Tag: Debt

 

6 Steps to Enjoying a Debt-Free Holiday Season

The holidays can be an exciting time. ‘Tis the season to enjoy family get-togethers, time off from work, meaningful gift exchanges and more.

Yet, the holiday season can cost money – a lot of money. Indeed, you’re not alone if you worry about overspending. The average American racks up more than $1,000 in holiday debt each year.

Luckily, there are 6 steps you can take to enjoy a debt-free holiday season. Take a look:

1. Develop a Realistic Spending Plan

Your first step should be to develop a spending plan for the holidays, also known as a budget. By knowing how much you can spend, you can then set realistic expectations.

To start, list out all of the expenses you’ll incur over the next few weeks, and figure out how much you’re likely to spend on your holiday gifts. Once you know your limit, it’s time to start saving automatically. I’ll share some of the most creative budgeting methods below.

2. Shop Around for Deals

When doing your holiday shopping, be sure to compare stores and prices to find the best deals. Shopping on Black Friday or Cyber Monday can help you save so long as you don’t go overboard.

You can also use coupons and look for BOGO deals. And, don’t forget to take advantage of stores that offer price matching. Give yourself enough time to comparison shop by starting early. This way, you won’t feel rushed to buy the first thing you see.

If you see items you want to buy but don’t have enough cash, find out if the store offers a layaway service, This way you can pay as you get paid instead of charging your purchases immediately. Pro tip: If you set up direct deposit with Chime, you can get paid earlier, freeing up more immediate cash for you.

3. Pay for Everything with Cash

Forget about credit card reward points or cash back, particularly if you’re afraid you’ll get into holiday debt. In some cases, it’s just not worth it.

Instead of using a credit card for your holiday purchases, use the cash you set aside according to your budget. When you pay for all your holiday expenses in cash, it’s basically impossible to overspend and get into debt.

You can even try using the cash envelope budgeting method by assigning each category in your budget an envelope that you’ll fill with a designated amount of cash. Once an envelope is empty, that’s it. You’ll need to stop spending in that area. This budget does come with some drawbacks as you won’t be able to shop online and you’ll need to be organized so that you don’t misplace your envelopes filled with cash.

In the long-run, however, the envelope budget forces you to slow down when shopping and spend more mindfully.

4. DIY Hidden Costs

It’s easy to overspend on seemingly hidden things like decorations, greeting cards, white elephant gifts and party food. Instead of spending cashola, go the DIY route.

For starters, you can make your own holiday decor with craft supplies or dollar store items. I went to my local dollar store the other day and found everything from wreaths, ornaments, table decor, holiday lights, and more  – all for a buck each.

When it comes to making your own greeting cards, you can design them online using a free program called Canva. Rather than buying baked goods, you can also bake some of your favorite treats for cheap. Lastly, if you’re doing a gift exchange, you can always DIY gifts – whether it involves making homemade candles and bath bombs, or creating custom artwork.

5. Earn Extra Money

Once you’ve created a budget and have limited your holiday spending as much as possible, it may be time to start earning some extra money.

If finances are tight around this time of year, you can find more wiggle room by starting a side hustle or seeing if your can work overtime at your job. If you’re looking for something easy that pays quickly, you can drive for Uber or Lyft, deliver groceries with Instacart, babysit or pet sit, shovel snow, rent a room out in your home, design logos on Fiverr, or clean homes. These are just a few ideas to get your creative juices flowing.

The key is to look for opportunities that you can start ASAP. This way you’ll be more apt to earn enough money to meet your holiday spending needs.

6. Focus on Experiences

The holiday season is not just about having and spending money. It’s also about showing gratitude, spending time with loved ones, and having positive experiences.

When you focus on experiences over money, you’ll be more likely to avoid overspending and going into debt during this time of year. And here’s the best part: Experiences can be free. For example, you can trade in a day of shopping for a day of binge-watching holiday movies while eating Christmas cookies and sipping hot cocoa. Or, you can drive around your neighborhood to look at Christmas lights, go sledding in the snow, or find a free local event to attend.

The Holidays Don’t Have to Be a Debt Sentence

Don’t sentence yourself to debt over the holidays. It’s not worth it and you have plenty of inexpensive ways to have fun, give gifts and enjoy the season. If you need inspiration, just turn to these 6 steps to a debt-free holiday season.

 

Make These 3 Money Moves to Protect Your Family in 2019

With a new year comes new goals. A new year is also an ideal time to reevaluate your financial situation. Whether you are looking to pay off debt, increase your savings, or create a new budget, there are plenty of ways to improve your financial situation in 2019.

But here’s an often overlooked financial consideration that you should take into account: insurance. Security is absolutely priceless, and you never know when tragedy can strike. Are you and your family prepared?

As we move toward 2019, take the time to research insurance options to protect you and your family, To get started, here are three essential money moves to position yourself for potential emergencies and life challenges.

1. Get term life insurance

No matter who you are or what your financial situation is, life insurance is important.

According to the Life Happens 2018 Barometer survey, over 35 percent of households would feel financial impact within one month if the primary wage earner passed away. But, according to the same survey, only three in five people have their own life insurance policy or a policy through their job.

And that’s not all. According to the Life Insurance and Market Research Association, it appears that even those who do have life insurance feel insecure with their overall coverage level. Nearly 40 percent of Americans state that they wish their spouse or significant other had more life insurance coverage. In addition, more than half of married millennials would like more life insurance coverage for their spouses or partners, according to the same survey.

Where to start? Think about purchasing term life insurance. This type of insurance is relatively inexpensive for most families. It’s also easy to understand. In a nutshell, term life insurance provides coverage for an agreed-upon period – or term – of time. For example, if you should pass away during your policy period, your insurance company pays out the benefit to your designated beneficiaries. With term life insurance, you choose how long you want your policy to last. Common term lengths are 10, 20, or 30 years. Also important to note: Once the term is over, the policy expires. Yet, for an affordable price, term life insurance provides peace of mind and a financial security blanket for your family.

TIP: Check out Ladder

If you don’t currently have term life insurance, there many ways to purchase it, including through life insurance companies and insurance comparison sites. One option is the term life insurance company Ladder. Ladder makes life insurance easy because you can apply for it directly online without having to deal with insurance brokers. Ladder offers life insurance at affordable rates with a price lock guarantee. And, best of all, it only takes five minutes to apply to get insured!

2. Purchase renters or homeowners insurance

Tragedy can strike home at any time. Are you prepared?

You never know when a pipe could unexpectedly break, or your neighbor sets off the sprinkler system in your apartment building, ruining everything. Be prepared and protect yourself and your loved ones by getting homeowners or renters insurance today.

TIP: Check out Lemonade

For starters, check out Lemonade, a new type of renters and homeowners insurance that prides itself on transparent payment options and quick payment of claims. Renters insurance rates start at just $5 per month, and $25 a month for homeowners insurance. Plus, any money that you pay that doesn’t get funneled into claims will be donated to a charity of your choice. Pretty sweet (no lemonade pun intended!)

Lemonade currently offers renters, condo, and homeowners insurance in New York, California, Illinois, New Jersey, Nevada, Georgia, Pennsylvania, Maryland, Arizona, Michigan, Connecticut, and Washington D.C. They offer renters and condo insurance in Texas and Rhode Island, and renters insurance only  in Iowa, Wisconsin, New Mexico, Ohio, Oregon, and Arkansas. Additional states and coverages are rolling out every year.

3. Don’t forget auto insurance

Bad things happen to car owners all of the time – and it can cost you an arm and a leg, even if you are not at fault. Even one small accident, like getting rear-ended, can cost you thousands of dollars if you don’t have the appropriate insurance.

Fortunately, car insurance can put your mind at ease during or after an accident. It can also be expensive. In fact, the average annual cost of car insurance paid in the United States was more than $941 in 2018, according to a study by ValuePenguin. And, depending on where you live, your state could be one of the more costly ones. Louisiana takes the medal for the state with the highest car insurance rate, costing insured residents an average of $152 a month. That’s $1,824 a year – ouch!

TIP: Check out Root

Luckily, insurance companies like Root are on a mission to make car insurance more cost-effective. Instead of just basing your rate on your driving record, Root uses an app to track your driving. Your real-time driving habits then determine your rate. If you are a responsible driver, you’ll receive a better quote. Because of this, you can save as much as 52 percent on car insurance with Root.

