Without the Fiduciary Rule, Can You Still Find an Honest Retirement Planner?

Earlier this year, the U.S. Court of Appeals for the 5th Circuit effectively repealed a rule from the Department of Labor requiring financial advisers to meet some of the same legal requirements to which real estate agents, attorneys and other professionals must adhere serving their clients. While the so-called “fiduciary rule” isn’t exactly dead yet, it probably isn’t going to be enforced either. So what does that mean for investors looking for a new financial adviser?

In all honesty, not a lot. The new rule went into effect in part last year, so it’s a bit of a return to the status quo. Here’s what happened: The new rule was met with a lot of criticism from a number of groups, financial advisers in particular. It was intended to ensure brokers and other financial planners and advisers make investment recommendations in the best interest of their clients. For example, if your adviser were to choose one investment for your portfolio over another because it paid them a higher fee but had a lower rate of return for you, the fiduciary rule would have smacked them.

The 5th Circuit’s ruling has essentially repealed the Department of Labor’s enforcement of the rule. It technically remains in effect, but it has been rendered virtually meaningless.

How to choose a good financial adviser

This means investors should do their due diligence in choosing any kind of financial adviser. Here are five things you can do to ensure you get an adviser who acts in your best interest:

1. Choose a certified financial planner

Certified financial planners are trained and held to a code of ethics. They also take mandatory classes to maintain their licenses. This helps ensure they are aware of the latest industry standards and that someone is keeping an eye on their work.

2. Ask how they get paid.

If the planner you’re considering gets paid a commission instead of a flat, hourly rate, they have an incentive to choose investments that are in their own best interest. Members of the National Association of Personal Financial Advisors are fee-only and accept no commissions for their work.

3. Do they follow a code of ethics?

Ask if they follow a code of ethics and make sure you read it. If you see “fiduciary” in the language, your planner has agreed to put your best interests first.

4. Are they working for someone you know and trust?

Getting a recommendation from a friend or family member is a great way to find an adviser, but you should still do your due diligence as outlined in steps one through three.

5. Run a background check.

This may sound complicated, but it’s pretty simple. Start by asking your potential adviser if they’ve ever been convicted of a crime. Also ask if they’ve ever been investigated by a regulatory agency or industry group, and, if so, if they were found guilty or responsible of any wrongdoing. It’s also a good idea to Google them. Finally, ask for references of current clients.

Can’t I just do it myself?

If your investments are solely through an employer plan like a 401(k) and you’ve only just begun to invest, a self-directed program may be all you need for now. But as your investments grow and become more complicated, choosing an adviser can be a wise decision. Just like you’d go to a professional to extract your teeth or install your septic system, turning over your investments to a professional also typically results in better outcomes.

Another benefit to hiring an adviser is that they help keep you disciplined when it comes to your short- and long-term investment strategies. They frequently also can help with reviewing employment and other contracts, insurance policies and other legal vehicles.

Worried about your retirement nest egg? Here are five fast ways to start saving more.

This article originally appeared on Policygenius.


A Guide to ChexSystems

Imagine going to a new bank and waiting in line to open an account. You chat with the friendly bank teller, giving him the information he needs to open an account, along with your ID.

Maybe you’ve had a few overdraft charges in your past, but who hasn’t? Besides, your act is together now, and when you need a late-night pizza, you know you have the money in the bank for it. After a few minutes, his face turns grim. “I’m sorry,” he says. “At this time, we can’t offer you a bank account with us.”

What gives? If you haven’t experienced this embarrassing event yourself, count yourself lucky. It happens every day, and it might just happen to you someday too. It may have to do with one consumer reporting agency: ChexSystems.

Read on to learn more about ChexSystems and what you can do if you’re denied a bank account.

What is ChexSystems, anyway?

ChexSystems is a consumer reporting agency (CRA), and it operates like the credit agencies Equifax, Experian, and TransUnion. Except, in this case, ChexSystems collects data about how you’ve used your past bank accounts, rather than how you’ve paid off your debts. Another key difference between ChexSystems and the debt-related CRAs is that ChexSystems generally only lists negative information on your report. So, even if you’ve only had one overdraft charge, it’s possible that it’s the only thing listed on your ChexSystems report (even if you are an otherwise perfect banking customer.)

There are a few other agencies that do the same job as ChexSystems, but according to the National Consumer Law Center, ChexSystems is one of the most widely-used CRAs. In fact, over 80% of financial institutions use CRAs like ChexSystems and its rival, Early Warning Services, to determine whether to grant someone a bank account. Information on your ChexSystems report stays there for a full five years. This means that your mistakes from yesteryear can still impact you today.

Why ChexSystems is Unfair

The reason banks use CRAs like ChexSystems is to make sure you’re not going to open a fraudulent account or rack up a bunch of unpaid bank fees. It makes sense, right?

In reality, however, using ChexSystems is an unfair business practice that can harm consumers like you, according to the National Consumer Law Center. Currently, 17 million Americans — about five percent of the entire U.S. population — don’t have a bank account. And, out of those in this group who have had bank accounts in the past, about 15.5% of them can’t get a bank account now, likely due to a negative CRA report.

Lest you think this is a problem just for poverty-stricken people, think again. On average, about 25% of banks will automatically deny you right off the bat if you have any negative information on your account at all, even if you’re a millionaire. A further 50% of banks will need to call in a branch manager to make a decision on your case (how embarrassing).

