending for many of us.

And, because you may spend more than at other times of the year, you’re probably going to use credit cards. But, did you know that while credit cards offer some cool rewards like cash back, using your debit card is often a wiser choice? Read on to learn why.

1. You spend only what you have

Everyone wants to think they’re responsible with credit and only buy what they can afford. Well, a lot of people are wrong. According to a 2017 study by Magnify Money, 68 percent of consumers attributed their holiday debt to credit cards.

Of the consumers surveyed, 44 percent racked up more than $1,000 and five percent accumulated more than $5,000 in credit card balances. More disturbing is the fact that half of those consumers noted that it will take more than three months to pay off the debt they accrued during the holidays. That’s more than a quarter of the entire year!

When you use a debit card, however, you spend only what you have in your bank account. And, this helps you become more mindful and realistic about your budget. Using a debit card during the holiday season can also help you avoid fees and that dreaded holiday credit card debt.

2. You don’t have to worry about making another payment

The holiday season can make the most organized person run around like a headless chicken. Everyone’s schedule seems packed to the brim and there’s always something else added to the to-do list (Think: “Buy white elephant gift for the company party.”)

When you’re so busy, some of your normal day-to-day duties can fall to the wayside. And, if you don’t have auto-pay set up, you can potentially miss a credit card payment. Another common problem during the busy holiday season: You say you’ll “do it later” and then when you remember to pay your bill, it’s late.

When you use a debit card, however, you don’t have to add anything else to your to-do list – including making yet another payment. The money comes straight from your bank account and you don’t have to do a thing.

3. A debit card is free to use

One of the biggest perks with using credit cards is the rewards, like cash-back and airline miles. But oftentime the best rewards cards come with an annual fee and the conversion on the rewards isn’t as great as you think. In many cases, miles are literally worth about a penny per mile or less.

So, you may actually be spending your money on an annual fee, high interest rates, late fees, and more – without getting much in return.

Here’s where debit cards take center stage. Debit cards are free and can help you avoid debt.

4. Your debit card can help you save

At Chime, we’re all about helping you save money when you spend money. It’s all about balance. Am I right?

With this in mind, check out Chime’s round-up savings program, where every time you use your debit card, we round-up the purchase to the nearest dollar and put it into your Savings Account. This way you can effortlessly save and know that you’re being financially responsible at the same time.

5. Stop fraud instantly

There are no two ways about it: Fraud can be rampant during the holiday season. A lot of credit card enthusiasts think this is a solid reason to use credit over debit.

But, your debit card can offer protections that are similar to your credit card. For example, if you suspect any fraudulent uses on your Chime card or your card goes missing, you can simply go into the app and immediately put a halt on purchases by disabling transactions. No need to stay on a long customer service line (who wants to talk on the phone?!) and no need for lengthy emails. Just put a stop to it, now.

Not only that, but Chime alerts you any time you use your debit card. So, if your debit card get into the wrong hands, you’ll know right away.

Bottom line

The holiday season should be a time of joy and fun, not stress and debt.

Using debit instead of credit can help you keep your spending in check, plus you’ll have one less thing to worry about. So, this holiday season: Try spending only what you have and enjoy the season with family and friends. It sure beats worrying about money!

 

Why Debit Cards are the Best for Budgeting

Everyone has different methods of managing their finances. Some people swear by the cash envelope system, while others put everything on credit cards with the aim of paying them off in full each month.

Yet, perhaps the most underrated way to stay on budget is to use a debit card that links directly to your savings account. This way you can readily keep tabs on your daily spending as your purchases come right out of your bank account.

According to Nasdaq, banking institutions in the United States issue over 165 million debit cards each year. So, you likely already have a debit card and this may become your best friend when it comes to controlling your spending.

Here are 5 reasons why debit cards can help you stick to your budget.

1. You can easily track your spending

Perhaps one of the biggest advantages of using plastic versus cash is that you can easily track your spending without having to carry around wads of dollar bills.

Every time you swipe your debit card, your transaction is tracked. When you go to view your bank account online or your monthly bank statement, you can see just how much money you spent, and where. While you may not be able to easily discern exactly what you bought (that’s when you can look at your receipt), keeping tabs on your bank account debit transactions provides a good starting point to figure out where you are potentially spending too much money.

2. You don’t have to worry about going into debt

Unlike credit cards, debit cards only allow you to spend the money you already have in your bank account. If you try to spend more money than what you have, you may be charged a steep overage fee, depending on how your account is setup. While overdraft fees can be costly, these fees are typically not as expensive as the amount that credit cards charge in interest (which in 2018 was nearly 17 percent!)