Give yourself the gift of security

You certainly can’t put a price-tag on security. You also shouldn’t have to spend a ton of dough to feel financially stable. So, this year, save money and protect yourself and your loved ones by making sure you have insurance.

 

Money Manners: Should you Stage a Money Intervention for Your Family?

Talking about money with trusted pals and your boo may be hard enough. But, envisioning a holiday sit-down for a mature pow-wow with your family over finances? Well, that may feel like a far-fetched, unicorn scenario.

But, what should you do if you have a relative who is royally screwing up his finances, especially if you know this mess may have a ripple effect on other loved ones? You may need to step in and intervene.

Take a look at our tips for determining whether you should stage a money intervention with the fam bam during the holidays, and our shortlist on how to proceed.

Assess the Gravity of the Situation

Communicating about money matters is well, extremely complicated. Add to the mix deep-rooted resentment, history and family dynamics, and you may feel like you’re precariously tip-toeing over landmines.

To gauge whether you should set up a money intervention, figure out exactly how serious the matter is. Is someone committing an act of financial infidelity, such as running up credit card debt, hiding bank accounts, or keeping a huge sum of student loan debt under wraps from a significant other? Or, maybe you have a teenage cousin who has no idea how to manage her finances and constantly spends everything she has. This can turn ugly once she hits college.

If it’s a serious matter, think about what would happen if nobody stepped in to intervene. If doing nothing can lead to debilitating, long-term consequences, a money intervention may be in order.

Figure Out If It’s Appropriate to Stage an Intervention

On the flipside, let’s say your sister has been complaining about how her money habits don’t align with her boyfriend’s. Perhaps she’s a saver and he never puts enough in a savings account. This would perhaps be considered a minor “flare-ups” and may be better handled between the two of them. While you feel inclined—or may have even been asked —to have a “little talk” with the couple, it may heighten feelings of tension and cause resentment.

Don’t be afraid to set boundaries around the types of money matters you’re comfortable discussing with your relatives. And, perhaps you can simply suggest resources or a money management app that can help them with some of the issues they’re facing. Maybe this is all that’s needed to point your family members in the right direction.

Determine If You’re the Right Person

Let’s say that you’ve looked at the facts at hand, and determined that a money intervention is appropriate. If that’s a given, it’s time to decide whether you are the right person to facilitate this type of discussion.

Ideally, the facilitator should be an unbiased person who can remain calm throughout the intervention. Maybe a family friend who knows both parties would better suited. Or, you may want to bring in an experienced, trained professional, such as a financial therapist. Someone like this has no emotional ties to your family and may be the best person for the job.

If you’re the one handling the intervention, here are a few dos and don’ts to get started:

Don’t: Make Assumptions

Most of the time you only know one side of the story. For example, you may only hear from your Uncle Bill about how his wife Jane neglects to pay the bills on time. But to be fair, you may not have gotten wind from your Aunt Jane that Bill is no money saint, either.

It’s tough to do, but leave your assumptions at the door. Go into the situation with an open mind, and get the facts and details from everyone involved. If you take an unbiased, balanced perspective, you can then stage a more effective intervention.

Do: Time It Well

Just like it’s a major faux paus to ask for a loan during someone’s birthday party (yes, I’ve been guilty of this), a holiday gathering is not be the best time to stage a money intervention.

Instead, choose a time that works for everyone involved, and pick a private space so you can discreetly discuss touchy matters.

While the holidays are one of the few times during the year when all your family members may be in the same place, avoid discussing money matters over the dinner table. If you must have an intervention the day of a holiday gathering, schedule it before or after the festivities in a separate location.

Don’t: Go for the Jugular

While you may know what the main issue is, consider starting out by having a general conversation about money. This can lead into deep-seated matters, such as financial infidelity, debts that have remained long unpaid, issues with gambling or bouts of overspending.

The key here is to harbor healthy and respectful communication. Otherwise, it can escalate into a shouting match and reflexive rounds of pointing and blaming.

Do: Defer to a Professional If Necessary

As I mentioned above, it may be easier to bring in a pro, such as a licensed therapist or maybe even a money coach who works with couples or groups.

A money intervention can cause tension, and dredge up deep-seated, bad feelings. Without proper training, a well-intended conversation can quickly go south.

Handle the Situation Gently

When trying to decide whether staging a money intervention is appropriate and necessary, just keep this in mind: For every action, there is a reaction.

Do your best to create a safe space before bringing out the elephant in the room. And whatever you do, tread with care. If executed properly, facilitating a family financial intervention can shift your family’s money situation in a positive direction. It can also foster deeper communication and trust.

 

Tips to Curb Overspending on Black Friday and Cyber Monday

The deals. The doorbusters. The catchy television commercials and ads that land in your email.

Yup, Black Friday and Cyber Monday are among the biggest shopping events of the year. According to a Coinstar survey released last year, at least 30% of Americans plan to shop on Black Friday or take advantage of holiday deals and 70% expect to go over budget.

So, how can you avoid getting lured in by all these offers? Take a look at our top 5 ways to avoid overspending on these two major spending holidays:

Stick to Your List

Holiday wish lists aren’t just meant for kids to tell Santa what they want. The whole family should be making these lists as this will help you control who you are buying for and how much you’ll spend.

You can also refer to your list when scanning ads for Black Friday and Cyber Monday deals as this will help you resist the urge to make extra impulse purchases. If you stick to your list and plan your shopping trips carefully, you’ll be more likely to spend less overall.

Keep Up with Your Transactions

If you’re using a debit card to shop, it’s a good idea to track your transactions as this will help hold you accountable. It’s easier to blow your budget when you spend freely and don’t really keep up with where your money is going.

If you’ve ever had a busy and expensive weekend, you can probably relate. Say you went out of town and splurged a little. If you didn’t check your bank account to review your transactions, you had zero accountability for your mini spending spree. The same thing can happen with holiday spending. It’s easy to make one too many purchases on Black Friday or Cyber Money.

Here’s a pro tip: Instead of manually logging into your account to check your balance and review your transaction history, Chime can send you instant transaction alerts whenever you use your Chime debit card – attached to your free bank account. This way, you can stay motivated and stick to your spending plan.

In addition, if you have mobile banking with Chime, you can easily see your account balance simply by using the Chime app.

Only Choose One Day to Shop

Is it just me, or does Black Friday and Cyber Monday seem to last for several days? Originally, these events took place on one day. Now, Cyber Monday has turned into Cyber Week and Black Friday often starts the night of Thanksgiving and carries into the weekend.

I’ve seen some retailers offer special deals each day of the week to entice customers to come back and keep shopping. This is a marketing trick and if you play along, you’ll give yourself more opportunities to overspend.

Instead, choose only one day to do the bulk of your Black Friday and Cyber Monday shopping. Get what you need, then put your money away. When you’re done shopping, unsubscribe from email lists, skip commercials, and avoid all the buzz for the remainder of day (or week).

Compare Deals

Retailer loyalty may or may not be the most important thing when shopping on Black Friday and Cyber Monday. Many stores offer the same products – possibly even from the same brand.

This means you should compare pricing to make sure you get the best deal. As an example, when I bought a PlayStation 4 for my son on Black Friday last year, I saw the same exact item at three different stores. I chose to purchase it at the retailer with the lowest price. If I didn’t shop around first, I would have spent money unnecessarily.

Some stores even price match in an attempt to beat out competitors’ deals. So, make sure you check to see if the store you prefer has a price matching policy.

Aside from prioritizing the best price offer, you can also consider other aspects of the deal that may save you money. For example, some purchases comes with a mail-in rebate, whereas some stores offer gift cards with certain purchases.

Don’t Buy Something Just Because It’s On Sale

It can feel great to score a deal, but you only truly win if you need the item or were specifically looking to buy something in particular. There’s no point in buying something just because it’s on sale.

It’s tempting when you come across deals that seem like they’re unbeatable, but try to shop and spend mindfully while sticking to your values.

Take a page from my book: When you come across a great deal for something not on your list, ask yourself how you’ll feel about that item in 30 to 90 days. Would it end up stuffed in the corner of your house somewhere? In other words, do you really need to spend the money on that item?

If you truly feel like purchasing something, see if you can swap it out with something else on your list so you’re not overspending.

