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The Best Credit Cards for Pet Expenses

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Americans are spending more and more on their pets every year, according to the American Pet Products Association. This year, the association estimates spending will rise to $69.36 billion (up from $66.75 billion in 2016), $16.62 billion of which will go toward veterinarian care (up from $15.95 billion). That means owners may need to prepare to spend more money for their furry family members.

Some vets don’t offer a payment plan directly through their billing office, so applying for a credit card might be your best option to pay for your pet’s medical bills and other expenses (outside of using your savings, borrowing the money from family and friends or crowdsourcing the funds).
The older your pets get, the more likely it is they’ll need medical care, so planning ahead with a pet card can be a good idea. As much as pet owners can try to predict how much they’ll spend on their loved one, it really is impossible to know.

Is a pet-specific credit card a good idea?

A credit card designed for pet health care costs may sound like a great idea, but the truth is, there aren’t many of them. CareCredit is the only card with a specific feature for financing veterinarian bills, and you’ll have to see if your vet accepts it.

The card has a 0% APR promotional offer from six to 24 months, perfect for those who need more time to take care of their pet’s expenses. There are longer financing terms available as well, starting at 24 months and ending at 60 months.

Purchase Amount

CareCredit Financing Options

$1,000 or more

Eligible for a 24-, 36- or 48-month financing
offer with a 14.90% APR

$2,500 or more

Eligible for a 60-month financing offer
with a 16.90% APR

One of the downsides of CareCredit is that it charges deferred interest if you don’t pay off the balance by the time the introductory offer ends. The current standard APR is 26.99 percent.

If you’re going to carry a card that charges deferred interest, make every possible attempt to pay off the balance before that interest kicks in. You can use a credit card payoff calculator to help you figure out what you need to pay monthly in order to get rid of your debt before the promotional APR period ends.

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Other options

Using a pet-focused credit card to take care of vet bills isn’t the only way to spread out the costs of animal health care — or even necessarily the best option.

Below, we’ve listed several credit cards that can help you tackle hefty veterinary bills; what’s best for you will depend on a variety of factors, like how much time you have to prepare for the expense and what your personal financial situation actually is.

For a one-time expense: Cards with a 0 percent introductory APR

Some credit cards offer a one-time 0 percent APR introductory rate on new purchases. That means whenever you spend money during the promotional period, you won’t have to pay interest on those purchases as long as you pay off the balance before the promo period ends.

This type of card is best for people who can anticipate an expense, such as an imminent surgery. Keep in mind that it may take a few weeks to get approved and receive your new credit card, so planning is key.

Also, promotional periods start when your account opens, not with your first purchase, so you’ll want to apply funds to the vet bill as soon as you can after getting the card to maximize the time you have to pay off the balance interest-free. This course of action is really best for a one-time cost: Recurring costs can add up quickly, making it difficult to pay off the balance by the time the special offer runs out.

Citi® Diamond Preferred® Card

Why we like it

The Citi® Diamond Preferred® Card has a 0 percent intro APR for 21 months, one of the longest periods available. That includes both purchases and balance transfers. Once the promotional period is over, the rates will switch to a variable APR of 13.99-23.99%, depending on your credit score.

This card has no annual fee and is a good option if you’re confident you can pay off the balance before the intro period ends. Otherwise, you could face some heavy interest fees.

Fees and fine print

There is a balance transfer fee of 3 percent of each balance transfer, with a minimum charge of $5. Foreign transactions result in a 3 percent fee, and late-payment fees can be up to $35.

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The Provident Signature CashBack Visa® card from Provident CU

Why we like it

The Provident Signature Cash Back Visa® card from Provident CU is one of the few credit cards that offers both cashback rewards and a 0 percent APR intro offer on both purchases and balance transfers. The offer lasts the first 14 months your account is open, and after the promotional period ends, the standard variable APR rates kick in: 11.99-16.99 percent for purchases and 12.99-17.99 percent for balance transfers. Those rates are somewhat less than other cards on this list, which make it a good option if you’re not sure you can pay off your balance in 14 months.

The card doesn’t have an annual fee and earns unlimited 1.5 percent cash back on all purchases. It also has no foreign transaction fees and includes travel accident and trip cancellation/interruption insurance, making it a great choice for pet owners who also like to go places.

Fees and fine print

The biggest downside to this card is its availability: You have to be a member of Provident Credit Union to get it. The credit union is based in California and mostly serves the Bay Area, though you can join if you have a membership with one of a variety of associations.

Beyond membership eligibility, here are some things to consider: Balance transfers carry a fee of $10 or 2 percent of the balance transferred, whichever is greater, and, if you miss a payment, a late-payment fee up to $15.

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For managing existing debt: Balance transfer credit cards

Sometimes your pet has a one-time emergency, like a tooth extraction or hip surgery, that you can’t anticipate. While you can plan ahead for routine needs, it’s hard to be prepared for a procedure that costs several thousand dollars in one fell swoop.

