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Introducing FICO 9: What This Means for You


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 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: April 26, 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 2.14%. 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 2.15%. 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 2.16%.

Below is a 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 start from 2.19%.
  • CommonBond*: CommonBond was highlighted earlier in this post, with fixed and variable rates available. Variable rates start at 2.15% and fixed rates start at 3.50%.
  • CommonWealth One Federal Credit Union: Variable interest rates start at 3.36%. You can borrow up to $75,000 and need to be a member of the credit union in order to qualify.
  • Purefy (formerly CordiaGrad): Fixed rates range from 3.95% to 6.75% APR and variable from 3.00% to 4.95% APR. The lowest range is only available if you sign up for an automatic payment from a Purefy 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 2.16%. 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 4.17% and 4.74% 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 5.00% 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 3.87%.
  • 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 2.14% and fixed rates starting at 3.50% with auto-pay.
  • 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 4.66%. 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 6.74%. 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 5.99%. 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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Should I Drain My Emergency Fund to Pay Off Student Loans?

Depressed man slumped on the desk with his hands holding credit card and currency

When Michelle Schroeder-Gardner graduated with an MBA in finance in 2012, she had $40,000 in student loan debt. But by the middle of 2013, she was happily debt-free. “To pay it off in that time frame, I side hustled like crazy,” says Schroeder-Gardner, 26, who writes at “I was a freelance writer, mystery shopper, eBay seller, survey taker and more. I was working 100-hour weeks between my day job and my side jobs.”

In her final push to pay off her loans, Schroeder-Gardner and her husband used about $10,000 from their emergency fund—almost all of it—to pay off the balance. “It made us a little nervous, but we knew that we would still be fine due to our low budget and high income,” she says. “I didn’t want my student loans hanging over my head for years to come.”

Although it’s admirable—amazing, even—that Schroeder-Gardner eliminated $40,000 in student loan debt in less than a year, experts might disagree with her technique. Draining your emergency fund under circumstances that aren’t an emergency isn’t something they typically recommend.

When should you do this?

“Some of it has to do with life stage,” says Wes Brown, a financial planner in Knoxville, TN. “If you’re living at home in your parents’ basement, and other liabilities are at a minimum, and there’s a safety net, then I could see supporting this.”

In other words, if you’re not saddled with a variety of fixed expenses that would be at risk if you lost your job or needed to replace your roof, you’re a better candidate for wiping out your emergency fund to pay down debt.

You also may be in the clear if you have access to other kinds of liquidity, such as a home equity line of credit, or the Bank of Mom and Dad. “It could be that you have family members or friends who are willing to lend to you, or that you have good silver you could pawn or sell,” says Larry Luxenberg, a financial planner in New City, NY. “But whatever it is, you may need money in an emergency, so you need to be prepared for all sorts of contingencies.”

James Bryan, a financial planner in Edina, MN, agrees. “This isn’t a bad route in certain situations,” he says. “For example, if you’re 26, you live in an apartment, you have a pretty steady job and you don’t have a big car payment. But you have to make darn sure that you have excellent job security and you’re healthy and not at risk of any disability.”

When shouldn’t you do this?

“If you don’t have any liquidity resources, I would say that’s a bad idea,” Luxenberg says. “A lot of things in your personal finances require patience and balancing things. Too much debt can be a bad thing, but a reasonable amount of debt for the right purposes can be a good thing.”

That’s because of all the debt you could have, student loan debt is one of the more favorable types. It’s typically lower cost than consumer debt, you get a tax break on the interest paid, and there’s often flexibility in payment plans if you fall on hard times. “The worst case scenario is where you use up your emergency fund to pay off student loan debt, and then you find yourself in a bind,” Brown says. “So you have to borrow from another line of credit to cover that, and you’re swapping a more favorable kind of debt for a less favorable kind.”

It’s also not a great plan to wipe out your emergency reserve if you’re carrying a mortgage. You could be one mortgage payment away from owning your home outright, but if you miss it because you lose your job and have no back-up cash, you could still be foreclosed on. And of course, there’s always unexpected maintenance. “A home is a massive responsibility,” Bryan says. “A roof, a new furnace, they cost a lot of money and they don’t give you a 12-month warning.”

