Category Saving And Spending

Why Financial Productivity Begins with a Positive Mindset

The following is a guest post by Orion Talmay, of Orion’s Method.

Dealing with finances can be stressful and leave you feeling overwhelmed. It’s all too easy to ignore mounting debts or believe you’ll never save up a significant amount of money. But taking control of your life and changing the way you think can make a huge difference. We take a look at why financial productivity begins with a positive mindset. 

The Impact of a Positive Mindset on Financial Productivity 

Whether you want to work your way out of debt or save up to buy a house, with the right mindset and some hard work, those financial goals are possible. However, you have to start by getting out of a negative thought cycle—if you believe there’s no point trying, then you’ll never achieve them. Therefore, you might be tempted to make choices that make your financial position worse.  

Even with a positive mindset, you won’t achieve your goals overnight. But it’ll put you on the right track to take more control over your finances. 

How to Achieve a Positive Mindset 

Achieving a positive mindset can be difficult, but you can adopt some proven techniques that’ll help you:

  • Take care of yourself
  • Know where you stand
  • Set achievable goals
  • Make small changes
  • Try to see the positive

Take Care of Yourself 

If you’re struggling with a negative mindset, you might slip into bad habits throughout your life, not just when dealing with your finances. Learn to take care of yourself and prioritize your own well-being. 

Start with the basics—make sure you’re exercising regularly, eating a balanced diet, and getting enough sleep. These might seem obvious, but a bad routine leaves you tired, stressed, and unhealthy, which all have a big impact on your mind. 

Treat yourself well, and get into a good routine that helps you stay in control. You’ll see an improvement in your physical and mental health, which puts you in a better position to make informed financial decisions. 

Know Where You Stand 

It’s tempting to bury your head in the sand when it comes to finances. However, not knowing exactly where you stand will add to your stress.

Open those bills and credit card statements you’ve been ignoring. Check your bank balance, work out your incoming and outgoings. Get a clear picture of your current financial situation and understand what bills and repayments you need to make and when they’re due. 

It might be hard to start with but it’ll improve your mindset and put you in a better position to get on top of your money. 

Set Yourself Achievable Goals 

It’s easy to feel negative if you can’t see a way out of your current situation. So, once you know exactly where you are, come up with some realistic targets that you can achieve within a certain time frame. 

For example, if you want to save up for something, set a savings goal and decide how much you can realistically put aside each month, and how long it’ll take to reach your target. 

The important thing with your goals is to make sure you’re sticking to them. If you put money towards debt or savings but you don’t have enough left to cover the rest of your bills, you’ll be tempted to borrow money from somewhere else. 

Make Small Changes 

Don’t try to overhaul everything in your life all at once. Make small, manageable changes that you’ll actually stick to and that will help you feel more positive. There are some really simple money moves that’ll make a noticeable difference. Start by looking at all your subscriptions and recurring payments—consider canceling the ones that you don’t use or can live without. 

If you buy your lunch during work every day, get into the habit of making it at home. Make small switches to your grocery choices, and try to stop buying things that you end up throwing out. Cut down on impulse buys—for nonessential purchases, make yourself wait a couple of weeks to consider whether you really want or need it. 

Try to make one or two small changes each week that you can follow through on. It’ll improve your mindset if you can stick with these habits long-term, rather than trying to do everything at once and feeling like you’ve failed when you slip up. 

Try to See the Positive

Often easier said than done, but try to get out of the cycle of negative thoughts. Revisit your goals each day to remind yourself what you’re trying to achieve and what you should be focusing on. 

When you have a negative thought, where something seems impossible or too difficult, stop and think about ways around it. Don’t get stuck on things that can’t or won’t happen and focus on solutions, workarounds, or breaking it down into smaller steps to get through it. If you struggle to focus on the positives, meditation can help you to manage your thoughts and give you more perspective.  

Why a Positive Mindset Matters

Everyone feels unmotivated and disenfranchised from time to time. It happens to the best of us. However, if you really dig deep and find what’s causing your low energy, you’ll be better equipped to find the root and weed it out. Try to channel your energy into more productive outlets, and make changes whenever they take a toll on your mental state. That’s the key that’ll enable your long-term success. 

Having a positive mindset is the foundation for taking control of your money and becoming more financially stable. Setting yourself goals, addressing bad habits, and learning how to get a handle on your thought processes will help you to manage your finances and put you in a better position with all aspects of your life. 

Source: credit.com

Stimulus Checks 2021: What You Need to Know

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Disclaimer

With two stimulus checks under our belts, planning is currently underway for President Joe Biden’s $1.9 trillion COVID relief package. If passed, it would supply Americans with a third round of stimulus checks.  

A quick recap—the first stimulus checks made the rounds in April 2020. Individuals with an income of up to $75,000 received $1,200. Meanwhile, married couples who made up to $150,000 received $2,400, along with $500 per child. The second wave of stimulus checks, coming in at only $600, arrived in December 2020 and January 2021. Married couples received $1,200, with an additional $600 per child.

With almost a full year between the last stimulus check over $1,000 and now, people’s finances are suffering. In a poll published by NPR in September 2020, 63% of those polled in Houston, TX faced serious financial issues due to the pandemic. Additionally, 57% of those polled reported that someone in their household either lost their job, were furloughed or had their hours or wages reduced since the pandemic started.  

Needless to say, people need financial relief. And while it looks like a stimulus relief package will probably pass, there are a few details still on the table. The biggest points up for debate? Who should get a stimulus check in 2021—and how much they’ll get. 

Who Will Get a Stimulus Check?

President Biden has been adamant that the households that qualify should receive a $1,400 stimulus check. Based on the most recent proposal under consideration, households earning $75,000 or lower would receive $1,400 checks. Meanwhile, married couples who earn $150,000 or less would receive $2,800, along with $1,400 per child. 

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While it looks like this plan will stick, it’s worth noting that a group of Republicans have created a plan that’ll send $1,000 checks to individuals earning $40,000 or less and couples earning up to $80,000. This relief package targets lower-income households while leaving out a lot more people than President Biden’s plan.

When You Can Expect Your Check

In order to speed up President Biden’s stimulus relief package, Democrats are using a budget reconciliation process. In a nutshell, this would allow Democrats to approve the stimulus package without Republican votes. While the stimulus package is being sped up, a few more details have to be ironed out before the package is drafted and voted on.

All that to say—it could take several weeks for you to get your $1,400 stimulus check. Even when the package is passed, it still has to be signed by President Biden and sent out by the IRS. So be on the lookout, but know that you’ll likely have to wait at least a few more weeks. It is worth noting, however, the House is planning to get the stimulus package approved in the next two weeks.

How Should You Spend Your Stimulus Check?

Ultimately, how you should spend your check is up to you. Everyone is in a different financial situation, so you might spend your check differently than others. But if you’re wondering how to spend your third check, you have a few options:

  • Use it to cover the basics. If you’ve been struggling to pay for your basic needs, like groceries and rent, you can use your stimulus check to cover the bills. 
  • Pay down debt. The past year has taken a toll on a lot of our finances. If you’ve racked up debt in 2020, you could use your stimulus check to help pay down some debt. 
  • Put it in savings. It never hurts to save some money for a rainy day. You can put some or all of your stimulus check in a high-yield savings account until you need it.
  • Donate it. If you’re doing pretty well financially, you might want to consider donating your stimulus check to a good cause or to support small businesses.