That’s where a card with a balance transfer offer can help. These cards usually offer a low interest rate, sometimes even 0 percent, on balance transfers. If you’re currently paying for your pup’s bills on a card with a high interest rate, consider applying for a card with a 0-percent-APR balance-transfer promotion. Depending on your current interest rate and your minimum payment, you could save hundreds on interest.

This kind of card is best for those who aren’t adding to the balance on a regular basis and are simply trying to pay off one-time expenses. These cards offer this low rate for a certain length of time, sometimes up to 24 months. Ideally, you should pay off the balance before the offer expires so you don’t pay interest on the balance. Calculate how much you need to pay each month so you can do that, keeping in mind it may require making more than the minimum payment.

Discover it® 18-Month Balance Transfer Offer

What we like

The Discover it® 18-Month Balance Transfer Offer is an introductory 18-month balance transfer offer at 0 percent APR. The card also has a six-month introductory APR of 0 percent on purchases. After the intro periods expire, your balance will be subject to the ongoing variable interest rate of 11.99-23.99 percent, depending on your credit. There is a 3 percent fee per balance transfer.

This card has no annual fee and is also a rewards card: You can earn 5 percent cash back in certain categories (the categories change each quarter), and all other purchases earn 1 percent cash back. Discover will match all the cash back earned at the end of your first year, automatically. Redeem your cash back for any amount, any time. Cash rewards never expire.

One more benefit is that this card doesn’t charge a penalty APR, which is when card issuers can increase the APR if you miss a payment.

Fees and fine print

Keep in mind that the balance transfer intro offer differs from the purchase intro offer: New purchases only have a six-month, 0 percent APR intro period. The APR and cashback rewards may tempt you to spend more than you should, so be prepared to exercise self-control if you get this card to pay down vet-bill debt.

Discover also waives the late fee the first time you miss a payment, but don’t let it become a habit: Subsequent late payments will cost up to $37.

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Chase Slate®

What we like

The Chase Slate® stands out among many credit cards because there is an introductory $0 balance transfer fee if you complete a transfer within 60 days of the account opening. Any transfers made after 60 days will come with a 5 percent balance transfer fee ($5 minimum).

There is an introductory 0% APR on the first 15 months for both purchases and balance transfers and no annual fee. After the intro offer expires, purchases and balance transfers will have a 15.99% – 24.74% variable APR. There is also no penalty APR with this card, so you don’t have to worry about losing the 0% intro offer if you make a late payment. Terms apply.

Fees and fine print

Late payment fees cost up to $37, depending on your balance, and foreign transactions carry a 3 percent transaction fee.

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Citi Simplicity® Card

What we like

The Citi Simplicity® Card is a top pick if you’re looking for a card with a stellar balance transfer offer and other significant perks. This card has no annual fee, no late fees and no penalty interest rate if you miss a payment. There is also 0 percent introductory APR for the first 21 months on balance transfers and purchases, after which it will convert to a standard, variable APR of 14.99-24.99 percent, depending on your credit score.

Fees and fine print to watch out for

While this card might be great for some pet owners, there are some other things to watch out for. The balance transfer fee is 3 percent of the balance ($5 minimum), and this card has a foreign transaction fee of 3 percent.

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For ongoing expenses: Low-interest credit cards

If you have an older pet who needs monthly meds or is on a strict diet, proper care can involve costly recurring expenses. If, as a result, you can’t afford to pay off your credit card balance in full every month, having a low-interest credit card can help.

Interest fees can add up quickly once the balance grows, so be sure to watch how much of the principal you’re paying every month and how much is going to interest. You might be more motivated to pay off the debt in full if you know how much it’s costing you each month.

UNIFY Financial Credit Union Variable Rate Visa® Credit Card

What we like

Any U.S. citizen or permanent resident can join UNIFY, and it offers a credit card with one of the lowest interest rates out there. The ongoing interest rate on this card ranges from 5.99-18 percent APR (variable), so if you have good credit and anticipate dealing with hefty vet bills for a very long time, this card could help you keep your financing costs down. There’s no annual fee and no foreign transaction fee.

Fees and fine print

This is a no-frills credit card with no introductory periods, so you’ll start incurring finance charges as soon as you start carrying a balance from month to month. If your ongoing expenses are going to last less than a year and a half, you may be better off with something like the Citi Diamond Preferred (described above) because of its long introductory purchase APR.

Late payments on the UNIFY credit card incur a fee of up to $25 fee at five days past the due date, and besides the low APR, this card offers very few perks.

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TruWest Visa Platinum

What we like

The TruWest Visa Platinum card has 0 percent Intro APR for the first 18 billing cycles on both purchases and balance transfers, as well as no annual fee. However, its premier perk is its low ongoing interest rates, which range from 6.95-20.95%, some of the lowest available.