What’s the best approach?

For most it will be keep that emergency reserve and address your debt the old-fashioned way—by paying it down paycheck by paycheck. If you have no emergency reserve, consider splitting your discretionary funds between savings and debt every time you get paid. That way you can achieve two goals at once. “You could use a simple equation like 70% toward debt and 30% toward savings,” says Nev Persaud, a financial planner in Atlanta. “You have to be wise in creating a balance.”


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4 Benefits of Battling Student Loan Debt

college-grad (1)

It was around 2012 that I started wondering if taking out student loans for grad school had been the biggest mistake of my life. I had already borrowed $49,000 in federal loans, with interest rapidly accruing on about half of them. I knew it would be at least three more years before I could finish my degree and begin paying back the debt in earnest. I was filled with so much regret that I seriously considered dropping out of grad school to cut my losses and start paying back the loans earlier. Ultimately, however, I decided to stay and finish my degree, graduating in January 2016 with a total debt of nearly $57,000.

It’s impossible to say whether or not taking out the loans was actually a mistake, since I don’t know what would have happened if I had made different decisions. I admit that there are definitely days when I wish I had no graduate degrees and no debt. However, over the past few months, I’ve also started to realize that the experience of living with debt has had a lot of very positive consequences for me. For example…

1. I’ve become much more conscious about my spending

In the days before I had student loans, I spent very little time thinking about where my money was going. While I didn’t tend to buy a lot of large or expensive items, I did make frequent smaller purchases without much consideration. In a typical weekend, for instance, I could easily pay $18 for a book, $5 for a magazine, $7 for a fancy juice, $9 for a burrito, $20 for a manicure, and $10 for a movie—all while putting nothing at all towards savings or retirement. I accepted the status quo assumption that the amount of money you make is the amount of money you get to spend, and I figured that as long as I could pay off my credit card balance each month, I was being responsible. But knowing that I would soon need to start making student loan payments forced me to reevaluate my entire approach to money. I opened up a spreadsheet, began manually tracking my spending, and was shocked to realize how many mindless, unnecessary purchases I was making. I now spend far less now than I used to because I think carefully about the value of each potential purchase.

2. I’ve discovered the power of reframing

One way of dealing with my student debt—perhaps the easiest way—would be to simply make the minimum payment each month and to heave a deep sigh each time the money left my bank account. But after thinking carefully about my options, I realized that the more money I can put towards the loans each month, the faster I will pay them off, and the less interest I will pay in the long run. My minimum monthly payment is about $350, but because my living expenses are extremely low right now (I live with roommates, I don’t have a car, I don’t have kids), I’ve consistently been able to put $1000-$1200 each month towards the loans. The approach of paying more than I have to has totally reframed the way I view loan repayment. Instead of a depressing obligation or a source of anxiety, debt repayment has become a challenge, a race against myself, a mountain to climb. I’m truly excited each month to pay as much as I can and to watch the remaining balance on the loans drop. I’ve also become motivated to take on extra jobs, like freelancing, tutoring, or teaching, to increase my income and thereby accelerate my repayment even further. I see this as a valuable lesson in the power of reframing a difficult situation—something I may be able to apply to other areas of my life in the future.

3. I’ve learned the power of negotiation

Before I had loans, it never crossed my mind to attempt to negotiate a salary. But since becoming motivated to pay off my loans as quickly as possible, I have negotiated my salary three separate times: twice as a graduate student and once as a professional starting a new job. Each of these negotiations was successful, resulting in a total win of about $7000. Asking for more money is not something that comes naturally to me, but I’m finding that it gets easier with practice, and it’s a valuable skill that may pay off substantially in the future when the stakes are even higher.

4. I’ve met new people and developed new skills

If it weren’t for my loans, I never would have discovered the online personal finance community and the wealth of resources and support that it offers. Reading articles and blogs about personal finance inspired me to start my own blog about debt repayment, which has allowed me to gain a great deal of writing experience and connect with other bloggers and writers from around the world.