Again, you should take a serious look at your finances and your needs before you decide exactly how to put your stimulus check to use.

The Next Round of Stimulus Checks Will Probably Happen

As of right now, things are looking pretty good for the third round of stimulus checks. But who qualifies and who doesn’t could still be on the table. In the meantime, if you need some financial guidance, take a look at our COVID financial resource guide.

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Source: credit.com

How to Get a Peer Loan on Bad Credit Now

Getting bad credit peer loans is easy. More important is understanding your credit and getting back on track after the loan.

We’ve all been there. Maybe a missed payment hit your credit score or you’ve had bad credit for a while. You might just not have much credit history, a major factor in bad credit but really no fault of your own.

But what do you do when you’ve got bad credit and need a loan?

Banks will probably not even look in your direction. You could get a high-interest credit card but that might be part of the reason you’ve got bad credit in the first place. Besides the temptation from another credit card burning a hole in your pocket, this type of money will hurt your credit score even more.

Credit card debt goes on your credit score as “revolving debt” which is the worst kind and really dings your score.

I’ve been here before, five years ago when I destroyed my own credit score. I was able to get all the credit card debt I wanted…at super-high interest rates. The credit card companies will always give you money – at a price.

But that’s only a shovel to dig yourself deeper. You need a way out of your bad credit dilemma.

I was able to get back on my feet using peer to peer lending and learned a lot about debt. I learned what factors affected my credit score and how to play the system for personal loans at rates I could afford.

What does this mean to you?

It means you don’t have to make the same mistakes I did looking for a peer to peer loan. I took out one loan before I understood the interest rate and hidden fees…and it almost set me back even farther. Fortunately, I learned quickly how to find better loans even on bad credit.

I am not advocating getting yourself in more debt, especially if your bad credit score means higher rates. If you can give yourself three months to fix your credit score with these credit score hacks then you could save thousands on interest.

But sometimes you just need the money, like now. Fortunately, peer loans have become a great way to get the money you need even if your credit score is less than stellar.

Get a Bad Credit Peer Loan
Get a Bad Credit Peer Loan

More important that getting a bad credit peer loan though is what you do with it and how to get your credit back on track afterwards. After detailing the process of getting a loan, I’ll share what I learned about bad credit and how to game the system to get back on track.

Check your rate on a loan up to $35,000 – won’t affect your credit score

How Does Peer Lending Work for Bad Credit Borrowers?

There is a solution but it’s not from traditional bank loans. Banks are restricted from lending to bad credit borrowers because the loans don’t qualify for guarantee programs. Most likely, if you have a credit score below 660 FICO then the banks won’t help you.

The solution, the one I found after ruining my credit in 2008, is peer-to-peer lending.

P2P sites connect borrowers directly with investors. Since investors are more interested in the return on the loan, your credit score won’t hold by back from getting a loan.

Borrowers fill out an application on the lending site and their credit report is checked to determine an interest rate. Then investors help fund your loan, usually in less than a day. You make monthly payments directly to the site from your checking account and the platform splits the money between investors.

Getting a Bad Credit Peer Loan

Getting a bad credit peer loan is actually pretty easy and a lot like getting a traditional loan from a bank. PersonalLoans.com makes personal loans of up to $35,000 and for terms between three to five years. The interest rate on your loan is fixed and you will have several opportunities to reject the loan offer before taking the money.

Your monthly payment on the loan is made by check or automatic withdrawal and paying off your loan can actually help increase your credit score in more than a few ways.

Simple and Secure Personal Loans! Check your rate without hurting your credit score!

1) Creating a listing on Personal Loans or other p2p lending sites takes a few minutes and involves your personal information and income. None of the information on this first screen affects your credit score.

personalloans.com review peer lending bad credit
Personal Loans Application Start

The company will do a “soft check” on your credit to pre-approve your loan and assign an interest rate. This soft check on your credit does not affect your credit score as an inquiry so don’t worry about checking it out.

Your credit score and other factors will put you in a credit rating category. Depending on the loan term and how many you’ve had before, you will be able to see the range of interest rates that might be available. Credit rating categories D through HR (high risk) are generally what most would consider bad credit and will mean rates from 21% to around 36% on an annualized basis.

While you can’t change your bad credit immediately, there are some things you can do to get a lower interest rate on peer loans.

  • Shorter-term loans are made at lower rates so if you can make the payments on a three-year loan then you’ll save money on interest
  • Lower loan amounts mean lower rates, there’s less risk borrowers won’t be able to repay the loan. It’s just another reason to only borrow as much as you need.
  • Repeat borrowers get lower rates. If you need to borrow a larger amount, you might try taking out a smaller loan first and pay it off in a year or two. Most peer to peer lending does not charge an early payment penalty so you can pay your loan off whenever. Most borrowers see significantly lower rates on their second loan. Paying off the first loan will also improve your credit score, adding to your payment history and paying down other debt.

You always want to look at the APR rate listed instead of the borrower rate. APR or annual percentage rate is the actual cost of the loan when you factor in compounding.

P2P Bad Credit Loan Rates
P2P Bad Credit Loan Rates

Rates can get fairly high for bad credit borrowers but are still well below rates on payday lending or credit cards. That’s why the most popular use of peer loans has been for credit card consolidation and to get out of the cycle of payday loans. Peer loans have fixed payments and a fixed payoff date, giving you a way out of never ending borrowing.

I checked my own rate on Lending Club and was able to get an 11.5% rate, way under the interest charged on my credit card. I used a short-term peer loan to pay off the credit card debt from a recent conference I attended.

Since peer loans do not have pre-payment penalties, I can pay off the loan early and not have to worry about the interest rate. Make sure you use a loan payoff calculator to find how much you can save and the interest you’ll save with a consolidation loan.

bad credit peer loan application process
Peer Loan Application for Bad Credit

Depending on how bad your credit actually is, you may have to work on it before even getting a peer loan. Below are the average credit scores on the Prosper Rating categories. Your credit score must be at least 640 to get a loan on the site and average credit scores are between 664 and 679 for the lowest three bad credit categories.

Bad Credit Peer Loans Average Credit Score
Bad Credit Peer Loans Average Credit Score

If your credit score is too low to get a peer loan, check out a recent post on fixing your credit score fast. I outline the 21 steps I used to add 140 points to my credit score. The list includes bad credit fixes that work in just a few months to some that take longer but add big-time to your FICO score.

If Personal Loans offers a loan rate and you accept the terms, you then complete a loan listing that will go on the site for investors to fund. The bad credit peer loan site itself does not actually make loans but offers investors the opportunity to loan you money and earn the interest on proceeds.

Investor demand for loans is very strong right now so you have a pretty good chance of getting your loan funded. Keep an eye on your loan listing and any requests by the p2p lending site for information. Getting documents submitted quickly is the best way to make sure you get your money as quickly as possible.

People think that all peer to peer loan sites are the same but there is actually quite a bit of difference between them. You can use those differences to get the best peer loan for your needs and at a better interest rate.

Warning Signs in Peer-to-Peer Lending

Any time your loan options are restricted because of bad credit, you can be sure that the payday loan and scammers will be sniffing around to take advantage. The peer-to-peer lending sites I review in this article are legit but there are some warning signs to watch for with other platforms.