Couple this with the fact that many big banks have unfair or unclear overdraft policies, making it even harder to avoid negative marks on your ChexSystems report.

What are my rights for dealing with my ChexSystems report?

Luckily, ChexSystems is governed by the Fair Credit Reporting Act just like TransUnion and the other CRAs. This means that when it comes to how your information is reported and used, you do have rights.

You can get a free copy of your ChexSystems report once per year, just like with your credit report. It’s a good idea to check your report periodically to make sure there’s no fraud or errors listed on it, especially if you plan to open a new account.

If you do apply for a bank account and are denied based on what the bank saw in your ChexSystems report, you can also get another copy for free to make sure it’s accurate. Sadly, even if you’ve paid all of your bank charges, negative information still stays on your report – if it was actually your fault. Yet, if you spot an error, you can resolve it by contacting your bank and ChexSystems to file a dispute. The bank and ChexSystems have to investigate your dispute, but — surprise — it doesn’t always go in your favor, even if you’re in the right. If you think both of them made a mistake and they’re not clearing it up to your satisfaction, you can also file a report with the Consumer Financial Protection Bureau and the Federal Trade Commission.

What if I’m still denied a bank account based on my ChexSystems report?

If you’ve checked your report and it accurately reports negative information, we hate to be the bearer of bad news. Many banks won’t offer you a bank account.

However, you’re not out of options just yet. There are many bank accounts — like Chime Bank — that don’t use the ChexSystems reports. If you open a bank account with Chime Bank, you won’t even be charged pesky overdraft fees, which may have led to the negative information in in the first place.

Having a negative ChexSystems report is certainly an inconvenience, but it’s not the end of the world. Chime has your back, even if no other banks do.


6 Things You Should Do Right After Graduation

So, you graduated college. Now what?

Indeed, graduation is a monumental achievement. It’s also a time full of changes and this may cause feelings of fear and anxiety. Perhaps you’re starting your first job or still searching for your dream job. Maybe you’re leaving your friends and family to move across the country. Or, perhaps you’re living on your own for the first time and learning how to save money.

Wherever you may be on your post-grad path, life can feel overwhelming. So, take a deep breath and start planning now for long-term success. To help you get going, here are 6 tasks you should do immediately after graduation. Ready, set, go!

1. Create a Career Plan

Whether or not you have your first job lined up, now is a great time to consider your career plan. Sure, you’ve probably thought about your career while in college. But now it’s time for a reality check: what are your job prospects really like?

As a good starting point, identify your strengths and interests. Not sure what talents really set you apart? Ask your friends and family for their input.

Next, map out your goals. Where do you want to be in 20 years? What about 10? By keeping your long-term goals in mind, you can better evaluate your options. With a career plan, you’ll scrutinize each job opportunity more carefully. Career plans can also help you move forward confidently as you’ll hopefully be taking steps in the right direction.

2. Clean Up Your Social Media

Do you have some embarrassing photos and posts on social media? You’re not alone. Even if your posts are meant to be funny, you never know how a potential employer could react.

According to CareerBuilder, over 70 percent of employers search job candidates’ social media profiles before making hiring decisions. According to the same study, over 50 percent of employers decided not to hire a candidate after viewing something negative on their social media profiles. Whoa.

So, before you start applying for jobs, make sure your social media sites are professional, or at least private. Pro tip: remove any photos of you partying or acting in any way than can be frowned down upon.

3. Update Your Banking

Now is an ideal time to consider your banking options. It may be in your best interest to switch to a bank that is free to sign up and has no fees.

For example, if you are moving to another state to start a new job, you may not have access to your current local bank. Or, perhaps you want a bank account that will help you save money. One way to achieve this goal is to open a Chime bank account. The best part about a Chime account is that there are zero fees.

4. Network like Crazy

You never whether that person you recently met will be the ticket to your next big gig. The bottom line: post-graduation is a crucial time to network.

Just take it from Tom Farley, the president of the New York Stock Exchange. In an interview in Fortune Magazine, Farley stated, “When I think about my own career, I owe every job I’ve ever had to networking.”

If you’re intimidated by the idea of networking, don’t fret. You can begin by simply sharing your professional goals with your friends and family. They likely have connections to people who may be able to guide you in your career. And, social media sites like LinkedIn allow you to make professional connections from behind a screen.

With LinkedIn, you can reach out to professional recruiters and hiring managers, and connect with people in your field. In fact, about 95 percent of recruiters use LinkedIn to find qualified candidates, according to an article by US News & World Report. So don’t miss out!

5. Create a Budget

Landing your first job and seeing those paychecks hit your bank account is exciting. But, as you enter the post-graduate world, you’ll also encounter a slew of other expenses. It’s easy to spend more than you earn.

To avoid overspending, it’s a wise idea to create and stick to a budget. For tips on picking out a budgeting style that works best for you, be sure to check out our budgeting guide.

6. Understand Your Student Loans

Unfortunately, many recent college graduates don’t know how to deal with paying back their student loans. Some don’t even realize how much they actually borrowed.

In fact, according to a study by the Brookings Institute, only 38 percent of college students know how much money they borrowed to pay for school. Furthermore, 14 percent of students with student loans incorrectly reported having no debt at all, according to the same study. Because of this, many recent college graduates suffer a rude awakening when they find out what they really owe.