Credit cards impose a “credit limit” on consumers. This is the limit on how much you can borrow on your credit card. Your credit limit is determined based on a number of factors, including your credit score and credit history. And, oftentimes credit card users spend more money than they can afford to pay off each month. When this happens, you’ll get charged interest. Interest is the money credit card companies charge you for carrying over a balance from month to month. With the average credit card interest rate of 16.71 percent, it can be easy to get stuck in the cycle of debt.

With debit cards, your “debit limit” is the amount of money you have in your bank account. If you don’t have the money available, well, you won’t be able to spend it. This may not sound like much fun, but it will certainly help you avoid the same type of spending sprees that often occur with credit cards.

3. You don’t have to carry a wad of cash around

On the other end of the spectrum, cash budgets are preferred by many people who don’t feel like they can keep a handle on credit card spending.

Yet cash comes with its own set of problems. For example, the cash envelope system is a popular way of budgeting, but it requires you to have a significant amount of cash on you at all times. Here’s how this type of budget works: you stash cash in individual envelopes for each area of spending, such as groceries, gas, fun money and clothing. You only put as much cash into each envelope as you have budgeted for that particular category each month. Once you are out of money, you’re out.

Indeed walking around with envelopes of cash to pay for things is enough to make anyone sweat, as you may worry about losing your money or having your purse or wallet stolen. Once your cash is gone, it’s gone.

4. You can count on ease and convenience

Counting your actual dollars and cents takes a fair amount of time when you’re standing at the register in a store. Debit cards, on the other hand, are convenient and transactions are quick to process when you’re making a purchase.

5. You can sync your debit card with budgeting apps

Finally, if you prefer to use budgeting apps to keep track of your finances, your debit card may be the perfect solution for you.

It’s impossible to sync a cash-only budget to an app. You need to have a budgeting app linked to a credit or a debit card in order for it to automatically update. While debit cards can’t list out every single individual purchase you make, they can connect to budgeting apps that can help you distinguish where your money is going.

Digital apps take the grunt work out of budgeting. Instead of having to track every individual expense, you can let an app do the work for you, saving you a ton of time and effort.

Should you use a debit card for budgeting?

Depending on your spending habits and preferences, a debit card may be a great way to help you stick to your budget.

You may be surprised at how much money you can save by simply tracking your spending using the debit card you most likely already have in your wallet. It certainly doesn’t hurt to give it a try, right?

 

What Are Online Prepaid Debit Cards? A Look At The Key Differences Between Prepaid Card vs. Debit Card vs. Credit Card

What are the key differences between a debit card, a credit card, and a prepaid card? With so many financial terms floating around it can be difficult to figure it all out. Some people use personal finance terms interchangeably like ‘checking account’ and ‘bank account’ or ‘interest rate’ and ‘APR’. In these instances, this is understandable.

Yet, when it comes to prepaid, debit and credit cards, it’s important to note that these cards are not the same thing. While they all may show a network logo like Visa, MasterCard, American Express, or Discover, these three types of cards are actually quite different.

With that said, these cards do have one thing in common: if you’re not using cash, you’re likely using one of them to make your purchases.

Read on to learn more about the differences between prepaid cards, bank issued debit cards and credit cards.

Debit Card

A debit card is one of the most used bank cards around. Debit cards have numerous features that make them convenient. They also have downsides like:

  • Limited security
  • ATM use and bank fees
  • Potential overdraft fees

Scroll down for the specifics. We picked out everything you need to know to decide if a debit card a good choice.

Prepaid Card

Prepaid cards are another fairly common money card option. These are often used as gifts and rewards, but people with limited access to standard banking options as well as those with limited budgets often use them in lieu of a checking account. Just like credit cards and debit cards, prepaid cards have their own pros and cons. With a prepaid card, you load money onto the card and then use it to make purchases or withdraw money from an ATM. You can put money onto your card with any of these options:

  • Arrange for a paycheck to be directly deposited onto the prepaid card.
  • Add funds at retailers or financial institutions like a Walmart or currency exchange location
  • Use a reload card which works just like a gift card (it contains a code that becomes linked to the amount of money you paid the cashier. You can then load the card over the phone using your code)
  • Transfer funds from an existing bank account
  • Note: Be mindful that some loading methods may come with a small fee.

There are different types of prepaid cards to choose from: free prepaid debit cards, reloadable prepaid cards with no fees, and no limit prepaid debit cards, to name a few. Make sure you understand the terms and limits of this type of card before you use one.

