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Reviews

Review of State Farm Bank Rates

Editorial Note: 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 prior to publication.

Year Established1999
Total Assets$16.7B
LEARN MORE on State Farm Bank’s secure website

When you hear about State Farm, chances are that the first thing that comes to mind is insurance. After all, for years their slogan — “Like a good neighbor” — implied that State Farm’s main business was to protect you with insurance for when things in life don’t go as planned.

But with a rebrand, they’ve now shifted their message to imply that not only are they around when life goes wrong, but they’re also “here to help life go right” with a larger focus on their other products and services — more specifically, banking and financial products outside the realm of insurance.

State Farm Bank offers all of the traditional banking products you’d expect: home loans, vehicle loans, and credit cards, plus checking and savings accounts, money market accounts, and more.

For this review, we’ll be focusing on their certificates of deposit, IRA accounts, checking accounts, savings accounts, and money market accounts.

*Note: All rates below are based on State Farm's corporate location (zip code: 61791). To see rates in your area, enter your zip code on their rates page.

State Farm Bank’s Most Popular Accounts

APY

Account Type

Account Name

Compare Rates from Similar Accounts

0.10%

Savings

State Farm Bank Savings

1.75%

Ally Bank Online Savings Account

on Ally Bank’s secure website

0.10%

CD Rates

State Farm Bank 12 Month CD

2.40%

Barclays 12 Month Online CD

on Barclays’s secure website

1.45%

CD Rates

State Farm Bank 36 Month CD

2.55%

Ally Bank High Yield 3 Year CD

on Ally Bank’s secure website

2.65%

CD Rates

State Farm Bank 60 Month CD

3.00%

Barclays 60 Month Online CD

on Barclays’s secure website

State Farm CD rates

Regular CDs

CDs from State Farm Bank don’t offer the highest rates available, and with a somewhat complex early withdrawal fee policy, you can likely find a better place to keep your money in a CD.

Term

Less than $100,000

$100,000+

12 months

0.10%

0.10%

24 months

0.40%

0.40%

30 months – special term

2.30%

2.30%

36 months

1.45%

1.45%

48 months

1.75%

1.75%

60 months

2.65%

2.65%

  • Minimum opening deposit: $500
  • Minimum balance amount to earn APY: $500
  • Early withdrawal penalty: If you make a principal withdrawal within six days of your initial deposit, or within six days of your previous withdrawal, the penalty is seven days’ interest. For all other principal withdrawals, the penalty will be the greater of a minimum of $25 or:
    • 90 days of interest for a CD term of 11 months or less
    • 180 days of interest for a CD term of 12 to 23 months
    • 365 days of interest for a CD term of 24 to 47 months
    • 545 days of interest for a CD term of 48 months or greater

We like that the account minimum is low at only $500, which makes it easy to get started with little money. Another benefit is that interest compounds daily and can be added to the CD, paid out to you by check, or deposited into a State Farm Bank account.

However, rates are low compared to many other banks’ CD products, and the complex early withdrawal penalty makes it less attractive if you’d have to withdraw your funds early for any reason.

If you decide to use this product, make sure you invest money that you likely will not need to access during the time that it is invested. Also, you have to move quickly when your CD matures if you want to withdraw your funds without a penalty — there is only a 10-calendar-day grace period after which the CD will automatically renew.

How to get State Farm’s CDs

You can apply for an account directly on State Farm’s website. To be eligible, you must have a Social Security Number, Tax Identification Number, or Individual Taxpayer Identification Number. Minors may open a CD and be listed as the primary or secondary account holder; however these accounts must be opened through a State Farm agent or by phone.

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Coverdell Education Savings Account (ESA) CDs

If saving for your child’s education is important to you, you might consider using a Coverdell ESA. Contributions are not tax deductible, but funds will grow tax-free until distributed. Plus, the earnings are used for qualified education expenses, they can be withdrawn tax-free.

Coverdell ESA funds can be invested in a CD or in mutual funds. CD rates are listed in the table below.

Term

APY (Less than $100,000)

APY ($100,000+)

12 months

0.10%

0.10%

24 months

0.40%

0.40%

30 months – special term

2.30%

2.30%

36 months

1.45%

1.45%

48 months

1.75%

1.75%

60 months

2.65%

2.65%

  • Minimum opening deposit: $500
  • Minimum balance amount to earn APY: $500
  • Early withdrawal penalty: If you make a principal withdrawal within six days of your initial deposit, or within six days of your previous withdrawal, the penalty is seven days’ interest. For all other principal withdrawals, the penalty will be the greater of a minimum of $25 or:
    • 90 days of interest for a CD term of 11 months or less
    • 180 days of interest for a CD term of 12 to 23 months
    • 365 days of interest for a CD term of 24 to 47 months
    • 545 days of interest for a CD term of 48 months or greater

Coverdell ESA CD rates are the same as traditional CD rates. The only difference is that these funds are to be used for educational expenses for students.