So, it’s best to be educated about your loans. Your student loan provider should be sending you information about how to access your student loans and make payments. If you don’t hear from your loan providers shortly after graduation, you should contact them directly.

If you have federal student loans, you can find out who your servicer is by going to the National Student Loan Data System. Start by clicking on “Financial Aid Review,” and accept the terms and conditions. After that, go ahead and login. In order to log in, you will need your FSA ID. If you do not already have an FSA ID, you can easily create one on the web page. Once you login, you will see all of your student loan information, including your total balance. From there, it’s a good idea to figure out how you will tackle your loan payments by factoring this into your budget.


You’ve worked hard to get to this point. Graduating from college is a major accomplishment. So, while you’re setting yourself up for financial success, you should also take advantage of this transition time by relaxing and enjoying the summer. Just remember to budget for your summertime fun!


What Do You Need to Open a Bank Account?

If you’re ready to open a bank account or switch banks, there’s probably a big question looming over your head: “What do you need to open a bank account?” After all, opening a bank account is a process and you want to prepare and have things ready. Right?

So, here’s the lowdown on what you need to open a bank account.

Know what kind of bank account you want

First things first. You want to know what kind of bank account you want. Do you want a checking account to pay your bills? Or are you looking for a savings account to pocket your coins?

Perhaps you want both a checking and savings account to help you manage your finances. Here are some things to consider when searching for a specific type of bank account:

  • Look for online bank accounts with no fees
  • Look for free checking account banks (with no monthly minimums!)
  • See which banks offer a free checking account without an opening deposit
  • Find options where you can open a checking account online instantly

All of these things can make it easier to find the right bank for you.

What kind of bank do you want to work with?

Secondly, you’ll want to figure out what bank you actually want to do business with. A bank is a financial institution responsible for housing your money. You want to make sure your values align with your bank and that you’re not getting nickeled and dimed for everything.

Do your research and search for free checking account banks that don’t hit you with monthly fees or unnecessary charges. A good option can be an online bank account, like Chime, where there are no fees and you can open a checking account online instantly.

Before deciding on a bank, make sure to read the fine print and understand any fees, as well as the terms and conditions. This way you’ll avoid any surprises later on.

What do you need to open a bank account?

After you’ve figured out what type of bank account you want and chosen the bank you want to work with, it’s time to actually open an account!

But what do you need to open a bank account? And if you’re applying in-person, you might wonder what to bring to open a bank account. While many banks have different requirements, they often need the same information. All banks, for example, require that you are at least 18 years old.

Take a look at what to bring to open a bank account:

1. Government-issued I.D.

In order to open a bank account or online bank account, you’ll likely need a government-issued I.D. like a passport or driver’s license.

2. Social security card

You will need a social security number to open a bank account, so bring your social security card with you or have it handy if you’re applying for an online bank account.

3. Utility bill, lease, or billing statement

Now that you know you’ll need an I.D. to open a bank account, you may wonder, “Do I need proof of address to open a bank account?” This may be an important question if you’re in the middle of moving or don’t have a full-time residence. The answer is yes. You will need to have a utility bill, lease or billing statement on hand to have proof of address to open a bank account.

How to open a bank account online

If you want to open a checking account online instantly, you will want to apply for an online bank account and download their mobile app. If you’re wondering how to open a bank account online, it’s pretty simple and can be done from the comfort of your own home!

Simply go to the site or app of the online bank account, fill out the application, and then provide your personal information and verification. Once you apply for a traditional bank account or an online bank account, you’ll want to deposit money to fund your account.

If you’re worried about how much money you need to open a bank account, consider an online bank account like Chime that has no fees and no requirements for minimum balances.

Bottom line

If you’re ready to open a bank account at a traditional bank or apply for an online bank account, you’ll want to know what to bring to open a bank account. Using this guide, you can be prepared and open a bank account today.


The 10 Golden Rules of Money Etiquette

We know how awkward – and frightening – talking about money can be. Yup, it’s oftentimes considered more taboo to chit chat about the “M” word than about sex and politics.

While shooting the hay about your job may be less anxiety-inducing than your debt situation, having convos about financial matters is super important.

Yet, as the saying goes, “there’s a time and place for everything.” If not well-timed or in the proper context, chatting about finances can simply create tension. To avoid socially awkward situations, money faux paus, or full-on blow-ups, here are the 10 golden rules of money etiquette:

1. Thou shall not inquire about one’s debt during family functions

 That’s right. No meddling about Uncle Harold’s outstanding credit card balance or cousin Ave’s student debt load in front of spectators at a 4th of July grill-out or during Thanksgiving dinner.

Or even worse, it’s probably not a good idea to start a convo about how much debt is owed to you. What’ll most likely happen? Probably nothing productive. Instead, you’ll probably painfully endure mad-dog glances for the duration of the meal.  

What to do instead: If a family member’s debt involves you (can you say authorized user, or long-overdue loan?) carve out some private time to suss things out. If the person is in a bad financial situation, see if you can talk to him one-on-one about how to build solid credit card habits. But tread carefully! You don’t want to set off any landmines.

2. Thou shall not ask to split the bill afterward.

Does this sound like a likely scenario? You’re enjoying a lovely patio brunch with some pals. Your meal companions order double espressos, bottomless mimosas, while your frugal self meagerly gulps on tap water. When the check drops, your friends say they’re too tipsy to do math, and suggest splitting the bill evenly. You know, for the sake of convenience.