Are you working on paying off student loans?

Here’s a checklist of possibilities that may be helpful to you in managing your payments:

  1. Are your monthly payments more than you can handle? If you have federal loans, you might be eligible to lower your monthly payments through income-driven repayment. More information about this program is available here.
  2. Alternatively, are you in a place where you might be able to pay back more than your minimum monthly payments? If so, this will save you money in the loan run because less interest will accrue. Consider carefully reevaluating your spending habits to see if there are expenses you could cut, with the goal of putting more money towards your loans each month.
  3. Check your eligibility for loan forgiveness. The federal government offers partial or total debt forgiveness to individuals who have worked at certain types of public service jobs. More information can be found here.
  4. Look into options for refinancing. There are a variety of lenders that you may be able to work with to secure a lower interest rate on your loans. However, be aware that if you refinance your federal loans, you will no longer be eligible for government-sponsored options such as income-driven repayment or loan forgiveness.

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Home Equity Loan or Personal Loan: How to Choose the Right Fit for You

Home Equity Loan or Personal Loan

One of the most important things you can do when making any personal finance decision is to remember that it’s called personal finance for a reason. We all have different financial circumstances, priorities, and goals, and what’s right for one person – or even what’s right for most people – may not be right for you. Such is the case with choosing between a home equity loan and a personal loan. As with most important financial decisions, especially those that involve borrowing money, there is no “right” answer, only the right answer for you.

Before determining what’s right for you, let’s first take a look at what each option entails and examine the key differences between the two.

Home equity loans

A home equity loan is fixed amount of money borrowed against the equity in your home. So, for example, if you owe $300,000 on a home valued at $500,000, a home equity loan enables you to borrow against that $200,000 in equity. Home equity loans are fixed-rate installment loans, meaning they’re repaid in equal monthly payments over a fixed period of time – usually in the neighborhood of 15 years. While they’re commonly used to finance home improvement projects, borrowers are free to spend the money on whatever they choose, including education costs and debt consolidation.

In many ways, a home equity loan functions similarly to your original mortgage loan, and is often referred to as a second mortgage. Like a mortgage, home equity loans are secured against the borrower’s home. You can apply for and receive a home equity loan from most banks, mortgage companies and credit unions. Many apply for a home equity loan from the same lender that provided their mortgage, but you’re free to shop around for the best offer.

Remember, too, that a home equity loan is not to be confused with a home equity line of credit, or HELOC. Though a HELOC is likewise money borrowed against the equity in your home, it functions as a revolving line of credit, much the way a credit card does. Your lender sets a credit limit based on the equity in your home, and you can borrow against that limit at any point while the line of credit it still open. Because it’s a revolving line of credit and not an installment loan like home equity and personal loans, let’s set HELOCs aside for this comparison.

Personal loans

Rapidly emerging as an alternative to home equity loans, personal loans are direct-to-borrower loans that are not secured by collateral such as a home or automobile. Often referred to as unsecured loans, personal loans are typically fixed-rate loans, and, like home equity loans, involve borrowing a lump sum of money to be used at the borrower’s discretion and repaid in equal installments over a defined period of time. Interest rates on personal loans are typically determined by a borrower’s credit score and history. Some traditional financial establishments such as banks and credit unions offer personal loans, but there’s also a growing market of non-traditional personal loan providers such as online and peer-to-peer lenders.

Understanding the differences and trade-offs

Though they share some similarities, there are key differences between home equity loans and personal loans. As noted earlier, home equity loans are secured against the borrower’s home, so, just as is the case with your mortgage, if you default on your home equity loan, your lender can foreclosure on your home. Personal loans, on the other hand, are usually unsecured, so, while failure to make your payments on time will adversely impact your credit, none of your personal property is at risk.

Because they’re secured against your home, however, home equity loans usually feature lower interest rates and longer loan terms than personal loans. In addition, provided you have the necessary equity, you can usually borrow more money with a home equity loan than you can with a personal loan. Personal loan amounts tend to cap out in the neighborhood of $100,000, whereas home equity loan amounts are limited only by the available equity in your home. In other words, the trade-off for the peace of mind that comes with unsecured debt is usually a smaller loan amount and a larger monthly payment.

