Tag: DEBT

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Personal Loans

Can I Get a Holiday Loan?

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

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If you’re stressed over the possibility of racking up holiday debt this year, you may be right to worry. In our 2016 holiday debt survey, 65.2 percent of respondents who added debt during the holidays said they did so unexpectedly and didn’t budget for the extra expenses.

This just goes to show what can happen if you take on debt without a plan. If you charge holiday purchases and don’t have a plan to pay them off, you can wind up making monthly payments for longer than you think — and fork over lots of interest payments along the way.

While most people said credit cards were the main source of their debt, nearly 9 percent said they used personal loans to finance their holiday spending, making it the third most popular borrowing option overall.

If you’re considering using a personal loan to fund your holiday shopping this year, it’s important to know the pros and cons first.

First up … what’s a holiday loan?

A holiday loan is simply a personal loan issued by a financial institution, like an online lender, bank or credit union. While these loans are intended to cover holiday expenses, they are not the same as other short-term loans such as payday or cash advance loans.

Since holiday loans are unsecured, you can borrow money without putting up anything as collateral. But because the lender is assuming more risk this way, these loans can carry very high interest rates. That being said, if you have good credit, relatively low levels of debt and sufficient income, you might qualify for lower rates.

Generally speaking, you can get a holiday loan (or other unsecured personal loan) in amounts up to $35,000 with several lenders. However, some may let you borrow quite a bit more. Your interest rate can vary depending on your creditworthiness, and the amount of time you have to repay your loan depends on how much you borrow and the loan terms you select. Personal loans are issued with a fixed repayment period, which can last up to 84 months.

Why get a loan for the holidays?

While some people budget throughout the year, setting aside money for the holiday season, there are plenty of ways to get off track. It’s possible that other expenses will pop up and cause your savings plan to go awry, or that you’ll need to pay for holiday travel or to get your home ready for guests.

Applying for a personal loan may be a good way to bridge the gap between the money you have and the money you need, says Jeff Rose, a certified financial planner and Discover Personal Loans partner. “Borrowing a set amount of money with a fixed repayment term and fixed rate can help you meet your financial obligations over the holidays while having a set budget with a clear payoff schedule, resisting the temptation to rely on revolving debt.”

Rose says he has seen situations where a holiday loan made sense. In one situation, an acquaintance of his was desperate to return home for the holidays to see his dying father on what could be his last Christmas. In that case, taking out a personal loan to travel home was “one of the best investments they’ve ever made,” Rose tells MagnifyMoney.

But, holiday travel isn’t the only reason to take out a holiday loan.

For example, the holidays are a popular time to propose, and “engagement rings can get expensive,” says Rose. You might even find the perfect ring that costs more than you have saved, but the time is ripe for asking.

“That’s where a personal loan can be a financially responsible tool to help you make this purchase,” he adds.

Or, perhaps you want to borrow money to cover the costs of holiday gifts, replace the appliances in your home or make a special purchase for your family.

What it takes to qualify

Getting a personal loan to cover expenses during the holidays is no different than getting a personal loan any other time of year, notes Rose. “Different lenders have different qualifications for loan approval and offer different rates, so my advice would be to research and find what fits your financial situation,” he says.

Generally speaking, however, some typical minimum requirements for a personal loan include being a U.S. citizen or permanent resident, being at least 18 years of age, and having a low debt-to-income ratio.

Your credit score may also impact your ability to get a personal loan. While it’s possible to get a personal loan with a FICO score of 500 or above, the best loan rates and terms go to those with good or excellent credit.

In addition to your credit score, another important requirement for getting a personal or holiday loan is that DTI — debt-to-income ratio — says San Diego financial adviser Taylor Schulte. To calculate your debt-to-income ratio, add up your monthly debt obligations (i.e. mortgage, auto loan) and divide that by your monthly gross income.

“Some experts say a debt-to-income ratio higher than 36 percent can dramatically reduce your chances of getting a loan or increase the interest rate to an unreasonable number,” he says. To improve your debt-to-income ratio, try paying down your existing debts,, picking up extra work to bring in additional income or putting on your game face and asking for a raise.

Schulte also notes that, if all else fails, you could ask a family friend or family member to cosign for your loan. While this can help you get a lower interest rate and better terms, this also means your cosigner is jointly responsible for repayment.

Holiday loans versus credit cards

While a holiday loan can be a good option for consumers who need cash to cover end-of-year or holiday expenses, some consumers also turn to credit cards to meet their needs. This strategy can be advantageous since some credit cards may offer a 0 percent intro APR on purchases for 12 months or longer. But, before you decide between a holiday loan and a 0 percent intro APR credit card, it’s important to note how each one works — and the reasons one option might work better for you than the other.

If you’re considering a personal loan, know that these financial products typically have a fixed interest rate and are structured with equal payments made over a specified time period. In that respect, a personal loan may be easier to pay off in a timely manner since you know exactly when your last payment will come due.

With a credit card, on the other hand, you’ll get access to a line of credit you can use to charge purchases. Because the amount you borrow may vary, you may not know your exact monthly payment. Plus, your monthly payment will increase as you use your card to charge more purchases.

While many cards offer 0 percent intro APR on purchases for more than 12 months, your APR, or interest rate, also resets after the introductory offer is over. If you don’t pay off your balance before that happens, you could wind up paying a hefty interest rate on your balance that is higher than what you would pay on a personal loan.

Things to watch out for

While borrowing money for the holidays can make sense, that doesn’t mean this option is foolproof. There are plenty of risks that come with borrowing.

Risk #1: Borrowing without a plan

Whether you decide to take out a holiday loan or charge your holiday purchases on a credit card, Rose recommends making sure you have a clear plan for the funds you borrow and a true need, along with the ability to repay the loan.

“Also, consider the repayment timeline and total cost of the loan, including any fees, from the start to ensure you can afford the monthly payments,” he adds

Any time you borrow money, you should also make sure you’re not borrowing to buy things you can’t truly afford — or just being wasteful in general. “Around the holiday season, it can be easy to spend more than you planned,” says Rose.

If you rack up too much debt and don’t have a clear plan to pay it back, you could wind up spiraling into more and more debt or taking years to pay it all off. And obviously, more debt inevitably leads to more interest charges layered on top.

Risk #2: Too many fees

Look for personal loans that do not charge additional fees — examples of these would be origination fees and prepayment penalties.

And understand other potential traps, such as with personal loan companies that precompute interest or ask you to pay for unnecessary insurance. In a precomputed loan, the total amount of interest that you would pay during the entire term of the loan is calculated and added to the balance up front.

Risk #3: Not shopping around

Another major risk of personal loans is that you won’t take the time to shop around, Schulte says. Through his personal experience, Schulte has seen how many people wrongly assume their primary bank is the best place to get a loan — even when that’s not even close to being accurate.

“It doesn’t hurt to start with your primary bank to see what they can offer,” says Schulte. “But, failing to shop around could literally cost you thousands.”

Schulte suggests shopping around with at least three to five lenders before making a decision. Fortunately, it’s fairly easy to get multiple loan quotes online.

We recommend you shop online to find lenders without those tricks and traps. A good place to start the search is with LendingTree, MagnifyMoney’s parent company. With a short online form LendingTree will perform a soft credit pull (with no impact to your score) and match you with multiple loan offers.

Because dozens of lenders participate in LendingTree’s program, you may also find lenders willing to accept borrowers with less-than-perfect credit.

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Tips for financial success during the holidays

There are a number of things you can do throughout the year to help yourself financially when the holidays roll around, Rose says. If you’re eager to make the most of this holiday season, or at least escape the holidays with minimal financial damage, consider these suggestions:

  • Save for the holidays all year long.“If each month you put a portion of your income in a separate account designated for holiday spending, you should have a nice amount of money set aside when the season arrives,” says Rose. While it may be too late to start saving for this year’s holiday season, it’s never too early to start saving for next year.
  • Set appropriate expectations for your family.Whether you’re worried you’ll have a skimpier array of gifts under the tree or not, Rose says it’s important to have an upfront conversation with your family (spouse and children) about how many gifts they are going to receive and how much you’re going to spend. “It’s easy to get caught up in the season and start adding more and more to the pile and buying stuff you don’t need,” he says.
  • Stock up on gifts all year long.“You can also take advantage of buying gifts when retailers are having big sales,” says Rose. On Cyber Monday, you can typically get huge savings on everything from clothes to electronics. Buying in advance on these type of sales is huge, and right after this year’s holiday season can be a great time to stock up on next year’s gifts.
  • Opt out of gift exchanges.If you’re involved in multiple gift exchanges or “Secret Santa” arrangements, opting out for the year can help you save some cash. By not participating in these holiday “extras,” you can save money for the gifts that are most important.
Holly Johnson
Holly Johnson |

Holly Johnson is a writer at MagnifyMoney. You can email Holly here

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What Happens to Debt When You Divorce? 

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For every two to three new marriages in 2014 there was at least one divorce, according to the latest Centers for Disease Control and Prevention data — a grim statistic that could easily kill deflate your inner romantic.  