What to do instead: Oy vey, this is one of my personal pet peeves. Figure out the payment sitch beforehand. Otherwise, you’ll be tasked to be the “uptight one” who wants to divvy up the bill according to what each person ordered. Note that you may be expected to be the one that has to calculate the tab. This is far better than paying more than you budgeted. You can also decide ahead of time to use an app to split the tab. Easy peasy.

3. Thou shall not text about serious money matters with your partner.

This is a money faux paus I’ve ashamed to admit to. This happens when I’m feeling particularly brave and resolute about having “a talk” on budgeting or how to best split bills. I’ll then send my partner a mini-novella of a text. In turn, he gets agitated or feels blindsided. A likely reply: Let’s discuss IRL.

What to do instead: It’s simply not in good taste to bombard your partner with long-winded texts about serious money topics. Instead, carve out some time to discuss spending habits or your financial future. It doesn’t have to involve a five-course dinner. You can chat en route to the supermarket, or during an evening walk around the neighborhood. Just make sure it gets done.

4. Thou shall not outright ask about another’s salary.

While discussing salaries isn’t always a social no-no, it’s deemed outright rude to ask someone how much she earns. Why? It can easily lead to feelings of inadequacy, or cause your friend to go into “compare and despair” mode.

What to do instead: If you suspect you make more than your friends and family, it’s easy to be the one mouthing off about how much you take home. It’s quite a different story if your friend earns more than you. But please, don’t be the clueless one who lives in a self-absorbed, more financially-astute than-thou bubble.

If you’re dying to talk salary, start by broaching topics with lighthearted money topics. For instance, mention a great deal you nabbed at a sample sale. Or how you’re trying to cut back on eating out. Or… you might even start out with a general discussion on career planning or investing in your professional life. Then feel things out, and take it from there.

5. Thou shall not hide important financial information.

If you have outstanding debt, or made a money boo-boo in your younger years, you’ll need to let the cat out of the bag eventually. You loved ones deserve to know the truth. Plus, remaining silent is a borderline act of financial infidelity, and can lead to feelings of hurt and betrayal.

What to do instead: Be upfront with those who could be negatively impacted by information you don’t share. Otherwise, this may just lead to more problems down the line.

6. Thou shall not ask for one’s credit score on a first date.

…Or net worth for that matter. A relative of mine once had his date ask him what tax bracket he fell into. The proper response? “None o’ your business.” You’ll probably want to make sure you have similar interests and values before prodding about someone’s net worth. Just sayin’.

What to do instead: As you know, talking about money matters is a super sensitive topic. When you’re just getting to know someone, you want to be extra careful. When on a date, I’ve learned to look for subtle cues on how my date manages money. Granted, as a personal finance writer, many times my date will outright express an interest in money management or flat-out admit they’re terrible with money. It’s a start, and will lead to more serious discussions as the relationship progresses.

7. Thou shall not ask for money during a friend’s birthday.

Sad but true: I have been guilty of this. Granted, I was a broke college student at the time. My good friend checked out some books at the university library using my card. He lost them during a bad breakup, and I was fined three hundred dollars.

On his birthday, I brought up the topic and suggested coming up with a repayment plan. The lighthearted chit chat in the room dramatically faded into dead silence. #majorfail

What to do instead: Approach the situation with kid gloves. In private. You really don’t know what is going on in the other person’s life. My friend eventually paid part of it of back, only to have his car towed, and he needed the moola to get his car back. We were both riding the broke student train. While three hundos was nothing to scoff at, especially at a time when I subsided on mac and cheese, I realized it was best to just let it go.

8. Thou shall not push your frugality on another person.

Yup, this was former me. I used to assess people’s capacity for frugality with a harsh, critical stare. And just like how some youngins would only choose friends who drove certain cars and carried certain brands of handbags, I picked my friends based on how good they were at scouting a killer deal.

What to do instead: While hanging out with frugal folks can help you stick to your budget, it’s also great to have friends with different money philosophies and habits. It’ll not only help you be more open-minded and compassionate, but you’ll build your resistance to FOMO.

9. Thou shall not judge others on their money decisions.

There’s no point in harshly judging others on how and why they spend their money. People have varying relationships with money, mindsets, and ways of being. Just because you may decide to do something differently doesn’t mean what they’re doing is plain wrong.

What to do instead: If you really want to help others with their finances, be the cheerleader or accountability buddy they need in their life. Only help out if they ask for it. Sure, you’ll want to tout the benefits of auto-transferring a portion of your paycheck, or saving for an emergency fund. But, put a lid on it – for the time being. Otherwise, you’ll come off as intrusive, which will just lead to ill feelings of resentment.

10. Thou shall not debt shame.

Debt shaming can feel just as bad as looking down on someone who doesn’t have a lot of money. You just don’t know what kind of situation someone is in, and what factors led them to their current state of affairs. Debt can create a lot of stress, anxiety and depression.

What to do instead: Be a pal. If someone shares tales of debt woes, nod and commiserate. Offer up resources and tips if you think it would be useful.

Bottom Line

Stick to these golden rules of money etiquette, and I assure you, you’ll be a well-regarded money nerd. It sure beats being the insensitive, out-of-touch one who just doesn’t get it and is privy to an eyeroll – or two. Trust me, your relationships and social life will be better off for it.