Speaking of trade-offs, though home equity loans may deliver lower interest rates, (generally starting slightly north of the going mortgage rate), the application process is typically far more arduous than that of a personal loan. For starters, you’ll need to arrange and pay for an appraisal of your home to determine the available equity. That won’t be the only upfront cost either, as you’ll incur a variety of application costs and processing fees, just as you would with a traditional mortgage. It all adds up not only to higher upfront costs, but a longer process and thus a longer wait for your money. From start to finish, the process of securing a home equity loan can take weeks or longer. By comparison, some personal loans process in days or less.

Advantages to each

So, to recap, the typical advantages of a home equity loan include lower interest rates, longer loan terms, lower monthly payments, and, provided you have necessary equity, the ability to borrow larger amounts of money.

Personal loans, on the other hand, have advantages of their own, including what is usually a faster and less stressful application process, lower – if any – upfront application costs or fees, and the peace of mind that comes with not having to put your home up as collateral.

The verdict

If you have significant equity in your home, have the cash needed to pay upfront fees, and are willing to navigate a longer and more tedious loan process, a home equity loan is likely your best choice, as it will usually yield a lower interest rate, longer loan term, and lower monthly payment. Likewise, if you need a sizable amount of cash (think north of $100,000) and have the requisite equity, a home equity loan is probably the way to go.

On the other hand, maybe you don’t have equity in your home, or you just don’t want to drain the equity you do have. Maybe you’re not interested in having another lien against your home. Maybe you need the money fast, in days as opposed to weeks. Or maybe you just plain don’t want to deal with the hassles of a more traditional loan process. If any of those things apply to you, then a personal loan might be just what you need, especially if you have excellent credit and can score an interest rate comparable to what you would get with a home equity loan.

All of which to brings us back to where we started, for the verdict really is that most boring of answers: it depends. Fortunately, it depends on something you know better than anyone else – you. Focus on what’s right for you, based on your specific situation, and the “right” answer is sure to follow.

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9 Employers That Help Pay Off Student Loans

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Companies looking to attract talented employees have long been offering attractive benefits packages, including health insurance, vacation days, a 401(k) with an employer match, and sometimes even stock options or equity in the company. Recently, however, a new item is starting to appear on some of these lists: student loan repayment. A small but growing list of private companies is now offering to pay back a portion of employees’ federal student loans, in addition to the more traditional benefits.

A 2015 research report produced by the Society of Human Resource Management revealed that only 3% of companies (among the 450 surveyed) currently offer employees assistance with student loan repayment. However, this number may likely increase in the coming months and years as more companies begin to recognize that highly competent, educated employees often have a substantial amount of student debt.

If you’re dealing with student loans and in the process of considering a job transition or getting ready to graduate from college, then you might want to put these nine companies on your radar:

1. Fidelity Investments

The financial services corporation is offering to pay up to $2,000 per year towards student loans, up to a maximum of $10,000 over five years, for any employee who has worked there for at least six months.

2. PricewaterhouseCoopers

Starting in July 2016, the professional services network will contribute up to $1,200 per year towards the student loans of eligible employees, for up to six years.

3. Natixis Global Asset Management

Natixis will contribute a lump sum of $5,000 towards repayment of Federal Stafford or Perkins loans for full-time employees who have been with the company for five years, followed by an additional $1,000 each year for up to five years, for a total of up to $10,000.

4. Nvidia

Employees of the technology company who graduated within the past three years may be eligible for student loan repayment of up to $6,000 each year, for a total of up to $30,000.

5. LendEDU

The student loan education and refinancing company will contribute $200 per month, or up to $2,400 per year, towards employees’ outstanding student debt.

6. CommonBond

This marketplace lender will contribute up to $100 per month, or $1,200 a year, towards employees’ student loans, for as long as the employee continues to be employed at CommonBond.