Breaking up a marriage is hard to do and it’s made all the more difficult by the financial implications. 

The average price of a divorce, from start to finish, lands at around $15,500 (including $12,800 in attorney’s fees), according to a 2014 survey put out by Nolo, a publisher specializing in legal issues. If the legal expenses are one side of the coin, figuring out what to do with your joint financial assets and debts is the other.  

We’ve talked about what happens to debt after you’ve married. Now it’s time to ask what happens to debt when you divorce. 

Here’s everything you need to know, plus some tips for protecting your finances when a marriage ends. 

Where you get divorced 

When it comes to splitting up debts, the state you live in can sway the outcome in a big way. A majority are considered equitable distribution states, where the judge uses his or her discretion to divide up debt in a way that’s deemed fair and evenhanded. 

Each state has its own set of laws and procedures, but Vikki S. Ziegler, a longtime matrimonial law attorney licensed in multiple states, says the court generally has more leeway in an equitable distribution state.  

Simply put, the judge has the freedom to take multiple factors into consideration. This might include everything from one spouse’s income to another’s employment status.  

The situation could play out much differently if you live in a community property state. These states are listed below, and in them, debt is viewed a bit differently. 

  • Alaska* 
  • Arizona 
  • California 
  • Idaho 
  • Louisiana 
  • Nevada 
  • New Mexico 
  • Texas 
  • Washington 
  • Wisconsin 

*Alaska has an optional community property system. 

Community property states typically split all marital debt right down the middle, regardless of who actually accrued the debt. This means that if your spouse racked up hidden balances during the marriage, you’ll likely be on the hook for half. In community property states, the divorce process is typically more cut and dried than subjective. 

“The most important thing for someone leaving a marriage to understand is how the law applies in each state that they are getting divorced in,” Ziegler told MagnifyMoney. “How are you going to allocate debt, and who’s going to be responsible for what?” 

An experienced divorce attorney can help fill in the blanks. 

The type of debt 

The type of debt you have is another biggie. Let’s first zero in on secured debt, like a mortgage or car loan.  

According to John S. Slowiaczek, president of the American Academy of Matrimonial Lawyers, whichever spouse decides to keep certain assets — such as the house or a car — will also assume whatever debt is left over.  

“Debt associated with an asset will ordinarily be allocated to the person acquiring the property,” Slowiaczek tells MagnifyMoney. 

Your mortgage: The loan will likely be the responsibility of both parties equally, unless it’s only in one party’s name. If you both co-borrowed the mortgage, you’ll have to decide who will keep the loan and who will exit if one partner wants the house. One way to get one name off a mortgage loan is to refinance the debt and put the loan under just one person’s name.  

The equity built up in the home usually belongs to each party 50/50 as long as the title is held as joint tenants with right of survivorship or tenants by the entirety; don’t be intimidated by the legal jargon. All this means, essentially, is that you legally own the home together.  

If you decide to sell the house, either the couple or the court will likely compel that process, after which you can divide the proceeds equally after paying off the debt.  

If you’re planning on staying in your home, refinancing your mortgage before you divorce can help ease the financial blow. With divorce being as costly as it is, finding ways to trim your budget can better prepare you for a single-income lifestyle. Refinancing could do just that, lowering your monthly payment and potentially your interest rate, assuming you have good credit.  

A lower bill may also make it financially possible for you to stay in the house, if that’s what you want. Plus, if you apply before splitting, you’re more likely to get approved since a combined income will likely make you more attractive to lenders.  

Your car loan: The same usually goes for car loans — if one spouse wants to keep the vehicle, he or she could refinance the loan under his/her own name. Or you can sell altogether and divvy up the cash. As Slowiaczek mentioned above, remaining debt follows the asset, so whoever keeps the car will assume the debt. 

Credit debt. The way nonsecured debts, like credit cards, are handled goes back to individual state laws.  

In a community property state, Ziegler says the courts usually take a 50/50 view of marital debt. But equitable distribution states typically look at who contributed to the debt, how much money each party makes, and other statutory requirements that allow them to potentially allocate the debt differently. In other words, things aren’t as black and white, and the courts have more interpretive wiggle room.   

Barbara, a 36-year-old sales professional in Tampa, Fla. is eight months into the divorce process. Florida is an equitable distribution state, meaning the debt she and her husband accrued could end up being split any number of ways. One of the toughest parts of her experience has been the $35,000 of credit card debt she says she shares with her ex. 

“It was mostly accrued by [my husband], but mostly in my name,” she told MagnifyMoney. The couple also have a $202,000 mortgage, and deciding who will assume the mortgage (and the equity in the home that comes with it) has been a point of contention.  

Ziegler says Barbara probably has more leverage than if she lived in a community property state.  

Student loans. Generally speaking, Ziegler says the court is required to look at the purpose of the degree each spouse pursued to determine whether it’s marital or non-marital debt. Again, it really depends on the nature of the debt, who benefitted from it, and what state you live in, among other things.  

For example, a student loan may be in your spouse’s name, but who’s making the payments? And which one of you is the primary earner? These things matter and could potentially play into your divorce agreement. 

When you acquired the debt 

One bit of good news: no matter where you live, Ziegler says premarital debts are off limits. Where divorce is concerned, the court is only interested in debts that were accrued during the marriage. The same generally goes for debt acquired post-separation.  

How the debt was used 

Every case is different, but the reason behind the debt can sometimes be argued. If, for example, debt was taken on for one spouse’s personal use, the other spouse might argue against being on the hook for it, depending on the property laws in the relevant state. 

“Credit card purchases to buy groceries or make a car payment are obviously marital, but what about debt that was racked up for personal use, like [cosmetic surgery] or gifts for someone your spouse was having an affair with?” asked Ziegler. “It can be argued that those expenses are not marital debt and should be assumed by the individual.”  

This underscores the importance of parsing out individual versus marital debts. To help make it easier, Ziegler recommends that couples maintain two different types of accounts: joint for marital expenses, and individual for personal spending. It’s also wise to keep your statements handy.
 

How to financially protect yourself during a divorce 

Divorces don’t usually come cheap, but there are steps you can take to soften the blow. 

Sign a prenup

Prenuptial agreements aren’t as taboo as they once were. According to a survey released by the American Academy of Matrimonial Lawyers (AAML) in 2013, “prenups” are on the rise; a whopping 63 percent of divorce attorneys cited an increase in recent years. This is because they serve as a loophole against state rules, dramatically simplifying the fight over debts and assets. 

“Most prenuptial agreements say that if the debt is in either party’s name, it’s separate debt that cannot be allocated or redistributed for payment,” said Ziegler.  

If you’re already married, it isn’t too late to protect yourself. As of 2015, 50 percent of AAML members reported an uptick in postnuptial agreement requests. 

Safeguard your credit

Take steps to safeguard your credit before you divorce. As soon as you begin the separation process, do yourself a favor and make a list of all your individual and joint debts to get an idea of what you’re dealing with. Are you or your spouse listed as authorized users on any accounts? If so, cancel those straight away to avoid accruing any new joint debt. To make sure you don’t miss anything, pull your credit report and take a thorough look at your open accounts. 

Ziegler also suggests making it clear in the divorce agreement who’s responsible for which debts — but that doesn’t always protect you. 

“The reality is, if your name is still attached to the account, and your ex-spouse defaults on payments, it’s going to negatively impact your credit,” she warned.  

If your ex agrees to pay off any debts, you can protect yourself by transferring the balances fully into the former partner’s name. 

Marianne Hayes
Marianne Hayes |

Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here

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Personal Loans

Getting Loans from Someone Other than a Bank

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

Getting Loans from Other Bank

Updated November 06, 2017

Personal loans allow borrowers to have access to a fixed amount of money at a fixed interest rate, with a fixed monthly payment and you know when you’ll have completely paid off the loan. They are a great resource for someone looking to refinance debt and can’t use a balance transfer. If you need cash, personal loans are usually the best way to borrow. Personal loans tend to be much cheaper and simpler than a credit card.

How to get a personal loan?

Step 1: Check and see if you can get a loan with an Internet-only lender.

Ideally, you should start your shopping with a site like LendingTree, which lets you shop at dozens of lenders with just one simple online form (described below). LendingTree is the parent company of MagnifyMoney.

Step 2: Go to your local credit union and see if they can match or beat your P2P loan

Step 3: Take the loan with the lower interest rate

If you aren’t eligible for a P2P loan from an Internet-only lender then try your local credit union.

Internet-only lenders

The rise of technology allowed a new wave of lenders to offer an alternative to traditional bank loans. Peer-to-Peer lending (or P2P for short) allows borrowers to receive loans from “peers” often in the form of individual investors or hedge funds, endowments and pension funds.

Peer-to-peer loans are interesting because they were developed specifically for the digital environment. This makes them accessible with a few clicks on a computer and a relatively simple application process. Companies like Prosper, LendingClub and Upstart facilitate matching borrowers with investors. There is no need to visit a bank branch. The aim of P2P lending is to give a borrower lower interest rates while giving investors higher returns.