College Grads: What to Watch out for When Choosing Your First Adult Bank Account

Shortly after graduating college, reality sets in: you’re a real adult now. It can be overwhelming, but it’s time to deal with your financial life and this includes taxes, student loan debt, and mortgage or rent payments. It’s also time to get down to business when it comes to saving money.

First things first: you’ve got find a bank that is free and will help you manage your money efficiently. If you had a student checking account at your college bank, it’s time to get rid of that and instead open a bank account that suits your new adulting lifestyle.

Luckily, opening your first adult bank account isn’t as difficult as it seems. Here are 5 tips to help you get you started.

Consider Accessibility and Convenience

If a brick-and-mortar bank is important to you, make sure that a branch is easily accessible should you need to make deposits, withdrawals or talk to a teller. This doesn’t mean your bank has to be on every street corner in your neighborhood. But, you also don’t want to travel far if you have an issue with your account and need to speak to a representative.

With this in mind, make sure your bank is open during the hours you can get there. For example, if you have mostly evenings available during the week, you may want to consider a bank that can accommodate those hours.

Another tip: you may want to consider an online bank account, especially if you never go into a branch and prefer to deal with banking issues online or on the phone. With an online bank, you’ll have 24/7 access to your account. You can also manage your account from home or on the go on your mobile device.

Check the Fees

Banks fees are one of the most important factors to keep in mind when choosing where to open your first adult bank account.

For starters, miscellaneous fees can eat up your account balance fast. In fact, the average U.S. household pays more than $329 in bank fees every year! Some of the most common bank fees include:

  • Monthly maintenance fees
  • Minimum account balance fees – charged if your daily account balance falls below a certain threshold
  • Overdraft fees. These can run you up to $35 per overdraft incident
  • ATM fees. These are charged when you use an out-of-network ATM
  • Refunded deposit fee – charged for a bounced deposit check
  • Paper statement fee
  • Lost debit card fee
  • Foreign transaction fee

The good news is that most of these fees can be avoided depending on which bank and account you choose. For example, Chime makes banking faster and has no fees, ever. That’s right. No overdraft fees, minimum balance requirements, monthly service account fees, ACH bank transfer fees, card replacement fees, or foreign transaction fees. In addition, Chime members have access to more than 30,000 fee-free MoneyPass ATMs located all over the U.S.

Read the Fine Print

Before you open a bank account, be sure to read the fine print in order to fully understand the terms and details.

For instance, it’s important to read about any applicable fees associated with your account, as well as other terms and conditions. In addition, make sure you understand the bank’s privacy policy and familiarize yourself with features you can take advantage of as an account holder.

Consider the Saving Account Benefits

While you may be mainly focused on opening a checking account, it’s a wise idea to open a savings account as well.

Pro tip: it helps to keep your spending money separate from your savings. As part of your savings plan, you may want to start a fund to cover emergencies and unexpected expenses. Plus, you can begin saving up for big purchases in advance. This will help you steer clear of racking up credit card debt.

When it comes to choosing the best savings account, you may want to consider a bank that will provide an interest-bearing account and automatic transfer options. And, just like with a checking account, you’ll want to examine the fees and read the fine print. One major rule set by the Federal Reserve is that banks cannot allow you to withdraw money from your savings account more than six times per month. Some banks may even have an excessive withdrawal fee, so make sure to check on this.

Comparison Shop and Choose Wisely

Post-graduate life is full of changes and new beginnings. And, your first bank account after college marks a new start on your adult financial life. By following the advice above and comparison shopping, you’ll be one step closer to finding the best bank for you.


6 Reasons Direct Deposit is the Best Way to Get Paid

Direct deposit is by far the most common way to get paid in America. In fact, 82% of U.S. workers get their paychecks electronically, according to the National Automated Clearing House Association.

If you’re among the 18% of workers still getting paid via paper checks, here are 6 reasons why you may want to switch to direct deposit. Take a look:

1. You get paid faster

If you get paid by check, your money isn’t always available to you immediately. Instead, you may have to wait a couple of days after depositing the check to actually have access to that money. Why? Your bank needs to make sure the funds are available at your employer’s bank before clearing your check. The process is even slower if you get your checks by mail. And just think: you can run into yet more delays if you deposit your check right before a holiday weekend.

With direct deposit, however, funds clear instantly, giving you immediate access to your hard-earned cash. Better yet, if your normal payday happens to be over a holiday weekend, you’ll typically get your paycheck on the last working day before the weekend.

Lastly, depending on your bank and how your employer processes payroll, you may even get your paycheck before everyone else. For example, Chime Bank offers an Early Direct Deposit feature, which allows you to get paid up to two days early.

2. Paper checks are inconvenient

With direct deposit, you don’t have to wait to get your check in the mail or stand in line at the bank to deposit it. When you get direct deposit, your cash is in your bank account immediately.

Paper checks can indeed be inconvenient. Not only this but you can also run into problems trying to cash the check. For example, if your bank is not the same as your company’s bank, verification can take a couple of days – meaning you’ll need to wait to access your own money.

3. You can’t lose it

Because direct deposit happens electronically, the chances of losing your paycheck are slim, especially if you’ve provided the correct bank account information to your employer.