  • Don’t accept a loan from an unsolicited email. If you get an email from a lending site without having filled out an application, there’s a good chance it’s a fraud.
  • Don’t accept very short-term loans of less than one-year. The lending sites are hoping you can’t pay it off in a year and will have to refinance.
  • Don’t accept a loan with a balloon payment, i.e. a loan that isn’t completely repaid from regular payments.
  • Don’t apply on lending sites that claim to not check your credit score. Even bad credit lenders need to check your credit to give you a fair rate.

All lending sites must show you an annual percentage rate (APR) somewhere on your loan, even if you’re charged a fee instead of an interest rate. Look for this rate and don’t pay anything over 36% unless you have no other choice.

Get a debt consolidation loan to pay off your credit cards – check for details

How do P2P Lending Sites Work for Your Loan?

bad credit peer loans online
bad credit peer loans online

The p2p lending site will verify the information on your loan application through your credit report, electronic data and standard verification procedures. They may or may not call your employer to check your information but will certainly call you to verify it.

When your loan is funded, Personal Loans will deduct its fee and release the money to your bank account. The peer lending platform charges a fee of between 1% to 5% on your loan, which will come out of the money before it is deposited into your bank account. The rate is pretty standard and you are looking at the high-end 5% for a bad credit peer loan.

While there is nothing much you can do about the origination fee on a bad credit peer loan, there are two fees you can avoid. Most peer lenders charge a late fee, if your payment is more than 15 days late, and a failed payment fee if your check is returned or automatic withdrawal does not go through. Both these fees are $15 each on Personal Loans peer lending loans.

Monthly payments on your loan are exactly like a traditional bank or credit card loan. Just sign up for automatic withdrawal or mail a check each month. You can pay off your loan early at any time without any pre-payment fees.

Personal Loans Complaints and Shopping Your Loan Around

One of the most common complaints I get from readers is the credit score needed for a loan on Lending Club. You will generally need a credit score of 640 or higher to get approved for a loan and rates can be fairly high for bad credit borrowers.

I always say shop around for your personal loan, even if you have good credit. On almost all of the online loan platforms, you can check your rate without affecting your credit score so it doesn’t hurt to try out a few different options.

If you have a higher credit score and need a personal loan, you might want to start at some of the peer loan sites for better credit borrowers. Peer lending sites like SOFI and Upstart can be more difficult to qualify for a loan because of their higher credit requirements but rates are usually lower than at bad credit peer loan platforms. SOFI specializes in student loan refinancing and can even originate home loans. Upstart specializes in personal loans to borrowers with no credit and recent college graduates.

For borrowers with credit scores below the cutoff, I usually recommend PersonalLoans which is like a LendingTree for personal loans. You enter your personal information and how much you need and the site will look for the best rates from different lenders. The website sources from traditional bank lenders as well as peer networks and credit scores as low as 600 are accepted.

Compare Peer-to-Peer Lending Sites for Bad Credit

Comparing peer-to-peer lending sites and bad credit options starts with understanding which sites will accept applications from borrowers with your credit score range.

There are three types of p2p lending sites. I’ve linked reviews for each personal loan site below so you can get more information before you apply.

  • Sites like SoFi and Lending Club generally only accept applications from borrowers with a 640 credit score or higher. Rates are usually lower but it’s more difficult to get a loan.
  • Sites like PersonalLoans and Upstart will lend to bad credit borrowers with credit scores of 520 FICO or higher. Rates are a little higher but you can refinance with no pre-payment penalty when your score increases.
  • Sites like BadCreditLoans will accept applications from very bad credit borrowers. Rates are usually the highest here but still well below what you’ll find at payday lenders and no credit check sites.

Applying for a peer-to-peer loan doesn’t affect your credit score until you accept the loan so it’s always best to try a couple of sites to find the best rate. None of the p2p sites charge a pre-payment penalty so you’ll want to pay off the loan as quickly as possible.

I’ve used this strategy to lower my monthly payment on a loan and still save on interest. Get a loan on a longer payment period, either 36- or 60-months. Longer-term loans will have lower monthly payments though rates may be a little higher.

After paying on the loan for 18-months, your credit score should be quite a bit higher than where it was initially. You can then apply for a debt consolidation loan on another p2p lending site for a much lower rate.

Which Loan Company is Best
for Bad Credit?

While most of the loan
companies in the list will work for bad credit borrowers, there are a few that
stand out as specializing in bad credit loans. I’ve used a few of these sites
for loans when I destroyed my credit in 2009 and have received recommendations
from readers over the last five years running this blog.

By far, the most often recommended is PersonalLoans.com and this is the one I’ve used the most as well. There are a few reasons I like the site above the rest in the list of online lenders.

  • The credit score requirement is lower, around 540 FICO for small
    loans
  • The website is a loan aggregator which means it shops your loan
    around to different loan companies so you don’t have to do it.
  • Rates seem to be lower on the platform versus the other bad credit
    lenders

That said, there are a few other loan companies that will help even the worst credit score borrowers including BadCreditLoans.

Can I Get an Emergency Loan
with Bad Credit?

Emergency loans is basically
what these companies do best. Even if your loan application is verified, which
only about one-in-five of the applications get verified through employer or
bank statements, you’ll usually have the money in your account within a couple
of days.

The most important thing to remember in getting a personal loan is to borrow as little as you need and ask for as little time to repay as you can cover. Even if you have very bad credit, you can usually get a loan for a couple thousand on one-year terms. Ask for a larger loan though with five-year payment terms and you run the risk of getting your loan denied.

Alternatives to Bad Credit Loans

Depending on how bad your credit is, even peer lending can be expensive. Most sites start around 7% interest but can go as high as 36% annually for really bad credit borrowers.

That means you need to explore all your options for a loan.

Money that you don’t have to pay back is always going to be a great choice…if you can get it. Social lending sites like GoFundMe allow you to start a project and collect money from donors. Most of the money comes from your own social network so a lot of these don’t go far unless you have a super-supportive network but it might be worth a try.

It’s tough asking friends and family for a loan but this might be a better option if you have really bad credit. Getting enough for a few months can give you time to increase your credit score enough to get a better rate on peer-to-peer sites.

Secured loans are always going to be the lowest rates but you have to put up your house or car as collateral. Whereas bad credit loans might charge between 14% to 24% rates, you might be able to get a HELOC or loan on your car for 9% even on bad credit. Just make sure you are absolutely able to make payments, otherwise you’ll risk losing your home. When in doubt, go with the unsecured p2p loan so you don’t have to worry about collateral.

Are Direct Lenders Better for
Bad Credit?

There’s one difference I really haven’t pointed out between peer-to-peer lending and other online loan sites. There is a subtle difference here that might be important for some borrowers and really reinforces that idea of shopping your loan around.

The difference is in WHO is
actually making the loan on the website. Most p2p sites are only middlemen or facilitators
to your loan. They might have investors on the site that fund loans as an
investment. Other peer lending sites are more like loan aggregators, passing
your application on to their list of lenders.

Still other websites are
direct lenders themselves. Whereas the other websites do not directly make
loans, these sites are more like traditional banks that review applications and
make money on the interest.

I’ll admit, it’s a difference
that may not seem all that important. You don’t care where your money comes
from, as long as your application is approved.

But it can sometimes make a
difference in the rates and terms on your personal loan. The true peer-to-peer
lending sites with investors funding your loan tend to offer lower rates
because investors are competing for loans. This is the case with the loan
aggregator sites as well because the lenders compete.

