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Introducing FICO 9: What This Means for You

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Yesterday, FICO announced that it will be releasing FICO Score 9.  If you have unpaid medical bills or other collection items, this change will impact you.

What is FICO?

FICO is the most widely used credit score in the country. 90 percent of all credit decisions (mortgages, cards, credit cards, personal loans and more) use the FICO score in some way.

So, when FICO makes a change to its score, we should listen. This score has a big impact, because lenders use it and others (like CreditKarma) are trying to approximate it.

What are they changing?

This change is huge for people with unpaid medical bills and other collection items.

Unpaid medical bills

According to Experian, 64.3 million Americans have a medical collection record on their bureau. In the current world, this can significantly harm their credit score.

If you have an unpaid medical bill, it can be reported to a credit bureau in two ways:

  • The medical service provider can report to the bureau, or
  • A third party debt collection agency that has purchased the debt, or has been contracted to collect the debt, can report it

99.4 percent of cases have been reported by collection agencies. So, if your doctor is calling you to pay – it probably hasn’t been reported to an agency. But, once a collection agency starts calling you, you probably have a negative item on your credit bureau.

The purpose of a credit score is to help lenders understand the likelihood of someone being responsible and paying back on time. There has been a widespread belief that people have been unfairly punished for medical bills. In fact, the CFPB has proven that people have been unfairly punished, in a May 2014 report.

With the new score, FICO is agreeing with the CFPB. Medical collections will now be differentiated from non-medical collections. And people will be “punished less” for medical collections. This makes sense, for three reasons:

  1. The medical system is complex, and many people have been hit with small medical collections that they didn’t even realize they owed. For example, with a small co-pay that ended up with a collection agency.
  2. Historically, many responsible people could not get insurance because they had a pre-existing condition. And, when medical disaster struck, they had no way to pay the medical bills. They tried to be responsible, but couldn’t.
  3. Even with insurance, multiple emergencies in a family can lead to large deductible payments. Doctors and hospitals can quickly turn over bills to collection agencies, resulting in a negative remark on the credit bureau. Even people who are just paying back their medical bills, responsibly, over time can be punished.

This is a big win for the CFPB. Hats off. A government agency has done the math for the industry, and the industry has agreed. This should result in better access to credit, and lower rates on existing credit – once (and if) the changes are accepted by the industry.

Paid Collection Accounts will now be bypassed

Beyond medical bills, many other types of debt can end up on your credit bureau. For example, failure to pay your utility bill, your phone bill, your overdraft or any other type of debt can result in your account being sold to a collection agency. And the agency will usually report the collection account on your bureau. Having these accounts can seriously harm your score.

But, the older the collection item, the less impact it has on your score. I have regularly met people who felt confused. They have recovered and now had money. Should they pay back that five-year-old collection item, or just let it age. They wanted to pay it back, but would receive advice from some people not to do so. Why? Because activity on a collection item could make it appear more recent.

This change removes all ambiguity. If you pay back your collection items, your score will benefit. This is the way it should be.

When will I see the impact

Unfortunately it will take a while. FICO sells its credit score to banks. Whenever a new score is introduced, a bank has to decide whether or not to upgrade. In order to make this decision, they need to do a lot of analysis.

First, they will perform a “retro” analysis. This means they will look at the past few years of their portfolio history, and they will estimate how the portfolio would have performed if the new score was used.

They will then need to build strategies, which includes the cutoff (above what score will they approve accounts), the pricing and the extra rules that they want to build. In my experience, this takes 12 to 18 months (there are so many committees that need to approve this!).

Banks are very eager to “swap in” new customers. So, if previously rejected customers can now be approved, banks will be keen to proceed.

They are less keen to charge people lower interest rates. So, the CFPB needs to watch the banks closely. If people are truly lower risk, they should pay lower prices. But, banks are not eager to reduce pricing.

In Conclusion 

We fully support the changes. Medical bills are being severely punished. And people should not be afraid to pay off collection accounts.

We are realistic: it will be a while before we feel the impact.

And we are rightly skeptical: banks will be happy to approve more people and give more credit. They will be less excited to reduce interest rates.

Got questions? Get in touch via TwitterFacebook, email info@magnifymoney.com or let us know in the comment section below!

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19 Options to Refinance Student Loans – Get Your Lowest Rate

19 Options to Refinance Student Loans - Get Your Lowest Rate

Updated: February 5, 2016

Are you tired of paying a high interest rate on your student loan debt? Are you looking for ways to refinance student loans at a lower interest rate, but don’t know where to turn?

Below, you’ll find the most complete list of lenders currently willing to refinance student loans. You can also go directly to our comparison tool, which lets you see student loan terms all at once, with no need to give up personal information.

But before you do that read on to see if you are ready to refinance your student loans.

There is good news: in recent years, the student loan refinancing market has started to come back. Not just with traditional banks, credit unions and finance companies, but even the addition of new businesses that specialize in refinancing student loan debt.

Loan approval rules vary by lender. However, all of the lenders will want:

  • Proof that you can afford your payments. That means you have a job with income that is sufficient to cover your student loan and all of your other expenses.
  • Proof that you are a responsible borrower, with a demonstrated record of on-time payments. For some lenders, that means that they use the traditional FICO, requiring a good score. For other lenders, they may just have some basic rules, like no missed payments, or a certain number of on-time payments required to prove that you are responsible.

If you are in financial difficulty and can’t afford your monthly payments, than a refinance is not the solution. Instead, you should look at options to avoid a default on student loan debt.

This is particularly important if you have Federal loans.

Don’t refinance Federal loans unless you are very comfortable with your ability to repay. Think hard about the chances you won’t be able to make payments for a few months. Once you refinance, you may lose flexible Federal payment options that can help you if you genuinely can’t afford the payments you have today. Check the Federal loan repayment estimator to make sure you see all the Federal options you have right now.

If you can afford your monthly payment, but you have been a sloppy payer, than you will likely need to demonstrate responsibility before applying for a refinance.

But, if you can afford your current monthly payment and have been responsible with those payments, then a refinance could be possible and help you pay the debt off sooner.

Is it worth it? 

Like any form of debt, your goal with a student loan should be to pay as low an interest rate as possible. Other than a mortgage, you will likely never have a debt as large as your student loan.

If you are able to reduce the interest rate by re-financing, then you should consider the transaction. However, make sure you include the following in any decision:

Is there an origination fee?

Many lenders have no fee, which is great news. If there is an origination fee, you need to make sure that it is worth paying. If you plan on paying off your loan very quickly, then you may not want to pay a fee. But, if you are going to be paying your loan for a long time, a fee may be worth paying.

Is the interest rate fixed or variable?

Variable interest rates will almost always be lower than fixed interest rates. But there is a reason: you end up taking all of the interest rate risk. We are currently at all-time low interest rates. So, we know that interest rates will go up, we just don’t know when.

This is a judgment call. Just remember, when rates go up, so do your payments. And, in a higher rate environment, you will not be able to refinance to a better option (because all rates will be going up).

We typically recommend fixing the rate as much as possible, unless you know that you can pay off your debt during a short time period. If you think it will take you 20 years to pay off your loan, you don’t want to bet on the next 20 years of interest rates. But, if you think you will pay it off in five years, you may want to take the bet. Some providers with variable rates will cap them, which can help temper some of the risk.

Places to Consider a Refinance

If you go to other sites they may claim to compare several student loan offers in one step. Just beware that they might only show you deals that pay them a referral fee, so you could miss out on lenders ready to give you better terms. Below is what we believe is the most comprehensive list of current student loan refinancing lenders.

You should take the time to shop around. FICO says there is little to no impact on your credit score for rate shopping as many providers as you’d like in a 30 day period. So set aside a day and apply to as many as you feel comfortable with to get a sense of who is ready to give you the best terms.

Below we highlight the student loan refinance companies that offer the lowest interest rates.