Fees and fine print

This card is from TruWest Credit Union, and you must be a member of the credit union to join. However, it’s not easy to become a member. Membership is available to those who work in select Arizona and Texas counties or have worked for select employers including Motorola, Freescale and ON Semiconductor. Relatives of current members are also eligible. Current members must have at least $5 deposited with TruWest in order to apply for a credit card.

Because membership is so limited, only a small portion of the population will be eligible for this card.

There is no penalty APR, but late fees can cost up to $25. Foreign transactions have a fee of 0.8-1 percent — the higher fee applies when the transaction requires a currency conversion.

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Zina Kumok
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Zina Kumok is a writer at MagnifyMoney. You can email Zina here

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Pay Down My Debt

The Risks of Debt Consolidation 

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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If you’re one of millions of Americans trying to get rid of consumer debt, you’ll do almost anything to pay it off quickly: work long hours, take on a part-time job, sell your belongings in a yard sale. 

When you’re feeling helpless about your debt, consolidating your loans might seem like the best option, especially if you have multiple types of loans weighing you down.  

Why is debt consolidation so popular? Consolidation involves either taking multiple loans and converting them into one loan, or transferring one loan with one lender to another one, locking in more favorable terms along the way. Most of the time, people consolidate because they get a better interest rate they want to take advantage of. After all, a lower interest rate could help people pay off the debt faster and save money at the same time.  

Other consumers like to consolidate if they have multiple loan payments that are proving difficult to juggle. Consolidating can simplify their finances and ensure that they’re not missing any payments. 

However, consolidating your debt isn’t risk-free. Indeed, it’s a strategy with many potential repercussions, not the least of which are the impacts to your credit score and your financial future in general. Many people sign up for debt consolidation thinking it’ll change their lives, without realizing what they’ve actually agreed to. 

Risks to consider before consolidation  

You may pay more interest over time.  One of the biggest risks when consolidating a loan is that you could end up paying more than you did before. If your consolidation loan has a longer loan term (that’s how much time the lender gives you to pay back the loan), you might pay more in interest overall than if you had kept your other loan(s) as is. 

When some people consolidate their loans, they find that their monthly payments are now less than in the past. Some vow to keep paying the same amount anyway, to take advantage of lower interest rates and take bigger chunks out of the principal in the process. This is ideal. If you simply keep paying your new reduced monthly payment, it could take longer to pay off the loan and you could face higher interest charges in the long run.

Your credit might take a temporary hit. You might decide that paying down debt is worth the risk of a temporary ding to your credit, but it’s still a risk worth noting.  If you are taking out a new credit card,  a home equity loan or any other type of loan to consolidate debt, the lender will have to pull your credit report.  

Every time you open a new form of credit, it has two impacts on your credit score. First, it counts as a hard inquiry and can erode your score.  New credit inquiries will also stay on your credit report for a year, according to Experian, complicating attempts to take out another loan. 

Secondly, a new debt on your report decreases the average age of your credit. The lower your credit age, the lower your overall score. 

Which doesn’t mean you should avoid debt consolidation. It just means you should consider the pros and cons. Indeed, the benefits of debt consolidation can certainly outweigh this risk.  

Debt relief fees. Some consolidation companies that promise to service your debt also end up charging high fees for something you can do yourself. Before consolidating, read reviews of banks and lenders to see which one will have the fewest fees and best rates you can get. 

You may not solve the underlying issue.  When you take out a new loan to repay other debts, you may not be fixing whatever foundational problem dragged you into debt in the first place. It’s one thing to face an unexpected medical emergency that resulted in bills you can’t afford to cover out of pocket. But if your debt is the result of overspending or a lack of budgeting, then you may only be treating the symptoms of a bigger condition. Because you are trading in one set of loans for another, you may still struggle to pay down the debt if you don’t change your spending habits.  

Next up: We’re going to cover several ways to consolidate your debt and explain the pros and cons of each. 

4 ways to consolidate your debt — and the risks involved

Balance transfers:  

How they work. balance transfer is when you take a credit card balance and move it to a different card, usually one that you have just opened. Most consumers use a balance transfer because they’re relatively easy to do and because they find a credit card offering a lower interest rate than the one they aim to replace.

Many credit card companies have special promotions in which you can get a 0 percent introductory APR on balance transfers for a certain length of time, sometimes as long as 24 months. Because credit card interest can be in the double digits, transferring a balance to a card with no interest lets borrowers pay off their total debt much faster.  

For example, if you have a $5,000 balance on a credit card with 15% APR and you apply for a credit card with 0% intro APR for 24 months, you could transfer the balance and save $639.73 if you pay off the balance before the offer ends (making $250-a-month payments to accomplish that goal). 

However, there might be a fee you have to pay with a balance transfer, often set at  3-5 percent of the total balance. Do the math before you apply for a balance transfer offer. The money you will save on interest charges might outweigh the cost of the balance transfer fee.  