In contrast, it’s possible to lose paper checks or have them stolen. In fact, check fraud is still the most prevalent form of payments fraud, according to a recent report by the Association for Financial Professionals. If you do lose your paycheck, you’ll have to go through your employer to get a new one. Unfortunately, this process can take days, and things can get complicated if someone found the check and cashed it.

4. There’s no cost to you

Signing up for direct deposit through your workplace – assuming your employer offers this option – is free to you. But, of course, you need a bank account for the funds to be deposited into.

If you do happen to belong to the small percent of the U.S. population that doesn’t have a bank account, you still have options. Just keep in mind that these options will cost your money. For example, Walmart offers a check-cashing service, but the retailer charges up to $6 per check, depending on the check amount. Other check cashing services can charge up to 10% of the check amount — that’s $100 for a $1,000 check.

5. You can avoid monthly maintenance fees

Many big banks still charge monthly fees on checking accounts. And some banks require that you receive a certain number of direct deposits a month to waive fees. For example, in order to waive certain fees, you may need to receive direct deposits totaling $500 or have at least one direct deposit per month in any amount.

If you do bank at a financial institution with fees like this, being paid via direct deposit often allows you to meet these monthly requirements. This means you won’t get dinged with these specific fees and you’ll save money. Of course, you can also just switch to a bank account, like Chime, that will never charge you fees.

6. You can automatically divert payments to savings

Some employers allow you to set up direct deposit with multiple accounts. By doing this, you can automatically deposit cash into your savings account without lifting a finger.

If your employer doesn’t allow multiple-account direct deposits, you can set up automatic savings instead. For example, if you’re a Chime bank member, you can take advantage of Chime’s Automatic Savings program. Through this program, you can request that Chime automatically divert 10% of every paycheck into your Chime Savings Account. Once you opt in, Chime does the work for you, and you don’t even need to get your employer involved.

Automate your paychecks to simplify your finances

Here’s the bottom line: if you don’t currently have direct deposit, sign up for it if possible. At the end of the day, direct deposit is more convenient than dealing with paper checks and it gives you greater control over your hard-earned cash.


Rise of Challenger Banking

Have you ever heard of challenger banks? If not, you’re not alone. A fairly new term in the U.S. banking industry, challenger banks are financial institutions that provide banking services to consumers who want to avoid the costs and complications that sometimes come with traditional banks.

Challenger banks typically don’t have physical branches or hefty fees. They also focus on the building a better banking experience rather than offering a suite of products and services like loans, investing guidance and financial planning.

To better understand challenger banks, it’s first important to understand a bit more about the history of the banking industry as a whole. From there, you’ll appreciate why challenger banks are becoming so popular among consumers looking to save more money. Read on to learn more.

A Short History of Banking in America

Before the 1980s, banks didn’t have nationwide locations. So, if you went on vacation halfway across the country, you may have had difficulty accessing cash in a pinch.

The 1980s gave way to laws deregulating the banking industry, which included removing federal limits on the rates banks could pay on deposit accounts and paving the way for banks to open branches across state lines. Then, in 1994, President Bill Clinton signed the Riegle-Neal Interstate Banking and Branching Efficiency Act, making it even easier for banks to expand and acquire banks in other states. Big banks started making big moves.

For example, NationsBank bought Bank of America in 1998, marking the largest bank merger in U.S. history. It created the first nationwide retail banking network. Around the same time, Travelers Group Inc. acquired Citicorp; and Banc One Corp, a holding company for City National Bank, bought First Chicago NBD Corp. Other banks followed suit. Chase, Citi and Wells Fargo expanded their own networks, allowing Americans to visit branches in multiple states.

Banks kept growing until 2008 when the Great Recession began. When this financial crisis hit the U.S. economy, banks weren’t prepared. The U.S. government invested close to $205 billion to bail out banks across the country, including Wells Fargo, Bank of America, Chase and Citi. In return, both government regulators and bank shareholders pressured big banks to trim the fat, so to speak. The goal was to avoid another major recession and this led to big banks cutting costs for the first time in years.

The Fall-Out Result

This cost-cutting effort led big banks to shut down branches in hundreds of rural areas, and focus instead on heavily populated cities to get the biggest bang for the buck. At the same time, banks started investing in technology to appeal to younger consumers, while also offering services to entice wealthy customers.

While the banking industry was trying to reinvent itself, consumers couldn’t forget what happened in the late 2000s. For example, in 2008, just 32% of Americans had “a great deal” or “quite a lot” of confidence in U.S. banks, according to a Gallup poll.

To this day, many people are still unimpressed with the banking industry. In fact, only 27% surveyed were confident in banks in 2016, according to the poll. Major news like the Wells Fargo fake-account scandal hasn’t helped either, leaving customers wondering where else to turn.

The Rise of Challenger Banks

As more and more customers have grown dissatisfied with traditional banks, challenger banks have rose to the occasion.

With no physical branches and lower overhead costs, these online- and mobile-only banks can offer better products with lower fees. For younger generations, these features are appealing. For example, in 2016, FICO found that Millennials are two to three times more likely to switch banks than other generations. The company also found that 45% of Millennials cited high fees as their reason for switching to a new bank.