  • SoFi*: Fixed interest rates start as low as 3.50%, and variable rates start as low as 2.13%. SoFi offers student loans to borrowers who graduated from a selection of Title IV accredited colleges and universities. You need to be employed, or have a job offer with a start date in 90 days. You also must be able to demonstrate a strong cash flow. To get the lowest rate, you need to sign up for automatic payments.
  • Earnest*: Earnest offers fixed interest rates starting at 3.50% and variable rates starting at 2.13%. Unlike any of the other lenders, you can switch between fixed and variable rates throughout the life of your loan. You can do that one time every six months until the loan is paid off. That means you can take advantage of the low variable interest rates now, and then lock in a higher fixed rate later. You need to have a job or an employment offer. You need an emergency fund of at least one month. You also must have a positive bank account balance and a budget that makes sense. If you have had credit in the past, you need a history of on time payments.
  • CommonBond*: CommonBond offers fixed rates from 3.50% and variable rates from 2.13%. You need a degree, a job and a stable cash flow. They will also review your payment history with other lenders. CommonBond is now available to students with both graduate and undergraduate degrees. There is no maximum loan amount.
  • LendKey*: LendKey works with community banks and credit unions across the country. Although you apply with LendKey, your loan will be with a community bank. They have recently become very competitive on price, introducing a 3.25% fixed-rate 5 year loan. Variable rates start as low as 2.13%.
  • DRB Student Loan*: DRB offers a variable APR range from 1.90% – 4.78%. Their fixed APR ranges from 3.50% – 6.75%. This is bank that started expanding aggressively into student loans two years ago, and has already booked over $950 million of student loans. If you do not sign up for automatic monthly payments, your rate will be 0.25% higher.

Below is an alphabetical listing of all providers we have found so far. This list includes credit unions that may have limited membership. We will continue to update this list as we find more lenders. (If you are counting, there are now more than 19 providers. Our list has continued to expand since we first created this post.)

  • Alliant Credit Union: In order to qualify, you need to have a bachelor’s degree. The minimum credit score is 700, and you need two years of employment and a minimum income of $40,000. They offer variable interest rates, starting at 6%. Anyone can join this credit union by making a $10 donation to Foster Care for Success.
  • Citizens One (Citizens Bank): To get the best deal, you should have at least a bachelor’s degree. They will look at your credit history, and want to make sure that at least the last three payments on your student loans have been made on time. If you don’t have your degree, you need to have made the last 12 payments (principal and interest) on time. You must make at least $24,000 per year. They offer fixed rates starting at 4.74% and variable rates from 2.33%.
  • CommonBond*: CommonBond was highlighted earlier in this post, with fixed and variable rates available. Variable rates start at 2.13% and fixed rates start at 3.50%.
  • CommonWealth One Federal Credit Union: Variable interest rates start at 3.04%. You can borrow up to $75,000 and need to be a member of the credit union in order to qualify.
  • CordiaGrad: Fixed rates range from 3.95% to 6.75% APR and variable from 2.75% to 4.95% APR. The lowest range is only available if you sign up for an automatic payment from a CordiaGrad Checking Account. You must have at least $20,000 of debt.
  • Credit Union Student Choice: This is a tool offered by credit unions. The criteria and pricing vary by credit union. The credit unions have limited membership, but you can find out if you qualify on this site.
  • LendKey*: You will need to have graduated from an eligible school in order to qualify. You need to make at least $2,000 per month, and they will review your credit history. Variable rates are available, starting at 1.93%. You will be matched with a community bank or credit union that anyone can join.
  • DRB Student Loan*: They will refinance undergraduate, Parent PLUS and graduate loans including MBA, Law, Medical/Dental (Post Residency), Physician Assistant, Advanced Degree Nursing, Anesthetist, Pharmacist, Engineering, Computer Science and more degrees. Variable rates as low as 1.90% with a rate cap and 3.50% fixed.
  • Earnest*. They will look at alternative criteria to try and approve you for a lower rate, like your employment history or bank account balances. Variable rates as low as 2.13%.
  • Eastman Credit Union: They don’t share much of their criteria publicly. Fixed rates start at 6.5% and you must be a member of the credit union. Credit union membership is not available to everyone.
  • EdVest: They offer refinancing options for private loans used to finance attendance at a Title IV, degree-granting institution. If the loan balance is below $100,000 you need to make at least $30,000 a year. If your balance is above $100,000 you need to make at least $50,000. Variable rates start at 3.580%, and fixed rates start at 4.40%.
  • Education Success Loans: You must be out of school for at least 30 months, and you must have a degree. You also need a good credit score, with on-time payment behavior. Variable and fixed loan options are available, with rates starting at 4.99%.
  • IHelp: This service will find a community bank. Community banks can actually be expensive. You need to have 2 years of good credit history, with a DTI (debt-to-income) of less than 45% and annual income of at least $24,000. Fixed rates are available, starting at 6.22%.
  • Mayo Employees Credit Union: You need at least $2,000 of monthly income and a good credit history. Variable rates are available, starting at 4.75% and you would need to join the credit union.
  • Navy Federal Credit Union: This credit union offers limited membership. For men and women who serve, the credit union can offer excellent rates and specialized underwriting. Variable interest rates start at 3.51%.
  • RISLA: You need at least a 680 credit score, and can find fixed interest rates starting at 4.49% if you use a co-signer.
  • SoFi*: You must have a bachelor’s or graduate degree in order to apply, and you must have demonstrated on-time payment behavior. Both fixed and variable rates are available, with rates starting at 2.13% and fixed rates starting at 3.5%.
  • Upstart*: You need to have a degree (or be graduating within 6 months). A minimum FICO of 640 is required. Fixed interest rates starting at 4.67%. This is more of a traditional personal loan than a long term student loan refinance.
  • UW Credit Union: $25,000 minimum income required, with at least 5 years of credit history and a good repayment record. Fixed and variable interest rates are available, with variable rates starting at 3.51% and fixed rates starting at 7.49%. You need to join the credit union in order to refinance your loans.
  • Wells Fargo: As a traditional lender, Wells Fargo will look at credit score and debt burden. They offer both fixed and variable loans, with variable rates starting at 3.49% and fixed rates starting at 6.74%. Wells Fargo does not have a tradition of being a low cost lender.

You can also compare all of these loan options in one chart with our comparison tool. It lists the rates, loan amounts, and kinds of loans each lender is willing to refinance.

Don’t forget to follow us on Twitter @Magnify_Money and on Facebook.

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9 Best 0% APR Credit Card Offers – February 2016

There are a lot of 0% APR credit card deals in your mailbox and online, but most of them slap you with a 3 to 4% fee just to make a transfer, and that can seriously eat into your savings.

At MagnifyMoney we like to find deals no one else is showing, and we’ve searched hundreds of balance transfer credit card offers to find the banks and credit unions that ANYONE CAN JOIN which offer great 0% interest credit card deals AND no balance transfer fees. We’ve hand-picked them here.

If one 0% APR credit card doesn’t give you a big enough credit line you can try another bank or credit union for the rest of your debt. With several no fee options it’s not hard to avoid transfer fees even if you have a large balance to deal with.

1. Chase Slate® – 0% Introductory APR for 15 months, $0 Introductory FEE

151_card_Chase_SlateThis deal is easy to find – Chase is one of the biggest banks and makes this credit card deal well known. You can get this offer if you complete the balance transfer within 60 days of opening the account. So it’s worth a shot to see how big of a credit line you get. If it’s not enough, move on to the other options below.

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2. Alliant Credit Union Credit Cards – 0% APR for 12 months, NO FEE

logo_alliantAlliant is an easy credit union to work with because you don’t have to be a member to apply and find out if you qualify for the 0% APR deal.

Just choose ‘not a member’ when you apply and if you are approved you’ll then be able to become a member of the credit union to finish opening your account.

Alliant Credit Union

Anyone can become a member of Alliant by making a $10 donation to Foster Care to Success.

If your credit isn’t great, you might not get a 0% rate – rates for transfers are as high as 5.99%, so make sure you double check the rate you receive before opening the account, and they might ask for additional documents like your pay stubs to verify the information on your application.