You Can Still Get Great Deals Without Going Over Budget

Holiday spending can be great as long as you have full control over your spending habits. Even with all the Black Friday and Cyber Monday deals, it’s important to get clear on what you want and spend wisely. With this in mind, you won’t move into the new year with added debt – or guilt.

 

Are There Any Totally Free Checking Accounts?

When you begin a new career, a major concern is making your salary last until the next one comes along. A lot of people have a hard time managing their finances because they do not have a proper way of managing and saving their money. Some are not aware that they are already spending more of their pay than they should. Overspending can lead to other problems like inability to pay the bills, for example. Not a good way to be financially stable, right?

So how do you avoid those kinds of problems? That’s where banks come into the picture. Some people may doubt their money’s safety, but keeping money in the bank is a lot safer than just hiding it in your house. It is less likely to get stolen or lost and more importantly, banks help you manage your finances wisely with the use of their banking accounts.

Banking fees, unfortunately, can pose a big problem for consumers. It’s just not ideal for some. There are fees which can be avoided temporarily but not permanently. Wouldn’t it be nice if there was a solution to avoiding banking fees completely, like a totally free checking account?

Do You Really Need A Checking Account?

A bank account lets you have the freedom to budget your money according to your spending habits. Bank statements allow you to keep track of your transactions and see how you use your money. You might be scared of putting your money in a bank, but it’s a lot safer than keeping it in your own home where there’s a higher chance of losing it or get stolen. Also, without a bank account and card, carrying your cash everywhere is probably not a good idea.

A checking account may be the best bet for fresh graduates or first-time employees. It is a basic financial management tool that helps young adults to keep their money in order to pay the bills, groceries, and other things. Even without cash in hand, you could still use your checking account as a form of payment. Why give yourself the trouble when you can just carry a debit card instead?

The Right Account For You

Checking is the type of bank account that is perfect for those who value convenience when it comes to their money. A checking account comes with a debit card which is probably the most convenient and easiest way to pay. Most businesses and services now accept it as payment for their goods. It automatically debits the payment straight from your account and deducts it from your available balance. Debit cards are more suitable for day-to-day expenses.

A checking account also creates a safe place for your pay be directly deposited. Nowadays, most banks offer this option to their consumers. It is especially useful when managing your finances since the direct deposit feature allows you to receive your pay earlier than usual. You won’t even have to wait for your employer to give you your paycheck and then line up at the bank to deposit it.

Some advantages of owning a checking account:

  1. It is safe and secure. Keeping your money in your checking account at a bank guarantees better safekeeping and accountability..
  2. It is very convenient. A checking account offers checks or a debit card as forms of payment. Both methods are widely accepted by stores and merchants. You also get a record for each transaction so it makes things easier to manage.
  3. It is very accessible. Banks are now using the internet and smartphones for banking purposes. Almost every bank has their own mobile applications and websites where you can easily access your account through your smartphone or your computer.

While these are great advantages of having a checking account, there are also disadvantages.

Maybe the most common reason why people steer clear of a checking account is the banking fees that come with it. The fees that are included are overdraft fees, monthly maintenance fees, minimum opening deposit, ATM fees, foreign transaction fees, and card replacement fees.

Choosing a Bank

Another important consideration before opening a bank account is which among the many banks are you willing to put your money in. It is essential to pick a bank where you feel safe and what they offer is aligned with your interests. Not all banks are the same so it would be great if you compare each bank and list their pros and cons.

Let’s look at some of the major traditional banks which offer checking accounts for their consumers. Namely Chase, Bank of America, Wells Fargo, Citibank, PNC, and BBVA Compass.

Chase Bank is a subsidiary of JPMorgan & Chase Co. and currently the largest bank in the U.S. in terms of total assets with $2.53 trillion. The second largest bank in the U.S. with $2.28 trillion total assets is Bank of America with its headquarters found in Charlotte, North Carolina. Wells Fargo is the third largest bank in the U.S. in terms of total assets with $1.95 trillion and its headquarters is found in San Francisco, California. Citibank is a subsidiary and the consumer division of the multinational company, Citigroup, and is currently the fourth largest bank with $1.84 trillion total assets. PNC is the 9th largest bank in the U.S. with $380.77 billion total assets and its headquarters is found in Pittsburgh. BBVA Compass is a subsidiary of the Spanish multinational company, Banco Bilbao Vizcaya Argentaria, and it is headquartered in Birmingham, Alabama.

These banks all have their own checking accounts that they offer to the public. They also have mostly the same features and the only difference among them are the fees included. Some banks may offer lower fees and some may have higher ones. Either way, the bottom line is that every major bank imposes charges for their checking accounts. They have the same banking fees and they only differ on the amount. The question is, how do these fees affect you and your money?

What In The World Are These Checking Fees?

Banking fees sound like a nightmare for people who want a healthy financial life. Who would want to lose money on unnecessary fees? Most of the time, consumers don’t even realize they are paying them until they see their bank records.

But what exactly are these banking fees? Let’s go over the common checking account fees one by one.

Checking Account Overdraft Fees

Overdraft fees are one of the problematic fees which consumers encounter in checking accounts. These fees are charged when you withdraw money greater than the available amount in your account. BBVA Compass charges the highest overdraft fee with $38. Next is PNC which charges a $36 overdraft fee per item. Bank of America and Wells Fargo both charge $35 overdraft fee per item, while Chase and Citibank have a $34 overdraft fee per item.

Monthly Maintenance Fees for Checking Accounts

Monthly maintenance fees are charged when your balance falls under the required monthly balance at the end of the statement cycle. Chase, Citibank, and Bank of America checking accounts have a monthly maintenance fee of $12, while Wells Fargo has a $10 monthly fee. PNC only has a $7 monthly service charge and BBVA Compass does not charge. However, monthly maintenance fees can be avoided. Some banks require a minimum balance at the end of a statement cycle or a certain amount of direct deposits.

Minimum Opening Deposits

Minimum opening deposit fees are what you pay when you first open an account. Chase Total Checking Account, Bank of America Core Checking Account, Wells Fargo Everyday Checking Account, PNC Standard Checking Account, and BBVA Compass ClearChoice Free Checking Account all require a $25 minimum opening deposit fee. Only Citibank Simple Checking Account does not require any deposit for opening an account.

ATM Fees

ATM fees are imposed when you withdraw money from a different bank other than yours. Chase, Citibank, Wells Fargo, and Bank of America all have a $2.50 out-of-network ATM fee, while both PNC and BBVA Compass have a $3 out-of-network fee.

Foreign Transaction Fees

Foreign transaction fees occur when money is withdrawn from ATMs outside the country. Citibank has the lowest foreign transaction fee with $2.50 plus 3% of the amount per withdrawal. Next is BBVA Compass with a $3 plus 1% of the amount per withdrawal. Chase, Bank of America, Wells Fargo, and PNC all charge $5 plus 3% of the transaction amount per withdrawal.

Replacement Cards

In case your debit card is lost or has been stolen, banks require you to pay a fee for it to be replaced. Those who have debit cards from Chase, Citibank, and Wells Fargo get to replace their lost or stolen cards for free. On the other hand, BBVA Compass charges its consumers with $5 card replacement fee while PNC charges the highest with $7.50.

No Escape

To summarize, these major banks we mentioned all have banking fees. They don’t offer a completely free checking account. They may waive some of the fees but it’s not entirely free. Sadly, consumers might not escape them and may be forced to pay them just to have their money in a safe place. Remember that some banking fees are hidden and you may not have any knowledge of them being deducted from your account until you review your bank statement.

An Alternative to Traditional Checking Accounts

With the steady rise of technology, another method of banking has risen: mobile banking. One example of a mobile banking account is the Chime Account. Chime is an online banking account which lets you have your own checking account with only the use of your smartphone or laptop. Best of all, it is completely free. It doesn’t even require you to deposit a minimum fee when you open it. Its checking account is the same as what most national banks offer without the intimidating fees.

If you have your own Chime Spending Account, you will get to enjoy the following:

  • No monthly fees
  • No minimum opening deposit fees
  • No overdraft fees
  • No foreign transaction fees
  • No card replacement fees

The only thing you will be charged is for withdrawals from out-of-network ATMs which is really not a problem since you could just withdraw money from any ATMs that support Visa. In short, there are no hidden charges when it comes to Chime. It’s a truly free checking account.