On the other hand, while direct lenders might charge higher rates on loans, they can usually get your money deposited much faster as well. They’re the only ones making the decision. If you qualify for a loan, most will deposit your money within 24 hours. This is why it’s important to apply on at least a few different p2p and online loan sites. You may not know which are direct lenders or other types of sites but you’ll still be able to compare rates and other terms.

Getting your Credit back on Track with Peer Lending

Fixing bad credit with peer loans
Fixing bad credit with peer loans

One of the best things about peer loans for people with bad credit is that they can actually help you improve your credit score.

First, the regular payments you make on your peer loan will go on your credit report and improve your credit payment history. This is the biggest factor that credit rating agencies look at and will help boost your credit score over time.

One factor that most people don’t consider is that peer loans go on your credit report as “non-revolving” debt since they have a fixed payoff date and other terms.

Credit rating agencies like this type of debt better than credit card or “revolving” debt because you cannot continuously keep borrowing on the credit line.

Paying off your credit card debt with a peer loan will help increase your credit score by changing your bad revolving debt for not-quite-as-bad non-revolving debt. Of course, having more debt than you can afford will still be a problem no matter what type it is.

After you’ve gotten your peer loan and the money you need, sit down and really think about how you got into your bad credit situation in the first place. You’ve got the opportunity through the peer loan to get back on track but it could make things worse if you just use it for frivolous spending.

Check out a prior article on the site about setting realistic financial goals and a budget you can actually keep for more ideas on putting your financial house back in order.

I get a lot of questions about debt and paying down debt with a peer loan. The first thing I ask people is whether they want to be debt free or just free of bad debt. The question usually gets a puzzled look and silence. Understand the difference between good debt and bad debt first, then figure out how to pay off bad debt while using good debt to meet your financial goals.

Having bad credit is not the end of the world. Most of us have been there and fortunately, there are things you can do about it. Your options are probably more limited but there are still some doors open to you and a bad credit peer loan may be one of the best options. After you get your peer loan, just make sure you use it wisely and get your credit back to where it should be.

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How Cosigning On a Student Loan Could Impact Your Finances

Wise Bread Picks

While college students can get their own federal student loans without a cosigner in most cases, there are some situations where a cosigner is required. Federal Direct Parent PLUS loans, for example, can actually be taken out on behalf of dependents to help pay for higher education. Students can also apply for private student loans to pay for college. These loans tend to have high credit requirements that make it difficult for young people to qualify on their own.

But should you really cosign on student loans for your child? And should you cosign on any loans they can’t qualify for on their own? You can certainly consider it, but it helps to enter the situation with eyes wide open and understand all the pros and cons. 

The main advantage of cosigning is the fact that you’re helping your child (or dependent) pay for higher education when they may not be able to otherwise. However, it can also be a huge risk. Here’s everything you need to know before you sign on the dotted line.

You’re obligated to repay the debt no matter what

Whether you take on a Parent PLUS loan or you cosign with your child for a private student loan, the first thing you have to understand is that, no matter what, you’re obligated to pay that debt back. If your child stops making payments, you’ll be required to make them. If your child flat-out refuses to get a job and completely defaults on their responsibilities, you will need to repay that loan.

Cosigning on a student loan is similar to buying a house with someone or cosigning on a car loan. You’re both jointly responsible for repayment regardless of what the other person does. That can be a huge problem if your child doesn’t take their bills very seriously, but it may not be an issue if they treat their credit with care and stay on top of their bills.

Student loans are almost never discharged in bankruptcy

Another detail to understand is the fact that student loans are rarely ever discharged in bankruptcy. For the most part, they’ll stick around forever unless the borrower dies or you can prove you have some inescapable hardship. 

As a parent, you’re probably trying to save for retirement and reach other financial goals, so it’s important to understand that the student loans you cosign for will never go away until you pay them off — once and for all.

There’s no going back

When you cosign on a student loan, you can’t just change your mind and back out of the deal. Your child may be able to refinance their student loans in their name, but only if their credit score is good enough to qualify for student loan refinancing on their own. And if that was the case, they wouldn’t have needed a cosigner in the first place.

Your finances may be perfectly fine right now, but you should think through how they may be in five or 10 years. If you’re nearing retirement, you may not want to put yourself in a situation where you’ll be stuck paying off a child’s student loans. Plus, you never know how your health will be or the status of your career several years from now. Cosigning for student loans leaves you on the hook no matter what, and it’s hard to change that after the fact. 

Cosigning on a loan could affect your credit score

When you cosign on a student loan, you have to remember that you’re jointly accepting responsibility for the debt and any consequences that arise out of late payments or delinquency. So you should only cosign if you know your child or dependent is dedicated to paying their bills on time and avoiding default at all costs.

If you’re not paying attention, you could easily take a huge hit to your credit score without even knowing. Since payment history makes up 35 percent of your FICO score, it’s easy to see how even one late payment could cause major damage. Just think of what could happen if the student loans you cosigned for were paid late month after month. If you’re not also receiving a bill in the mail, you may not find out until the damage is already done.

The bottom line

There are situations where it can make sense to cosign on a student loan, but this decision should never be taken lightly. You may be helping your child earn their degree, but you’re taking a significant risk. (See also: Should You Co-Sign a Loan?)

You may want to assess the career field they plan to enter into and figure out how much they might earn upon graduation before you cosign. Some fields have plenty of promise right now, while others offer almost none, and you should know either way before you make any type of financial commitment. Maybe your college student could even spend time improving their credit score so they can qualify for student loans on their own. 

Cosigning on student loans should be a last resort for parents, not an easy fix for students who don’t take time to consider all their options. 

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Cosigning on a student loan can be a huge risk. Here’s everything you need to know how cosigning on your students college loan can impact your personal finances. | #finances #personalfinance #studentdebt

Source: wisebread.com

Explained: The Adrenaline-Driven Rise to GameStop Stock

January 28, 2021 &• 8 min read by Credit.com Comments 0 Comments

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GameStop, a dying video game retailer, has blown past epic proportions to the point of hitting all-time highs in the stock market.

A few weeks ago, the company (stock trading as ticker: GME) traded around lows of ~$19. As of January 27th, 2021, the GameStop stock has reached an all-time high of $350. That’s a ~1700 percent increase! Currently, GameStop’s market capitalization is $24 billion, previously $500-$700 million.

Before its euphoric rise, GameStop was on a slow demise to bankruptcy, as it faced significant challenges to its business model from the internet. Similar to BlockBuster, people stopped buying video games in-person at retail stores. “Downloads became a thing, and GameStop’s business declined,” says Michael Pachter to BusinessInsider, who covers the video game industry.

Alongside GameStop’s faltering business model, GameStop also ran into issues with its poor business decisions. They embarked on new initiatives, including the acquisition of Spring Mobile in 2013. The company had bet on making money by buying smartphone stores. By 2016, GameStop had owned and operated approximately 1,500 mobile-phone stores under the Spring Mobile name, and in 2018, had sold the whole mobile-phone business.

So how did GameStop rise from the ashes?

Well, A Trading Euphoria Caused By …

An army of traders from the Reddit r/WallStreetBets has been at the center of the GameStop saga. WallStreetBets (WSB), a community of Millennial and GenZ traders, have helped drive a to-the-moon surge of GameStock’s stock price while halting trading multiple times, crashing Reddit, and even forcing the subreddit to go private. With 3.5 million traders following the subreddit, WSB users are known for purchasing extremely risky products, including leveraged ETFs, financial call and put options, as well as shorting equities.