Some of the earlier challenger banks included Simple and Moven. Simple, founded in 2009, started offering its mobile banking service in 2012. Up until it was acquired by BBVA in 2014, many considered Simple to be a sort of anti-bank. Meanwhile, Moven launched in 2011 as Movenbank and dubbed itself “the first everyday cardless bank,” using mobile payments technology that was still in its infancy.

These early challenger banks paved the way for Chime to enter the scene in 2014. Chime, with its mobile-first approach to banking, offers Spending and Savings accounts. In addition, Chime helps its member save money with zero fees. For example, Chime’s Automatic Savings program allows you to automatically save 10% of every paycheck. You can also round up each purchase you make with your Chime Visa debit card and transfer the roundup amount to your Savings Account.

As a result of these features and no fees, Chime is now the U.S. leader in the challenger banking segment. In the past four years alone, more than 750,000 Chime bank accounts have been opened with more than $2.5 billion in transaction volume.

Challenger Banks Face Some Hurdles

While challenger banks offer a valuable alternative to traditional banks, change is hard and many consumers still want to visit a physical branch at least now and again.

In a 2017 survey, for instance, PricewaterhouseCoopers found that while many consumers are visiting their banks’ branches less frequently, 62% still felt it important to have a bank with local branches. In a separate study, Accenture found that even Millennials anticipate using bank branches in the future, with 86% expressing interest, mostly for the human contact.

Challenger Banks Are Here to Stay

Even with its challenges, challenger banks are here to stay. Indeed, the benefits make it worth it for many to forego a trip to a brick-and-mortar location. Challenger banks have also stepped up to the plate to fill a growing need for Millennials in search of a tech-friendly solution that will help them get ahead financially.

So, now that you fully understand the perks of a challenger bank, are you ready to switch banks?


How to Prioritize Your Financial Obligations and Goals

Creating financial goals can be an exciting and exhilarating experience. After all, who doesn’t love the idea of a wealthy retirement full of travel and spa days, or a brand new home with a huge down payment?

Yet, before you get caught up dreaming about financial freedom, it’s time to come back down to earth. Alas, visualizing your goals and making your dreams happen are two different things. In order to reach your money milestones, you’ll first need to create a plan – and this should encompass both your financial obligations and saving up for the fun stuff.

To help you prioritize your goals and obligations, we’ve put together a list of 7 steps to maximize your financial potential. Take a look:

1. Get a head start on your emergency fund

Paying down debt and investing for the future won’t do you much good if your furnace goes kaput and you don’t have the funds to fix it.

An emergency fund, however, can help protect you from unexpected setbacks. To get started, start saving money with the goal of earmarking at least $1,000 into a designated fund for emergencies. While you may want to come back to this account later and add more money, your first $1,000 will surely help you if you need cash for a small home repair or other minor emergency.

2. Get your 401(k) match

Nearly two-thirds of 401(k) participants qualify for an employer match, according to a study by Vanguard. If you belong to this group, you should take advantage of this ASAP as an employer match means free money to you. Cha-ching!

For example, let’s say you earn $60,000 a year and your employer matches up to three percent of your salary in 401(k) contributions. So, if you contribute $150 per month, your employer will contribute another $150. That’s an immediate return of 100% on the money you invest, making the decision a no-brainer.

3. Get the right insurance

Small financial emergencies can set you back, but big ones can seriously cripple you.

If you have kids or other people who depend on you, life insurance offers essential protection. Even if you don’t have any dependents, you may still want to consider an affordable term life insurance policy. Term life insurance provides a death benefit to your loved ones if you pass away during a specific period. You can typically choose a term of five, 10, 15, 20, 30 or 40 years. In most cases, your premium stays the same throughout the term. Term insurance is worth having because it’s relatively inexpensive and protects your loved ones from suffering financial problems should you pass away during the term of your policy.

Talking about insurance, you may also want to consider disability insurance, especially considering you’re more likely to become disabled than die prematurely. Although your employer may offer this type of insurance coverage, you can also look into your own policies for both short-term and long-term disability insurance. This is wise way to ensure that you and your loved ones can still receive an income while you’re recovering from an accident or debilitating illness.

4. Pay off high-interest debt

Now that you’ve managed some of your biggest risks and taken advantage of your 401(k) match, you’ll want to tackle your toxic debt.

Specifically, if you have credit card debt or any other debt with an interest rate of eight percent or higher, it’s a good idea to pay it off as quickly as you can. We choose the eight percent figure because that’s higher than the typical seven percent annual return you can expect by investing that money instead.

Once you eliminate your credit card debt, you can take the amount you were putting toward your monthly payment and invest it into your savings or retirement account.

5. Return to your retirement and emergency fund

Now, it’s time to go back and start building your future.

For your emergency fund, you’ll want to add to that initial $1,000 by saving enough to cover three to six months’ worth of basic monthly expenses. This way you’ll sufficient cash on hand to pay for a bigger emergency.

For your retirement savings, aim to save at least 10% of your gross income. Note that your employer match is included in this goal, so if your workplace is contributing three percent, you should shoot for seven percent from your own income. In addition to your 401(k), you may want to open an individual retirement account (IRA), which can give you a little more control over your investments.

Remember: the amount you set aside each month for these two goals is up to you, but try to be as aggressive as possible without sacrificing your other financial goals.

6. Eliminate other debts

While you’re working toward building your retirement account and emergency fund, you should also begin paying down your other debts such as student loans, auto loans, and your mortgage.