Also, since Chime is an online banking account, it doesn’t have any brick-and-mortar locations meaning it has no physical bank. It is just you and your phone or computer.

Why Chime is A Good Alternative

The totally free checking account offered from Chime is the real deal. It doesn’t have the same fees that most major banks impose, letting you have more freedom with your money. There are no more fees that will burden you and you get to be more wise in your spending habits with the help of its mobile banking app. Unlike traditional banks, Chime’s service is strictly online which means it’s very accessible and easier especially for young professionals.

Checking Accounts in the Modern Age

recent survey concluded that 4 out 10 Americans use mobile banking and 26% of banking consumers use their mobile phones for this kind of purpose. In the same survey, it also showed that almost half of young Americans gravitate towards the use of mobile banking and even people over 65 years old have chosen online banking as their preferred method. The rise of technology has really made a great impact on how we live and that includes our banking preferences. Which is why Chime is perfect for Americans who rely on mobile banking. With only a few clicks, you could already manage your finances no matter when and where you are.

Chime Checking Accounts Operate Entirely Online

Because of its strictly online platform, Chime lets you take care of your banking from anywhere and at any time. You can monitor your account 24/7. Also, Chime Account offers an early direct deposit feature in which you can receive your salary money two days earlier than the actual pay date. You don’t have to worry about waiting for your paycheck to come in the mail. It also saves you time and effort from enduring long lines at the bank.

Chime is a great alternative for consumers who are not very keen on spending more money on ridiculous banking fees. With Chime, you can enjoy the same benefits as checking accounts from major banks without drowning yourself in checking account fees.

How to Get Started with Totally Free Checking

A totally free checking account sounds amazing. So, are you ready for your own free checking account? Here’s how:

  1. Apply for a Chime Spending Account.

You can do this by simply going to their website and be ready to fill out your personal information.

  1. Download the Chime mobile app.

It’s available for download in the App Store and Play Store for free. Just download the app and register your account. Now you can view your account details and view your transactions.

  1. Deposit money to your account.

The easiest way to put money is through enrolling in direct deposit. When your pay comes, it will automatically be put into your account. There is also the option for mobile check deposits and electronic transfers from other institutions.

  1. And you’re good to go.

Now you can use your account to pay bills or send money to your family or friends. It’s that simple and easy.

Free Checking Account For Real?

In a GoBankingRates survey early this year, it was stated that young millennials from ages 18-24 are more influenced by bank account fees, which led them to open multiple accounts in different banks where there are lower fees. But why would you open multiple accounts when you can just own one completely free checking account? Having more than one account sounds very stressful and might lead you to even more financial problems. Chime offers you a way out of them with its Spending Account.

While some checking account fees of banks can be waived under some conditions, they do not offer completely free checking accounts. Traditional banks use these fees to earn profit to pay overhead and operational costs like rent, utilities, employee salaries, and more.

Opening a checking account with one of the major banks might not be a good idea for young professionals especially with hidden charges that could endanger their hard-earned money. Why burden yourself more with unnecessary fees when you could completely prevent that from happening by applying for a free checking account?

Yes, a free checking accounts exist and one of them is the Chime Spending Account. No hidden fees equal no worries! With Chime, you don’t have to shell out money just to open an account. More importantly, you will be able to manage your finances wisely and not lose sleep on how much money is going to be deducted from your account after every month.

Free checking is real and Chime has it. So don’t think about how banking fees would prevent you from having a good life and a healthy pocket. Instead, apply for your own free checking account as soon as possible.

To know more about Chime and its free checking account features, just visit their website for more information: https://www.chimebank.com

 

 

Which Bank Has The Best Overdraft Limit?

The Pew Charitable Trusts reported that the overdraft practices of multinational and small retail banks in the United States have contributed to the 66 percent of domestic deposits in the country since 2013. The organization documented the research in the Checks and Balances report which showed that several U.S. banks partake in debit overdraft fees. Many account holders stated that overdraft fees reduce their access to lower-cost financial services and put them at loss and theft of their funds.

What is an overdraft?

An overdraft occurs when the account balance of a consumer drops to zero or negative and cannot cover a transaction. Many banks give a credit extension to its checking account holders up to a certain limit. However, some banks also charge its consumers an overdraft fee for every settlement which differs from one financial institution to another.

Types of Overdrafts

Overdrafts are short-term debt or emergency fund that banks provide for their account holders. Consumers can also choose to opt-in for overdraft as long as they meet the requirements of the bank. Today, there are two types of overdrafts that consumers can choose from — authorized overdraft and unauthorized overdraft.

Authorized Overdrafts

In an authorized overdraft, the bank and the account holder have an agreement upon opening an account that there will be a corresponding amount limit that the latter can use on standard payment methods. For instance, a company has an overdraft limit of $5,000, which means that they can spend an added $5000 if their account balance reaches zero.

However, an authorized overdraft usually comes with a fixed interest rate which varies from one banking system to another and the amount withdrawn. Some financial institutions charge their account holders with a monthly or daily fee or a 15-20% equivalent annual rate (EAR).

Unauthorized Overdrafts

An unauthorized overdraft may occur in two scenarios:

-If consumers spend more than what they have in their accounts without acknowledging it in advance

-If the bank agreed for an overdraft, but the consumers exceed the arranged overdraft limit

Unauthorized overdrafts have several fees which include a more expensive monthly fee, daily fee, and transaction fees for cash withdrawal, direct debit, and check or card payment.

Reasons for Overdrafts

Overdrafts occur due to a variety of reasons such as the following:

Intraday Overdraft

An intraday overdraft, also called daylight overdraft, occurs when a particular bank transfers more money than it has in its reserve account. The Federal Reserve Banks operate on Fedwire, a reserve which enables fund settlement for numerous banks. For example, a bank has an asset of $100 million, and the Federal Reserve requires a ten percent or $10 million reserve maintenance. If the bank covers a transaction of approximately $11 million to several accounts, it will create a $1 million daylight overdraft since the bank will borrow from the Federal Reserve to cover the deficit. Daylight overdrafts can destabilize the financial services if several banks engage in such a practice.

Bank Fees

Several banks have hidden charges that create an insufficient balance to its consumers if subsequent deductions occur.

Merchant overdraft

Financial institutions offer unsecured overdraft services to merchants to address their amount overdrawn within the authorized overdraft limit.

ATM Overdraft

An automated teller machine (ATM) may allow cardholders to withdraw cash despite the insufficient balance. Although it can be intentional or unintentional, the consumers may acquire an overdraft if the ATM authorizes a withdrawal even when it is unable to communicate with the bank of the consumer.

Merchant Error

A merchant error is the unintentional human error that occurs if the consumer swipes their card twice or if they incorrectly input their pin. For instance, the purchaser authorizes a transaction of $10.00 which posts to the account as $1,000.

Authorization Holds

Another circumstance that pushes the account holders into overdraft is Authorization Holds. It is a banking industry system where the institution verifies a debit or credit card transaction until the handler settles the acquisition. In this scenario, the bank holds the amount of purchase without cash withdrawal from the account of the consumer. The transaction process can take up to five business days before the handler allows the settlement.

What is an Overdraft Fee?

Banks penalize account holders a hefty amount if they withdraw or make purchases with a negative or zero balance. This penalty fee is called an overdraft fee or the fine attributed to consumers when banks cover for their transactions.

According to an article from CNN Money, three of the biggest banks from the United States, Bank of America, JPMorgan Chase, and Wells Fargo, gained approximately $6.4 billion in 2016 from ATM charges and overdraft fees. This amount was $300 million more than their collated revenue in 2015, yet, no bank shows a hint of minimizing unnecessary charges to customers.

Multinational bank institutions impose an expensive overdraft fee that ranges from an average of $30 to $36. Wells Fargo, Chase, and U.S. Bank have overdraft fees of $35, $34, $36, respectively.

Types of Bank Overdraft Fees

An overdraft fee is a general term for the charges that banks impose for every transaction they cover for a consumer. Banks may deduct a different amount of overdraft fees from the checking accounts of consumers depending on the type of overdraft fee. There are four types of overdraft fee that consumers may encounter on their settlements — Overdraft Fee, Non-sufficient Funds (NSF) Fee, Overdraft Protection Fee, and Extended Overdraft Fee.