Credit Card

A credit card is separate from your bank account and allows you to make purchases by borrowing from a credit limit, which is based on your credit score and other factors. Credit cards offer increased security, robust features, longer term payment options but have downsides too. You’ll want to read our details below to decide if a credit card is an option. It’s also important to note that you’ll receive a certain limit when approved for a card. You can then spend up to this amount regularly so long as you make your minimum payments on time.

For example, if you get a credit card with a $1,000 limit, this means you can spend up to $1,000 on the card. While you can carry your remaining balance over to the next month, you will be charged interest on the balance until you pay it off. This is why it’s recommended to purchase only what you can afford to pay for within a short period of time – preferably during that same billing period.

A good rule of thumb is to only borrow up to 30% of your credit limit and try to pay the bill off in full each month. So, instead of spending your entire $1,000 credit, you may want to spend $300 or less and pay the bill off in full at the end of the monthly billing cycle. According to Experian, this is called credit card utilization and it’s a common factor when determining your credit score.

Credit cards can help you build your credit and demonstrate that you are a trustworthy borrower. In fact, credit card companies report your borrowing and payment history to the three major credit bureaus and this helps shape your credit score.

One final note about credit cards: when you decide to apply for one, make sure you understand all the fees and terms.

Key Takeaways: Prepaid Card vs. Debit Card vs. Credit Card

As you can see, there are quite a few key differences between the three cards above, so let’s discuss them in more detail.

Benefits of the prepaid card

A prepaid card is different from a debit card based on the fact that you don’t need a bank account to have a prepaid card. And, when you get a prepaid card you won’t be subject to any credit checks or inquiries into your banking history because you are using loading your cash onto the card. Another perk: you may be able to deposit your paycheck right onto your prepaid card.

But that prepaid card may not be so safe to use

While prepaid cards can look and feel like debit cards, they aren’t as safe as debit cards. Why? Since debit cards are connected to your checking account, you can easily monitor your account and spending online for free. Your money will also generally be protected if your debit card gets lost, stolen, or wrongfully charged.

However, the Consumer Financial Protection Bureau (CFPU) has put new rules in place to make prepaid cards safer for consumers. These new rules are set to go into effect on April 1, 2019.

Now let’s talk about credit cards vs. debit cards

Credit cards are different from both prepaid and debit cards due to the fact that when you use a credit card you are borrowing money while hopefully building a solid credit history. Better yet, many credit cards offer rewards in the form of points or cash back that can be redeemed for statement credits, travel, or merchandise. Some people like to use credit cards to purchase groceries, gas, and other everyday needs in order to rack up reward points.

As long as you’re not overspending and can pay your bill off in full each month, there’s nothing wrong with using this strategy. However, if you struggle with controlling your spending, you may want to steer clear of using credit cards for your daily purchases.

Instead of credit cards, consumers often choose debit cards for everyday spending. Why? Debit is safer than cash, you can monitor your activity online with mobile banking, and you can choose a bank that doesn’t have fees.

Which Financial Card Do I Need?

If you’re not going to be using cash 100% of the time, odds are you’ll need one of these three cards.

Some people start with a prepaid card, but most choose a debit card that’s connected to a checking account for easy access to their money. Still, others prefer a credit card, especially if it offers perks and rewards.

You can choose to use more than one card! Just find the best solution for you.

We’ll leave you with this thought: you may want to consider using two or all three of these cards for different types of spending. The bottom line: the best option is the card that works best for your spending and lifestyle habits.

 

How To Manage Your Money With Chime’s Mobile Banking App

Let’s face it — managing your money isn’t something that you’re taught in school (but learning about isosceles triangles sure came in handy.) Yet, learning how to manage finances is key to proper adulting.

Indeed, the best way to manage money can seem like a process of trial and error. But here’s a secret: using the right tools can make it much easier. That’s right. There are financial tools out there that can help you learn how to manage money and simplify the whole process.

Where should you start? With your bank. You may not realize it but your bank account is part of the foundation of your financial life. If your bank isn’t helping you manage your money, you can feel lost at sea. But with the right bank account app? You can get on the path of financial freedom and be the boss of your money.

Perhaps the best example of this is with Chime Bank. So, let’s dive in and find out how the Chime bank account app can help you manage your money.

1. Take control of your financial life

It’s time to take control of your financial life and make money moves that will benefit you now and in the future. Unfortunately, traditional banks make going to the bank seem like a pain. You may not like going to in-person branches, waiting in lines and dealing with tellers that treat you like a number. And, while traditional banks may have online banking apps, many of them are clunky and not very user-friendly.