This marketplace lender will contribute $200 per month towards student debt repayment for eligible employees.

8. Chegg

The social education platform is rolling out a plan to contribute $1,000 per year towards an employee’s student loan repayment, for as long as the employee is employed by Chegg.

9. ChowNow

The restaurant marketing company will put $1,000 per year towards student debt repayment for employees who have recently graduated.

Not working for a company offering student loan payments as a perk? Then refinancing your loans to a lower interest rate or going on an income-driven repayment plans for federal loans may ease your student loan burden.


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Debt Relief Options for Corinthian Students and Graduates

Debt Relief Options for Corinthian Students, Graduates

The vast majority of students who take out federal loans to fund their education are required to eventually repay these loans in full. But what if the institution you are attending closes, or is found to have violated the law?

If you are a student or graduate of a Corinthian school, you could be eligible for debt relief from the federal government. It was determined in 2015 that Corinthian Colleges, Inc., the company that operated Everest College, Heald College, and WyoTech schools, defrauded students by providing false information about the job rates of graduates.

Due to this finding, and to the subsequent closing of Corinthian college campuses, students who took out federal loans to attend a Corinthian school have the opportunity to apply for debt relief.

What is debt relief?

Debt relief is forgiveness of debt, in part or in full. If you attended Corinthian Colleges, you could be eligible to have up to 100% of your federal student debt from your Corinthian program discharged or forgiven.

How do I know if I am eligible for debt relief?

There are two types of debt relief that you may be eligible for as a Corinthian student or graduate, depending on your situation:

  1. If you attended one of Corinthian’s campuses that closed on April 27, 2015 (a list of these campuses can be found here), or if you withdrew from one of these campuses on or after June 24, 2014, you may be eligible for closed school debt relief for your Federal Direct Loans, Federal Family Education Loan Program loans, or Federal Perkins Loans. Note that if you later transferred your credits to a different school, this might impact your eligibility for debt relief.
  1. If you attended a Corinthian campus that did not close on April 27th, 2015, but you believe you were defrauded by the school, you may be eligible for debt relief for your Federal Direct Loans under a borrower defense to repayment.

How do I apply for debt relief?

First, determine whether you are more likely to be eligible for closed school debt relief or for debt relief under a borrower defense to repayment.

If you are applying for closed school debt relief, you must do so through your loan servicer. You may send them this application or contact them directly to see if they have their own application. There is no deadline to apply.

Instructions for applying for debt relief under a borrower defense to repayment are still under development; however, in the meantime, you can apply by submitting Borrower Defense to Repayment materials (a list of these materials is available on this page). Note that if you attended a Heald College location, you may be eligible for an expedited application process.

In either case, it may take time for your application for debt relief to be processed. You can request that your student loan payments be put into forbearance while your application is being considered (for up to 12 months), though you should note that interest will continue to accrue during this period.

What about my private loans?

The two types of debt relief listed above apply only to federal loans. If you took out private loans to attend a Corinthian school, contact your private lender to ask whether debt relief is an option.

Where can I find more resources?

The Department of Education has comprehensive resources available on its website for individuals who have attended a Corinthian school and are interested in applying for debt relief. You should read through these pages thoroughly before applying:

The government has also set up a borrower defense hotline at (855) 279-6207 for students who have questions about borrower defense to repayment.

If you need to find out who your loan servicer is, log into your borrower account at the Federal Student Aid website or call (800) 4-FED-AID.

Additionally, you can contact Next Steps EDU, an organization created to offer support and resources to students of Corinthian Colleges, through its website.

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Life Events, Pay Down My Debt

6 Reasons You Might Need to Take a Low-Paying Job

6 Reasons You Might Need to Take a Low-Paying Job

It seems like every day a new corporation announces its decision to layoff hundreds or thousands of U.S. workers and ship the jobs overseas. The cosmetic company Avon, for example, just recently announced that they’re moving 2,500 jobs to Britain.

Similar layoffs from company’s around the country, while beneficial to the company’s bottom line, leaves U.S. workers frustrated, unemployed, and facing serious money problems.