Risks. One of the risks of a balance transfer is that you might not actually pay off the balance before the balance transfer offer ends. This is dangerous because then you could  end up paying high interest fees on top of the balance transfer fee you already paid to start the ball rolling. 

Also, opening up a new credit card will usually ding your credit score and drag down the average age of your credit accounts (also a ding). If you’re applying for a mortgage or other significant loan, a new credit inquiry could hurt your chances of getting the best rate.  

Credit card companies can be ruthless when it comes to 0 percent balance transfer offers. If you miss a payment or are late, your special offer could end, and you could be switched to the regular, substantially higher APR. If you go through with a balance transfer, set up autopay, or check every month to make sure your payment has gone through on or before the due date. 

Personal loans 

How they work. A personal loan can be applied in a number of ways, such as paying off medical bills, funding a wedding or consolidating debt. It’s a fixed amount of money borrowed for a fixed amount of time. If you have a high credit score and a solid income, you may be able to qualify for a loan with a decent rate, which can make this a more affordable borrowing tool than, say, a high-interest credit card. On the other hand, people with poor credit may still qualify for a personal loan, but are likely to have to contend with much higher interest rates.  

Applying for a personal loan is easy. You can reach out to a local bank or credit union or apply online. Most lenders will give out personal loans up to $35,000 and will ask that they be repaid within three to five years. If you get approved for a personal loan, the bank will usually wire you the funds, and then you can use them for any purpose. 

Risks. A personal loan is often set up as a short-term loan. While this might help people pay off their debt expeditiously, the pitfall of a compressed timeline is the difficulty of staying on track.  There’s no point in getting a personal loan to consolidate your debt if you end up unable to repay your loans. 

HELOCs/HEL 

How they work. A home equity loan is when you borrow money from the equity you’ve built up in your property. You can use this money to start a business, remodel your house or, yes, pay off debt. There are two ways you can borrow this money, either with a home equity line of credit (HELOC) or a home equity loan.  

A HELOC is a line of credit you have access to for a certain period of time. You can withdraw money for a certain length of time and then enter a final repayment period, whereas a home equity loan means the bank gives you a lump sum that you then repay every month. The amount you can receive depends on how much the home is appraised for and how much you still owe. 

Many people prefer to take out a home equity loan or HELOC for debt consolidation purposes because interest rates are usually far lower than they would be on a different kind of loan. Unlike a personal loan or credit card balance transfer offer, a HELOC is backed by a piece of property that the bank can resell if you stop making your payments. For that reason, lenders are willing to give you a better deal than if you take out a loan that’s not secured by such collateral. 

Also, when you repay a home equity loan, you can usually deduct the interest on those payments. This gives you an advantage in taxes when it comes to consolidating. 

Risks. A home equity loan and a HELOC are, as we noted, backed by the home as collateral. If you fail to repay the home equity loan or HELOC, then the lender can seize the residence. In such circumstances, not only does your credit history take a hit, you also may have lost your biggest financial asset. 

If you lose your home due to foreclosure, your credit score will also likely tank, making it harder to purchase another house. These issues are all a huge reason why consumers should be careful about these particular options. 

Student loan consolidation (private and federal) 

How it works. If you have student loans through the federal government, you can either consolidate/refinance them through the Direct Consolidation Loan program or through a private lender. You won’t save any money on interest with the Direct Consolidation program, however, as the program determines your new interest rate by averaging the rates on your existing loans. But it can be helpful for borrowers juggling multiple student loan payments. 

If you’re looking to save on interest, then you may choose to refinance your loans with a private lender instead. To get the best refi offers, you’ll have to have great credit and a solid income. Check out MagnifyMoney’s list of the best student loan refinance companies out there. Like other forms of consolidation, refinancing your student loans will streamline your payments and make it easier to stay on top of what you owe. If you’re apt to forget payments, then consolidating several loans into one, with one payment, might help you avoid racking up late-payment fees. 

The risks. If you decide to consolidate your federal loans with a private lender, you will lose all the protections and benefits that come with federal loans, including deferment, forbearance and income-based repayment plans. Forgiveness options such as the Public Service Loan Forgiveness Program are also off the table if you consolidate your federal loans with private loans, even through federally guaranteed banks.  

Income-based plans are useful if you work in a low-paying field or have an unstable job. Most private loan servicers don’t provide these types of options, which makes it even more important to keep your federal loans where they are.  

Often, consolidating your student loans can mean that your monthly payment decreases as your payment term increases. Unless you’re actively paying more than the minimum every month, you’ll end up paying more in interest overall.

If you are wanting to know more to about the methods listed above as a way to consolidate debt, you can visit MagnifyMoney’s parent company LendingTree here.
 