When it comes to online banking apps, you’ll want to look for one that’s flexible, convenient and accessible. It’s also important that the app is intuitive and just makes sense. Chime’s online banking app fits the bill. It’s easy to use and works with your lifestyle so you can take control of your financial life.

Some other perks: you can cash checks on the go and easily transfer money from your Spending Account to your Savings Account. Plus, if you’re out to dinner and need to pay back a friend, you can easily transfer money to that friend using the Chime banking app.

Chime can help you stay on top of your financial life and make managing your money easier and convenient. No more bank visits, frustrating online apps or confusing websites. Chime has one of the best mobile banking apps, giving you the power to take charge of your money.

2. Know where your money is going

Wondering how to manage money? The first step is knowing where your money is going. But tracking can be tedious. Using the Chime mobile wallet, you know where you stand with your money at all times and where your cash is going.

You can get instant transaction alerts when you use your debit card. Not only that, but Chime sends you daily updates on your bank account balance.

So there will be no “OH MY GOSH how did my bank account balance get so low?!” moments. You won’t be left in the dark.

3. Avoid hidden fees

Benjamin Franklin said “Beware of little expenses. A small leak will sink a great ship.”

Perhaps the most annoying little expense is a hidden fee that you didn’t know about. This includes monthly maintenance fees from traditional banks — like, aren’t they supposed to maintain your account anyway regardless of how much is in your account? Isn’t that a bank’s job?

But at traditional banks, fees are everywhere. From monthly maintenance fees to overdraft fees, to ATM fees and foreign transaction fees. All of those fees can add up and cost you. In fact, the average household in the U.S. pays an astonishing $329 in bank fees every year.

When you’re trying to get your money right, you need to keep all the coins you can. Keep in mind: you’re the one trying to pay down your student loans, get out of credit card debt and save for that trip to Aruba you’ve been dreaming about.

With Chime online mobile banking, you can ditch fees forever. Seriously. No fees. No surprises. You can take that money and put it toward debt, savings, or something fun just for yourself. All of that money adds up and can make a difference.

4. Make the most out of payday

What’s your favorite day? When asked that question, most people would say “payday.” There’s something exhilarating and calming about knowing that money is hitting your bank account. It’s your reward for your hard work and a job well done. And, it also helps you pay your bills.

Imagine if you could get paid two days before payday. How exciting would that be? What could that do for your cash flow, your ability to pay bills faster and save more money? At Chime, we know the benefit of getting paid early. This is why we’ve created Early Direct Deposit. When you sign up for this option, you can get paid up to two days before your payday.

Your funds won’t be held hostage and you won’t have to deal with pesky physical checks. Getting your money early can help you take action on your financial goals.

Pay bills. Save money. Spend on the stuff that matters to you most. All without waiting for the money that you earned. Sounds like a win, right?

5. Supercharge your savings

You want to save for a rainy day. Save for your future. Save for your friend’s wedding next summer. Save for a ticket to Burning Man. It can all seem so overwhelming if you’re trying to figure out how to manage finances.

Using Chime’s online mobile banking app, you can save easily and effortlessly for everything you want. We have a Save When You Spend feature which rounds up your transactions to the nearest dollar and transfers that money from your Spending Account to your Savings Account.

So, if you go out for coffee and get a cappuccino for $3.75, that figure will be rounded up to $4 and twenty five cents will be transferred to your Savings Account. While that may not seem like a lot, your collective transactions add up and you’ll save a good chunk of change before you know it.

On top of that, you can automatically save a percentage of each paycheck with Chime. This way, when you get paid, you know you’re already saving money without extra work on your part. Boom. Savings just got easier. Your goals just got closer.

6. Protect your hard-earned dough

If you lose your debit card it can be quite scary. After all, your card links straight to your checking account and this is where your money is housed. So, what can you do if you lose your debit card or it gets into the wrong hands?

Instead of waiting in a long line to talk to a customer service rep and answer a million questions, you can use the Chime app and put a halt to your transactions immediately. Simply open your Chime bank account app and block transactions on your debit card. This will prevent any new transactions or withdrawals from your account.

Additionally, Chime has a Zero Liability policy so you won’t be held responsible for any unauthorized charges. In an environment ripe for data breaches and identity theft, being protected is crucial. We take an extra security measure and require two-factor authentication and also have fingerprint authentication.

Final word

Ready to finally learn how to manage your money? A bank account like Chime and it’s mobile wallet features can help you both manage your money and reach your financial goals.