These Reddit users have blown everyone’s expectations out of proportion. No one expected a group of online traders would have a massive effect on the stock market.

Most notably is perhaps the loser of this David and Goliath saga – Citron Research and Melvin Capital. Both of these investment firms took huge bearish bets against the GameStop stock, and even Citron had announced on Twitter that “GameStop buyers at these levels are the suckers at this poker game.” For those of you unfamiliar with stock trading, the two firms had shorted the GameStop stock by borrowing the stock to sell at a given price, with the idea that they will purchase back the stock later.

In this case, assume an individual sells short one share of GME at $19 in their margin account. What happens is they receive $19 from selling the share on the stock market, but they still owe their broker one share of GME. So, in this individual’s ideal scenario, they will want to buy back GME at a lower price to profit on the trade.

But in this trading saga, Reddit users had driven up the price by buying so much. Hence, increasing GME’s stock price. So, the individual holding the short position would have to purchase the stock back at a much higher stock price on the settlement date; thus, losing money.

The Squeeze

Due to the rampant rise in GME’s stock price, Citron Research and Melvin Capital had been taking on significant losses, and with due time, they would eventually have to close their position. Closing their position would squeeze them out of their position. For a short squeeze to happen, the firms’ losses have to be so high that the broker requires more capital to keep the position open. As of January 27th, both firms have closed their positions. Since then, hedge funds Citadel and Point72 have invested $2.75 billion into Melvin Capital.

The Question Still Remains – Why Did r/WallStreetBets Target Melvin Capital and Citron Research?

Greed has been present on Wall Street since the inception of the securities market. During the 2008 financial crisis downturn, banks were giving loans to anyone to make more and more money while selling mortgages to poor credit individuals. Their greed eventually reached a point where many homeowners could not make their mortgage payments causing foreclosures, and eventually, a recession. In the end, the banks received a bailout, and similarly, Melvin Capital received a bailout from other hedge funds.

In this ordeal, the two hedge funds shorting GME had become too greedy as they had driven GME’s share price from $20 to $10 and to $4. There was no means to an end for their greed and their hope for GameStop to go bankrupt. In part, short selling wipes out businesses. Elon Musk has also laid criticism to short-sellers, tweeting “short-sellers are jerks who want us to die.”

So, how does greed tie together with shorting a stock, hedge funds, Reddit users, and a video-game selling retailer?

Well, someone on WallStreetBets had noticed these hedge funds had sold short 140% of all shares available. The rule to short-selling is that ALL the shares they borrow MUST be paid back. Realizing these hedge funds had shorted GME by a ridiculous amount, these retail investors on Reddit (ordinary people like you and me) bought every share they could get their hands on. Thus, driving the price up like crazy and perhaps creating an arbitrage opportunity.

>> Learn more about investing in stocks with our investment guide for beginners.

Why?

These hedge funds would eventually HAVE to buy back these shares at whatever price they could purchase. They don’t have a choice. So, these Redditors bought all the GME shares they could buy and drove the prices up to ridiculous prices. Buying back these shares of GME would cost these hedge funds an arm and a leg.

Fast forward to today, January 27th, 2021, WallStreetBets users are creating memes, as well as notable people, including Elon Musk and Chamath Palihapitiya, who have influenced more people to buy GME stock. Hence, destroying these greedy hedge funds in the process.

Additionally, many Redditors felt crude sentiment towards these financial institutions as numerous Reddit posts complained about these institutions’ predatory actions. Even AOC tweeted, “Gotta admit it’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino.”

Notable People’s Influence Behind The GameStop Stock Rally

As it’s been interesting to watch GameStop’s stock rally, there have been notable individuals placing their own opinion. Michael Burry, best known from “The Big Short” as one of the investors who had made money from the 2008 financial crisis, had been holding onto GameStop since 2019. Although he has a 2.4 percent stake in GameStop as of Sept 30, 2020, he has stated, “there should be legal and regulatory repercussions. This is unnatural, insane, and dangerous”.

Contrarian Chamath Palihapitiya has also played a part, as he tweeted his purchase of $125,000 out of the money call options on GameStop.

For those unfamiliar with call options, call options are a financial derivative used to make speculative bets on the rise or fall of stock prices. In this case, Palihapitiya made a speculative bet for the increase of GameStop stock.

Elon Musk, well-known for the tweeting habits that have gotten him in trouble with the SEC, has also taken part in the GameStop rally by tweeting a subtle “Gamestonk!!”

How Does Reddit Feel About This?

Reddit’s r/WallStreetBets have broken all-time traffic records this week as millions of visitors flocked to the subreddit. According to Mashable, r/WallStreetBets received approximately 74 million page views in the past 24 hours. Note, Reddit had 52 million daily active users in October 2020.

One WallStreetBet moderator felt compelled to address the backlash with the narrative that the forum “is disorderly and reckless” and is involved in manipulation. He wrote, “What I think is happening is that you guys are making such an impact that these fat cats are worried that they have to get up and put in work to earn a living.”

Can Regulatory Bodies Do Anything?

The trading activity on GME reminds me of the old pump and dumps that ultimately harmed many traders.  The stock gets hyped up way out of proportion to its actual intrinsic value and essentially benefits the ones who are hyping it.  Will the stock really retain its value over the long haul?  If not, then the people who heard the hype and came late to buy it could suffer. – Eric founder of Mindful Trader

As the trading volatility ensues, regulators are becoming increasingly worried about all the signals this volatility is sending to traders, like TD Ameritrade and Schwab. Both brokerages have restricted certain kinds of trades in GameStop and AMC. TD Ameritrade said there was “an abundance of caution amid unprecedented market conditions and other factors.”

Regulators have been mindful of the action, as William Galvin, Massachusetts secretary of the commonwealth, told Barron’s that he was watching the story play out.

Regulators do monitor trading for any signs of market manipulation and what people say about stocks in public forums, according to Amy Lynch, a former SEC regulator. However, merely announcing to people that you are buying a specific stock and telling people they should as well have no legal repercussions.

The End of the GameStop Saga?

Ultimately, the GameStop saga has not run its full course, as trading is still occurring for the crazy stock. But, the two hedge funds that started all of this? They are entirely out. One hedge fund has wholly gone bankrupt, and other hedge funds have funded the other hedge fund. Will we be seeing this hedge fund enact vengeance on these Reddit users? Most likely not.

The takeaway we can all get from this whole ordeal is don’t mess with Reddit users, and perhaps the next generation of Millenials and Gen Z have more impact than we imagined?

This post originally appeared on Your Money Geek 


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Source: credit.com

How Can You Get Credit Card Rewards for Buying Gift Cards?

November 9, 2020 &• 4 min read by Jason Steele Comments 0 Comments

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The gift card market is worth more than $130 billion annually. Is that any surprise? You’ve probably bought at least one gift card in the past year for a friend or family member. It’s an easy way to show someone appreciation and to make sure they can get whatever they want. But what if we told you both you and the gift-giver can benefit from gift cards? That’s right—you can get credit card rewards for buying gift cards.

How Can Buying Gift Cards Earn You Rewards?

If you have a rewards credit card, you earn points or miles on some—or all—of your purchases. Unless your credit card terms of service say gift card purchases don’t count for rewards, you can get points or miles when you use your credit card to buy a gift card.