The contribution maximum is $2,000 per student per year up to age 18, even if multiple accounts are opened for the same student. This means if you open account for your child and your parents open an account for your child, the combined maximum is still $2,000 per year.

There is also a modified adjusted gross income cap of $95,000 for single tax filers and $190,000 for married filing jointly, after which only a partial contribution can be made to a Coverdell ESA. If your modified adjusted gross income is above $110,000 for single tax filers, or $220,000 for married filing jointly, you are not eligible to contribute to a Coverdell ESA.

Distributions from a Coverdell ESA don’t have to be reserved for college expenses. Any educational expenses for kindergarten through grad school may qualify. Qualified expenses include things like:

  • Tuition and fees
  • Academic tutoring
  • Books, supplies, and equipment
  • Room and board
  • Uniforms
  • Transportation
  • Computers and technology

Coverdell ESA funds can also be invested in mutual funds instead of CDs. Mutual funds may offer higher interest rates, depending on which funds are selected.

How to get State Farm Bank’s Coverdell Education Savings Account (ESA) CDs

An ESA can be opened by anyone, including the child for whom the funds are being saved, as long as their modified adjusted gross income falls without the limits outlined above. The combined total per year cannot exceed $2,000. There is no limit to the number of accounts that can be established for one student.

If funds contributed exceed $2,000, they must be withdrawn before June 1 of the following tax year. If they aren’t, the funds will be subject to a 6% excise tax, which will be reported on the child’s tax return each year that the excess funds remain in the account.

To open an account, call State Farm Bank at 1-877-734-2265.

LEARN MORE Secured

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How State Farm’s CD rates compare

While State Farm Bank offers a low minimum account deposit to open a CD, better CD rates can be found elsewhere. We’d suggest shopping around to find a higher interest rate CD, or investing your money in a different type of account.

State Farm’s IRA accounts

IRA CD rates

State Farm Bank’s IRA CD has a low account minimum of only $500 and also offers both a traditional and Roth plan. Interest is compounded daily, but rates are low compared to what is available from other banks.

Term

APY

12 months

0.10%

24 months

0.40%

30 months Special Term

2.30%

36 months

1.45%

48 months

1.75%

60 months

2.65%

  • Minimum opening deposit: $500
  • Minimum balance amount to earn APY: $10. If you’re age 59 ½ or older and are taking normal distributions, the account balance may fall below the minimum opening balance. However, it cannot fall below $10.
  • Early withdrawal penalty: If you’re age 59 1/2 or older, normal distributions are allowed without an early withdrawal penalty. However, if you want to transfer funds to a different IRA, withdrawals will be subject to early withdrawal fees. If you make a principal withdrawal within six days of your initial deposit, or within six days of your previous withdrawal, the penalty is seven days’ interest. For all other principal withdrawals, the penalty will be the greater of a minimum of $25 or:
    • 90 days of interest for a CD term of 11 months or less
    • 180 days of interest for a CD term of 12 to 23 months
    • 365 days of interest for a CD term of 24 to 47 months
    • 545 days of interest for a CD term of 48 months or greater

Like other CD products with State Farm Bank, you can withdraw interest earnings without penalty. Another nice benefit with this retirement investing account, you are also eligible to withdraw a portion of your original deposit as a normal distribution without penalty if you are over age 59 1/2. Keep in mind that any interest payments withdrawn will be considered distributions and taxes and IRS penalties may apply if you are under age 59 1/2.

However, one drawback with this account is that you can’t easily access your balance information online, and there are no electronic statements available.

How to get State Farm’s IRA CDs

To open an account, call State Farm Bank at 877-734-2265.

You can open your account with $500 or more and select either a Traditional or Roth plan with terms between 12 and 60 months.

The contribution limit for 2018 is $5,500, or 100% of your earned income, whichever is less. If you are over age 50, you can contribute an additional $1,000 per year.

There are also limits to the amount you can deduct from your taxes based on your adjusted gross income. These limits are based on federal law.

LEARN MORE Secured

on State Farm Bank’s secure website

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How State Farm’s IRA CD rates compare

Rates for State Farm’s IRA CD rates aren’t the highest on the market. There are other banks that offer better IRA CD rates so you can earn more interest on your money. One nice benefit that may not be available at all banks is that interest is compounded daily at State Farm Bank.

IRA Money Market Account

Investing in an IRA Money Market account with State Farm Bank may be easier than using their IRA CD product because you can electronically contribute a portion of each paycheck into your Money Market account. Plus, there’s no time commitment required for your investment.