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3. Edward Jones World MasterCard – 0% APR for 12 months, NO FEE

edwardjonesYou’ll need to go to an Edward Jones branch to open up an account first if you want this deal. Edward Jones is an investment advisory company, so they’ll want to have a conversation about your retirement needs.

But you don’t need to have money in stocks to be a customer of Edward Jones and try to get this card. Just beware that you only have 30 days to complete your transfer to lock in the 0% rate.

This deal ends April 30, 2016.

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4. M&T Bank Visa – 0% APR for 12 months, NO FEE

mandtbankIf you live in Florida, New York, Pennsylvania, Maryland, Virginia, West Virginia, or Washington, D.C. you can apply for this deal. Or if you already have an M&T account and reside out of those states you can apply online.

M&T is offering 0% no fee balance transfers until March 31, 2016, and if you don’t want to apply online you can call 1-800-724-3222.

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5. Logix Credit Union Credit Card – 0% APR for 12 months , NO FEE

If you live in AZ, CA, DC, MA, MD, ME, NH, NV, or VA you can join Logix Credit Union and apply for this deal. Some applicants have reported credit lines of $15,000 or more for balance transfers, so if you have excellent credit, good income, but a large amount to pay off (like a home equity line), this could be a good option.

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6. First Tennessee Bank Credit Card – 0% APR for 12 months, NO FEE

275_card.275_card.Platinum_Premier_VisaIf you want to apply online for this deal, you’ll need to live in a state where First Tennessee has a branch though. Those states are: Tennessee, Florida, Georgia, Mississippi, North Carolina, and South Carolina.

You need to have an existing First Tennessee account to apply online, but if you don’t have one, you can print out an application and mail it into their office to get a decision. You’ll find a link to the paper application when the online form asks you whether you have an account or not.

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7. Fort Knox Credit Union Visa Platinum – 0% APR for 12 months, NO FEE

1773_card.visaplatinumFortKnoxFCUWhile Fort Knox Credit Union’s field of membership is in Kentucky, if you don’t reside there the credit union may be able to find a way for you to join after you submit a membership application via a low cost association or other relationship. The maximum credit limit available is $25,000.

The 0% no fee balance transfer deal ends March 31, 2016.

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8. Capital One QuickSilver ONE – 0% APR until November 2016, NO FEE

quicksilveroneThere’s a catch here. While there is no balance transfer fee, this card has a $39 annual fee.

If you’re transferring a big balance of $2,000 or more, the $39 isn’t a big deal. But if it’s a small balance and one you don’t plan to pay off by May, then consider other options with no annual fee first.

Capital One tends to approve people with less perfect credit for this card than some of the other options and you might be able to check if you are pre approved by Capital One without hurting your credit score. Beware that after the 0% rate ends in November, 2016 your rate will ratchet up to a scary 22.9%.

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9. Aspire Credit Union Credit Card – 0% APR for 6 months , NO FEE

AspireYou don’t have to be a member to apply and get a decision from Aspire. Once you do, Aspire is easy to join – just check that you want to join the American Consumer Council (free) while filling out your membership application online.

Make sure you apply for the regular ‘Platinum’ card, and not the ‘Platinum Rewards’ card, which doesn’t offer the introductory deal.

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10. Elements Financial Credit Card – 0% APR for 6 months, NO FEE

To become a member and apply, you’ll just need to join TruDirection, a financial literacy organization.Elements 4c-horiz It costs just $5 and you can join as part of the application process.

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11. Power Credit Union – 0% APR for 6 months, NO FEE

Power Credit Union is based in Southern Colorado, but anyone can join by donating $5 to Relay for Life. The card also has an attractive fixed rate of 8.9% after the 0% promo period ends, so it’s a safe choice. The catch is they’re a really small credit union, and might not be used to getting a lot of interest from outside Colorado.

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12. Michigan State University Federal Credit Union – 0% until June 30, NO FEE

Anyone can join Michigan State University Federal by joining the Michigan United Conservation Clubs. Their current offer is for 0% until June 30th, so almost 6 months worth with no fee, and the deal expires on February 29th.

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For Texas residents: RBFCU – 0% APR for 12 months, NO FEE

Randolph Brooks Federal Credit Union is based in South Central Texas, but membership is available to any Texas resident who joins the American Consumer Council. Their cards offer no balance transfer fees and a 0% APR for 9 months.

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Are these the best deals for you?

If you can pay off your debt within the 0% period, then yes, a no fee 0% balance transfer credit card is your absolute best bet. And if you can’t, you can hope that other 0% deals will be around to switch again.

But if you’re unsure, you might want to consider…

  • A deal that has a longer period before the rate goes up. In that case, a balance transfer fee could be worth it to lock in a 0% rate for longer.
  • Or, a card with a rate a little above 0% that could lock you into a low rate even longer.

The good news is we can figure it out for you.

Our handy, free balance transfer tool lets you input how much debt you have, and how much of a monthly payment you can afford. It will run the numbers to show you which offers will save you the most for the longest period of time.

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The savings from just one balance transfer can be substantial.

Let’s say you have $5,000 in credit card debt, you’re paying 18% in interest, and can afford to pay $200 a month on it. Here’s what you can save with a 0% deal:

  • 18%: It will take 32 months to pay off, with $1,312 in interest paid.
  • 0% for 12 months: You’ll pay it off in 28 months, with just $502 in interest, saving you $810 in cash. That even assumes your rate goes back up to 18% after 12 months!

But your rate doesn’t have to go up after 12 months. If you pay everything on time and maintain good credit, there’s a great chance you’ll be able to shop around and find another bank willing to offer you 0% interest again, letting you pay it off even faster.

Before you do any balance transfer though, make sure you follow these 6 golden rules of balance transfer success:

  • Never use the card for spending. You are only ready to do a balance transfer once you’ve gotten your budget in order and are no longer spending more than you earn. This card should never be used for new purchases, as it’s possible you’ll get charged a higher rate on those purchases.
  • Have a plan for the end of the promotional period. Make sure you set a reminder on your phone calendar about a month or so before your promotional period ends so you can shop around for a low rate from another bank.
  • Don’t try to transfer debt between two cards of the same bank. It won’t work. Balance transfer deals are meant to ‘steal’ your balance from a competing bank, not lower your rate from the same bank. So if you have a Chase Freedom with a high rate, don’t apply for another Chase card like a Chase Slate and expect you can transfer the balance. Apply for one from another bank.
  • Get that transfer done within 60 days. Otherwise your promotional deal may expire unused.
  • Never use a card at an ATM. You should never use the card for spending, and getting cash is incredibly expensive. Just don’t do it with this or any credit card.
  • Always pay on time. If you pay more than 30 days late your credit will be hurt, your rate may go up, and you may find it harder to find good deals in the future. Only do balance transfers if you’re ready to pay at least the minimum due on time, every time.

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Can a Debt Collector Get Into My Bank Account?

Mixed Race Young Female Agonizing Over Financial Calculations in Her Kitchen.

Can a creditor get into your bank account if you don’t pay your debts? The short answer is: maybe.

Whether and to what extent a creditor can get into your bank account depends on your specific circumstances.

It’s important to note that the exact answer for you will depend on the state law in which you live. For that reason, it may be valuable to seek an attorney’s advice in your state.

But for a lot of people, in many states, the following rules typically apply.

How A Creditor Gets Access to Your Bank Account

To get into your bank account, the creditor must get a court order. Specifically, this means that the creditor must sue you (take you to court) and win. Only after the judge enters a judgment against you (meaning the creditor won the lawsuit against you) can the creditor have access to your bank account.

This is an important point to remember. You don’t have to live in fear that a creditor could be in your bank account at any given time until the creditor gets a judgment in its favor. Part of this process requires that you would be given notice of the lawsuit and hearing dates and times. So, you should know when you’re being sued, and you shouldn’t have to worry about a creditor having access to your bank account until that time comes.

One caveat to this general rule is that there could be a situation where a creditor does not need to get a judgment against you in order to access your bank account. One example of this is the federal government. If you have federal loans, the federal government does not need to get a judgment against you to access your bank account as a creditor. The government could also use wage garnishment, tax refund interception and Social Security garnishment to get repaid. There may be other rare exceptions for you, which is why it’s important to seek an attorney’s advice.