Again, there’s no rule of thumb here for how much you should put toward this goal. So, it’s important to decide for yourself whether being debt-free is more essential than saving for retirement or contributing to your rainy-day fund.

7. Work on other investment goals

When you’re making good headway on your other savings goals, it’s time to look toward the future.

For example, if you have children or plan to have kids, you may want to think about saving up for their higher educational needs. A 529 College Savings Plan is a good option to do that. It allows you to invest your contributions and withdraw them tax-free for qualified education expenses. And, depending on where you live, you might get some extra tax deductions and credits for contributing to a 529 plan. We recommend talking to a fee-only financial advisor to help steer you in the right direction here.

Also, now is the time to consider other savings and investing goals, like taking a nice vacation with the family, upgrading your house or car, or starting your own business.

Pour a foundation first, then build upon it

Every financial plan is different, but building a financial house without a foundation will surely crumble at the first gust of wind. These seven steps, however, will help you create a solid plan for your short and long-term money goals. Are you ready to get started today?


Does Job Hopping Increase Your Long-Term Salary?

Millennials are considered the job-hopping generation, according to a recent Gallup poll. This is no surprise as millennials are three times more likely to change jobs as older generations. Not only that but six in 10 millennials are open to taking on a new job opportunity.

We get it. Switching jobs often leads to a bigger paycheck. But does leaving your current employer for a higher paying job actually stunt your long-term salary growth? In other words, should you stay put?

The data suggests that millenials’ habit of job hopping can actually improve their long-term career and salary aspirations. With this said, it’s important that you weigh the pros and cons when deciding whether to stay or go. Read on to learn more.

Is job hopping the best way to make more money?

Over the past 20 years, switching jobs has almost always been more lucrative than staying at your current employer, according to data from the Federal Reserve of Atlanta.

Based on the latest numbers from February 2018, job hopping can almost double your salary increase. In fact, the last time sticking around netted a higher wage growth was in 2011. This suggests that job hopping can be good for your long-term salary too.

With this said, make sure you consider your full benefits package, as well as other costs incurred by switching jobs. Just because your salary is higher doesn’t necessarily mean your bottom line is better off.

Consider all the costs of switching

As easy as it would be to focus solely on salary increases, the decision to switch jobs isn’t always so simple. In fact, reduced benefits at a new job can often negate a salary increase. In addition, here are some other factors to consider.

1. Retirement contributions

If your current employer matches 401(k) contributions on a vesting schedule, you may lose some or all of those contributions if you leave too soon. In fact, roughly 71% of employers have a vesting schedule of at least three years, according to 2016 data from T. Rowe Price.

This means that the money your employer contributes to your retirement account isn’t yours for the taking, at least not at first. Rather, you gain ownership of the funds over time based on your employer’s vesting schedule. If you’re fortunate, you may be working for an employer that offers immediate vesting. In this case, you have nothing to worry about.

That said, you can still lose money if your new employer requires that you wait before you can contribute to a 401(k). Employers are allowed to have a waiting period for as long as a year. The point here: make sure you do your research on your current and future employer-sponsored retirement plans.

2. Bonuses

Depending on when you leave your job, you can potentially miss out on a bonus. This can even be the case if you’ve already had your performance review and the promised bonus hasn’t been paid out yet.

Also, depending on the new employer and when you switch jobs, you may not be eligible for a bonus your first year. Either that or your bonus may be prorated for the year, based on when you joined the company. So, make sure you inquire about bonuses before you leave your job and start a new one.

3. Health insurance

Even if your health insurance premiums stay the same from one job to another, switching jobs and health insurance plans can reset your deductible and out-of-pocket spending to zero.

If you don’t visit the doctor often or haven’t had a lot of medical expenses this year, this won’t matter much. But if you’ve almost reached your deductible with your current plan and expect more medical costs before the year is over, starting from scratch with a new plan can cost you hundreds, if not thousands of dollars.

4. Retirement plan loans

If you’ve borrowed money from your 401(k), leaving your job is one of the worst things you can do. That’s because your termination cancels the original repayment plan on the loan and you may have to repay the debt within 60 days.

If you default, the loan amount would be treated as an early withdrawal and could be subject to taxes plus a 10% penalty. For example, if your loan was for $10,000 and your effective tax rate is 25%, you could be on the hook for $3,500 in taxes and penalties.

And for what it’s worth, the National Bureau of Economic Research found that 86% of 401(k) loan borrowers who leave their employer end up defaulting. You certainly don’t want to be part of this percentage.

5. Moving costs

If you get a new job that requires you to move to a different city or state, there’s no guarantee that your new employer will foot the bill for your move.

Sure, you may be able to deduct some of your moving expenses when you file your taxes. But the tax break may not make up for all the costs you’ll incur when you relocate to a new city or state.

Consider your opportunities carefully

If you’re confronted with an opportunity to earn more by switching jobs, consider all the factors involved, including wage growth and other costs. And, don’t forget to take into account your current situation. If you love your job and don’t really want to leave, you can always brush up on your negotiation skills and ask for a raise.

Regardless of what you decide to do, make sure you weigh all of your options. Money is important, we get it. But money isn’t everything. Taking a new job for more money can leave you depressed and unmotivated, especially if you just left a job you loved. On the flip-side, a new higher-paying opportunity can open new doors and help you climb your career ladder.