One of the biggest hurdles during unemployment is finding a job that pays enough to replace lost income. This begs the question: If you’re offered a low paying job, and you’re unemployed with mounting bills and debts to pay, should you take the job offer?

In short, yes, you should. If you’re unemployed, or about to become unemployed, and there are no other job offers on the table, take the job that is offered to you until you can find something better. The following are six reasons why you should never turn down a job offer during a time of unemployment, even if it’s a low-paying one.

1. Companies don’t always hire the unemployed

Until you can find a better-paying job, take that low-paying job, because some companies don’t like to hire a person who is unemployed. It doesn’t seem fair that you can’t get a job unless you have a job, but it’s an unfortunate reality and frequent business practice in our country. That low-paying job may not be your first choice, but it is a job, and having a job will alleviate your financial woes (at least a little bit) and potentially give you leverage to get a better paying job.

2. Making payments on time needs to be your priority

If you decide not to take that job, and nothing else comes along, you could be facing a serious financial crisis. A worrisome statistic put out by the Bureau of Labor Statistics shows that 30.4 percent of unemployed persons in the U.S. have been unemployed for 27 weeks or more. If this happens to you, unless you have a hefty savings account to fall back on while you’re job searching, you’re going to be facing a tremendous problem paying your monthly bills. And missing payments can have serious long-term consequences.

35 percent of your credit score is determined by your payment history. It’s the largest factor in determining your credit score. Just one 30 days late payment can affect your credit score for two years, and one 60-90 day missed payment can affect your score for up to seven years.

Snag that low-paying job while it’s still available to you because you don’t want to have to ask yourself the question “which bills should I pay this month?”

3. Finding part-time or seasonal work can supplement the low paying job offer  

How are you going to pay your bills with a job that doesn’t leave much to live on, though? A low-paying job isn’t ideal, especially when you have mounting debt and looming bills to pay, but, again, a low-paying job is better than no paying job.

Depending on the economy and resources in your area, you sometimes have to take what you can get, especially when no other jobs seem to be forthcoming. Finding a part-time or seasonal job may be a good temporary solution to help you supplement your income until you’re able to find ideal employment that meets your everyday money needs.

Snagajob and Simply Hired are two great websites that specialize in helping people locate seasonal and part-time work. You might also have great luck looking in the jobs section on Craigslist.

4. Balance transfer credit cards can help you pay off debt efficiently

Did you end up charging monthly needs to a credit card during your period of unemployment? If you have taken that low paying job, you’re working part-time, and you’re still unable to meet your minimum payments, then you may benefit from applying for a balance transfer credit card.

If you qualify, a balance transfer credit card may help you by consolidating your credit card debt onto one credit card at 0% APR and enabling your entire monthly payment to go towards the principal balance. There may be a balance transfer fee for the debts you’re rolling over, often between 2% to 4%, but that usually pays for itself in just a few months when you factor in the interest rates you were paying. Find balance transfer options here.

5. Personal loans may help in the short term

Personals loans are another option to consolidate debt or get access to money you may need in a pinch. It’s much easier to be approved for a personal loan if you are employed. If you’re wary about getting another credit card, then a personal loan might be a good fit for you. An ideal personal loan comes with no origination fee and no pre-payment penalty.

The personal loan marketplace has been heating up in recent years with lots of competition to the traditional brick-and-mortar bank. Many personal loan providers give you the option to check if you’re pre-approved and your rate without harming your credit score. You should be sure to shop around in order to get the best deal. Even if some lenders do a hard pull of your credit report, it will only count as one inquiry if you do your loan shopping within a 30-day window.

6. Do what you need to do to get back on your feet

If you have just lost your job, be sure to check to see if you qualify for government benefits for the unemployed. This aid could help you get back on your feet while you search for a job.

A word of encouragement to those struggling: we all have to do what we have to do to keep a roof over our family’s head and food on the table. Don’t feel ashamed of a job that isn’t quite what you’re used to. Remember, this low-paying job is just temporary, and you’ll be back on your feet before you know it.