Life is more than just paying bills and working. With one of the best mobile banking apps on the market, Chime aims to make managing your money simple and even, well, fun. Isn’t it time you lived a less stressful life?

 

The History of Overdraft Fees

Overdraft fees are a wolf in sheep’s clothing. While a bank often markets overdraft protection as a way to help you out when you make an occasional budgeting error, it’s really just an expensive form of credit.

Think about it: in 2014, the Consumer Financial Protection Bureau (CFPB) found that the majority of overdraft fees were charged on transactions of $24 or less. With a median fee of $34 at the time, the same type of charge on a loan for a similar three day period would result in an annual percentage rate (APR) of 17,000%.

How did we get to this point? And what can you do about overdraft fees? Read on to learn more.

A short history of overdraft protection

An overdraft occurs when you’ve written a check, taken a cash withdrawal or used your debit card in an amount that exceeds your available funds. Most banks and credit unions offer overdraft protection, and this covers your shortfall in exchange for a fee.

The first overdraft authorization happened in 1728, according to the Royal Bank of Scotland. An Edinburgh-based merchant named William Hog received permission from his bank to temporarily withdraw more money from his account than he had available. This cash credit, as it was termed, was the forerunner of the modern overdraft. At one point, 18th-century philosopher David Hume called the cash credit idea “one of the most ingenious ideas that has been executed in commerce.”

But, let’s now think about this in terms of modern times. In 2017 alone, consumers paid $34.3 billion in overdraft fees, according to PYMTS.com. So, it’s possible that if Hume knew what would become of the cash credit idea, he may have changed his tune.

The modern overdraft

It’s unclear exactly when banks started charging overdraft fees. But according to Moebs Services, a research firm that focuses on financial institutions, these fees have steadily increased over time.

In 2000, for instance, the median overdraft fee was $20 among banks and $15 at credit unions. In 2017, those fees increased to $30 and $29, respectively. That said, some of the biggest banks in the U.S. charge between $34 and $36. While there are still some institutions that don’t charge fees on overdrafts of less than five dollars, this is not a universal feature. Also, some institutions charge extended overdraft protection, which adds more fees if you don’t bring your balance back to zero within a certain period. These time periods can range from one day to a week.

What you can do to avoid overdraft fees

 

While overdraft fees are ubiquitous, it’s possible that you’ll never have to deal with them. For starters, you can budget your money in a way that you never overdraw your account. And, if you make a mistake, you can also get your account back in the black before the end of the business day.

There are also three things you can do to boost your chances of never paying an overdraft fee. Take a look:

 

1. Opt out of overdraft protection

In 2009, the Federal Reserve Board announced a new rule prohibiting financial institutions from charging overdraft fees on ATM and one-time debit card transactions unless the customer opts in for overdraft protection on these transactions. The rule, which was made under Regulation E, went into effect on July 2010.

Yet, according to a 2017 study by The Pew Charitable Trusts, nearly three-quarters of people who overdraft don’t know they have the right to opt out. Guess what? You can opt out! By doing so, any transaction that overdraws your account will simply be declined.

This may not be ideal in some situations. For example, a credit card company may charge you a returned payment fee if a payment doesn’t go through due to an insufficient balance. For other transaction types, however, the only negative impact from a declined payment may be an embarrassment.

2. Get an account with a bank that offers alternatives

Rather than charging a flat fee every time you overdraw your account, some banks offer less punitive forms of overdraft protection. For example, some banks set up automatic withdrawals from a savings account to cover overdrafts.

Let’s say you overdraw your account on a Monday morning and your account is still negative at midnight. Instead of charging you an overdraft fee, the bank will transfer cash from your savings account to cover the negative amount.

Another option is an overdraft line of credit. Again, instead of charging you a flat fee, the bank charges you interest — say 18% — on the negative balance. While this might seem high, if you overdraw $24 and bring your account back to positive within a few days, the accrued interest amounts to pennies.

 

3. Get an account with a bank that doesn’t charge overdraft fees at all

With the rise of challenger banks, many new institutions have addressed some of the major issues with the traditional banking system, including the problem of overdraft fees.

If you open an account with Chime, for example, you’ll never pay overdraft fees. Period. This means you don’t have to find some other way to avoid the problem because there’s no problem to begin with.

 

The bottom line

Overdrafts have been around for a long time, but the penalties keep getting worse. The good news is that there are plenty of ways to avoid overdraft fees, and some financial institutions don’t charge them at all.

If you’ve paid an overdraft fee recently, it may be a good time to look into alternatives at your bank or switch banks altogether.

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