For example, let’s say you earn one point per dollar spent. You’re planning to buy your mom a $50 gift card for her birthday and your niece a $25 gift card for her special day. Use a credit card to buy those gift cards at retailers, and you can earn 75 points just for buying gifts you were already going to purchase.

Maximizing Rewards When Buying Gift Cards

But it does get better. If you plan ahead just a little, you can maximize the rewards you get. For example, imagine you want to buy a $100 gift card for a couple for their wedding.

Your credit card gives you one point per dollar for any purchase. You could buy that gift card at a department store or drug store and earn 100 points. But what if you get three points per dollar when you shop at grocery stores? You may be able to purchase the gift card at a grocery store and earn 300 points.

But you don’t have to limit your gift card rewards earning to actualgifts. Are you planning to buy an appliance from a store such as Best Buy? Imagine it’s going to cost around $500. You might purchase $500 in Best Buy gift cards at the grocery store with your credit card and use them to buy the appliance. And if you’re earning three points per dollar, that’s 1,500 points!

Use Gift Card Purchases to Meet Signup Bonus Requirements

If your new credit card requires you to spend $3,000 in three months to get the signup bonus points, gift cards might help you get there. Perhaps you’ve spent $2,000, but you really don’t need anything else. You don’t want to spend $1,000 on random things just to earn the bonus points. But you could buy $1,000 worth of grocery, restaurant and other gift cards that you can use to fund your life in the next few months.

Avoid Abusing the System

Of course, you need to approach getting rewards from buying gift cards with moderation. If a credit card company thinks you’re abusing the system, they may cancel your points—or even your account.

So how could you abuse the system? If you’re spending thousands a month buying gift cards at grocery stores to maximize category rewards points and then selling those cards to friends, that’s abuse.

But imagine that you need to buy medication and other supplies at a drug store every month. If those costs are around $150, you might use your credit card to buy a $150 gift card at a grocery store chain every month. That’s because the credit card in question gives you six points per dollar spent at grocery stores.

You’ll earn an extra 900 points a month, while buying medications you already would be paying for. That probably won’t be seen as abuse.

Should You Use Credit Card Rewards for Gift Cards?

This really isn’t a two-way street. While you canuse credit card rewards to get gift cards in most cases, it’s usually the most expensive way to redeem your rewards. That’s because you need more points for every dollar redeemed on gift cards than you might on travel rewards or other options.

Reward Credit Cards

If you’re planning to use your credit card to buy gift cards at grocery stores or other retailers to earn more rewards, make sure it’s allowed first. If you don’t already have a rewards card, you can shop for one in Credit.com’s credit card marketplace. Here are a few options:

  • Chase Sapphire Preferred Card, which lets you earn one point for every dollar spent and comes with a generous signup bonus

Chase Sapphire Preferred® Card

Card Details
Intro Apr:

Ongoing Apr:
15.99% – 22.99% Variable

Balance Transfer:
15.99% – 22.99% Variable

Annual Fee:

Credit Needed:
Excellent-Good

Snapshot of Card Features
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $750 toward travel when you redeem through Chase Ultimate Rewards®
  • 2X points on dining at restaurants including eligible delivery services, takeout and dining out and travel & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for travel through Chase Ultimate Rewards®. For example, 60,000 points are worth $750 toward travel.

Card Details +

  • Mastercard Black Card, which lets you earn 1.5% cash back or 2% airfare rewards

Mastercard® Black Card™

Card Details
Intro Apr:

Ongoing Apr:

Balance Transfer:
0% introductory APR for the first fifteen billing cycles following each balance transfer that posts to your account within 45 days of account opening. After that, your APR will be 14.99%.

Annual Fee:
$495 ($195 for each Authorized User added to the account)

Credit Needed:

Snapshot of Card Features
  • Patented black-PVD-coated metal card—weighing 22 grams.
  • 2% value for airfare redemptions with no blackout dates or seat restrictions. 1.5% value for cash back redemptions. Earn one point for every one dollar spent.
  • 24/7 Luxury Card Concierge®—available by phone, email and live mobile chat. Around-the-clock service to help you save time and manage tasks big and small.
  • Exclusive Luxury Card Travel® benefits—average value of $500 per stay (e.g., resort credits, room upgrades, free wifi, breakfast for two and more) at over 3,000 properties.
  • Annual Airline Credit—up to $100 in statement credits toward flight-related purchases including airline tickets, baggage fees, upgrades and more. Up to a $100 application fee credit for the cost of TSA Pre✓® or Global Entry.
  • Enrollment in Priority Pass™ Select with access to 1,300+ airport lounges worldwide with no guest limit. Includes credits at select airport restaurants for cardholder and one guest.
  • Cell phone protection for eligible claims of up to $1,000 each year. Plus additional World Elite Mastercard® benefits.
  • Annual Fee: $495 ($195 for each Authorized User). Terms and conditions apply.

Card Details +

  • TD Cash Credit Card, which lets you earn 2% cash back at grocery stores among other perks

TD Cash Credit Card

Card Details
Intro Apr:
0% Introductory APR for 6 months on purchases

Ongoing Apr:
12.99%, 17.99% or 22.99% (Variable)

Balance Transfer:
0% Introductory APR for 15 months on balance transfers

Annual Fee:

Credit Needed:
Excellent-Good

Snapshot of Card Features
  • Earn $150 Cash Back when you spend $500 within 90 days after account opening
  • Earn 3% Cash Back on dining
  • Earn 2% Cash Back at grocery stores
  • Earn 1% Cash Back on all other eligible purchases
  • $0 Annual Fee
  • Visa Zero Liability
  • Instant credit card replacement
  • Digital Wallet
  • Contactless Payments

Card Details +

Want to Get Approved? Have a Good Credit Score

Getting approved for top rewards cards does usually require good credit. Before you apply, make sure you know where you stand. Consider signing up for ExtraCredit to get details about your credit score as well as cash-back rewards when you’re approved for certain offers, including credit cards.


Sign up now.

Source: credit.com

What Is Phone Insurance?

What Is Phone Insurance? – SmartAsset

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your financial details.

Most adults in the U.S. consider a cell phone to be one of life’s essentials. We’re so reliant on our phones that losing or accidentally damaging a cell phone would constitute a major crisis. And because cell phones can be expensive, many Americans couldn’t afford to replace a cell phone right away. That’s why phone insurance can seem like an appealing option. Here’s what to know about phone insurance. 

Find out now: Is it better to rent or buy? 

Phone Insurance Basics

Like other forms of insurance such as life insurance, phone insurance is a hedge against risk. Specifically, phone insurance provides some protection against the loss, theft or destruction of your phone. Phone insurance may be offered to you when you buy your phone through your provider. Alternatively, you can buy a separate phone insurance policy.

Many phone plans and phone purchases come with basic phone insurance, through the phone manufacturer, the phone service provider or both. Generally, these built-in forms of insurance cover things that are the manufacturer’s fault. If your phone simply stops working, you’ll probably be able to get a new one at no cost.

But what about phone-related misfortune that isn’t the result of a manufacturing default? If you drop your phone in the bath tub, leave it at a restaurant or discover that someone has stolen your phone, what do you do? In most cases, your phone plan doesn’t come with built-in protection against these eventualities. You won’t be able to walk into, say, Verizon and ask for a new, free phone because you dropped yours on the sidewalk. But if you purchased additional phone insurance, whether through your provider or from another company, you would be covered against loss, theft and damage. Your phone would be repaired or replaced with a refurbished phone.