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9 Best 0% APR Credit Card Offers – April 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. Navy Federal Credit Union – 0% APR for 12 months, NO FEE

navyfederalIf you are a member of the military, or related to someone who is, you can join Navy Federal Credit Union, open an account, and take advantage of this offer.

Navy Federal is offering 0% no fee balance transfers until April 30, 2016.

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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. Capital One QuickSilver ONE – 0% APR for 9 months, 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 9 months your rate will ratchet up to a scary 23.24%.

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8. 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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9. 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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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.


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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“How I Dealt With a Surprise $4,800 Medical Bill”

Depressed man slumped on the desk with his hands holding credit card and currency

In 2011, Thomas Nitzsche needed two surgeries to have some pre-cancerous areas removed. Even though he did have health insurance at the time — and that health insurance covered 80% of his procedures — the St. Louis, MO resident was shocked to discover that he still ended up owing $3,000 for one of the procedures and $1,800 for the other.

“It’s important to check the itemized bill to look for any errors and duplicate charges once it arrives, since this is something that is reported to happen frequently,” Nitzsche said. His bill was error free, so he called the billing department and requested to apply for financial aid. “Unfortunately [the hospitals] didn’t offer aid, and it seems most do not,” says Nitzsche. “Nor do pharmaceutical companies often advertise the copay assist. While the hospital will likely ask for supporting documentation of income and monthly expenses … in all cases, I’ve had to ask for assistance myself.”

Since Nitzsche dealt with two different hospitals for his procedures, he faced two different policies in terms of dealing with the hospital bills, as well. In the course of haggling, Nitzsche was able to get 60% of his larger bill forgiven and he was put on a payment plan for the balance. The smaller bill was denied financial aid, but they did offer to put him on an extended, 24-month, repayment plan. “According to the billing department, simply the act of applying for aid — whether approved or not — allowed them to extend the repayment from 12 to 24 months,” said Nitzsche. “Obviously the thresholds and policies vary by facility. I was also put on a medication for an extended period of time, but was able to get a manufacturer’s co-pay assistance card to completely cover the cost.”

[Co-pay cards are designed to help people with private insurance pay for the co-payments required to obtain prescriptions at the pharmacy. Often these types of cards are offered by pharmaceutical companies. Ask your doctor’s office or pharmacy about it, or learn more here.]

After having gone through the process of dealing with a costly medical bill, Nitzsche recommends patients do the following when faced with potentially expensive medical procedures, medicines or exams:

1. Get an up-front estimate of what your portion of the cost will be

“That way you aren’t surprised or stressed out when the bill arrives, and you can start to plan accordingly,” he said. “For some expensive services, like MRI’s or dental work, you may even be able to shop around. I got orthodontic work from a dental school as a young adult at a deep discount this way.”

2. Pay attention to medical bills as soon as they arrive

By handling his bill in a timely manner, Nitzsche was able to avoid any seriously negative ramifications that could have affected his credit. “I paid as agreed and was able to settle everything with no impact to my credit, since it was never reported and it was all handled in-house and not sent to a collection agency,” he said. “I was working as a credit counselor at the time, so the experience helped me with clients facing similar situations. Unfortunately many do not reach out for help until the bills have already gone to collections, at which point you cannot get financial aid or an in-house payment plan to keep it from damaging credit.”

3. Never settle for the original fee

In most cases there is always some way to receive assistance, whether that’s in the form of a reduced bill or a more lenient timeframe to pay it back. “Call the service provider right away and inquire first about financial aid and then about a payment plan,” suggests Nitzsche. “If you have multiple large bills and are not able to get financial aid or set up on a payment plan — which should be rare — you can contact a nonprofit credit counseling organization to see if a Debt Management Plan would be a good fit.”

4.  Don’t overpromise what you can afford to pay

Once you start the repayment, stick to it every month to prevent the bills from defaulting and going into collections, Nitzsche suggests. “In some cases, just one missed or late payment can break the agreement and result in this action,” he added. “So set reminders, auto payments, etc., and if you do have to make a late payment, call them and get an agreement in place.”