1.    Overdraft Fee

The most common bank fee which occurs when account holders purchase a product that exceeds their account balance. The overdraft fee for financial entities in the United States varies by institution. Moreover, banks limit the number of transactions per day for consumers. Typical overdraft fees are between $34 and $35..

2.    Non-sufficient Funds (NSF) Fee

Insufficient funds occur when account holders make a transaction with a zero or negative balance in their checking accounts or debit cards. Most banks penalize similar amounts for NSF and overdraft fees. Chase Bank, Wells Fargo, and PNC Bank charge a non-sufficient funds fee of $34, $35, and $36, respectively, to their account holders.

3.    Overdraft Protection Fee

Financial institutions charge a significant amount of Overdraft Protection Fees for every fund transfer transaction made from a credit card or savings account to a checking account to cover insufficient funds. Some bank retailers also consider a credit card settlement as a form of cash advance, so they charge an added fee of $10 or 3% of the transaction amount.

4.    Extended Overdraft Fee

The Extended Overdraft Fee, or sometimes called as the “extended overdrawn balance fee” or “sustained overdraft,” is the penalty that banks impose on top of the standard overdraft fees when consumers leave their checking account with a negative or zero balance for a number of consecutive days.

For instance, the U.S. Bank has an additional extended overdraft fee of $25 to account holders which starts on the eighth calendar day and each week afterward. On the other hand, JPMorgan Chase charges a $15 extended overdraft fee (even if the account is overdrawn by $5 and below) if a particular statement has $0.00 balance for five or more consecutive days.

Are Overdraft Fees Illegal?

The Federal Reserve implemented a federal law in 2010 which altered the overdraft practices and credit unions of financial institutions. They stated that banks should decline transactions if the consumer has an insufficient balance. The Overdraft Protection Law prohibits banks from automatically charging its account holders overdraft fees from ATM withdrawals and one-time debit charges. Consumers can opt-in to an overdraft coverage and service if the bank offers overdraft protection.

The Overdraft Protection Law only covers pre-authorized transactions which are not authorized.  These include ATM cash withdrawals and debit card settlements. Meanwhile, the federal law does not apply to automated bill payments, checks, and money transfers. Banks can still charge an overdraft fee to such transactions.

How to Avoid Overdraft Fees

Listed below are useful tips to limit and avoid overdraft fees and overdraft programs.

1.    Link Checking Account to Secondary, Credit Card, or Line of Credit Accounts

Financial analysts and experts advise account holders to connect their primary checking account to their savings or credit card to cover the deficiency of the transaction. This allows customers to avoid any unwanted and unnecessary overdraft fees.

2.    Set Up a Daily Account Balance Notifications and Alerts

An alert from the bank will aid the account holders to track their balance and transactions. If consumers are conscious of their available balance, they can transfer funds or refrain from purchasing products to avoid unintended overdrafts. Online and mobile banking systems allow their users to set up an email or receive text alerts and notifications when their account balance reaches the maintaining threshold or has low cash.

For instance, the U.S. Bank automatically alerts their account holders via text or email about their current balance, transfers, and transactions. They also allow the consumers to choose and customize their account alerts for credit cards, ATM withdrawals and checking and savings account.

3.    Choose a Checking Account with No Overdraft Fees

Although most banks have an average overdraft fee of $34 for each transaction, some banks do not charge an overdraft fee. Chime offers accounts with no fees and several added features.

●     Chime – Chime does not charge its account holders unnecessary fees such as monthly maintenance fees, service charges, minimum balance fees, foreign transaction fees, and overdraft fees. The founders of Chime ensure its members that there are no hidden charges for a transaction, and it also guarantees its account holders up to $250,000 FDIC insurance through The Bancorp Bank.

Chime also offers a service where account holders can link their external accounts to their Chime Spending Account by logging into their online accounts. After a successful login, account holders then select the Move Money feature and tap the Transfers button. A prompt will appear on the display screen where account users can enter their information and link into their Spending Account.

Chime extends a $200 transfer each day and $1,000 per month which will be available within five business days. It also allows numerous external accounts such as PNC Bank, Capital One 360, Wells Fargo, and U.S. Bank to name a few.

4.    Avoid Spending More Than the Available Account Balance

The most effective and convenient way to steer clear of overdraft fees from banks is to minimize expenditure especially if the account balance is below the maintaining balance or if the transaction costs more than the available cash on the account.

What is an Overdraft Protection?

The miscalculation of budget or oversight in expenses often leads to a shortage of funds. An Overdraft Protection, also called bounce protection or courtesy overdraft, is a convenient feature that consumers may avail from their respective financial institutions to cover their transactions.

Moreover, it is a service that several banks offer their account holders to protect their accounts from reaching a negative or zero balance. Banks automatically transfer funds from their secondary accounts, credit card, or money market savings to their checking accounts.

Benefits of Overdraft Protection

The primary advantage of an Overdraft Protection is the access to quick cash. Although banks impose an interest rate for an Overdraft Protection service, the fees for bounced checks are higher. Furthermore, it reflects positively on the credit score of an account holder compared to unacceptable checks that influence the credit score of the purchaser and limits their access to other forms of credit.

What is an overdraft limit?

An overdraft limit or overdraft protection is the maximum amount that banks allow its consumers to withdraw in their accounts aside from their existing debt. For example, an organization has a checking account balance of $5,000 with an overdraft limit of $500. It means that they can make settlements of up to $5,500, but they cannot withdraw or request for an added money if the payment exceeds the limit.

However, account holders should pay the interest on the amount they withdraw. Banks calculate interest based on the daily balance overdrawn, and this is debited to the account every month. They add outstanding credits to the overdrawn amount for the next month.

Banks with the best overdraft limit

Small and big banks usually offer an overdraft limit which ranges from $100-$1,000 depending on the income of the account holder. Below is brief information on some financial institutions about their overdraft protection services, limits, and fees.

Chase

Chase Bank or JPMorgan Chase & Co. is a global financial firm based in New York City. It is the largest bank in the United States and sixth in the world with total assets of approximately $2.534 trillion. It provides mortgages, auto loans, and a selection of credit cards for its consumers. Chase also offers a checking option of Chase Total Checking which allows its users to access online bill payments that come with a security-enhanced chip debit card.

Chase has an overdraft fee of $34 per transaction and an overdraft limit of three settlements per day. This means that account holders can acquire a total of $102 in overdraft fees per day. Chase offers overdraft protection that allows its account holders to link their savings account to their checking accounts in case the latter lacks fund. However, it does not apply its standard overdraft protection services for a purchase which costs $5 or less or for an overdraft of $5 or less.

Wells Fargo

Wells Fargo is a California-based financial institution with several offices throughout the United States. It offers an economical mobile banking experience and ample access on ATMs to its account holders. Furthermore, Wells Fargo charges its account holders a standard overdraft fee of $35 per transaction with a maximum of four settlements daily that can reach up to $105. Account holders can connect two backup accounts to their chief checking account with a regular charge fee for transfer fees.

Chime

Chime is an upstart account for the tech-savvy generation that offers a cash-back rewards program for its members. Unlike traditional financial institutions, Chime has no unnecessary fees including hidden fees, monthly fees, overdraft fees, service fees, minimum balance requirements or fees, card replacement fees, transfer fee, or in-network ATM fees.

Furthermore, consumers can transfer funds from their Savings Account to their Spending Account without any difficulty through Chime’s online experience or with the Chime App. Chime does not have its own ATM system, but it uses the 24,000 MoneyPass networks nationwide with a fee-free cashback for 30,000 locations.

U.S. Bank

One of the largest banks in the United States that provides a variety of financial services which include mortgages, payment services, and investments to its account holders, businesses, and organizations. U.S. Bank also offers overdraft protection which covers the purchases of the consumers when they have insufficient funds.

If the consumer has overdrawn their account by $5, the U.S. Bank will not charge an overdraft fee. However, for an overdrawn amount of $5.01 and above, U.S. Bank has an overdraft fee of $36 for every transaction with a maximum of four settlements daily. This means that the purchaser can incur up to $144 in overdraft fees each day. Account holders can connect their secondary saving account to their checking account with a transfer fee of $12.50 and $7.50 for Standard and Gold accounts, respectively.

BBVA Compass

An Alabama-based multinational financial institution which originated in 2007 with a variety of branches operating in seven states including Texas, Arizona, California, Florida, New Mexico, Alabama, and Colorado. BBVA Compass belongs to the top 25 biggest commercial banks in the United States, while the Small Business Administration considers it one of the leading small business lenders in the country.