Alternatives to debt consolidation   

If you’re having trouble managing your debt, refinancing your loans could be one solution. When you refinance, your hope is to secure a loan with more favorable terms, ideally a lower APR, but you may also refinance in order to get a loan with lower monthly payments.

The simplest way to take hold of your debt is to go over your expenses and compare them to your income. Are there any changes you can make to spend less money every month? Could you try to eat out less or take the bus to work? All those small substitutions will add up quickly and you can put the difference toward your loans. 

If you want to pay off your debt quickly and are afraid of consolidating, consider using the debt snowball approach, popularized by Dave Ramsey. This strategy recommends paying off the smallest balance first. Then, when that loan is extinguished, you’ll apply the monthly payment to the next-smallest balance, and so on, until all your debts are repaid. The snowball method can help you feel empowered, and not overwhelmed, in tackling your loans. 

If you’re truly having difficulty with your loans, you should consider talking to a bankruptcy attorney. That expert should be able to tell you if your situation is truly dire and if you should consider filing for Chapter 7 or 13. 

The bottom line 

Consolidating debt can make sense for the right person. If you’re already trying to pay off your debt quickly and want to minimize your interest fees, then consolidation could save you even more money and time. 

Before you sign up, however, look at the total amount of interest you’ll pay with your current loan terms compared with the terms of consolidation. Will you save money? Or will you just trade in smaller payments in exchange for more breathing room? 

If you see consolidating as one more way to extend your payments, then doing so won’t lead to debt payoff. Consider the pros and cons before you decide on debt consolidation — and be aware that it’s not a magic cure. 

Zina Kumok
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Zina Kumok is a writer at MagnifyMoney. You can email Zina here

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New CFPB Rules Get Tougher With Payday-Lender Debt Traps

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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In early October, the Consumer Financial Protection Bureau announced it would implement long-awaited new rules aimed at limiting the power of payday and title lenders. The bureau director, Richard Cordray,  has been a vocal critic of the nonbank lenders, and the agency has been working on new rules to regulate lenders in this space for several years.

“The CFPB’s new rule puts a stop to the payday debt traps that have plagued communities across the country,” Cordray said in a statement. “Too often, borrowers who need quick cash end up trapped in loans they can’t afford. The rule’s common sense ability-to-repay protections prevent lenders from succeeding by setting up borrowers to fail.”These rules will apply to both brick-and-mortar and online lenders.

What changes are happening

Lenders are going to have to prove that a borrower can afford to repay the loan

One of the major rules is a “full-payment test” that will determine if borrowers can “afford the loan payments and still meet basic living expenses and major financial obligations.” Payday lenders typically don’t run a credit report on borrowers and only usually look at a pay stub to determine if you qualify.

Most consumers end up unable to repay the loan when it comes due, usually a couple weeks later. According to the CFPB, more than 80 percent of all payday loans are rolled over or renewed. The same is true for title loans, with 20 percent of borrowers losing their vehicle to title loan companies. Because there is little regulation on interest rates, these loans usually have APRs of 300 percent or more.

However, borrowers can avoid the full-payment test if the lender meets the following requirements: It must make 2,500 or fewer covered short-term or balloon-payment loans per year and earn no more than 10 percent of its revenue from such loans.

It won’t be as easy for lenders to access funds in borrowers’ bank accounts

Another issue is that many payday and title loans require access to the user’s bank account, where payments will be automatically debited. If the user does not have the amount available in his or her account, the account will be overdrawn. This usually results in the consumer being charged overdraft fees on top of the hefty interest already going to the payday lender.

According to the CFPB, “these borrowers incur an average of $185 in bank penalty fees, in addition to any fees the lender might charge for failed debit attempts, specifically, a late fee, a returned-payment fee, or both.”

One of the rules that the CFPB installed is a limit on attempted debits, so the lender has to get authorization from the consumer to debit the account more than twice. The CFPB also hopes to limit the amount of times a loan can be extended, as a way to decrease the fees the borrower must pay.

Borrowers can repay debt more gradually

To avoid the full-payment test, payday lenders can lend up to $500 if they structure the payments so the borrower can pay them off “more gradually.” However, there will be strict rules in place for this type of loan.

For example, lenders won’t be able to offer gradual repayment plans to customers who have recent or outstanding short-term or balloon-payment loans. They also can’t make more than three loans in quick succession and can’t make loans under this option if the consumer has already had more than six short-term loans or been in debt for more than 90 days on short-term loans over a rolling 12-month period.

Few options for borrowers in need

The CFPB’s long-awaited rules may help protect borrowers from predatory lenders, but don’t solve a key issue: There just aren’t that many viable alternatives for people who need to borrow small sums quickly.

A report from the Milken Institute, “Where Banks Are Few, Payday Lenders Thrive,” found that neighborhoods with more banks tend to have fewer payday lenders, and vice versa. There was also a strong correlation between payday lenders and neighborhoods with higher African-American and Latino populations as well as a greater instance of payday lenders where there are fewer high school and college graduates.