Another exception to this rule is if the place where you owe money to is the same financial institution where you hold your money. For example, if you bank at Chase Bank and also have a loan from Chase Bank, the bank may be able to access your funds to repay this loan (this would be included in the paperwork you signed allowing this to take place).

[7 Things to Know if You Have Debt in Collections]

Giving a Creditor Your Bank Account Information

If a creditor has access to your bank account, you can be pretty confident that the creditor is going to collect what it’s owed. This means that you should never give a creditor your bank account information. Most debt collectors will ask you to pay this way, and you should not do it. Allowing the creditor to debit your account is essentially permission to continue to do it. Even if the creditor is only supposed to take less than the full amount you owe from the account, it could take more. And if the creditor takes more money from the account than you give it permission to, you are going to have to prove that. Getting your funds back and taking a creditor to court can be avoided if you do not give the creditor your account information.

[How to Make a Payment to a Collections Agency Without Getting Ripped Off]

For example, if the creditor says that you can pay half of what you owe, and to do so, you need to give the creditor your bank account information, I urge you not to do this. In every situation that I have encountered, it is never a good idea to give the creditor your bank account information.

The general consensus is that you should not give your bank account information to a creditor. If the creditor insists that this is the only way for it to take payment from you, then you should open a second account specifically to pay this debt. Only fund the account with money that you want the creditor to have. This way, the creditor cannot access your full bank account.

How Much Money Can a Creditor Take From Your Account?

There are consumer protection laws in place to prevent a creditor from taking too much money out of your account. But again, these are state laws that vary depending on where you live.

Typically, the laws that limit a creditor’s ability to garnish your bank account require you as the debtor to do something. You are responsible for figuring out what the law is in your state and taking action to limit the amount that a creditor garnishes from your account.

A creditor can also garnish your wages, up to 25% of your paycheck. This is garnishment from your paycheck. If the funds are actually deposited into your bank account, the 25% doesn’t hold true.

If you are in this situation, you should consult an attorney to see what state laws are in place where you live.

How to Get Help

If you are concerned about a creditor seizing money from your bank account, a good place to start is to contact a local attorney to find out what state laws specifically apply to you.

Avoid giving a creditor your bank account information. In general, it’s not a good idea. And remember that typically, a creditor needs to get a judgment against you before it can access your bank account.

An excellent resource to help you with your creditor problems is the Consumer Financial Protection Bureau. This is a federal agency that aims to protect consumers, specifically with financial protection.

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Fastest Ways to Eliminate Expensive Credit Card Debt

Very Upset Woman Holding Her Many Credit Cards.

Spending this past holiday season alone increased by 7.9% from the year before, which only added to the growing problem of credit card debt in America.

If you’re struggling to break free from a pile of credit card bills that come in the mail every month, you’re not alone. This year doesn’t have to be the same as years past though — just a few moves could help you eliminate that expensive credit card debt fast so that you can move on with your life and start saving for some actual fun goals.

MagnifyMoney’s Paying Down Debt Guide has an in-depth look at how to get the banks to cut your rates, but in the meantime, here are some of the fastest ways to go about eliminating that pesky, expensive credit card debt.

1. Apply for a card with 0% interest and do a balance transfer

If you have a good credit score — generally around 680 or higher — and your cards charge you an interest rate of 15% or higher, opting for a balance transfer to a credit card with 0% interest is your best option. A balance transfer will allow you to roll over your debts from your high interest card to the new, 0% interest one, generally for a one-time transfer fee. With these types of cards it’s important to read the fine print — you’ll usually only have a certain amount of time to pay off debts at 0% interest before a new rate kicks in, and sometimes purchases made on the new card aren’t covered under the 0% interest offer. Check out this piece for more on how balance transfers helped save one writer from debt, and this one for nine of the best no fee, 0% APR credit card offers available today.

2. Consider a personal loan

If you can’t imagine getting out of credit card debt by using another credit card, a personal loan might be the answer for you. Checking if you’re pre-qualified won’t hurt your credit score, and rates could be as low as 5-6% if you have great credit (although they generally tend to hover around the 10-20% mark). If those numbers are less than what you’re paying on your current card (which, let’s be honest, they most likely are), then check out this piece for some of the best personal loan offers available based on your credit score and the amount of loan you’ll need.

3. Work on improving your credit score

If you have poor credit (let’s say lower than 600), it can be hard to find products like personal loans and 0% balance transfer credit card options to help dig you out of debt. If this is the case for your situation, your first step on the road to debt recovery should be building a better credit score so that one day soon you will have those other products as options. You’ll want to do a couple things here to start working on your credit score, like keeping your utilization rate low, paying in full and on time each month and avoiding any further credit card debt. Check out this piece for six simple steps to start improving your credit score now.

Remember that deciding to work hard at eliminating your credit card debt is a great first step. Now all you need to do is find your credit score and start on the plan that will work best for your needs. If you need a little extra inspiration, check out how one woman made a plan to dig herself out of $27,000 of debt in just two years.

If she can do it, so can you.

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College Students and Recent Grads, Pay Down My Debt, Reviews

Review: Nelnet, Inc. Student Loan Servicer

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According to Chairman Mike Dunlap, Nelnet’s overall mission is to “make educational dreams possible.” It’s headquartered in Lincoln, Nebraska, and more than five million borrowers have their student loans (federal and private) serviced by Nelnet.

Unfortunately, as a federal student loan borrower, you don’t get to choose the company that services your loans. While the U.S. Department of Education remains the owner of your loans, you’re assigned to one of ten federal student loan servicers when your loans are disbursed. Nelnet is one of those ten.

If your student loans are serviced through Nelnet and you’d like to get a better idea of what to expect in terms of customer service, information and services available through the website, and how to dispute an issue with Nelnet, read on.

Overview of Nelnet

Nelnet’s website is fairly easy to navigate, and all the important information is provided on the front page in a grid pattern. Pages worth a visit include:

  • Lower your payment with a new repayment plan: A large amount of federal student loan borrowers aren’t aware that they can apply for a different repayment plan and lower their minimum student loan payment. If you’re experiencing financial difficulty, you should check to see what options are available to you. Nelnet provides a chart that compares all the repayment options, and it also gives you instructions on how to change your plan.
  • Postpone your payments with deferment or forbearance: Similar to the page above, it’s useful to know when you’re eligible to hit “pause” on your student loan payments. Forbearance and deferment are temporary fixes, whereas repayment plans tend to be more permanent. Either one will help in the event you hit a rough spot with your finances. Nelnet breaks down the different types of deferment borrowers may be eligible for, and explains how you can apply.
  • Get financially fit: This is Nelnet’s library of financial knowledge that any recent graduate can benefit from. There are worksheets for budgets, tips on how to use credit responsibly, how to safeguard yourself from identity theft, a worksheet for your financial goals, and more.
  • FAQ: Every loan servicer has one, but it’s worth reviewing the popular questions so you know what to expect. For example, Nelnet covers making payments, how to opt-in to automatic debits, how payments are applied, payoff and tax information, and what happens when your loans become delinquent.

Many loan servicers offer knowledge centers that borrowers aren’t aware of. It pays to familiarize yourself with the site as you’ll likely be spending a lot of time there throughout your student loan payoff journey.

What Borrowers Are Saying

Nelnet has had 343 complaints closed with the Better Business Bureau in the last three years at the time of writing. The most common problem cited involves the product and service offered, as well as billing and collection services.

Some complaints are in reference to Nelnet reporting loans incorrectly to the credit bureaus, with loans showing as delinquent or default when they were paid. Other complaints are about the lack of customer service – borrowers have attempted to contact Nelnet several times, or have tried to submit paperwork, and Nelnet insists it hasn’t received anything from the borrower.

In a post on The College Investor about Nelnet, many people have commented that they’ve experienced difficulty in getting their loans paid down properly. Among their complaint were that Nelnet fails to acknowledge payments at times, doesn’t communicate clearly with borrowers when their loan is transferred, and sometimes drops the ball when borrowers apply for forgiveness, discharge, or forbearance.