BBVA Compass offers several services which include mortgages, student banking, investments, savings, digital services, and specialty programs. Moreover, it provides numerous overdraft management solutions with tools to notify its account holders and monitor their accounts through Online and Mobile Banking. The Overdraft Payment and Protection Programs feature of BBVA Compass includes the Linked Account Overdraft Sweep Service, Overdraft Protection Line of Credit, and Courtesy Overdraft Option.

PNC Bank

PNC is a bank corporation with over 2,459 branches and approximately 9,000 ATMs nationwide. It provides various financial services such as lending, investments, banking, retirement, property authority, and wealth planning. In addition to that, PNC offers its eligible account holders overdraft protection where they link their checking account to their secondary savings, checking, money market account, personal line of credit, or credit card.

The overdraft protection is less expensive as compared to the standard overdraft fee of PNC which costs $36 for each purchase. PNC also limits the purchasers to only four settlements daily that can reach up to $144 overdraft fee. Meanwhile, PNC declines ATM and one-time debit card transactions with no charge if the account balance of the purchaser is low.

SunTrust Banks

With approximately 1,400 branches and 2,100 ATMs in Washington D.C. and the southeastern states, SunTrust Banks, Inc. gained an asset of $199 billion as of the first quarter of 2018. The bank offers a variety of services which include investment banking, lending, money market services, mortgage, credit cards, and deposits. Furthermore, it provides overdraft assistance, Overdraft Coverage and Overdraft Protection, to its account holders to ensure that they can supply funds when needed.

In Overdraft Coverage, SunTrust allows the consumers to make ATM or debit card transactions daily even with insufficient funds in their accounts. However, the bank will charge an overdraft fee of $36 for each purchase with a maximum of six settlements a day. SunTrust will not penalize the consumer if the overdraft and returned item fees are below $5.

Overdraft Protection service guarantees the consumers that no overdraft or declined transactions will occur once they set up their Overdraft Protection accounts. The account holders are required to link their SunTrust checking account to their SunTrust savings, money market, credit card, or line of credit account to transfer funds in case of transaction deficiency. There is a $12.50 fee for each transfer transactions, but consumers can avoid the charge if they deposit funds to cover the overdraft on the same business day.

Bank of America

The multinational financial institution based in North Carolina is the second largest bank in the United States with a variety of financial services. It provides checking, savings, credit cards, home loans, auto debts, and investment services to its account holders, and several overdraft services.

According to the overdraft scheme of Bank of America, they will not approve ATM withdrawals or debit card purchases if there are inadequate funds in the account of the consumer. Additionally, the bank offers two overdraft options on how the account holders prefer them to process their check payments. The first option is the standard overdraft setting with a $35 fee for every overdraft or declined transaction with a limit of four settlements per day. On the other hand, the Decline-All option is also a $35 fee per item, but the bank will not authorize purchases that will lead to an overdraft.

The Verdict

Based on the overdraft limit of some financial institutions, multinational banks such as PNC, Bank of America, Chase, U.S. Bank, and Wells Fargo have approximately $100 in overdraft limit each day. SunTrust Bank has the highest overdraft limit of seven settlements where account holders can incur up to $252 per day. These figures contribute to the $33 billion overdraft revenue of banks in 2016 according to the report of the Consumer Financial Protection Bureau. Meanwhile, there are great fee-free account options in the United States, such as Chime, which has no overdraft fees or hidden charges.

As a modern consumer, it may make sense to choose a lees traditional option, such as a Chime account, in order to avoid overdraft fees. Chime offers online and mobile access along with the security of a traditional bank, but with none of the hassle.

 

How to Pay off Debt Fast: Two Methods You Need to Know

Sad but true: if you have debt, you know that the balance in your savings account can be more of an illusion. It often seems like there’s an underwater glacier that’s pulling any net balance in your account to a negative.

But no need to despair. There are some tactics to help you methodically pay off money owed.

For instance, you may have heard the terms “avalanche” and “snowball” debt repayment methods tossed about. No, it doesn’t involve hiding out in a snowy mountain range until your debt load magically disappears, although that would be pretty awesome. Instead, these are two common tactics to pay off your debt, whether you have student loans, credit card debt, personal loans, car loans, and so forth.

As September is the Month of Budgeting here at Chime, we are taking a deeper dive into these two popular debt repayment strategies. Read on to learn more about  the pros and cons of both, and from there you can figure out which budgeting method is best for you.

Avalanche Debt Repayment Method

With the avalanche debt repayment method, you will first make the minimum payments on all your debts. You will then focus on tackling the debt with the highest interest rate, paying the minimum payment plus extra payments each month. After you’ve crushed the first one, you then take the money you would use to pay off that debt and move onto the debt with the next-highest interest rate. (Note: we highly recommend setting up automatic savings, so you don’t spend the money you need to pay off your debt.)

To keep things simple, let’s just focus on credit card debt. Let’s say you have three credit cards, each with varying balances and interest rates:

Card A – Balance: $800, Minimum Payment: $50; Interest Rate: 25%

Card B – Balance: $2,000, Minimum Payment: $45: Interest Rate: 22%

Card C – Balance: $500, Minimum Payment: $40: Interest Rate: 20%

Because you’re doing the avalanche debt method, you’ll first make minimum payments on all three cards. In this scenario, you’d then also throw down $200 each month toward the credit card with the highest interest rate (in this case Card A with an interest rate of 25%).

After you’ve finished paying off Card A, or “mother lode interest rate (25% APR)” card, (congrats, btw), you put the minimum payment on Card B ($45) and Card C ($40), plus an extra $200 toward Card B (with the second highest interest rate of 22%.) Once you’ve paid off Card B, you’re left with Card C to pay off.

Pros

  • Pay off your debts faster. Because you’re throwing down larger chunks of cash toward your debt, you’ll make faster headway.
  • You save more money on interest. Because you’re tackling debt that costs you more in pesky interest rates (they add up quickly, trust me), you’ll be saving more moola.

Cons

  • Depending on your situation, you may not be able to afford to make the minimum payments, plus extra every month. If you do, it may not feel like you’re making much of a dent.
  • If the balance with the highest interest rate happens to have the largest amount of debt, it could it could take months to pay it off.

Snowball Debt Repayment Method


With the snowball debt repayment method, you will also make the minimum payments on all your debts. But there are two major differences between the snowball and avalanche repayment methods.

1. Instead of focusing on interest, you make payments based on your balances.

2. Instead of first paying off the debt with the highest interest rate, you start with the one with the lowest balance.

So, to illustrate this, let’s use the same three cards as we did with our Avalanche Debt Repayment example:

Card A – Balance: $800, Minimum Payment: $50; Interest Rate: 25%

Card B – Balance: $2,000, Minimum Payment: $45: Interest Rate: 22%

Card C – Balance: $500, Minimum Payment: $40: Interest Rate: 20%

In this case, you’d start with making extra payments on Card C (balance of $500) until it’s completely paid off. Next, you’d take the extra monthly payments you were making on Card C and put them toward Card A, which is the card with the next-highest balance (balance of $800). Once Card A is paid off, you then put all your efforts into Card B (balance of $2,000).

Pros

  • You enjoy wins early in the game. It’s quite motivating to knock out your first debt.
  • Because you’re focusing on the debt with the smallest balance, you can make greater strides with less money.

Cons

  • The biggest downside of the snowball method is you don’t save as much in interest. In other words, you’ll be paying more.

So which method is best? In the realm of social science and human behavior, research reveals that even though rationally we may want to save more, most people stay more motivated by taking care of the debts with the smaller balances.

That being said, it’s still ultimately up to you to decide. We’re not here to sway you one way or the other. Like all things in personal finance, there’s no one-size-fits-all solution. It really depends on what motivates you the most. Would you rather save more in interest, or knock out the smaller debts first?