Jennifer Harper, who researched predatory lending in Chattanooga, Tenn., as part of the Financial Independence Committee for the Mayor’s Council for Women, said she hopes there will be a solution for consumers that doesn’t require them to take out a payday loan.

“We want to find an alternative to payday lending that would still allow people to access they need, without those crazy interest rates,’ she said. “Getting that quick access to cash may be fine for that day, but then it really puts a burden on the borrower long-term.”

Jason J. Howell,  a certified financial planner and fiduciary wealth adviser in Virginia, agrees with the new regulations taking place.

“The CFPB is taking the opportunity to protect the most vulnerable consumers: lower-income borrowers that are typically ‘un-banked,’” he said. “The proposed rule would reduce fees that make payday loans especially hard to pay back; and that could also reduce the issuance of these loans in the first place.”

Zina Kumok
Zina Kumok |

Zina Kumok is a writer at MagnifyMoney. You can email Zina here

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What Trump’s Budget Means for Public Service Loan Forgiveness

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Confirming the fears of many, President Donald Trump’s recently proposed federal budget calls for the defunding of the Public Service Loan Forgiveness program. While those currently enrolled in the program would not be affected, anyone taking out loans after July 1, 2018, would not be eligible.

Proponents of the program, designed to attract candidates to the public sector by forgiving student loans after 120 consecutive payments, fear this cut would incentivize teachers, lawyers, nurses, and other professionals to seek out careers in the private sector where the salaries are significantly higher. Opponents say the program is too costly, and the proposed cuts would save taxpayers billions.

What Does This Mean?

Adam Minsky, a Boston, Mass.-based attorney who specializes in student loans and consumer issues, cautioned that President Trump’s budget proposal is just that — a proposal.

The president can propose a budget, but it’s up to Congress to finalize and ratify it. The Republicans currently have a majority in both the House of Representatives and the Senate, and the federal budget only needs to have a simple majority for it to pass. Still, that would require about eight Democrats to vote yay, something they’re unlikely to do unless the final draft takes a more bipartisan turn.

The process of getting a budget approved through Congress is a long road. Each chamber of Congress has to approve the bill internally, then the bill goes to a committee that looks at both the Senate and House of Representatives bills to reconcile any differences. Finally, the bill is sent to both houses of Congress for a final vote.

Budget proposals rarely make it through Congress unaltered. Trump’s proposal is more like a polite nudge from the executive branch, not a firm decree.

Budget talks will continue throughout the summer and fall, and it’s not clear when a final proposal will be announced.

What Is the Public Service Loan Forgiveness Program?

Started in 2007, the Public Service Loan Forgiveness program allows borrowers who took out federal student loans to have their loans forgiven after 120 consecutive payments (10 years), as long as they served in a government or nonprofit role while all those payments were made. Graduates who utilize the program are on a mandated income-based repayment plan, so their payments are often much lower than they would be on the standard plan.

Careers such as law, nursing, social work, teaching, law enforcement, firefighting, and the military would all be affected by this shift. Many who choose to enter these professions have the option of working for the private sector where salaries are higher, but choose the public route because of this program. Not having the PSLF program could mean a dearth of candidates entering these fields.

“You have people making major life decisions based on the existence of this and other programs,” Minsky said.

The program incentivizes people to work in the public sector where salaries are lower and the demand is greater. If people don’t have a reason to take a lower-paying job, some experts worry that the gap between the rural and urban communities and other low-income areas will continue to increase.

Who Is Affected by This?

Only borrowers who take out federal student loans after July 1, 2018, would be affected by this change, and anyone who took out loans before this would be grandfathered in. The first crop of students who will have their loans forgiven will be this fall. Currently, over half a million people are enrolled in the PSLF program.

What’s the Problem?

The problem with Trump’s proposal is that the Public Service Loan Forgiveness program is a federal law. A budget proposal can’t change the law, but it can defund the program. That’s where the legal confusion arises.

“That’s the million dollar question,” Minsky said. “How can you have a program that is legally allowed to exist without funding it?”

He anticipates that if a budget passes defunding the PSLF program, several lawsuits would immediately come about.

“The way they’re going about doing it is problematic from a legal point of view,” Minsky said.

What Can People Do?

If you oppose the president’s proposal, you should contact your local representatives to tell them how you feel. Each citizen has one House representative and two Senators. Minsky recommends calling, writing a letter, and setting up a meeting with their spokesperson.

When you call, “you want to identify yourself as a constituent and as a voter,” he said.

If you have coworkers who would also be affected by this, try to rally them to take action. Ask your boss if the organization you work for can take a public stand on these issues. Post about it on social media and encourage your friends to reach out to their elected officials. Strong public opinion could sway politicians to listen to the people and not include this proposal in their own budget.