This is not acceptable behavior from a student loan servicer. You shouldn’t have to jump through hoops to get a servicer to acknowledge that you’ve made a payment or a special request, and it shouldn’t be reporting false information to the credit bureaus (though that happens more often than you think – make sure you make a habit out of checking your credit report!).

First Steps to Take to Resolve Disputes With Nelnet

If you’ve been trying to contact Nelnet to no avail, you should be keeping a paper trail or detailed notes documenting each attempt.

If you haven’t tried contacting Nelnet yet, then you should. Despite some people having communication issues, it’s your job to alert Nelnet to the problem you’ve been experiencing. Have you been emailing Nelnet or submitting a secure form online? Then try calling instead. Different methods of communication may yield different results.

It can be a pain to go through this, but if your issue is severe (such as having false information on your credit report), you need to take every action possible to get Nelnet to fix it.

There are several ways to contact Nelnet:

You can email a representative by filling out a form.

You can call them 24/7 at 1-888-486-4722. The fax number is 877-402-5816.

Its general correspondence address is:

Nelnet
P.O. Box 82561
Lincoln, NE 68501-2561

Note that there are different mailing addresses for documents related to deferment, forbearance, repayment plans, and enrollment status changes, as well as loan discharge and forgiveness claims, and bankruptcy claims. Those can be found on the “Contact Us” page.

Nelnet also claims it answers any questions asked via Twitter or Facebook within 24 hours. It’s worth a try, especially as social media is much more public. Others might be experiencing the same troubles as you, too.

When All Options Are Exhausted, Get the Student Aid Ombudsman Involved

Studentaid.gov explicitly states that you must make an attempt to contact Nelnet before turning to the Student Aid Ombudsman Group. Do everything in your power to resolve the situation yourself, which will prepare you to get on the phone with the Ombudsman when the time comes.

You can also prepare by using this list provided by the Ombudsman Group to gather the necessary information for review. When you’re ready, you can call 1-877-557-2575, fax 202-275-0549, fill out the online dispute form, or write to them at the following address:

U.S. Department of Education
FSA Ombudsman Group
830 First Street, N.E., Mail Stop 5144
Washington, DC 20202-5144

If you choose any of the alternatives to filling out the form online, be sure to include all the information on that form in your correspondence. It will cut down on the back and forth while communicating with the Ombudsman Group.

Submitting a Complaint With the CFPB When You Have Private Loans

The Student Aid Ombudsman serves borrowers with federal loans, and the Consumer Financial Protection Bureau serves those with private student loans. Nelnet services both types of loans, so if you have private loans, you’ll want to file a complaint with the CFPB instead.

The CFPB has been getting very strict with private lenders on the matter of abuse. If you think you’ve been wronged by Nelnet, then it’s worth making the CFPB aware of it. All you need to do is go here and fill out the short student loan complaint form.

After you’ve submitted it, Nelnet will have 15 days to respond to your complaint, and the CFPB will help you and Nelnet reach a resolution. Most cases are resolved within 60 days.

Don’t Give Up

Resolving a dispute with a lender or loan servicer can be tiring, but it’s important not to give up. You have certain rights as a consumer, and loan servicers shouldn’t be trying to take advantage of you. Do what you can to get a Nelnet representative on the phone, and remember to write down names, dates, and what was discussed in the conversation in the event the representative doesn’t log it. This will help you if you need to escalate your efforts by bringing the issue to the attention of the Ombudsman Group or the CFPB.

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How to Get Your Hospital Bill Reduced or Even Eliminated

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Here’s a little secret that many hospitals don’t want you to know: the bill they send you is only an initial offer.

There is almost always room to negotiate, and in some cases you can get your bill reduced by as much as 90%, or even forgiven completely.

All it takes is knowing who to ask.

Hospital Financial Assistance

You may not have known that many hospitals – non-profits in particular – have financial assistance programs specifically designed to help people pay for medical care they wouldn’t normally be able to afford.

And there are two situations where you’re especially likely to qualify.

1. Uninsured

The first is if you’re uninsured. In many cases, simply being uninsured can result in an automatic bill reduction, no matter your income. Those with lower incomes may qualify for even bigger reductions.

(Keep in mind that this isn’t necessarily a reason to go without insurance. Insurance comes with many protections, such as max out of pocket costs and pre-negotiated rates for procedures that reduce the cost without any work on your end. Not to mention the penalties for being uninsured.)

2. Insured, but still owe a significant amount

The second is if you are insured but your insurance only covers part of the cost. The lower your income and the more of your bill you’re responsible for, the more likely it is that you’ll qualify for assistance.

Two Types of Financial Assistance

If you find yourself in one of those situations, there are two types of assistance you might be eligible for.

1. Bill reduction or forgiveness

The first is a bill reduction, or potentially even total forgiveness. This redditor got a $12,000 bill reduced to $1,500 by simply contacting the hospital’s billing department, and there are other stories in that thread from people with similar experiences. In general, the more difficult your circumstances the more you may get forgiven.

2. 0% interest repayment plan

The other type of assistance that most hospitals offer is a payment plan with 0% interest. These programs are often offered without any eligibility requirements, meaning anyone can enroll. And while they don’t reduce your bill, they can make it easier to afford by spreading it out over a period of months instead of requiring a big payment up front.

In some cases you may be able to use a combination of the two by qualifying for a reduction and then paying the reduced bill over a number of months.

How to Get Financial Assistance from the Hospital

To see whether your qualify for financial assistance, the best thing to do is reach out to your hospital as quickly as possible once you have your bill in hand

“Just ask”, says Pam Horack, CFP® and founder of Pathfinder Planning. “I have found that if you contact the hospital billing department about payment, they are more than willing to work with you.”

Thomas Nitzsche from Clearpoint Credit Counseling Solutions agrees: “Act immediately upon receiving the bill and contact the billing department of the provider and ask to apply for financial aid, even if you think you make too much.”

Figuring Out Who to Ask

To figure out who to contact, first look at your bill. There should be a phone number for the billing department right on it, and you can call them up and ask about financial assistance.

If that doesn’t work, just Google “your hospital” + “financial assistance”. That should bring you directly to their financial assistance program with contact information to get you started.

From there, simply follow their instructions and provide the information they need. Though Melanie Lockert, the founder of Dear Debt who three years ago had a $1,600 bill completely forgiven, acknowledges that the process can take some time.

“I was grateful that they covered everything,” Lockert said, “but I did have to hand over a lot of information: bank statements, tax info, pay stubs, and any other documentation to help my case. It took about two months for me to get the letter saying that everything was covered.”

If you run into any issues or are having trouble understanding your bills or organizing your financial situation, you might consider reaching out to a non-profit credit counseling service for help. The National Foundation for Credit Counseling (NFCC) is a good place to start.

How to Negotiate Your Medical Bill

What if you don’t qualify for a bill reduction, or if the bill isn’t reduced by as much as you’d like? What are your options then?

Pay in Cash (or with an FSA/HSA)

You may be able to negotiate a lower bill, especially if you can pay up front in cash.

“Sometimes doctor offices, hospitals, labs and other medical facilities will offer a discount if you pay your portion of the bill in full,” says Shanda Sullivan, CFP® and founder of Sullivan Financial Strategies. “I myself and a client have saved 5%-10% off of our medical bills. It never hurts to ask.”

Adds Horack, “When I have had large bills, I called and asked if I could get a discount for paying cash. They reduced my bill by 20% and I paid with my FSA [Flexible Spending Account].”

Research the Price at Other Hospitals

Another strategy is to research the average cost of the care you received using sites like Healthcare Bluebook, or even calling up other local hospitals. If your hospital is charging you more, you could use that information as leverage for getting your bill reduced.

The bottom line is this: you have a number of options when it comes to reducing your hospital bill. In many cases, the simple act of asking can save you a lot of money.