Tips on Getting Started

Ready to nip your debt in the bud? Here are some pointers on kick-starting the process: 

  • Add up all your debts. Once you’ve decided which repayment debt plan you’d like to go with, tally up all your debts so you can see your balances, interest rates, terms, and fees. Pro tip: there are lots of money management and money-saving apps that allow you to view your debts at-a-glance. The key here is to figure out which debt to tackle first. If it’s been a while since you’ve paid close attention to a particular account, reach out to a representative and get the deets. This will help you make an informed decision.
  • Track your progress. There are a ton of creative ways to track your progress, including a debt payoff thermometer, a Pac-Man style board game where each square or circle represents a certain amount of cash, and you color in each square as it gets paid off.
  • Open a savings account once your debt is paid off. Once your debt is paid off, you can take your money and throw it toward whatever you like—vacation, splurge fund, a car, and what have you. Just make sure you open a savings account for your new goal. This way you can ensure you’re making steady headway.

You Got This

No matter which debt repayment method you choose, here’s the thing: the fact that you’re making it a priority is king. And by keeping debt payoff top of mind, you’ll be on your merry way to crushing it.

 

10 Years After the Financial Crisis – How Fintech Is Helping

“Too big to fail.” If reading that brings a little bit of red to your eyes, you’re not alone.

Though originally popularized in the 1980s during the bailout of Continental Illinois National Bank, this phrase once again became common parlance during the 2008 financial crisis. According to the Federal Reserve Bank of Cleveland, this saying became synonymous with the unwillingness of regulators to close a large troubled bank because they believed the short-term costs of a bank failure were too high.

So, it’s no surprise that nearly half (49 percent) of Americans still have negative associations with the term “too big to fail,” according to a recent Chime survey. The generations who had the strongest negative connotations included boomers (55 percent), many of whom lost their retirement savings in 2008, and millennials (50 percent), who graduated to a nonexistent job market.

In the decade since that phrase was splashed across newspapers and discussed at every dinner table, the United States has slowly clawed its way back from the financial crisis. This brings up the question: Has anything really changed?

How banks are doing

Following the Great Recession, the American people bailed out banks, investors, and shareholders. The Federal Reserve slashed interest rates and pumped trillions of dollars into the American economy.

Ten years later, the same big banks are still at the top of the game: JP Morgan, Bank of America, Wells Fargo, Citibank, and US Bank. Across the U.S., banks had record profits of $56 billion in the first quarter of 2018. Although CEOs earn less than before, they’re still killing it. The stock market has sustained one of its longest bull runs in history, with the S&P 500 growing more than 300 percent since the crisis.

“This is not an industry that has examined itself and remade itself in the wake of the crisis,” stated Phil Angelides, chairman of the Financial Crisis Inquiry Commission, in The Wall Street Journal.

That’s despite Dodd-Frank, a 2010 bill that aimed to protect consumers by placing more controls on banks, including their lending requirements. While the bill did result in increased accountability and oversight, the current administration has begun to roll back some of its provisions. Even if the remainder of the consumer protections stay intact, the WSJ points out that many of the regulators have backgrounds in the very industry they’re supposed to be monitoring.

In other words, banks are doing well, executives and stocks are flying high…but how about the American people?

How Americans are doing

Every year since 2013, the Federal Reserve Board has asked 12,000 adults about their financial lives for the Survey of Household Economics and Decisionmaking (SHED).

According to the 2017 report, only 7 percent of adults say it’s “difficult to get by financially” —  about half the number who said so in 2013. And nearly three-quarters say they’re either “living comfortably” (33 percent) or “doing okay” (40 percent).

Although things have improved, that doesn’t mean everything is OK. Here’s a deeper look at the numbers.

Unemployment and income

Unemployment has dropped to 3.9 percent, lower than it was before the recession. Even the “real” unemployment rate — which includes people who’ve stopped looking for work and people working part-time because they haven’t found full-time opportunities — is only 7.4 percent.

Not counted in that percentage, though, are the people who aren’t looking for work because they can’t find childcare, are addicted to opiates, or are turned off by low wages. Of the Americans who are employed, more than one-fifth (23.3 percent) are in jobs where the median wages fall below the federal poverty line, reports the WSJ. Nearly 40 percent of adults, according to SHED, have family incomes of less than $40,000. Overall, the WSJ says median household income has only risen 5.3 percent since 2008.

Chime’s survey underscores this: 54 percent of Americans are living paycheck-to-paycheck.

More people, SHED learned, are working on the side, too: 31 percent of adults engaged in gig work in 2017, up from 28 percent in 2016.

Wealth and inequality

Chime’s survey asked people how the recession had affected their financial habits. This is what we found:

  • 72 percent became more inclined to save money
  • 62 percent feel their savings are “in a better place” compared to 10 years ago

Despite these promising signs, the wealth gap continues to grow. One report by the Federal Reserve Bank of St. Louis went so far as to say millennials may become a “lost generation” for wealth accumulation.

“Wealth in 2016 of the median family headed by someone born in the 1980s remained 34 percent below the level we predicted based on the experience of earlier generations at the same age,” stated the report.

Those with exposure to the stock market — just half of the American population — have bounded ahead, while everyone else has been left behind. In the New York Times, Nelson D. Schwartz reports the “proportion of family income from wages” has fallen from 70 percent to just under 61 percent. The rest, he says, is largely from investments.

“The people who possess tradable assets, especially stocks, have enjoyed a recovery that Americans dependent on savings or income from their weekly paycheck have yet to see,” wrote Schwartz in the New York Times. “Ten years after the financial crisis, getting ahead by going to work every day seems quaint, akin to using the phone book to find a number or renting a video at Blockbuster.”

When the recession hit, Americans lost $16 trillion in net worth. Today, the wealth of the median American household is still 34 percent lower than it was in 2007, according to the New York Times. Why? Because for families without large investments, their wealth was wrapped up in home value.

Housing

Although housing prices have fully recovered — with the average house price 1 percent higher than the peak in 2006 — there aren’t as many homeowners as there were before the recession.

In what The Penny Hoarder calls “The American Nightmare,” 9 million people lost their homes during the housing crash. According to CNN, the overall homeownership rate dropped from 69.4 percent in 2004 to 63.1 percent in 2016. And, of the Americans who rent, nearly half of them are cost-burdened, according to Harvard University. This means they spend more than 30 percent of their income on rent.

Debt and savings

Debt also remains a common struggle. In fact, Chime’s survey found that 65 percent of Americans have some sort of debt, with 40 percent carrying more than $10,000 and 14 percent carrying more than $50,000.

Here are some staggering stats:

  • Student debt, in particular, has crippled millennials. Today’s students graduate with nearly $40,000 of loans, according to Student Loan Hero.
  • When faced with an unexpected expense of $400, 40 percent of adults can’t pay for it, reports SHED. While that figure has decreased from 50 percent in 2013, it still isn’t good.
  • Twenty percent of Americans are behind on their debt payments, according to SHED; a slight increase from 18 percent in 2015.

In addition, SHED found 22 percent of adults expected to forgo payment on some of their bills in November or December 2017 — mostly credit cards. (That may be why 64 percent of the people we surveyed prefer debit cards over credit cards.)

When it comes to retirement, the picture is also bleak. SHED reports less than two-fifths of non-retired adults think their retirement savings are on track. One-fourth have no retirement savings or pension whatsoever.

The rise of fintech

Though the traditional financial industry may not have learned much from the Great Recession, entrepreneurs did.

They immediately saw a need for a new breed of financial businesses. They realized banking and financial services should no longer be exclusive, confusing and predatorial. Instead, entrepreneurs thought financial institutions should be helpful, transparent and free.

So, in the years after the crash, fintech companies started sprouting up left and right.

While the streak of new companies began to slow in 2015 — perhaps, Deloitte posits, because other technologies like bots and blockchain have attracted entrepreneurs — investments into fintech are still robust.

In 2017, according to SHED:

  • 62 percent of adults auto-paid some bills
  • 52 percent received electronic account alerts
  • 46 percent used automatic saving

And, when it comes to mobile banking, those customers are more satisfied. Fifty-nine percent of the millennials we surveyed would recommend their online or mobile bank to a friend. Of those who used national banks, only 22 percent would do the same.

How fintech is helping

Although the financial crisis has had a lasting impact on Americans, it’s also created a landscape in which fintech can thrive.

So, if there’s been one benefit of the Great Recession, it’s the growth of new financial companies that value transparency and put consumers first.

New fintech startups are indeed helping today’s consumers close tomorrow’s wealth gap. For example, Chime offers comprehensive, modern banking with zero fees. With services like Early Direct Deposit, you can avoid predatory payday lenders. And, with automatic savings features, you can build your emergency fund without thinking about it.