Zina Kumok
Zina Kumok |

Zina Kumok is a writer at MagnifyMoney. You can email Zina here

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How Weight Loss Helped This Couple Pay Down $22,000 of Debt

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Photo courtesy of Brian LeBlanc

About two years ago, Brian LeBlanc was fed up. The 30-year-old policy analyst from Alberta, Canada, had struggled with his weight for years. At the time, he weighed 240 pounds and had trouble finding clothes that fit. He decided it was time to change his lifestyle for good.

LeBlanc started running and cutting back on fast food and soft drinks. He ordered smaller portions at restaurants and avoided convenience-store foods. About a year into his weight-loss mission, his wife Erin, 31, joined him in his efforts.

“The biggest change we made was buying a kitchen food scale and measuring everything we eat,” Brian says. “Creating that habit was really powerful.”

Over the last two years, the couple has shed a total of 170 pounds.

But losing weight, they soon realized, came with an unexpected fringe benefit — saving thousands of dollars per year. Often, people complain that it’s expensive to be healthy — gym memberships and fresh produce don’t come cheap, after all. But the LeBlancs found the opposite to be true.

Erin, who is a payroll specialist, also managed their household budget. She began noticing a difference in how little money they were wasting on fast food and unused grocery items.

Photo courtesy of Brian LeBlanc

“Before, we always had the best intentions of going to the grocery store and buying all the healthy foods. But we never ate them,” she says. “We ended up throwing out a lot of healthy food, vegetables, and fruits.”

Before their lifestyle change, Brian and Erin would often eat out for dinner, spending as much as $80 per week, and they would often go out with friends, spending about $275 a month. Now, Brian says if they grab fast food, they choose a smaller portion. Last month, they only spent $22 on fast food.

What’s changed the most is how they shop for groceries, what they buy, and how they cook. Brian likes to prep all his meals on Sunday so his lunches during the week are consistent and portion-controlled. They also buy only enough fresh produce to last them a couple of days to prevent wasting food.

Shedding pounds — and student loan debt

Photo courtesy of Brian LeBlanc

Two years after the start of their weight-loss journey, they took a look at their bank statements to see how their spending has changed. By giving up eating out and drinking alcohol frequently, they now spend $600 less a month than they used to, even though they’ve had to buy new wardrobes and gym memberships.

With their newfound savings, the LeBlancs managed to pay off Brian’s $22,000 in student loans 13 years early. Even with the $600 they were now saving, they had to cut back significantly on their budget to come up with the $900-$1,000 they strived to put toward his loans each month. They stopped meeting friends for drinks after work, and Erin took on a part-time job to bring in extra cash. When they needed new wardrobes because their old clothing no longer fit, they frequented thrift shops instead of the mall.

When they made the final payment after two years, it was a relief to say the least.

Now the Canadian couple is saving for a vacation home in Phoenix, Ariz., which they hope to buy in the next few years, and they’re planning to tackle Erin’s student loans next. They’re happy with their weight and lives in general, but don’t take their journey for granted.

“There were times we questioned our sanity and we thought we cannot do this anymore,” says Erin. But they would always rally together in the end.

“There are things that are worth struggling for and worth putting in the effort,” Brian says. “Hands down, your health is one of those things.”

How Getting Healthy Can Help Financially

Spending less on food isn’t the only way your budget can improve alongside your health. Read below to see how a little weight loss can tip the scales when it comes to your finances.

  • Spend less on medical bills. Health care costs have skyrocketed in the last two decades, but they’ve impacted overweight and obese individuals more. A report from the Agency for Healthcare Research and Quality stated that between 2001 and 2006, costs increased 25% for those of normal weight — but 36.3% for those overweight, and a whopping 81.8% for obese people. The less you weigh, the less you’ll pay for monthly health insurance premiums and other expenses.
  • Buy cheaper clothes. Designers frequently charge more for plus-size clothing than smaller sizes. Some people claim retailers add a “fat tax” on clothes because there are fewer options for anyone over a size 12. It might not be fair, but it’s the way things are.
  • Save on life insurance. Your health is a huge factor for life insurance rates. Annual premiums for a healthy person can cost $300 less than for someone who is overweight.
  • Cut transportation costs. Biking or walking to get around is not only a cheap way to exercise — it’s a cheap way to travel. You’ll be saving on a gym membership and limiting gasoline costs in one fell swoop. Bonus points if you go the whole way and sell or downgrade your vehicle.
Zina Kumok
Zina Kumok |

Zina Kumok is a writer at MagnifyMoney. You can email Zina here

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What To Do if Your Insurance Doesn’t Cover a Health Care Provider

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Smiling senior man having measured blood pressure

It’s a pretty common scenario: you’re looking to book a medical appointment, so you go to your insurance company’s website to find an in-network doctor. You book the appointment, see the doctor, and all seems well — until you get a whopping bill. Apparently, that doctor wasn’t in your network after all, and now you’re faced with out-of-network charges.