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College Students and Recent Grads, Pay Down My Debt, Reviews

CommonBond Grad Student Loan Refinance Loan Review

CommonBond Grad Student Loan Refinance Loan Review

Updated January 8, 2016

CommonBond was founded by three Wharton MBAs who felt the sting of student loans after they graduated. The founders decided to provide a better solution for graduates, as they thought the student loan system was broken and in need of reform. As a result, they strive to make the refinance (and borrowing) process as simple and straightforward for graduates as possible.

CommonBond* began by servicing students from just one school, and has rapidly expanded. Today, CommonBond loans are available to graduates of over 2,000 schools nationwide. Although the business started servicing only students with graduate degrees, today CommonBond is also available to refinance undergraduate degrees as well.

As you might be able to tell by the name, CommonBond thinks of its community as family. There is a network of alumni and professionals within the community that want to help borrowers. This alone sets it apart from other lenders, as members often meet for events.

While these are all great things, we know you’re more interested in how CommonBond might be able to help you make your student loans more affordable. Let’s take a look at what terms and rates they offer, eligibility requirements, and how they compare against other lenders.

Refinance Terms Offered

CommonBond offers low variable and fixed rate loans. Variable rates range from 2.13% – 5.68% APR, and fixed rates range from 3.25% – 7.49% APR.

Note that these rates take a 0.25% auto pay discount into consideration.

There is no maximum loan amount. CommonBond will lend what you can afford to repay. CommonBond offers fixed and variable rates with terms of 5, 10, 15, and 20 years.

The hybrid loan is only offered on a 10 year term – the first 5 years will have a fixed rate, and the 5 years after that will have a variable rate.

CommonBond has a great chart listing repayment examples based off of borrowing $10,000, which can be found on its rates and terms page.

To pull an example from that, if you borrow $10,000 at a fixed 4.74% APR on a 10 year term, your monthly payment will be $104.80. The total amount you will pay over the 10 year period will be $12,575.90.

The Pros and Cons

CommonBond is available to graduates of 2,000 universities. While that is a very long list, not all colleges and universities are included.

One pro to consider is the hybrid loan option available. It might seem a little confusing at first – why would someone want a variable rate down the road?

If you’re confident you’ll be able to make extra payments on your loan and pay it off before the 5 years are up, you might be better off going with the hybrid option (if you can get a better interest rate on it).

This is because you’ll end up paying less over the life of the loan with a lower interest rate. If you were offered a 10 year loan with a fixed rate of 6.49% APR, and a hybrid loan with a beginning rate of 5.64%, the hybrid option would be the better deal if you’re intent on paying it off quickly.

What You Need to Qualify

CommonBond doesn’t list many eligibility requirements on its website, aside from the following:

  • You must be a U.S. citizen or permanent resident
  • You must have graduated

CommonBond doesn’t specify a minimum credit score needed, but based on the requirements of other lenders, we recommend having a score of 660+, though you should be aiming for 700+. The good news is CommonBond lets you apply with a cosigner in case your credit isn’t good enough.

Documents and Information Needed to Apply

CommonBond’s application process is very simple – it says it takes as little as 2 minutes to complete. Initially, you’ll be asked for basic information such as your name, address, and school.

Once you complete this part, CommonBond will perform a soft credit pull to estimate your rates and terms.

If you want to move forward with the rates and terms offered, you’ll be required to submit documentation and a hard credit inquiry will be conducted. CommonBond lists the following as required:

  • Pay stubs or tax returns (proof of employment)
  • Diploma or transcript (proof of graduation)
  • Student loan bank statement
  • ID, utility bills, lease agreement (proof of residency)

CommonBond also notes it can take up to 5 business days to verify documents submitted, so the loan doesn’t happen instantaneously.

Once your documents are approved, you electronically sign for the loan, and CommonBond will begin the process of paying off your previous lenders. It notes this can take up to two weeks from the time the loan is accepted.

Who Benefits the Most from Refinancing Student Loans with CommonBond?

Borrowers who are looking to refinance a large amount of student loan debt will benefit the most from refinancing with them.

Common Bond

Apply Now

*referral link

Keeping an Eye on the Fine Print

CommonBond does not have a prepayment penalty, and there are no origination fees nor application fees associated with refinancing.

As with other lenders, there is a late payment fee. This is 5% of the unpaid amount of the payment due, or $10, whichever is less.

If a payment fails to go through, you’ll be charged a $15 fee.

It’s also noted that failure to make payments may result in the loss of the 0.25% interest rate deduction from auto pay.

Transparency Score

Getting in touch with a representative is simple and there is a chat and call option right on the homepage. Some lenders have this hidden at the bottom, or they don’t offer a chat option at all.

CommonBond also lets borrowers know they can shop around within a 30 day period to lessen the impact on their credit.

It does not list its late fees on its website, unlike other lenders. However, after making a chat inquiry, the question was answered promptly.

CommonBond does offer a cosigner release and is ranked with a A+ transparency score.

Alternative Student Loan Refinancing Lenders

The student loan refinancing market continues to get more competitive, and it makes sense to shop around for the best deal.

One of the market leaders is SoFi. It’s always worth taking a look to see if SoFi* offers a better interest rate.

The two lenders are very similar – CommonBond offers “CommonBridge,” a service that helps you find a new job in the event you lose yours. SoFi offers a similar service called Unemployment Protection.

SoFi’s variable rates are currently 1.90% – 5.18% APR, and its fixed rates are currently 3.50% – 7.24% APR, which is in line with what CommonBond is offering.

SoFi also doesn’t have a limit on how much you can refinance with them.

SoFi logo

Apply Now

 *referral link

Another lender to consider is Earnest. There is no maximum loan amount, and Earnest has a very slick application process.

Its variable rates are currently 1.90% – 5.75% APR, and its fixed rates are currently 3.50% – 7.25%.

Earnest

Apply Now

*referral link

Lastly, you could check out LendKey. It offers student loan refinancing through credit unions and community banks, but only offers variable rates in most states and fixed rates in a select few. The maximum amount to refinance with an undergraduate degree is $125,000, and the maximum amount to refinance with a graduate degree is $175,000.

All three of these options provide forbearance in case of economic hardship and offer similar loan options (5, 10, 15 year terms).

Lendkey

Apply Now

*referral link

Don’t Forget to Shop Around

As CommonBond initially conducts a soft pull on your credit, you’re free to continue to shop around for the best rates if you’re not happy with the rates it can provide. As the lender states on its website, if you apply for loans within a 30 day period, your credit won’t be affected as much.

Since CommonBond does have strict underwriting criteria, you should continue to shop around and don’t be discouraged if you are not approved. The market continues to get more competitive, and a number of good options are out there.

Customize Your Student Loan Offers with MagnifyMoney Comparison Tool

 

*We’ll receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.

 

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News, Pay Down My Debt, Strategies to Save

One Day To Financial Freedom

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Today I have published, in partnership with Forbes, my third eBook, “Richer in 7 Hours: Financial Tips & Tools To Grow Your Net Worth.”

January is a wonderful time of year if you want to help promote financial responsibility. After indulging during the holidays, people are ready to improve their lives. One of the most common resolutions made by Americans is to live a financially healthier life in 2016. People vow to spend less, save more and start making smarter money decisions.

Unfortunately, most resolutions are quickly broken or forgotten. A survey by the University of Scranton revealed that only 8% of people are successful in keeping their resolutions. Anyone who consistently visits a gym can attest to the high failure rate of resolutions. If you try to get access to the treadmill in January, it will be almost impossible. But if you try again in March, you will have plenty of choices.

Why do people break their resolutions so quickly and so easily? According to Psychology Today, resolutions fail for two main reasons:

  • People really don’t ‘want to change their lives, and will quickly fall to temptation once again.
  • People set unrealistic or vague goals, and quickly give up once success looks impossible to achieve or to define.

If people really don’t want to change, I can’t help them. But for people who have the desire and willingness to change, I wanted to write a book that is easy to read and helps people define simple, concrete steps towards financial freedom. Even more importantly, realistic and achievable goals are set and success is celebrated.

And I wanted to make sure that all this could be done in one day, because people have busy lives and short attention spans.