Interestingly, some big banks have acquired or built their own online lenders which are offering consumers even better rates. SunTrust has done that with the acquisition of LightStream, and Goldman Sachs has recently invested in building Marcus.

Step 1: Shop Online for a Personal Loan (without hurting your score)

[Disclosure: LendingTree is the parent company of MagnifyMoney.] At LendingTreee, you can shop for a loan at dozens of lenders with just one online form (that takes less than 5 minutes to complete). LendingTree will perform a soft credit pull (with no impact to your score), and you can get real offers – including how much you can borrow and the interest rate. We think this is one of the best places to start your personal loan shopping journey.

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LightStream*

Pro:

  • If you have excellent credit, LightStream offers some of the lowest interest rates in the market. Rates start as low as 2.49% (to finance an auto) and 5.49% (to refinance credit card debt).
  • You can get the money by the next business day. This is a remarkably fast process.
  • LightStream has a rate match promise: if you find a lower interest rate somewhere else, they will match it.
  • There is no pre-payment penalty and no origination fee.

Con:

  • You must have excellent credit to qualify.
  • LightStream does not have “soft pull” functionality. If you apply for a loan, there will be a hard inquiry on your credit report.

LendingClub*

Pro

  • Their interest rates are most likely lower than other loans with an APR range of 5.99% to 35.89%.
  • You can find out your interest rate without a hard inquiry on your credit score. Prosper uses a “soft pull” so there will be no point reductions on your credit score, nor an inquiry left on your report for finding out the interest rate.
  • There is no pre-payment penalty(fine if you pay off the loan early), but they won’t refund your loan fee.

Con:

  • You must have a high credit score (600 or higher) to be eligible to get a personal loan from LendingClub.
  • You probably won’t be accepted if you have a history of missed payments.
  • There is an upfront fee, but your APR will include the fee. Be sure to compare the APR and not just the interest rate when you’re shopping around.

Upstart*

People with minimal credit history can turn to Upstart for an opportunity to be eligible for a personal loan.

Upstart evaluates where you went to school, your area of study, your grades and employment history to determine your eligibility for a loan and your interest rate.

Step 2: Credit Unions

Credit unions are not-for-profit organizations that offer alternatives to traditional banks. They have more of an emphasis on serving their community than worrying about a corporation’s bottom line. Unlike banks, credit union members own the credit unions.

Credit unions do offer loans, but first you must become a member of the credit union. Some credit unions are closed. But others (like PenFed) will let you join if you make a $15 donation to a charity.

Pros

  • Loans from a credit union usually have lower interest rates than a bank, and possibly the lowest you can find.

Cons

  • You will need to join a credit union, and may not qualify for a loan so you could be out the cost to join.

PenFed offers a 9.99%-14.99% interest rate with no upfront fee for a term of five years. However, you will need to have a 700+ credit score to be competitive for this personal loan.

Non-bank lenders

OneMain is a non-bank lender owned by Citigroup. You will have to physically visit a branch to get approved. But, the process usually takes less than 30 minutes. Borrowers with high credit scores should first explore the P2P space and credit unions before turning to OneMain, because it will be a more expensive form of borrowing.

Pros:

  • If having face-to-face contact is important to you, then you can visit physical branches.
  • OneMain will approve people with credit scores as low as 550, so it is possible to get a loan when other reject you. Although expensive, OneMain will be much less expensive than payday loans or title loans.

Cons:

  • You have to visit a branch, even if you’re preapproved online. If you don’t have a branch near you, this could be a serious hassle.
  • There will be a hard inquiry on your credit report
  • Likely higher interests rates (APRs) than a loan from P2P lenders like Prosper or LendingClub
  • A few complex terms and conditions

Warning:

  • Don’t bother with the insurance products they’ll try to sell you.

Step 3: Take the Lowest Interest Rate

Personal loans can be valuable tools to help pay down debt, reduce interest rates and save you hundreds to thousands of dollars. But remember; don’t rush into a personal loan just because it seems like a good deal. Take the time to do your research, shop around and ensure your getting the absolute best interest rate you can. Even the difference of .01 can make a difference in the long run.

Read where to find the best personal loan rates online here.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

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Back to Our Pre-Recession Ways, Americans Are Spending More and Saving Less

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

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Americans appear to be back to their pre-recession savings habits. The personal savings rate in the U.S. dropped to 3.1 percent in September 2017, according to the Commerce Department — the lowest level since the Great Recession took hold.

Meanwhile, Americans are spending more (household debt is at a 10-year high) and consumer confidence has risen to its highest level in almost 17 years, according to data released Tuesday through The Conference Board, a global, independent business membership and research association.

3 reasons we’re saving less:

Household debt is on the rise again. Total household debt increased to $12.84 trillion in the second quarter of 2017, up $114 billion, or 0.9 percent, from the same quarter last year, the Federal Reserve Bank of New York reported in August. This was a new high since the third quarter of 2008, the peak of the mortgage crisis. People may feel they can get access to funds by borrowing when it is needed, rather than holding money in savings, said Andrew Opdyke, economist at the First Trust Advisors.

But incomes are up and we’re spending more. While personal income rose 0.4 percent in September, consumer spending surged 1 percent, the fastest pace since 2009, Commerce reported.

Hurricanes don’t come cheap. The Commerce Department Bureau of Economic Analysis (BEA) said August and September estimates of personal income and spending reflected the effects of Hurricanes Harvey and Irma. Millions were displaced by the hurricanes, and experts say the spending jump was driven by a hurricane-induced uptick in auto sales and increases in gas and household utility prices.

Year

Personal Savings Rate

Total Household Debt

Consumer Confidence

2007

3.0%

$11.85 trillion

99.6

2008

4.9%

$12.60 trillion

97.3

2009

6.1%

$12.41 trillion

98.1

2010

5.6%

$11.94 trillion

97.9

2011

6.0%

$11.73 trillion

96.8

2012

7.6%

$11.38 trillion

99.0

2013

5.0%

$11.15 trillion

99.0

2014

5.7%

$11.63 trillion

99.8

2015

6.1%

$11.85 trillion

100.4

2016

4.9%

$12.29 trillion

100.4

2017

3.7%*

$12.84 trillion

101.1

Sources:

U.S. Bureau of Economic Analysis


*as of Q3

Federal Reserve Bank of New York

Organisation for Economic
Co-operation and Development

It’s not exactly news that Americans aren’t the greatest savers. The Federal Reserve reported that in 2016, 44 percent of Americans could not come up with $400 in cash to cover emergencies.

But should we worried that we’re saving less and spending more than we have in a decade?

Economists say that as the economy is humming along, consumers are feeling more confident that they can spend and borrow more without putting themselves in financial distress. It’s no coincidence that Americans saved the most in the same year (2012) that consumer confidence was comparatively low.

Brian Wesbury, chief economist at First Trust Advisors, writes that rising debt levels aren’t so alarming when you factor in overall income growth. Household incomes grew by 3.2 percent between 2015 and 2016, according to the Census Bureau.

“Yes, consumer debts are at a record high in raw dollar terms, but so are consumer assets,” wrote Brian Wesbury, chief economist at First Trust Advisors. “Comparing the two, debts are the lowest relative to assets since 2000 (and that’s back during the internet bubble when asset values were artificially high.”

How to calculate your personal savings rate

Take your total monthly income from all sources (salary, retirement account, etc.), less taxes and money spent on everyday expenses, including debt payments.

Next, divide your monthly savings amount by your total income. Then multiply by 100 to get your personal saving rate.

There’s no magic savings rate to aim for. A good rule of thumb is to save 10 percent of each paycheck for retirement, and establish an emergency fund covering at least three to six months’ worth of basic living expenses.

Evidence suggests that many Americans are just getting by, shouldering record levels of student loan debt while grappling with rising fixed costs. The Consumer Financial Protection Bureau in September reported that 43 percent of American adults struggled to make ends meet in 2016.

But savings is key to achieving financial security. The CFPB study found that adults with savings and financial cushions had a higher level of financial well-being than those who didn’t have a safety net to fall back on.