Find out now: How much life insurance do I need? 

Is phone insurance worth it? 

Phone insurance can add a significant expense to your budget. Like health insurance, phone insurance generally comes with both monthly premiums and a deductible. Phone insurance deductibles are usually around $200. The deductible is the amount you must pay before the insurance kicks in. Phone insurance plans generally limit the number of replacement phones you can get – so if you’re a chronic phone-loser, your policy might cut you off.

So is it worth it? Well, you may already have some coverage for your phone. Some phone plans come with built-in phone insurance, so before you evaluate whether to buy an add-on policy, take a look at your current plan to see whether you’re already covered. It’s also worth taking a look at the terms of your credit card, which may offer an extended warranty on your phone if you used the card to purchase the phone. And if you have homeowners insurance or renter’s insurance, take a look at those policies, too. Your phone might be covered through your homeowners insurance or renter’s insurance policy.

If you don’t have phone insurance, deciding whether to buy an add-on policy is largely a question of your comfort with risk and your budget. If you pay for phone insurance and nothing happens to your phone, you will have lost the money you spent on premiums. On the other hand, if you opt out of phone insurance and your phone is stolen, you’ll have to come up with the money to replace your phone. You won’t automatically get a refurbished phone, as you would if you had phone insurance coverage.

Check out our budget calculator. 

Bottom Line

If your phone is lost, stolen or damaged, you might want to dip into your savings to get a new, used or refurbished phone as a replacement. If you have some liquidity in your budget in the form of cash savings, opting out of phone insurance and buying a replacement phone could turn out to be a cheaper option. Before you decide, consider your budget and the likelihood that something might happen to your phone. If you do opt for phone insurance, look for an affordable option with a short (or non-existing) waiting period. Policies with waiting periods leave consumers out of luck if their phone is lost, stolen or damaged before the policy kicks in.

Photo credit: ©iStock.com/MilosStankovic, ©iStock.com/xavierarnau, ©iStock.com/Portra

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

December 9, 2020 &• 4 min read by Alice Stevens Comments 0 Comments

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Disclaimer

Food delivery and ridesharing are great ways to earn extra income. The market for food delivery has increased as restaurants have had to adapt to COVID-19 precautions, and just about everyone could use some extra income as we continue to navigate life during a pandemic.

If you’re considering joining a food delivery or rideshare company as a driver, you need to be sure you have the right insurance coverage. If you’re in an accident, you want to be able to replace your car or fix it so you can keep working.

As you review your car insurance, here’s what you need to know:

You have a coverage gap

Rideshare and delivery companies offer some insurance coverage while you are on your way to pick up passengers or food and while you are transporting passengers or food. However, when you have your app on and are waiting to accept a delivery, neither your personal car insurance or your rideshare company offers coverage. 

If you are in an accident while you’re waiting to accept a job, you won’t have any insurance coverage. You’ll be on your own for covering the resulting costs and may have to deal with other issues.

Look for an insurance policy to cover the gaps

To protect yourself and cover this gap, you’ll want to purchase an additional policy or a policy that adds rideshare coverage to your personal policy. These policies and riders are commonly called rideshare insurance. However, they are commercial auto coverage policies that offer insurance coverage when you use your car for business.

Choose a reliable and highly rated insurer for your policy. Check the insurer’s financial strength to gauge the company’s financial stability and ability to make claims payments. Reading customer reviews can give you a sense of the customer experience with the insurer, which can also help you find a good company.

As you shop for policies or riders that can be added to your personal auto coverage, you can use companies like Policygenius to compare policies across multiple insurers. The ability to compare quotes and policies quickly and efficiently makes it easier to find a good deal. This can also be beneficial if you’re also shopping for personal auto insurance coverage.

Before you buy a policy, understand how it works:

  • What is the deductible? This is the amount you’ll pay before the insurer starts to pay for covered damage.
  • How much is the premium? This is the monthly fee you pay for insurance coverage.
  • Does the policy have a benefit maximum? This is the most an insurer will pay. Once this limit is reached, the rest of the expenses are your responsibility.
  • What coverage is offered—collision, liability, comprehensive, medical payments, income loss, etc.? Car insurance policies are highly customizable because you can choose how much and what kind of coverage to buy.

Car insurance requirements vary by state. Liability coverage for property damage and physical injury is most commonly required. Some states require additional coverage for uninsured or underinsured motorist insurance or Personal Injury Protection (PIP). PIP coverage offers coverage for lost wages according to your policy’s terms.

Making a claim for lost wages will depend on whether your state is an at-fault or no-fault state. You may need to file a claim with the other driver’s insurance, use your uninsured or underinsured motorist insurance, or PIP coverage.

Keep in mind that you typically have to have the same level of coverage on your personal insurance as you do with your rideshare coverage. Knowing the cost and kind of protection offered by your policy will help you find one and choose coverage that will meet your needs.

Communicate with your personal car insurance carrier

If you’re driving for hire and do not communicate that to your car insurance company, you could lose your coverage. Insurers can end your policy and no longer offer you coverage if you don’t communicate clearly about your car usage. 

While communicating and getting commercial auto coverage added to your policy can cost more, you’ll be better protected if you have the right coverage and won’t have to worry about your insurer rescinding the policy. Communicating with your car insurance company about how you’re using your car will ensure that you have the coverage you need, which will give you peace of mind and benefit you in the long run.

Set yourself up for success

Before you sign up with a food delivery or rideshare service, understand what coverage your company offers and where the coverage gap is. This will help you know what to look for as you evaluate rideshare or commercial auto insurance policies.

If you’re happy with your current auto insurance provider, start by asking them what they offer. You can also compare what your current insurer provides with what other insurers are offering to check that your company is competitive.

Purchasing insurance to cover the gap will give you peace of mind and financial protection if you’re in an accident. It will also protect your car, which is essential to your ability to work as a rideshare or food delivery driver.


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Top 5 Tips for Keeping Senior Care Costs Low

Top 5 Tips for Keeping Senior Care Costs Low – SmartAsset

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Caring for an aging parent or friend can be expensive. But when you know that someone needs assistance, it’s hard to avoid offering to help. While there’s nothing wrong with providing a relative or confidant with financial support, you don’t want to lose sight of your own financial goals. Here are five strategies that you can implement to keep senior care costs low.

Find out now: How much life insurance do I need?

1. Invest in Long-Term Care Insurance

As an extension of health, disability and life insurance, long-term care insurance provides coverage for nursing home care, home health care and other services that meet the daily needs of elderly individuals. While long-term care insurance isn’t cheap, purchasing it may be worth it if your older family member or friend can’t qualify for Medicare and doesn’t have enough savings.

It’s best (and more affordable) to sign up for long-term care insurance before chronic or debilitating conditions surface. Just be sure to read the fine print and compare benefit options before picking a policy for you or your loved one.

2. Make Your House Home-Care Ready

Installing a walk-in shower or stair lift when you’re healthy may seem crazy. But making your home more accessible may pay off, especially if it eliminates the need for you to move to a special facility when you grow older.

Some states and nonprofits offer loans and grants to help low-income elderly individuals make modifications to their homes. So that’s something to consider if you need help covering the cost of your renovations.

Related Article: Do Wealthy Investors Need Long-Term Care Insurance?