All You Need Is A Day

Most people hate thinking about their finances. It can be depressing, complicated and boring. But, for one time a year (January), people are ready to spend time thinking about their relationship with money. I don’t want people to waste that positive energy and enthusiasm. So, I have created a guide for an intensive personal finance day. Over the course of seven hours, readers will be able to:

  • Understand the difference between building wealth and just getting by.
  • Understand how to calculate their net worth.
  • Create a written budget, leveraging one of the many available budgeting apps out there.
  • Create a plan to eliminate debt. Most importantly, the reader will automate that plan by setting up regular payments.
  • Create a plan to save for retirement. Most importantly, the reader will automate the retirement savings.
  • Ensure that your dependents will be protected financially if something unexpected happens.

Today it is easier than ever to leverage (mostly free) apps and tools online to build a budget, automate debt repayment, plan for retirement and automate savings. I have packed all of this into a single day, because I want intensity while people are willing to give it. In December, people have no problems taking a day to shop. In January, lets get that same type of intensity focused on building a financial plan.

And automation is key. Unlike exercise, people have the ability to automate good financial decisions. When you automate your debt repayment, it happens until you make a conscious decision to stop it. When you automate retirement savings, it just happens until you make a conscious decision to stop it. If you just spend the remaining cash in your checking account each month, your year will be a success.

Available at Amazon

My new book is available for purchase at Amazon for $3.99. Kindle Unlimited subscribers can read it for free.

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Balance Transfer, Best of, Pay Down My Debt

Best balance transfer credit cards: 0% APR, 24 months

Best balance transfer credit cards

Looking for a balance transfer credit card to help pay down your debt more quickly? We’re constantly checking for new offers and have selected the best deals from our database of over 3,000 credit cards. This guide will show you the longest offers with the lowest rates, and help you manage the transfer responsibly. It will also help you understand whether you should be considering a transfer at all.

1. Best balance transfer deals

No intro fee, 0% intro APR balance transfers

Very few things in life are free. But, if you pay off your debt using a no fee, 0% APR balance transfer, you can crush your credit card debt without paying a dime to the bank. You can find a full list of no fee balance transfers here.

Chase Slate

Longest $0 Intro fee, 0% Intro APR

Chase Slate

Chase Slate provides a 0% intro APR for 15 months with a $0 intro fee.

You can get longer transfer periods by paying a fee, so this deal is generally best if you have a balance you know you ‘ll pay in full by the end of the promotional period. And don’t expect a huge credit line with this card, so it may be best for smaller balances you can take care of quickly.

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Transparency Score
  • Interest is not deferred during the balance transfer period
  • There are late payment and cash advance fees

Tip: You have only 60 days from account opening to complete your balance transfer and get the introductory rate

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Alliant Credit Union

Good 0% intro period with no intro fee

Alliant Credit Union, 12 months, $0 introductory transfer fee

A no fee alternative if you already have a Chase balance or are looking to take care of additional balances is the Alliant Credit Union 12 month, 0% deal. There’s no fee for the transfer, and Alliant is one of the largest credit unions in the United States, so they’re used to handling new members.

Alliant is a credit union anyone can join, with national availability, by making a $10 donation to Foster Care to Success, though you can apply for the card without being a member.

There is a late payment fee of up to $25, and a penalty APR of 24.25% if you make a late payment that lasts until you make 6 on time payments in a row

Transparency Score
Transparency Score
  • Interest is not deferred during the balance transfer period
  • The range of the purchase interest rate based on your credit history (9.24% – 21.24%) is more than 10%, which is a wide range. You also don’t know which balance transfer promo APR you get (0% – 5.99%) until you apply.
  • There are late payment and cash advance fees

Tip: Beware that not everyone approved gets the 0% introductory rate. Some people report needing a 720 FICO to get 0%, otherwise you may be approved for a rate as high as 5.99%.

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0% balance transfers with a fee

If you think it will take longer than 15 months to pay off your credit card debt, these credit cards could be right for you. Don’t let the balance transfer fee scare you. It is almost always better to pay the fee than to pay a high interest rate on your existing credit card. You can calculate your savings (including the cost of the fee) at our balance transfer marketplace.

These deals listed below are the longest balance transfers we have in our database. We have listed them by number of months at 0%. Although you need good credit to be approved, don’t be discouraged if one lender rejects you. Each credit card company has their own criteria, and you might still be approved by one of the companies listed below.

Santander Sphere

Longest 0% intro balance transfer card

Santander Sphere, 24 months, 0% APR, 4% fee

If you have a big balance, or know you can’t pay off your balance quickly – go as long as you can with a good balance transfer rate, even if it comes with a fee.

At 24 months this is the longest 0% APR balance transfer card in the market right now, so you have 2 years to get the balance paid down.

There’s a $35 late payment fee and a penalty APR of 29.99% applies if you make a late payment, and will apply to your existing balances until you make 6 straight months of on time payments.

Transparency Score
Transparency Score
  • Interest is not deferred during the balance transfer period
  • The range of the purchase interest rate based on your credit history (12.99% – 42.99%) is more than 10%, which is a wide range.
  • There are late payment and cash advance fees.

Tip: You have 90 days after you open the account to complete the balance transfer.

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Citi Simplicity

Long 0% intro balance transfer card

Citi Simplicity, 21 months, 0% APR, 3% fee

Although this isn’t the longest available deal in the market, the Citi Simplicity is one of the most friendly. There are no late fees ever and no penalty APR if you miss a payment. So it’s a safer choice in case things go wrong than other options.

With the longest balance transfer deal good for 24 months (2 years), you can get 0% APR until 2018.

Transparency Score
Transparency Score
  • Interest is not deferred during the balance transfer period
  • The range of the purchase interest rate based on your credit history (12.99% – 22.99%) is 10% or less, which is typical
  • There are cash advance fees

Tip: You have 4 months after you open the account to complete the balance transfer.

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Bank Americard Visa

Decent 0% intro balance transfer period

Bank Americard Visa, 18 months, 0% APR, 3% fee

This is a basic balance transfer deal with an above average term. If you don’t have credit card balances with Bank of America it’s a decent option to free up your accounts with other banks. If you have really good credit, the ongoing APR as low as 10.99% is lower than many other balance transfer deals we’ve seen.

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  • Interest is not deferred during the balance transfer period
  • The range of the purchase interest rate based on your credit history (10.99% – 20.99%) is 10% or less, which is typical
  • There are late payment and cash advance fees

Tip: You only have 60 days after you open the account to complete the balance transfer.

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Low rate balance transfers

If you think it will take longer than 2 years to pay off your credit card debt, you might want to consider one of these offers. Rather than pay a balance transfer fee and receive a promotional 0% APR, these credit cards offer a low interest rate for much longer.

The best offer gives you up to 48 months (4 years) of a low rate and has no fees for transfers before March, 2016. If you can’t get the 4 year offer, there is another good option offering a low rate for three years.

Signal Financial

Longest low rate balance transfer card

Signal Financial, 4.95% APR, 48 months, 0% fee

If you have a lot of debt or just need a long time to pay off at a reasonable rate, it’s hard to beat this deal from Signal Financial Credit Union, with a fixed 4.95% rate for 48 months and no fee to transfer. You can also choose 3.95% for 36 months or 2.95% for 24 months, but you’re better off with other deals than taking one shorter than 48 months. Signal used to offer a life of balance fixed rate, but it was recently discontinued, and this deal is good until March 31, 2016.

Signal is a credit union in the Washington, D.C. area that anyone can join by making a $10 donation to the WABA – Washington Area Bicyclist Association.

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  • Interest is not deferred during the balance transfer period.
  • The range of the purchase interest rate based on your credit history (11.76% – 18.00%) is 10% or less, which is typical.
  • There are late payment fees.

Tip: Beware that Signal has a cumbersome process for a transfer. You have to fill out and fax a paper form like this to request it, and activating your membership can also take time. So don’t do this counting on a quick solution, but if you put in effort and get the account it’s a great deal.