7 strategies to boost your savings:

  1. Automate. Many employers can set up automatic deposits of your income into multiple checking or savings accounts. You can have a portion of your paycheck automatically transferred into a savings account so that you will be less inclined to touch that money. It makes easier for you to resist the temptations to spend.
  2. Make retirement a priority. If you are not able to set aside 10 percent of your income, you should try to contribute enough to capture the full company match for your 401(k), if your employer offers one.
  3. Track your spending. You will be surprised by the amount of money you spend on groceries or Starbucks once you actually track the money coming in and out. The more you know about your finances, the better off you’ll be. A simple app to track spending patterns is a good place to start engaging in day-to-day money management and establish a habit of saving and budgeting.
  4. Get rid of high-interest debts. Debts are anti-assets. It makes more sense to pay off high-interest debt, such as credit card debt, than to save. Here are four tips to help you pay down debts.
  5. Avoid lifestyle inflation. Lifestyle inflation means people spend more as their incomes increase. It is one of the ultimate budget-killers.
  6. Don’t keep up with the Joneses. Forget them. The key to being satisfied with the state of your finances and your life is focusing on your needs and goals rather than comparing with your friends and co-workers
  7. Find ways to help break your negative spending habits. Here is a simple $20 rule that can help break your credit card addiction. We’ve also written about other strategies to break bad money habits here.
Shen Lu
Shen Lu |

Shen Lu is a writer at MagnifyMoney. You can email Shen at shenlu@magnifymoney.com

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No Credit, or Poor Credit? Here Are Your Loan Options

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

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

Updated November 03, 2017
Don’t have a credit history established, or have a low credit score? It can be challenging to find lenders that will approve you if you have a thin credit file or poor credit, but it’s not impossible.

You still have options when it comes to personal loans, and these options come from reputable lenders.

What’s even better is that these lenders will only conduct a soft credit inquiry when you apply to find out what rates they can offer you. This means your credit score won’t be negatively affected, so you don’t have to worry about damaging it further.

In this article we’ll review how to find reputable lenders, why you should stay away from two popular options people turn to when they’re in a poor credit situation: payday and title loans. And what you can do to increase your credit score.

Check for approval without a credit hit

It’s worth noting low scores aren’t always indicative of how responsible you are with credit. A low score, or thin file, could just be a result of a short credit history. If you have a clean history (no late payments, low credit utilization, etc.), you’ll have an easier time obtaining a loan over someone who has had delinquencies on their record, but might have a higher score.

If you have bad (or no) credit, you should apply to as many lenders as possible that use a soft pull to ensure you don’t hurt your credit score. We recommend starting with LendingTree, where you can use one short application form to get rates from multiple lenders at one.

LendingTree: Dozens of lenders partner with Lending Tree – and many of them may approve people with poor or no credit. You can fill out a simple form and compare multiple offers in minutes. We highly recommend starting your shopping experience here first to have a good chance of getting a loan. (Note: MagnifyMoney is owned by LendingTree)

LEARN MORE

Here are 5 personal loan lenders for people who have less than ideal credit (meaning under 700) that will let you check your rate without impacting your credit score:

OppLoans: If you have no or bad credit, OppLoans is an online lender that could help. If your credit score is below 630 (or if you have no credit score at all), OppLoans will work with you. You can check to see if you are approved without impacting your score. And – unlike payday lenders – OppLoans offers much more affordable borrowing options. They also have great reviews – with a customer service rating of 4.9/5 stars.

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on Opploans’s secure website

LendingClub: People with credit scores below 600 can get approved. You can borrow $1,000 – $40,000 and get the money deposited into your account within a few days. Fixed APRs range from 5.99%-35.89% on terms up to 5 years. LendingClub has an origination fee of 1%-6% on its loans. LendingClub is not available in Iowa or West Virginia.

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on Lending Club’s secure website

Upstart: Borrow between $3,000 and $50,000 for up to 5 years with APRs ranging from around 9.45% to 29.99%. While the minimum credit score needed to qualify is 640 (Upstart will also consider applicants who don’t have a score), you must have a clean credit history. You could also be eligible for next day funding.

Avant: You could borrow anywhere from $2,000 to $35,000 through Avant, and you could receive your funds as soon as the next business day. APRs range from 9.95% – 35.99%. Although the minimum credit score varies, you have a much better chance if your score is above 580. Avant is available in all states except Colorado, Iowa, West Virginia, and Vermont.

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on Avant’s secure website

Prosper: Another peer-to-peer marketplace lender, Prosper’s loans are similar to LendingClub’s. You can borrow $2,000 to $40,000 with APRs ranging from 5.99%-36.00% on 3 and 5 year terms. There’s an origination fee of 1%-5%, and its minimum credit score is 640.

There are several other personal loan lenders that will do a soft credit check. You can find them on our personal loan table here. While many of these lenders have minimum credit score requirements, you’ll find they take other factors into account aside from your FICO score.

Additionally, since these lenders only do a soft credit pull, you’re free to shop around for the best rates without fear of damaging your credit score.

Why You need to Stay Away from Payday Loans and Title Loans

Not eligible for personal loans? Don’t turn to payday loans or title loans.

If you’re not familiar with either, you might be wondering what’s so bad about them. After all, they seem convenient – most offer “fast cash,” and if you live in a populated area, you’ll probably find a payday loan or title loan shop nearby.

However, both require you to give something in exchange for funds, and neither require any sort of stringent approval process to ensure borrowers can afford the loans.

Payday Loans

Payday loan companies require you to write a check for the amount you wish to borrow, plus a set fee. The lender holds onto the check until the loan becomes due (typically on the borrower’s next payday, hence the name), and gives the borrower the money they need in the meantime.

The problem? If you can’t pay when the loan balance becomes due, you can choose to extend the term of the loan. When you do, you get hit with more fees. The APR on payday loans is extremely high, so you’ll pay more each time you extend your loan term.

Payday loans are on the smaller side – anywhere from $100 to $1,000. According to PayDayLoanInfo.org, the average term is two weeks, with 400%+ APRs. When you factor in fees, the APR can go up to 780%.

[Stuck in a Payday Loan Trap? Here are the ways out.]

Title Loans

Title loans require you to give your car’s title to the title loan company in exchange for an amount equal to the appraised value of your car. You usually have to own your car outright to be eligible for a title loan, and the term is around 30 days.

Like payday loans, if you can’t pay on time, you may choose to roll the loan over to the next month, incurring more fees. If you can’t pay back the loan at all, you run the risk of the lender repossessing your car.

As you can tell, both of these options are bad ideas if you want to stay clear of getting into a horrible debt cycle. These loans are purposely too expensive for borrowers to afford. If people are looking for quick cash because they don’t have any, it stands to reason they’ll be in the same situation a week or two from the time they borrow.

Non-Profit Credit Counseling to Rebuild Credit Score

You want to make every effort to improve your credit score, even after you’re approved for a loan, because having a good credit score will benefit you in other areas of life. For that reason, you might want to consider teaming up with a non-profit credit counseling service.

These companies can provide you with personalized advice on your specific situation so you can work on rebuilding your credit score. They can also work with your creditors and negotiate on your behalf to possibly lower interest rates or get better terms on your existing debt.

It can be tricky to find a reputable credit counseling agency – even with a non-profit organization. If you’re interested in a credit counseling service, USA.gov lists a few considerations and questions you should ask before committing. You want to make sure the credit counseling agency is actually going to help you get your credit and financial situation under control.

Alternative to Ways to Build Your Credit Score

If you don’t qualify for a personal loan, and don’t want to turn to payday or title loans, there are a few steps you can take to increase your credit score. This post has 6 tips to help get you started. These methods won’t boost your score immediately, but over time, you’ll see an improvement.

The Federal Trade Commission also has 6 alternatives to payday loans on its website, which might apply to your situation. For example, if you’re a member of a credit union, you could inquire about a loan through them as you have an established relationship already.

Also, if you haven’t started budgeting and tracking your spending, you should – doing so can help you spot problem areas with your money.

Read the Fine Print and Shop Around

Regardless of which loan you decide to apply for, always consider the cost. You want to make sure you’re getting the best possible terms, which means getting the lowest APR offered. Typically, cash advances and credit cards are going to have higher APRs than personal loans but lower than payday lenders.

Remember to always read the fine print. Loans of any type have plenty of fees associated with them that you should avoid. Shop around for the best deals and work on improving your credit score so better options become available to you.

Customize your personal loan offers with 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.

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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College Students and Recent Grads, Pay Down My Debt

4 Best Options to Refinance Student Loans – Get Your Lowest Rate

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

Updated: November 1, 2017

Are you tired of paying a high interest rate on your student loan debt? You may be looking for ways to refinance your student loans at a lower interest rate, but don’t know where to turn. We have created the most complete list of lenders currently willing to refinance student loan debt. We recommend you start here and check rates from the top 4 national lenders offering the lowest interest rates. These 4 lenders also allow you to check your rate without impacting your score (using a soft credit pull), and offer the best rates of 2017:

LenderTransparency ScoreMax TermFixed APRVariable APRMax Loan Amount 
SoFiA+

20


Years

3.35% - 7.125%


Fixed Rate*

2.815% - 6.740%


Variable Rate*

No Max


Undergrad/Grad
Max Loan
APPLY NOW Secured
earnestA+

20


Years

3.35% - 6.39%


Fixed Rate

2.57% - 6.19%


Variable Rate

No Max


Undergrad/Grad
Max Loan
APPLY NOW 
commonbondA+

20


Years

3.35% - 7.12%


Fixed Rate

2.81% - 6.74%


Variable Rate

No Max


Undergrad/Grad
Max Loan
APPLY NOW 
lendkeyA+

20


Years

3.15% - 7.26%


Fixed Rate

2.58% - 6.32%


Variable Rate

$125k / $175k


Undergrad/Grad
Max Loan
APPLY NOW 

You should always shop around for the best rate. Don’t worry about the impact on your credit score of applying to multiple lenders: so long as you complete all of your applications within 14 days, it will only count as one inquiry on your credit score.