3. Look Into Government Programs

The federal government offers some programs that make senior expenses less expensive. For example, your loved ones can apply for traditional Medicare. If they need help covering additional costs, they can consider enrolling in a Medicare Advantage or Medigap plan.

Depending on your loved one’s situation, they may be eligible for Medicaid. They’ll have to meet certain financial qualifications. But if they qualify, Medicaid coverage can lower the cost of their healthcare.

4. Compare Care Options

If you need a professional to help care for your elderly relative, you may need to look beyond nursing homes and assisted living facilities. It’s a good idea to take the time to visit different adult care facilities and meet with independent caregivers, home care agencies and home health aides. That way, you can compare a range of costs and services.

Even if you have elderly family members who can live alone, they may need companionship. If you have a busy schedule, you may be able to find a virtual caregiver online who can support your older loved one.

Related Article: 4 Financial Emergencies That Could Derail Your Retirement

5. Claim as Many Tax Breaks as Possible

If you choose to take care of an aging parent or relative on your own, you’ll need to make sure you’re financially prepared to assume that responsibility. Fortunately, there are tax breaks for individuals who serve as caregivers. For example, you may qualify for the Child and Dependent Care Credit.

Final Word

Caring for an older family member can place a big strain on your budget. That’s why it’s important to make the most of any resources and programs that can lower the cost of senior care.

If you’re concerned about your ability to cover your own healthcare costs in the future, you’ll need to make saving for retirement a priority. And it doesn’t hurt to make an effort to stay healthy to reduce your chances of contracting a serious illness or disease.

Photo credit: ©iStock.com/monkeybusinessimages, ©iStock.com/phillipspears, ©iStock.com/adamkaz

Liz Smith Liz Smith is a graduate of New York University and has been passionate about helping people make better financial decisions since her college days. Liz has been writing for SmartAsset for more than four years. Her areas of expertise include retirement, credit cards and savings. She also focuses on all money issues for millennials. Liz’s articles have been featured across the web, including on AOL Finance, Business Insider and WNBC. The biggest personal finance mistake she sees people making: not contributing to retirement early in their careers.
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How Can You Support Small Business During the 2020 Holidays?

November 20, 2020 &• 5 min read by Credit.com Comments 0 Comments

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Small businesses are a huge part of the American economy. They make up 99% of all businesses in the nation. But even in good times, small businesses have around a 50% long-term survival rate, making economic uncertainty and a global pandemic extremely worrisome for many small-business owners. Find out how you can support small businesses in your community this holiday season to help make your local economy a bit merrier and brighter.

How Are Small Businesses Struggling in 2020 and Beyond?

COVID-19 has hit the bottom line hard for businesses and consumers alike. Businesses of all sizes were overwhelmed by the increased consumer demands for shipping, delivery, and curbside service, and many were forced to close for weeks or even months in 2020. Many are looking to the holidays to make up for lost revenue earlier in the year.

Bluehost conducted a State of Small Business Marketing in August 2020 to find out small-business owners’ outlook for the future. While more than 70% of business owners said they were optimistic about the future, they do have concerns:

  • 44% are worried about finding new customers through 2021
  • 30% are worried about long-term economic impacts from the pandemic
  • 21% are worried about lower-than-normal sales or consumer demand

At the same time, many consumers have experienced negative impacts to their personal budgets during COVID due to lost jobs and reduced salaries. As a result, some might be planning to scale back on total holiday spending, and others might be turning to different shopping habits to help keep themselves and their families safe.

How Can I Help a Small Business?

Whether you want to shop online to stay safe during potential outbreaks or you’re reducing how much you spend in 2020 to make up for financial shortfalls, you can still support small businesses. Here are a few tips on how to do that.

  1. If you’re going to spend, choose to shop local instead of buying with big-box retailers or huge e-commerce platforms. Not sure if there’s a small business offering what you need? In the next section, you can get tips for finding local companies. Skip ahead >>
  2. Check local small business websites to see if there are options for shopping online. Many offer free shipping opportunities or curbside pickup, so you can get what you need without entering stores.
  3. Call ahead to ask about the best times to shop. Going out during slow times can limit your contact with people and can help you get the best possible service from local businesses.
  4. Spread your shopping out. Starting as early as possible and buying a little at a time can take the sting out of holiday costs while letting you enjoy the festivities and support small businesses. According to the National Retail Foundation, around 74% of businesses expect shoppers to spread out their spending in 2020.
  5. Plan ahead to take advantage of Small Business Saturday deals. Though stores might spread out the deals this year, Small Business Saturday is still occurring. This is the day after Black Friday, and many small businesses offer specific deals on that day.

Other ways to support local small businesses include dining out, using local bakeries and caterers if you need help with holiday feasts, and buying tickets for nearby festivities and events if it is safe to do so. While many are still worried about COVID-19 risks, businesses have had time to prepare new ways of serving customers and holding events in a safe manner.

How Do I Find Local Businesses?

Word of mouth—simply asking your friends and family—can be a great way to find small businesses to support. But if you have a limited social circle, you just moved to an area, or you’re trying to expand your options, here are other ways you can find stores and businesses to support during the holidays.

  1. Use the Small Business Saturday site. There’s an entire site dedicated to Small Business Saturday, which includes a map for locating small businesses near you. They’ve also created a map of 100 Black-owned businesses to support around the country.
  2. Search Yelp. You can search Yelp for specific types of businesses in your area and easily see whether people are having good experiences with each company.
  3. Check social media. Many small businesses have pages on Facebook or Instagram. You may be able to browse some products right on social or connect with a business to understand what services it offers. Social is also often a good way to find out the most current details on COVID-19 hours, restrictions, or safety protocols each business is observing.
  4. Begin with the search engines. Google especially can be helpful because it offers map results and access to consumer reviews a click or tap away from the immediate results page.
  5. Visit your local chamber of commerce, digitally or in person. Your chamber of commerce may provide a list of reputable local businesses, and you can also call or speak to someone in person about businesses specific to your needs.
  6. Search Etsy, Redbubble, and Society6. Many small businesses and independent artists sell their goods on sites like Etsy and Redbubble.
  7. Support small businesses via Amazon. The company’s Support Small initiative highlights small companies you can shop with and provides local directories. You can also buy hundreds of products from small businesses on Amazon and take advantage of Prime and free shipping offers.

If you want to support small businesses with your holiday shopping while also benefiting yourself or your family, consider getting a rewards credit card. You can earn points or cash back on spending and use those benefits to fund more holiday fun or future travel or spending.

Blue Cash Preferred® Card from American Express

Apply Now

on American Express’s secure website

Card Details
Intro Apr:
0% for 12 months on purchases

Ongoing Apr:
13.99%-23.99% Variable

Balance Transfer:

Annual Fee:

Credit Needed:
Excellent-Good

Snapshot of Card Features
  • Earn a $250 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.
  • 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%).
  • 6% Cash Back on select U.S. streaming subscriptions.
  • 3% Cash Back at U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more).
  • 1% Cash Back on other purchases.
  • Low intro APR: 0% for 12 months on purchases from the date of account opening, then a variable rate, 13.99% to 23.99%.
  • Plan It® gives the option to select purchases of $100 or more to split up into monthly payments with a fixed fee.
  • Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit.
  • $95 Annual Fee.
  • Terms Apply.

Card Details +

Sign up for ExtraCredit to get access to 28 of your FICO scores and a Reward It feature that helps you find credit card offers and earn even more perks when you successfully apply.


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