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SunTrust Prime Rewards

Long low rate balance transfer card

SunTrust Prime Rewards, 3.25% APR for 36 months, 3% fee

If you live in Alabama, Arkansas, Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, Washington, D.C., or West Virginia you can apply for this card without a SunTrust bank account.

The deal is the prime rate for 3 years with no balance transfer fee. That’s currently 3.25% though your rate will change if the prime rate changes, either up or down.

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  • Interest is not deferred during the balance transfer period.
  • The range of the purchase interest rate based on your credit history (10.24% – 21.24%) is more than 10%, which is high.
  • There are late payment and cash advance fees.

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For fair credit scores

In order to be approved for the best balance transfer credit cards and offers, you generally need to have good or excellent credit. If your FICO score is above 650, you have a good chance of being approved. If your score is above 700, you have an excellent chance.

However, if your score is less than perfect, you still have options. Your best option might be a personal loan. You can learn more about personal loans for bad credit here.

There are balance transfers available for people with scores below 650. The offer below is targeted at people with lower credit scores. As a result, there is an annual fee and the balance transfer offer isn’t as sweet. However, it will still be better than a standard interest rate.

Just remember: one of the biggest factors in your credit score is your amount of debt and credit utilization. If you use this offer to pay down debt aggressively, you should see your score improve over time and you will be able to qualify for even better offers.

Capital One Quicksilver One

Capital One Quicksilver One,
0% APR until Sep ‘16, $0 transfer fee

Balance transfer deals can be hard to come by if your credit isn’t great. But some banks are more open to it than others, and Capital One is one of them.

While there is no transfer fee for this card, and it has a 0% APR for almost a year, beware there is a $39 annual fee. If you try a couple of the options above and have no luck, then consider this as a fallback option.

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Transparency Score
  • Interest is not deferred during the balance transfer period.
  • You know the exact interest rate you will pay after the balance transfer period (22.90%).
  • There are late payment and cash advance fees, as well as an annual fee.

Tip: You can request a balance transfer 10 days after you receive your card. And you can do the transfer anytime before September to qualify for the $0 fee and 0% rate.

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2. Learn more

Checklist before you transfer

Never use a credit card at an ATM

If you use your credit card at an ATM, it will be treated as a cash advance. Most credit cards charge an upfront cash advance fee, which is typically about 5%. There is usually a much higher “cash advance” interest rate, which is typically above 20%. And there is no grace period, so interest starts to accrue right away. A cash advance is expensive, so beware.

Always pay on time.

If you do not make your payment on time, most credit cards will immediately hit you with a steep late fee. Once you are 30 days late, you will likely be reported to the credit bureau. Late payments can have a big, negative impact on your score. Once you are 60 days late, you can end up losing your low balance transfer rate and be charged a high penalty interest rate, which is usually close to 30%. Just automate your payments so you never have to worry about these fees.

Get the transfer done within 60 days

Most balance transfer offers are from the date you open your account, not the date you complete the transfer. It is in your interest to complete the balance transfer right away, so that you can benefit from the low interest rate as soon as possible. With most credit card companies, you will actually lose the promotional balance transfer offer if you do not complete the transfer within 60 or 90 days. Just get it done!

Don’t spend on the card

Your goal with a balance transfer should be to get out of debt. If you start spending on the credit card, there is a real risk that you will end up in more debt. Additionally, you could end up being charged interest on your purchase balances. If your credit card has a 0% balance transfer rate but does not have a 0% promotional rate on purchases, you would end up being charged interest on your purchases right away, until your entire balance (including the balance transfer) is paid in full. In other words, you lose the grace period on your purchases so long as you have a balance transfer in place.

Don’t try to transfer between two cards of the same bank

Credit card companies make balance transfer offers because they want to steal business from their competitors. So, it makes sense that the banks will not let you transfer balances between two credit cards offered by the same bank. If you have an airline credit card or a store credit card, just make sure you know which bank issues the card before you apply for a balance transfer.

3 Steps for Setting up a Balance Transfer

Nick Clements of MagnifyMoney, who once ran a large credit card business, explains how to set up a balance transfer.

Comparison tools

Savings calculator – which card is best?

If you’re still unsure about which cards offer you the best deal for your situation, try our calculator. You get to input the amount of debt you’re trying to get a lower rate on, your current rate, and the monthly payment you can afford. The calculator will show you which cards offer you the most savings on interest payments.

Savings calculator
Balance transfer or a loan?

A balance transfer at 0% will get you the absolute lowest rate. But you might feel more comfortable with a single fixed monthly payment, and a single real date your loan will be paid off. A lot of new companies are offering great rates on loans you can pay off over 2, 3, 4, or 5 years. You can see a list here.

And you might find even though their rates aren’t 0%, you could afford the payment and get a plan that takes care of your debt for good at once.

Use our calculator to see how your payments and savings will compare.

Balance Transfer Graph

Questions and Answers

Yes, you can. Most credit card companies will allow you to transfer debt from any credit card, regardless who owns it. Just remember that once the debt is transferred, it becomes your legal liability.

Yes, you can. Most banks will enable store card debt to be transferred. Just make sure the store card is not issued by the same bank as the balance transfer credit card.

As a general rule, if you can pay off your debt in six months or less, it usually doesn’t make sense to do a balance transfer.

Here is a simple test. (This is not 100% accurate mathematically, but it is an easy test). Divide your credit card interest rate by 12. (Imagine a credit card with a 12% interest rate. 12%/12 = 1%). In this example, you are paying about 1% interest per month. If the fee on your balance transfer is 3%, you will break even in month 3, and will be saving money thereafter. You can use that simplified math to get a good guide on whether or not you will be saving money.

And if you want the math done for you, use our tool to calculate how much each balance transfer will save you.

With all balance transfers recommended at MagnifyMoney, you would not be hit with a big, retroactive interest charge. You would be charged the purchase interest rate on the remaining balance on a go-forward basis. (Warning: not all balance transfers waive the interest. But all balance transfers recommended by MagnifyMoney do.)

Many companies offer very good deals in the first year to win new customers. These are often called “switching incentives.” For example, your mobile phone company could offer 50% off its normal rate for the first 12 months. Or your cable company could offer a big discount on the first year if you buy the bundle package. Credit card companies are no different. These companies want your debt, and are willing to give you a big discount in the first year to get you to transfer.

Completing a balance transfer is easy. If you are applying for a new credit card, most credit card companies will just ask you for the account number of the credit card that has the debt. The transfer will then happen automatically. (It will look like the balance transfer credit card made a payment for you). You can also call your credit card company, and complete the transfer easily on the phone.

Automate your payments so that it doesn’t happen! If you do miss a payment, you will be charged a late fee. If you become 60 days late, you could lose your promotional interest rate and could be charge the punitive rate, which is often near 30% with most companies.

No, you can’t. Credit card companies are trying to steal balances from their competitors. So these deals are only good if you bring balances from competitors.

Many credit card issuers will allow you to transfer money to your checking account. Or, they will offer you checks that you can write to yourself or a third party. Check online, because many credit card issuers will let you transfer money directly to your bank account from your credit card. Otherwise, call your issuer and ask what deals they have available for “convenience checks.”

In most cases, you cannot. Once a balance transfer is complete, it is complete.

Yes, it is possible to transfer the same debt multiple times. Just remember, if there is a balance transfer fee you would be charged that fee every time you transfer the debt.

You can call the bank and ask them to increase your credit limit. However, even if the bank does not increase your limit, you should still take advantage of the savings available with the limit you have.

Yes. You decide how much you want to transfer to each credit card.

No. You do not earn rewards with a balance transfer. No cash back, no points and no miles can be earned with a balance transfer.

No, there is no penalty. You can pay off your debt whenever you want without a penalty.

Mathematically, the best balance transfer credit cards are no fee, 0% offers. You literally pay nothing. The best in the market is offered by Chase, which has a 15 month 0% introductory offer with a $0 introductory fee.

However, if your debt is already with Chase, or you think it will take years to pay off your debt, you should consider a longer duration offer or a personal loan. You can find 21 month offers with 3% fees and 24 month offers with 4% fees. Your savings over the two years would likely be substantial, even when you include the cost of the fee.

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