We have also created:

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

Can I Get Approved?

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 loans 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, 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, then 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 single shopping period (which can be between 14-30 days, depending upon the version of FICO). 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.

Here are more details on the 5 lenders offering the lowest interest rates:

1. SoFi: Variable Rates from 2.815% and Fixed Rates from 3.35% (with AutoPay)*

SoFi

SoFi (read our full SoFi review) was one of the first lenders to start offering student loan refinancing products. More MagnifyMoney readers have chosen SoFi than any other lender. Although SoFi initially targeted a very select group of universities (it started with Stanford), now almost anyone can apply, including if you graduated from a trade school. The only requirement is that you graduated from a Title IV school. You need to have a degree, a good job and good income in order to qualify. SoFi wants to be more than just a lender. If you lose your job, SoFi will help you find a new one. If you need a mortgage for a first home, they are there to help. And, surprisingly, they also want to get you a date. SoFi is famous for hosting parties for customers across the country, and creating a dating app to match borrowers with each other.

GO TO SITE Secured

on SoFi’s secure website

2. Earnest: Variable Rates from 2.57% and Fixed Rates from 3.35% (with AutoPay)

Earnest

Earnest (read our full Earnest review) offers fixed interest rates starting at 3.35% and variable rates starting at 2.57%. 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 can choose your own monthly payment, based upon what you can afford (to the penny). Earnest also offers bi-weekly payments and “skip a payment” if you run into difficulty.

3. CommonBond: Variable Rates from 2.81% and Fixed Rates from 3.18% (with AutoPay)

CommonBond

CommonBond (read our full review) started out lending exclusively to graduate students. They initially targeted doctors with more than $100,000 of debt. Over time, CommonBond has expanded and now offers student loan refinancing options to graduates of almost any university (graduate and undergraduate). In addition (and we think this is pretty cool), CommonBond will fund the education of someone in need in an emerging market for every loan that closes. So not only will you save money, but someone in need will get access to an education.

4. LendKey: Variable Rates from 2.58% and Fixed Rates from 3.15% (with AutoPay)

Lendkey

LendKey (read our full LendKey review) works with community banks and credit unions across the country. Although you apply with LendKey, your loan will be with a community bank. If you like the idea of working with a credit union or community bank, LendKey could be a great option. Over the past year, LendKey has become increasingly competitive on pricing, and frequently has a better rate than some of the more famous marketplace lenders.

In addition to the Top 4 (ranked by interest rate), there are many more lenders offering to refinance student loans. 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. This list is ordered alphabetically:

  • Alliant Credit Union: Anyone can join this credit union. Interest rates start as low as 4.50% APR. You can borrow up to $100,000 for up to 25 years.
  • Citizens Bank: Variable interest rates range from 2.79% APR – 8.14% APR and fixed rates range from 3.35% – 8.33%. You can borrow for up to 20 years. Citizens also offers discounts up to 0.50% (0.25% if you have another account and 0.25% if you have automated monthly payments).
  • College Ave : If you have a medical degree, you can borrow up to $250,000. Otherwise, you can borrow up to $150,000. Fixed rates range from 3.35% – 7.50% APR. Variable rates range from 2.75% – 7.25% APR.
  • Laurel Road (formerly known as DRB) Student Loan: Laurel Roadoffers variable rates ranging from 2.99% – 6.42% APR and fixed rates from 3.95% – 6.99% APR. Rates vary by term, and you can borrow up to 20 years.
  • Eastman Credit Union: Credit union membership is restricted (see eligibility here). Fixed rates start at 6.50% and go up to 8% APR.
  • EdVest: This company is the non-profit student loan program of the state of New Hampshire which has become available more broadly. Rates are very competitive, ranging from 4.29% – 7.89% (fixed) and 3.18% – 6.78% APR (variable).
  • First Republic Eagle Gold. The interest rates are great, but this option is not for everyone. Fixed rates range from 1.95% – 2.95% APR. You need to visit a branch and open a checking account (which has a $3,500 minimum balance to avoid fees). Branches are located in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, San Diego, Portland (Oregon), Boston, Palm Beach (Florida), Greenwich or New York City. Loans must be $60,000 – $300,000. First Republic wants to recruit their future high net worth clients with this product.
  • IHelp : This service will find a community bank. Unfortunately, these community banks don’t have the best interest rates. Fixed rates range from 4.75% to 9.00% APR (for loans up to 15 years). If you want to get a loan from a community bank or credit union, we recommend trying LendKey instead.
  • Navy Federal Credit Union: This credit union offers limited membership. For men and women who serve (or have served), the credit union can offer excellent rates and specialized underwriting. Variable interest rates start at 3.55% and fixed rates start at 4.00%.
  • Purefy: Purefy lenders offer variable rates ranging from 2.79%-9.56% APR and fixed interest rates ranging from 3.35% – 10.65% APR. You can borrow up to $150,000 for up to 15 years. Just answer a few questions on their site, and you can get an indication of the rate.
  • RISLA: Just like New Hampshire, the state of Rhode Island wants to help you save. You can get fixed rates starting as low as 3.49%. And you do not need to have lived or studied in Rhode Island to benefit.
  • UW Credit Union: This credit union has limited membership (you can find out who can join here, but you had better be in Wisconsin). You can borrow from $5,000 to $60,000 and rates start as low as 2.87% (variable) and 3.99% APR (fixed).
  • 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 4.49% and fixed rates starting at 6.24%. You would likely get much lower interest rates from some of the new Silicon Valley lenders or the credit unions.

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. You can also email us with any questions at info@magnifymoney.com.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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20 Credit Cards with No Cash Advance Fees

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

Credit Cards with No Cash Advance Fees

If you have a credit card, your financial institution has likely mailed you checks for cash advance purposes. Understanding this aspect of your available credit is incredibly important, as it can be much more expensive than simply making a purchase.

Taking a cash advance gives you money now in cases where you can’t use a credit card (perhaps paying rent), or have otherwise maxed out your purchasing power. Many financial institutions will charge you a fee between 1% and 5% just for making this transaction.

But some cards have no fees for cash advances.

The catch is, interest starts accruing immediately on cash advances, meaning that even if you pay your statement balance in full by the due date, you will still incur interest charges in the interim. So if you do a cash advance, try to pay it off as quickly as possible, even before the due date, to minimize the interest you pay.

Best Cards with No Cash Advance Fees

These credit unions offer no cash advance fees on all their credit cards. While you’ll pay interest from the day you take out the cash, as a last resort it’s a better bet than paying an upfront fee. These are all credit unions anyone can join, but many of them require excellent credit to qualify for a card.

PenFed Credit Union

PenFed Credit Union CDs Pentagon Federal Credit Union, commonly known as PenFed, offers five different credit cards with no cash advance fees. None of them charge a foreign transaction fee, and all interest rates are the same for purchases and cash advances.

Anyone can join PenFed Credit Union simply by making a one-time donation of $14 to Voices for America’s Troops, or a one-time $15 donation to the National Military Family Association.

  • PenFed Platinum Rewards Visa Signature Card
  • PenFed Promise Visa Card
  • PenFed Gold Visa Card
  • PenFed Premium Travel Rewards American Express Card
  • PenFed Power Cash Rewards Visa

American 1 Credit Union

American 1 Credit Union American 1 Credit Union offers four different credit cards with no cash advance fees. Interest rates on purchases and cash advances are the same, though there is a foreign transaction fee of 1%.

Anyone can join American 1 Credit Union by joining Community 1 Cooperative. You pay $3 for membership, which includes a litany of discounts on consumer products and services across an array of industries.

  • American 1 In-House Visa

CapEd Federal Credit Union

 CapEd Federal Credit Union CapEd Federal Credit Union offers one card with no cash advance fees. It also carries the same interest rate for purchases and cash advances, but does have a foreign transaction fee that varies depending on if the transaction is in USD or requires conversion into a foreign currency.

To join CapEd, all you have to do is make a one-time $20 donation to the Idaho CapEd Foundation.

  • Visa Platinum Card by CapEd Federal Credit Union

First Tech Federal Credit Union

First Tech Federal Credit Union First Tech Federal Credit Union offers three different cards that come with no cash advance fees. The interest rates on these transactions will be higher than the interest rates on regular purchases, however. There are no foreign transaction fees.

Anyone can join First Tech through membership in the Financial Fitness Association, which costs $8 per year, or a digital membership to the Computer History Museum, which will run you $15 per year.

  • Odyssey Rewards World Elite MasterCard
  • Platinum Rewards MasterCard
  • Choice Rewards World MasterCard
  • Platinum Secured MasterCard

ISU Credit Union

ISU Credit Union ISU Credit Union offers two cards that have zero cash advance fees. Interest rates on cash advances are higher than those on regular purchases for the first year only, and there is a foreign transaction fee of 1%.