In other words: we’ve got your back as you achieve your financial goals.

 

Credit Score Money Tips: 3 Tips to Fix Your Credit Asap

Your credit score is an essential part of your finances. If you are interested in buying a home or a new vehicle with a loan, you may need to fix your credit score ASAP. The difference between an excellent credit score and a poor one can be worth tens of thousands of dollars over the life of a mortgage if you can get approved at all. While fixing a credit score can take up to a decade, there are some steps you can take today to get your credit score on the mend. If you want to fix your credit score ASAP, follow along to learn more.

Fix your credit tip #1: 100% on-time payments

The biggest factor in your credit score is your on-time payment history. If you have a series of late or missed payments, your first step to fix your credit score is to turn that trend around. Late payments stay on your credit for seven years, and there is no quick fix to get them removed. But you can start the clock to remove them all for good this month with your first of a lifetime of perfect on-time payments going forward.

If you have trouble keeping up with the bills, stop using your credit cards and set the payments to automatic. This way, you never have a late payment to worry about! Even if you don’t have a monthly payment due, many credit cards report an on-time payment. Whatever you have to do to keep a 100% on-time rate going forward, do it!

Fix your credit tip #2: Pay down balances

The fastest way to fix your credit score in a hurry is to pay off revolving credit balances. A revolving credit account is an account where you can add to your balance in the future. This means credit cards and other lines of credit need to be paid down as quickly as possible to raise your score. While it is easier said than done, if you can pay your credit cards down to zero, you should see your score increase if you carried a balance in the past.

If you need help putting together a credit card payoff strategy, consider the debt snowball or debt avalanche. This is a method of focusing on paying off one account at a time while making minimum payments on the others. As you pay off each account, your focus payment gets bigger and bigger and has a snowball effect of paying off your debt accounts.

Fix your credit tip #3: Be patient

If you follow tip #1 and tip #2 and don’t do anything else, you should see your credit score go up in the long-run. If you want to fix your credit permanently, however, it takes time. Those previous late payments hurt your score less and less over time, but it will take the whole seven years for them to go away for good. There is no quick answer to that part of fixing your credit. You have to be patient.

But if you build the right credit habits and hold to them for years, your credit will improve. While you are at it, don’t mess with your credit too much. Adding new accounts, increased credit limits, and even applying for a new credit card can temporarily lower your credit score. The more you can keep your hands off and just let your credit accounts age with perfect payment records, the better off your credit will be.

Your credit score is in your hands

It’s easy to blame credit card companies, debt collectors, and banks for a bad credit score, but in reality, your credit score is in your control. If you take charge and make your credit a focus, you should be able to fix your credit over time. When you want to borrow with the best terms or use the best credit cards for miles and points rewards, you’ll be thrilled you have excellent credit. You can also get back on your feet and open a bank account online with no deposit even with bad credit through a mobile bank like Chime. They can help you restablish good financial habits.

Following these habits, I’ve been able to build my own 800+ credit score. That helped me buy my home and earn hundreds of thousands of travel rewards points for free trips around the world It couldn’t have happened without my excellent credit score. If you want to join me in the 800+ club, follow these key tips to fix your credit score starting today.

 

Here’s What You Need to Know About Your Student Loans After Graduation

If you’re a new college graduate, you’re likely in a transitional stage.

You may be searching for or starting a job, moving to a new city, or unsure of your next steps. Graduation also means you need to re-evaluate your finances, especially if this is the first time you’ve had a significant income. With that higher income, you’ll need to budget for rent, groceries, and other expenses. You’ll also want to get a jump-start on saving as much money as you can.

While you have time to figure out the details, there’s one thing you can’t ignore: your student loans. Making student loan mistakes early on can cost you in the long-run. So, don’t wait – here’s everything you need to know about your student loans after graduation.

Learn how to access your student loans

If you don’t already know where your loans are, the first step is to find them. You can’t create a plan to get out of debt if you don’t know exactly how much debt you have. Hopefully you have received some correspondence from your student loan providers with information on how to access your accounts. But, this isn’t always the case.

If you have private student loans through a bank or other source, you will need to contact them directly to find out more information regarding your balance. If you have federal student loans, there is a step-by-step process for how to find them.

To find your federal student loans, you will need to access the National Student Loan Data System, or NSLDS for short. This is a central database which keeps track of all your federal student loan debt. You can log in at anytime to find out about your accounts, including whether your loans are subsidized or unsubsidized and what the interest rate is on each loan.

To get started, visit the NSLDS website and have your social security number on hand to log in. Once you’re on the website, click “Financial Aid Review” and then click on the link that says “Create an FSA ID.” This is a unique identifier you will need to remember, so write it down and store in a secure place.

Once you are logged in, you should be able to see a snapshot of all your student loans. You can set up automatic payments and create a plan after seeing your loan information. Your account will update with every payment you make, so you will want to check it frequently to keep track of your progress.

Understand when your grace period ends

If you have federal student loans, you will have a six month grace period after you graduate to start making payments.

Just be aware: graduates with unsubsidized federal student loans accrue interest during the grace period. In fact, unsubsidized loans accrue interest throughout your college career, and will continue to do so until they are paid off.

On unsubsidized student loans, the interest is added to the principal balance of your loan. Not only does this mean your principal balance is getting larger, but you have to pay more in interest because your principal balance is increasing. Ouch – that’s a double whammy.

On the other hand, if you have subsidized loans from the federal government, your loans will not accrue interest while you are in school or when you enter your grace period after graduation. Uncle Sam sets the interest rates on Direct Subsidized Loans, and those rates are fixed.

In order to qualify for a Direct Subsidized Loan, students must submit the Free Application for Student Aid, otherwise known as FAFSA. Eligibility is determined based on each individual student’s financial needs. While Direct Unsubsidized Loans don’t accrue interest during your grace period, it’s still a good idea to make payments during this time frame before interest starts accruing.

Know your repayment options

With federal student loans, you have a few repayment options. You will automatically be put on the Standard Repayment Plan, which assumes you will be able to pay back your student loans over a 10-year repayment period.

Even if you can afford to pay the monthly payment on the Standard Repayment Plan, it is worth considering other options that may be a better fit for your needs. Depending on your situation, you may be eligible to change to one of the following repayment plans:

Income-Based Repayment Plan (IBR) keeps your monthly student loan payment at 10 to 15 percent of your discretionary income at the maximum. To qualify for the IBR plan, you need to submit an application. Typically, you need to owe more on your student loans than what you are making in a year.

Pay As You Earn (PAYE) extends your repayment period, but it keeps your monthly payments at 10 percent of your discretionary income. If your income increases, your monthly payment will also increase, but it won’t ever be more than it would have been on the Standard Repayment Plan.

Revised Pay As You Earn (REPAYE) is similar to PAYE, but it allows more eligibility. Payments are capped at 10 percent of your discretionary income, but unlike the PAYE, your payments can increase past the amount it would have been on the Standard Repayment Plan if your income increases.

Income-Contingent Repayment (ICR) allows borrowers to cap their student loan payments at the lesser of two options: either a fixed 12-year payment plan based on your income or 20 percent of your discretionary income.

Graduated Repayment starts you off with a low monthly payment, but as time goes on, your monthly payment will increase. This is a great option for someone who expects an increasing income or someone with high earning potential.

Extended Repayment allows borrowers to extend their repayment schedule for up to 25 years. During that time, you can make either fixed or graduated payments. The pitfall of this plan is that you will pay significantly more in interest over the lifetime of the loan due to the extended repayment period.

With so many options, you can work with your student loan provider to find the best fit for you and your financial situation. The worst thing you can do is simply not pay your student loans because of financial struggles.

Know what happens if you miss a payment

Missing or being late on a student loan payment may not seem like a big deal, but it can have serious consequences in the long-run.

After you miss a payment, your loan is officially considered delinquent and will remain that way until you make a payment or until you request deferment or forbearance. You may also receive a late fee and see a mark on your credit. After 270 days of a missed payment, your loan is then considered to be in default.

One of the easiest ways to avoid missing a scheduled student loan payment is to set up automatic withdrawals from your savings account. This way, you don’t have to worry about paying yet another bill – it will be taken care of without a second thought.

All in all

No matter what your financial situation is, you have options to figure out how to repay your student loans. The important thing is to create a financial plan so you can ensure you are making as much progress as possible on repaying your debt.

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