This happens more often than we think. Unfortunately, insurance company websites are notoriously fallible. Not only that, but they change so frequently that it can be difficult to nail down just who is and isn’t covered. At some point or another, just about everyone will have to deal with a situation where their insurance doesn’t cover a provider.

It’s easy to feel duped in this scenario. Navigating the ins and outs of insurance is hard enough, but there’s nothing more frustrating than being fed incorrect information.

So what should you do?

What to Do If You’ve Already Gotten the Bill

Call the doctor

Doctors don’t usually consider themselves responsible for significant out-of-pocket costs resulting from a lack of research on the part of the patient.

But if you asked the doctor or their representative about insurance coverage beforehand, you should contact them immediately if that information ends up being false. Many physicians will honor the price they initially told you or at least give a hefty discount. Don’t get discouraged if they don’t get back to you right away. Keep calling to see if you can get a lower price.

Negotiate and ask for a better rate

Most doctors have two different rates: one for insurance companies and one for self-pay individuals. If your doctor’s visit isn’t going to be covered by your insurance, call the doctor’s billing department to ask for the self-pay cost.

“Most physician offices will accept a lesser amount, especially if they know the service is not going toward a deductible,” said health insurance agent Natalie Cooper of Best Quote Insurance of Ohio.

Ask about a payment plan if you can’t afford to pay the bill in one go. Most medical offices would rather get the money a little bit at a time than not at all.

“Most physician and hospital groups will accept a small payment of $25 or $50 per month until it’s paid off,” Cooper said.

Use a health savings account

If you’re struggling to pay a medical bill out of pocket, see if you can open an HSA and use those funds to pay for it. If you owe $2,000, you can transfer $2,000 to an HSA and then pay the doctor directly from that account.

What’s the benefit? HSA contributions are deductible on your taxes. Unfortunately, only people with high-deductible plans are eligible to start an HSA. Individuals can only contribute up to $3,400 a year or $6,750 in an HSA. You can start an HSA anytime if you have an eligible healthcare plan.

The IRS says you can only use your HSA to pay for qualified medical expenses, a list of which you can find here. Funds in an HSA roll over from year to year, and you can contribute up to $3,400 annually or $6,750 for families.

You can also open a Flex Spending Account, which works similarly to an HSA. However, funds don’t roll over to the next year and users can only contribute $2,550 a year.

How to Prevent Out-of-Pocket Expenses

Ask beforehand

Many people use the insurance company’s website to find a doctor, but those lists are often out of date. Insurance information can even change daily. The only way to confirm a doctor’s status with an insurance company is to call them directly and ask if they’re a network provider — not just if they accept your insurance.

“When they are a network provider, they are contractually required to accept no more than the negotiated contracted rate as payment in full, which is usually less than the billed rate,” said human resources expert Laurie A. Brednich. “When they say they ‘accept xyz insurance,’ they are usually not a network provider, but will file the claims on your behalf, and you are responsible for the full billed charges.”

It can also be helpful to give them your insurance group and account numbers beforehand so there’s no question about your specific policy. The more specific you can be, the more accurately you’ll be able to navigate the insurance labyrinth.

Find out if all procedures and doctors are covered

Have you ever been to a doctor who’s recommended you see a specialist for a certain procedure — only to find out that the specialist isn’t covered by your insurance, even though they’re in the same building?

When a doctor recommends you to a colleague, they’re not confirming that the other physician is covered in-network. Before you make the appointment, talk to the billing department to see what their policies are. You can request an estimate in writing beforehand so you’ll have an idea of what the costs will be.

Some procedures might not be covered even if they’re being ordered by your in-network doctor. If your doctor sends your results to a lab, that lab might be out of network, even if your insurance covers the doctor who ordered them.

Confirm the lab’s status before you go in. If it’s too late, call your insurance and ask if they can bill the service as in-network. Cite the fact that you weren’t aware the lab would not be covered.

If they refuse, contact the doctor’s office and explain your situation. Ask them why they used an out-of-network provider and see if they’re willing to write off the bill. Be polite, but firm.

Ask the doctor to apply

When Julie Rains’ insurance changed to a preferred provider plan, she discovered her trusted doctor was now going to be out of network. Instead of searching for a replacement, she asked if her physician would apply to the insurance company to be covered by her new plan. He agreed.

It took almost two months for him to be accepted, Rains said. If you’re going this route, it’s best to start as soon as you find out your insurance company has changed policies. Rains said between the time she found out about the changes and when they went into effect, her doctor had already been approved.

You might have less luck with a doctor you’ve only been seeing for a short time, but most medical professionals take long-term patient relationships seriously — especially if your whole family goes to the same office. As always, it doesn’t hurt to ask.

Zina Kumok
Zina Kumok |

Zina Kumok is a writer at MagnifyMoney. You can email Zina here

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