To join ISU Credit Union if you don’t live, work or study in Southeastern Idaho, you can qualify through paid membership at a number of Southeastern Idaho organizations including humane societies and educational cause groups.

  • Platinum MasterCard by ISU Credit Union
  • Platinum Plus MasterCard by ISU Credit Union

Mid-Illini Credit Union

Mid-Illini Credit Union Mid Illini Credit Union offers two different cards that come with no cash advance fees. Interest rates for purchases and cash advances are identical, and there is a foreign transaction fee of 1%.

Anyone can join Mid Illini Credit Union by making a one-time $1 donation to Dollars for Scholars, an organization that provides scholarships to students of McLean County, Illinois.

  • Visa Classic Card by Mid Illini Credit Union
  • Visa Platinum Card by Mid Illini Credit Union

Stanford Federal Credit Union

Stanford Federal Credit Union Stanford Federal Credit Union offers a singular card with no cash advance fees for which the general public qualifies. There are no foreign transaction fees, and rates are the same for purchases and cash advances.

To join Stanford Federal Credit Union, you can become a member at the Museum of American Heritage or join Friends of the Palo Alto Library.

  • Visa Platinum Cash Back Rewards Card by Stanford Federal Credit Union

Digital Credit Union

Digital Credit Union Digital Credit Union offers two cards with no cash advance fees. While interest rates are the same for both cash advances and regular purchases, foreign transaction fees will vary based on the need for currency conversion.

You can join Digital Credit Union by donating to any number of organizations that match your interests. The most common organization new members choose is Reach Out for Schools, which only requires a one-year membership at the cost of $10.

  • Visa Platinum Card by Digital Credit Union
  • Visa Platinum Rewards Card by Digital Credit Union

Alternatives to Cash Advances

While cards that offer no fees on cash advances are cheaper, that does not mean these transactions are cheap. You should only take a cash advance as a last resort in a true emergency. In order to avoid becoming one of the American households that can’t cover $400 financial hardships, start building an emergency fund today. When you withdraw money from your own savings account, you have to pay zero interest and zero fees.

If you don’t have an emergency fund, but you do have a credit card, it is wiser to charge emergency expenses as a purchase rather than taking money out as a cash advance if at all possible. Even when interest rates are identical for these two different types of transactions, cash advances will start charging you those rates immediately, while purchases won’t require you to pay interest until after the first statement is issued.

Payday loans are another alternative. However, they’re not necessarily a good one. They often come with numerous fees and aren’t as hassle-free as some lenders make them out to be. If you don’t pay off your loan at the end of the term (often about two weeks), you risk incurring fees that can add up to more than your loan. This can translate into effective interest rates in the triple digits. If they’re your only option, be extremely careful. Above all, make sure you fully understand the terms and costs.

Foreign travelers will also want to charge purchases whenever possible for this same reason. If you must use cash, a cash advance is a safer alternative to withdrawing money from your bank account abroad, but it is also wise to pay it off using your financial institution’s online services as soon as possible to avoid paying more interest than you have to.

Cash advances aren’t ideal, so if you can avoid them you should. However, they are a much better option than turning to the alternative lending industry where you’ll find predators and payday loans.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at brynne@magnifymoney.com

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Consumer Watchdog, Pay Down My Debt, Personal Loans

Should You Avoid LendUp? A Review of Its Loans

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

personal-loan_lg-e1469273811143

Updated October 25, 2017
Update: On Sept. 27, 2016, the Consumer Financial Protection Bureau ordered LendUP to pay more than $3.6 million in fines for allegedly misleading customers about its online lending service. Read the full CFPB order here

In a nutshell, the CFPB claims LendUP’s parent company, Flurish, Inc., misleadingly advertised its lowest-priced loans. LendUP advertised its loans as available nationwide, yet the most attractive loans were only available to customers in California, the agency says. 

The CFPB also claims  LendUP failed to accurately market the annual percentage rates offered with its loans and in some cases understated the true APR on its loans. 

What does the CFPB’s order mean for LendUP customers?

The CFPB has ordered the company to pay about $1.83 million in refunds to over 50,000 consumers. Consumers are not required to take any action. The company will contact consumers in the coming months about their refunds, the watchdog says.

In response to the CFPB’s claims posted on its website, LendUP says the transgressions date back to the company’s early days. “When we were a seed-stage startup with limited resources and as few as five employees. In those days we didn’t have a fully built out compliance department. We should have.”

Lendup LendUp is a company offering a better alternative to the typical shady payday loan. Its aim is to disrupt the payday loan system by providing consumers with more affordable loans, more education, and transparency.

This is quite a change from storefront payday lenders, who have confusing policies that often leave customers paying more huge amounts in interest.

LendUp wants to reform the payday loan industry by helping its customers get out of debt and build credit.

However, it could come at a hefty price for consumers. Payday loans are known for outrageous APRs, and while LendUp has more reasonable APRs than typical payday loan companies, it’s still something to be aware of.

Who Should Use LendUp?

Before we get into the details of the loans offered by LendUp, it’s important to address who should avoid its loans and who should consider them.

Payday loans are typically short-term loans to tide you over if you need money in between pay periods. The term can be one week, two weeks, or one month long. That’s a big difference from other personal loans that have terms of 1 to 5 years.

It comes down to your personal situation, and what you’re looking to use the money for.

If you have damaged credit or no credit at all, then payday loans might look like the only solution. LendUp can help you, but it’s important to consider the price.

If you’re simply looking to build credit, there are much better options out there. Taking a payday loan should be one of your last resorts. You can only start to build credit via LendUp when you reach Platinum or Prime status, which requires you to take on multiple loans.

Each time you borrow money from LendUp, you’ll be paying a significant amount in interest. For example, even if you only borrowed $100 for 31 days, you’d still pay $24.40 in interest (287.29% APR), according to their calculator.

For that reason, if you have poor or no credit, it’s better to look into opening a secured credit card, or trying to get approved for a store card. There’s no reason to pay $24 in interest if you don’t have to.

If you have severely damaged credit and are unable to get approved for any other solution, or you’re in dire need of cash to afford necessities like food, then you should consider LendUp over going to a regular payday loan store. LendUp is certainly the better option.

That said, if you’re looking for a long-term loan, or looking for more cash for a big purchase, then LendUp is not the right choice. You should check out the other personal loan lenders we’ve reviewed, such as SoFi*, Payoff*, and Upstart*.

How Does LendUp Work?

LendUp Ladder APRLendUp is a completely new solution to payday loans. It has what it calls the “LendUp ladder,” which is a point-based system. When you show that you’re a reliable customer and can make timely payments, you’re rewarded points, which enable you to climb up the LendUp ladder.

Update: In a consent order issued Sept. 27, 2016 the Consumer Financial Protection Bureau claims LendUP misleadingly advertised its loans as available nationwide. However, the most attractive loans, which customers were told they could earn access to through LendUP’s “Ladder” rewards program, were only available to customers in California. 

You can also earn points by watching LendUp’s educational courses on credit and for taking loans with them.

Climbing up the ladder gives you different statuses. You start at Silver, and from there, you can advance to Gold, Platinum, or Prime status. Each status has better terms, and at Platinum and Prime status, you can report your payments to credit bureaus to build your credit.

LendUp also doesn’t allow rollovers. That means if you’re unable to pay back your loan on time, LendUp will not charge you a fee to extend it, as other payday lenders do.

Instead, it offers free 30-day extensions on loans, so if you’re unable to make a payment, all you have to do is log into your account, and choose the option to extend your loan. LendUp tries to work with its customers as much as possible to ensure they’re getting out of debt, not back into it.

According to its website, LendUp is also the “first and only licensed direct lender with a relationship to the major credit bureaus.” LendUp emphasizes that there’s no middleman involved when customers take a loan, which allows LendUp to maintain its transparency.

LendUp Loan Details

Terms vary based upon the status you have with LendUp and you can get a loan amount of $100 – $1,000 depending on your tier.

Silver starts you off with a minimum loan amount of $100 and a maximum of $250. The terms range from 7 to 31 days. The maximum loan amount offered is $1,000, accessible at Prime.

Screen Shot 2015-03-27 at 5.57.58 PMLendUp provides a helpful calculator on its front page that gives you an idea of what you can expect with different loan amounts and terms.

For example, if you want to borrow $250, the APR range is 209.75% (30 days) to 755.03% (7 days).

According to ResponsibleLending.org, the typical two week payday loan as an annual interest rate ranging from 391% to 521%. LendUp falls within that spectrum.

Unlike payday lenders, LendUp rewards customers for continuing to borrower. LendUp does offer rates as low as 29% to its Prime customers, which is great when comparing against other payday loans. However, we’d prefer you focus on building your credit score and look to establish a line of credit with a credit union or get a personal loan from lender with better terms.

LendUp payday loans are also currently offered in only the following states: Ohio, New Mexico, Washington, Maine, Oklahoma, Louisiana, Florida, Texas, Wyoming, Alabama, Idaho, Indiana, Illinois, Mississippi, Oregon, Kansas, California, Missouri, Tennessee, and Minnesota.

LendUp is working on increasing its presence throughout the United States, but since its a direct lender, its has to comply with individual state laws and policies.

LendUp Application Process

The application process is fairly straightforward. LendUp says it should take 5 minutes or less to fill out the application and you’ll get an instant decision.

LendUp offers standard next day funding, instant funding, and same-day funding (Wells Fargo customers only). It warns that if you take instant or same-day funding, you’ll have to pay a fee to cover the cost.

LendUp offers a no credit check payday loan option. To qualify, you just need an active bank account and proof of income.

It assesses applicants on much more than just their FICO scores, which comes as no surprise. Throughout its site, LendUp makes it clear it wants to lend to those with bad or nonexistent credit. Like other personal loan lenders, LendUp uses its own algorithm consisting of different data points to determine whether or not to extend a loan to an applicant.

The Fine Print

LendUp states it doesn’t have any hidden fees, but as with any payday loan, you need to read the fine print.

First, fees and rates are dependent upon the state you live in, so make sure to review state specific information here.

The only fee that’s mentioned with a dollar value attached is a non-sufficient funds fee. LendUp automatically takes money out of your bank account, and if you don’t have enough money in there to cover it, you’ll get hit with this fee, which can be between $15 and $30.

Additionally, if you want to pay before your due date, you can pay with your debit card, but you’ll incur a fee to cover the cost of the transaction.

Opting to get your money instantly or same-day also comes with a fee.

What happens if you can’t afford to pay and you used your extension? This is a common concern among those already tight on money. On its site, LendUp says to contact them at the first sign of trouble. It’s willing to work with borrowers.

However, if you don’t pay, and you don’t contact LendUp, then there are consequences. LendUp can suspend your LendUp account, send your account to outside collection agencies, take legal action, and report your account delinquent to the credit bureaus.

Commendable, but Still a Payday Loan

LendUp’s mission is a commendable one – it wants to educate its customers and provide them with a better way to get back on their feet. LendUp is certainly an improvement over traditional payday lenders, but at the end of the day, it’s still a payday loan. When taking one, you need to consider the overall costs you might face.

Look into secured lines of credit or store credit cards – don’t look to take a payday loan first. Only take one if you desperately need the cash and you’re in a rough spot. Be aware of exactly what you’re getting yourself into, and make every effort to pay off your loan on time and improve your financial situation.

If you’re interested in looking into a loan with LendUp, use its site map to get specific information related to the state you live in, as loan terms vary depending on state.

*We 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.  

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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What Happens to Debt When You Get Married?

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

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According to the New York Federal Reserve, total student loan debt in the U.S. has reached $1.3 trillion, while more than 44 million Americans have student loan debt. Between these figures and soaring credit-card debt, paying off all we owe can take some people years, if not decades. 

The problem can seem particularly acute for young couples, more and more of whom are getting married with tens or even hundreds of thousands of dollars to pay off. In many instances, one partner has significantly more debt than the other. 

When Jeff and Cassandra Campbell of Austin, Texas.,  got married in 2006, Jeff was $61,000 in debt — his was a combination of credit card debt, a second-home mortgage and a car loan. Cassandra was debt-free, but the couple immediately agreed that with marriage, his debt was now the burden and responsibility of both of them.   

“I believe that successful couples combine everything when they say, ‘I do,’” says, Jeff, 53. “It’s no longer my income or your debt, it’s ours.”

Deciding how to tackle a single spouse’s or partner’s debt is no simple thing. It might be nice to chip in to help pay down your beloved’s debt, but in the eyes of the law, marriage doesn’t necessarily mean you have to. 

What happens to debt when we marry? 
 

Adam S. Minsky, a Massachusetts-based lawyer and expert in student loan law, says that although it varies by state, most of the time debt brought into a marriage only affects the spouse who brought it in.   

“Generally speaking, certainly where I practice here in Massachusetts, there is no way to make a spouse liable for a debt,” he says.

An exception might be if the couple did a form of refinancing once they got married and now jointly own the debt together. But if one spouse brought a debt into the marriage and both spouses paid off the debt together, the other spouse would not be liable for the debt, and that debt wouldn’t affect his or her credit score.

“As long as [the debt] only stays in one of their names, it’s only going to be reported for one of them,” Minsky says. 

There are, of course, slightly different rules when it comes to couples who are divorcing. For example, if a spouse helped pay off the other’s debt in marriage, that circumstance is often taken into account in divorce proceedings, Minsky notes. 

Learning the legal nuances of spousal debt, having necessary premarital conversations and understanding  optimal strategies for paying off debt can allow a couple to avoid the uncomfortable and frustrating conversations that might accompany one spouse having significantly more debt that the other.

Here are some tips on how to tackle debt as a couple:  

Have those tough (but essential) conversations before getting hitched.

Minsky says his greatest piece of advice for couples in which one partner has significant debt and the other doesn’t boils down to this: Talk about it openly before marriage. 

“Communication is the most important thing,” he says. “Because you don’t want to get married and then find out there’s a bunch of debt you didn’t know about, or you didn’t fully understand the nature of the debt, or you didn’t have a plan. I’d say develop that communication and be comfortable talking about it.” 

Eric Bowlin, 32, a real estate investor based in Worcester, Mass., says he and his wife, Jun — whom he met during graduate school—always approached their finances as a team. Eric says Jun accepted his roughly $85,000 debt ($60,000 of which was related to student loans) before they got married in 2009. But a tough conversation ensued when Eric wanted to make a large real estate investment before they had paid off the debt.  

“I deployed to Afghanistan” around 2010, he says, “and when I got home, we had saved about $100,000. We could have easily paid off all my student loans, car and half the multifamily house we owned, but I told her I wanted to use every dollar to invest in more real estate and I wanted to drop out of our Ph.D. program.” 

He says despite Jun’s hesitation, she agreed. “To this day I’m amazed she ever agreed to let me do that,” Eric says. He spent all of his savings, maxed out all his credit cards and borrowed about $40,000 from friends.  

“She was crying at night and I couldn’t sleep because of the stress,” he says. But his decision paid off. He has since built up a successful real estate portfolio, and the couple paid off their debt in 2016.

Employ strategies for paying the debt off together.

Once you and your partner have agreed to tackle the debt together, come up with a solid plan.  

“I’ve seen trouble happen when married couples never really talked about [debt], and then it’s a thing,” Minsky says. “Or they didn’t really come up with a plan and now there’s complicated feelings of resentment or guilt or shame.” 

The plan a couple employs will vary based on an array of variables: the amount and type of debt, income level, housing situation, location and more. The Campbells, for example, didn’t decide to pay off their debt until the birth of their first daughter. 

Shortly thereafter, they discovered the “snowball method,” popularized by personal finance personality Dave Ramsey, and decided to pay off their debts from smallest to largest.

They put retirement savings and vacations on hold, paid cash for everything except bills and generally limited their eating out and social activities. They became debt-free about five years ago.

Jeff’s advice for newly married couples is to agree on a budget before each month. 

“Some spouses will naturally be more of the spender, saver or math nerd,” he says. “So while it’s not crucial that both be involved in doing everything, the discussion should happen prior to the start of each month about where ‘our’ money is going to go, and what out of the ordinary expenses may be happening.” 

Don’t forget about your taxes.

Minsky advises giving thought to how you will file your taxes, especially in the case of student loan debt.

For example, if one spouse mostly has federal student loans and is going to do an income-driven repayment plan, there could be incentives for filing taxes as an individual as opposed to making a couple’s joint filing. That way, the income of the spouse without student loan debt won’t be factored in.   

We have previously explored the nuances of deciding whether or not to file jointly or single when spouses have student loan debt. 

Have a story to share? Send us a note at info@magnifymoney.com.

Jamie Friedlander
Jamie Friedlander |

Jamie Friedlander is a writer at MagnifyMoney. You can email Jamie here

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Pay Down My Debt

How to Choose the Right Type Of Debt Consolidation

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

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If you’re feeling buried by what you owe, debt consolidation could provide you with both immediate relief and a quicker path to debt-free.

Debt consolidation is the process of taking out a new loan and using that money to pay off your existing debt. It can help in a number of ways:

  • A lower interest rate could save you money and allow you to pay your debt off sooner
  • A longer repayment period could reduce your monthly payment
  • A single loan and single payment could be easier to manage than multiple loans

But debt consolidation isn’t without its potential pitfalls. First and foremost: Consolidating your debt doesn’t address the behavior that got you into trouble in the first place. If you’re in debt because of overspending, consolidating may actually exacerbate your problems by opening up new lines of credit that you can use to spend even more.

And every debt consolidation option has its own set of pros and cons that can make it a good fit or a bad one, depending on your circumstances.

This post explains all of those pros and cons. It should help you decide if debt consolidation is the right move for you, and, if so, which option is best.

Six Consolidation Options to Choose From

1. Credit card balance transfers

A credit card balance transfer is often the cheapest debt consolidation option, especially if you have excellent credit.

With this kind of transfer, you open a new credit card and transfer the balance on your existing card(s) to it. There is occasionally a small fee for the transfer, but if you have excellent credit, you can often complete the transfer for free and take advantage of 0 percent interest offers for anywhere from 12-21 months. None of the other debt consolidation options can match that interest rate.

There are some downsides, though:

  • You need a credit score of 700 or above to qualify for the best interest rate promotional periods.
  • Many cards charge fees of 3 to 5 percent on the amount that you transfer, which can eat into your savings.
  • Unless you cancel your old cards, you’re opening up additional borrowing capacity that can lead to even more credit card debt. Let’s put that another way: Now that you’ve paid off your old cards, you might be tempted to start using them again. (Don’t!)
  • If you don’t pay the loan back completely during the promotional period, your interest rate can subsequently soar. Some balance transfer cards also charge deferred interest, which can further increase the cost if you don’t pay your debt off in time.
  • This just isn’t for people with high levels of debt. Credit limits are relatively low compared with those tied to other debt consolidation options.

Given all of that, a credit card balance transfer is best for someone with excellent credit, relatively small amounts of debt and strong budgeting habits that will prevent them from adding to their burden by getting even further into debt.

2. Home equity/HELOCs

Home equity loans and home equity lines of credit (HELOCs) allow you to tap into the equity you’ve built in your home for any number of reasons, including to pay off some or all of your other debt.

The biggest benefit of this approach is that interest rates are still near all-time lows, giving you the opportunity to significantly reduce the cost of your debt. You may even be able to deduct your interest payments for tax purposes.

But again, there are perils. Here are some of the downsides to using a HELOC/home equity loan for debt consolidation:

  • Upfront processing fees. You need to watch out for upfront costs, which can eat into or even completely negate the impact of lowering your interest rate. You can run the numbers yourself here.
  • Long loan terms. You also need to be careful about extending your loan term. You might be able to reduce your monthly payment that way, but if you extend it too far, you could end up paying more interest overall. Home equity loans typically have terms of five to 15 years, while home equity lines of credit typically have 10-to-20-year repayment periods.
  • You could lose your home. Finally, you need to understand that these loans are secured by your home. Fail to make timely payments, and you put that home in jeopardy. This is why, though the interest rates are lower than with most other debt consolidation options, there’s also added risk.

Home equity loans and HELOCs are generally best for people who have built up significant equity in their home, can get a loan with minimal upfront costs, and either don’t have excellent credit or need to consolidate more debt than is possible with a simple balance transfer.

You can ask your current mortgage provider about taking out a home equity loan or line of credit. Also, compare offers at MagnifyMoney’s parent company, LendingTree, here and here.

3. Personal loans

Personal loans are unsecured loans, typically with terms of two to seven years. Interest rates typically range from 5 to 36 percent, depending on your credit score and the amount you borrow.

The advantage of a personal loan over a credit card balance transfer is that it’s easier to qualify. While you typically need a credit score of 700 for a balance transfer, you can get a personal loan with a credit score as low as 580. You can also qualify for larger loan amounts than the typical balance transfer.

And the big advantage over a home equity loan or line of credit is that the loan is not secured by your house. This means you can’t lose your home if you have trouble paying back the debt. You can also apply for and obtain a personal loan very quickly, often at a lower cost than a home equity loan or line of credit.

The biggest disadvantage is that your interest rate will likely be higher than either of those options. And if your credit score is low, you may not find a better interest rate than what you already have.

Generally, a personal loan is best for someone with a credit score between 600 and 700 who either doesn’t have home equity or doesn’t want to borrow against his or her home.

You can shop around for a personal loan at LendingTree here. It’s important to compare offers to get the best deal possible.

4. Banks and credit unions

In addition to shopping for a personal loan online, you can contact your local banks or credit unions to see what types of loan options offer.

This is more time-consuming than applying online, and it can be harder to compare a variety of loan options. But it may lead to a better interest rate, especially if you already have a good relationship with a local bank.

One strategy you might try: Get quotes online using a service like LendingTree’s, then take those quotes to the bank or credit union and give it a chance to do better.

This strategy is best for anyone who already has a good and lengthy banking relationship, particularly with a credit union. But if you’re going the personal-loan route, it’s worth looking into in any case.

You can find credit unions in your area here.

5. Borrowing from family or friends

If you’re lucky enough to have family members or friends who have ample assets and are happy to help, this could be the easiest and cheapest debt consolidation option.

With no credit check, no upfront fees and relatively lenient interest rate policies, this might seem like the best of all worlds.

Even so, there are some things to watch out for.

First: A loan fundamentally changes your relationship with the person from whom you borrow. No matter what terms you’re on now or how much you love and trust this person, borrowing money introduces the potential for the relationship to sour in a hurry.

Consequently, if you do want to go this route, you need to do it the right way.

Eric Rosenberg, the chief executive of Money Mola, an app that lets friends and family track loans and calculate interest, suggests creating a contract that outlines each party’s responsibilities, how much money will be borrowed, the timeline for repayment, the payment frequency and the interest rate. He also suggests using a spreadsheet to keep track of the payments made and the balance due.

And Neal Frankle, a certified financial planner and the founder of Credit Pilgrim, suggests adhering to the current guidelines for Applicable Federal Rate (AFR), which as of this writing require a minimum interest of 1.27 to 2.5 percent, depending on the length of the loan. Otherwise, you may have to explain yourself to the IRS and the person lending you the money could be charged imputed interest and have to pay additional taxes.

If you have a family member or a friend who is both willing and able to lend you money, and if your credit isn’t strong enough to qualify favorably for one of the other options above, this could be a quick and inexpensive way to consolidate your debt.

6. Retirement accounts

Employer retirement plans like 401(k)s and 403(b)s often have provisions that allow you to borrow from the accumulated sums, with repayment of the loan going right back into your account.

And while you can’t borrow from an IRA, you can withdraw up to the amount you’ve contributed to a Roth IRA at any time without penalties or taxes, and you can withdraw money from a traditional IRA early if you’re willing to pay both taxes and a 10 percent penalty (with a few exceptions).

The biggest advantage of taking the money out of a retirement account is that there is no credit check. You can get the money quickly, no matter what your credit history looks like. And with a 401(k) or 403(b), you are also paying interest back to yourself rather than giving it to a lender.

Still, while there are situations in which borrowing from an employer plan can make sense, most financial experts agree that this should be considered a last-resort debt consolidation option.

One reason is simply this: Your current debt is already hindering your ability to save for the future, while taking money out of these accounts will only exacerbate the problem. Another is that tapping a retirement account now may increase the odds that it will happen again.

“I’d stay away from a 401(k) loan like the plague,” says Ryan McPherson. McPherson, based in Atlanta, Ga., is a certified financial planner and fee-only financial planner and the founder of Intelligent Worth. “With no underwriting process, and because you’re not securing it with your house, you’re more likely to do it again in the future.”

If you are in dire straits and cannot use any of the other strategies above, then borrowing or withdrawing from a retirement account may be the only consolidation option you have. Otherwise, you are likely to be better off going another route.

Things to consider before picking a debt consolidation strategy

With all these debt consolidation options at your disposal, how do you choose the right one for your situation? To be sure, it’s a key decision: The right option will make it easier for you to pay your obligations, and less likely that you’ll fall back into debt.

Here are the biggest variables you should consider before making the choice:

  1. Have you fixed the cause of the debt? Until you’ve addressed the root cause of your debt, how can any consolidation option help you get and stay out of debt?
  2. How much debt do you have? Smaller debts can be handled through any of these options. Larger debts might rule out balance transfers or borrowing from relatives or friends.
  3. What are your interest rates? You need to be able to compare your current interest rates with the interest rates you’re offered by the options above, if you want to know whether you’re getting a good deal.
  4. What is your credit score? Your score determines eligibility for various debt consolidation options, as well as the quality of the offers you’ll receive. You can check your credit score here.
  5. When do you want to be debt-free? Shorter repayment periods will cost less but require a higher monthly payment. Longer repayment periods will cost more but with a lower monthly payment. With this in mind, you need to decide both what you want and what you can afford.
  6. Do you have home equity? This determines whether a home equity loan or line of credit is an option. If it is, you should decide if you’re comfortable putting your home on the line.
  7. Do you have savings? Could you use some of your savings, outside of retirement accounts, to pay off some or all of your debt? That may allow you to avoid debt consolidation altogether and save yourself some money.

So … what’s the best consolidation strategy?

Unfortunately, there is no single answer to this tough question. The right answer for you depends the specifics of the situation.

Your job is to know what you currently owe and understand the pros and cons of each option we’ve outlined above. In this fashion, you can make an informed choice, one that’ll get you out of debt now and keep you out of it forever.

Matt Becker
Matt Becker |

Matt Becker is a writer at MagnifyMoney. You can email Matt at matt@magnifymoney.com

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