Minimum balance amount

APY

$100 - $9,999

0.35%

$10,000 - $24,999

0.45%

$25,000 - $49,999

0.45%

$50,000 - $99,999

0.45%

$100,000 - $249,999

0.45%

$250,000 - $24,999,999

0.45%

$25,000,000+

0.45%

Rates effective as June 13, 2018

  • Minimum opening deposit: $1,000
  • Minimum balance amount to earn APY: $100
  • ATM fee: None
  • ATM fee refund for foreign transactions: Up to $10
  • Overdraft fee: $25 maximum of 3 per day

With State Farm Bank’s IRA Money Market Account, there is a minimum deposit of $1,000 required to open your account. However, if you take distributions, your account balance may fall to less than $1,000. The minimum balance required to earn interest is $100; however if your average daily balance is less than $500, you will be charged a minimum balance fee of $10.

Withdrawals from this account prior to age 59 1/2 may be subject to IRS penalties. Plus, you must give at least seven days notice before making any transfers or withdrawals from your account.

Interest on this account compounds daily but is only added to your account balance monthly.

You are only allowed to make six transfers from your account each month by phone or mail, otherwise you may be subject to an excessive transaction fee of $10. State Farm also has the right to refuse transactions after you’ve hit the limit, or even close your account. You can make unlimited withdrawals by mail or telephone.

How to get State Farm’s IRA money market account

To open an account, call State Farm Bank at 877-734-2265.

To be eligible, you must be at least 18 years old. IRA money market accounts can only have one owner.

LEARN MORE Secured

on State Farm Bank’s secure website

State Farm’s checking account options

Interest Checking

Although the minimum amount required to open a State Farm Bank Interest Checking account is only $100, you must maintain an average daily balance of $500 in order to avoid a minimum balance fee. In addition, your account must have a balance of $2,500 in order to earn the stated interest rates.

Minimum deposit amount

APY

$0 - $2,499

0.00%

$2,500+

0.25%

Rates effective as June 13, 2018

  • ATM fee: None.
  • ATM fee refund for foreign transactions: Up to $10
  • Overdraft fee: $25, maximum of 3 per day. Overdraft protection is $3 for a transfer from another State Farm Bank account.

You can’t just deposit $100 to open your account and begin earning interest. In fact, if you only deposit $100 to open your account, you will be subject to a minimum balance fee of $10 if your average daily balance isn’t at least $500.

Plus, if you want to earn interest on your money, you have to have a balance of at least $2,500, significantly more than the minimum required to open the account, or even the minimum required to avoid the minimum balance fee. If you don’t read the fine print, this can be misleading.

There are much better options for interest bearing checking accounts with higher APYs and lower minimum balance requirements.

How to get State Farm’s Interest Checking account

You can apply for an account online in only 10 minutes. You must have a Social Security Number, Tax Identification Number, or Individual Taxpayer Identification Number in order to apply.

There must be at least one account holder that is age 18 or older. Minors may be account holders, but you must open an account with a State Farm agent or by phone.

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Regular Checking

The requirement to open a regular checking account is much lower, plus there are no minimum balance fees to contend with.
  • Minimum deposit amount: $25
  • ATM fee: None.
  • ATM fee refund for foreign transactions: Up to $10
  • Overdraft fee: $25, maximum of 3 per day. Overdraft protection is $3 for a transfer from another State Farm Bank account.

While this account doesn’t earn any interest, we like that there are essentially no fees if you don’t overdraw your account. It also has handy features like mobile check deposit and a mobile banking app. You can also get account alerts by text or email.

It may be a good option for those who aren’t able to meet the minimum balance requirements for State Farm Bank’s Interest Checking account.

However, there are still plenty of online banks that offer interest-bearing checking accounts with no or low minimum balance requirements. You may as well be earning interest on your money with an online bank if you can.

How to Get State Farm Bank’s Regular Checking Account

You can apply for a regular checking account online on State Farm’s website in only a few minutes.

To be eligible for a checking account, you have to have a Social Security Number, Tax Identification Number, or Individual Taxpayer Identification Number. There can be multiple account holders listed, but at least one of them must be 18 years or older. If the account will have a minor listed, it must be opened over the phone or with a State Farm agent.

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How State Farm’s checking accounts compare

Compared to these interest-bearing checking accounts with several online banks, there’s no way State Farm Bank can be competitive. Their account minimums are much higher in order to earn interest. Even then, the amount of interest earned with State Farm is significantly lower than other banks.

We suggest checking out other options besides State Farm if you want to earn interest on your checking account.

State Farm Bank’s savings account options

Consumer Savings Account

The interest rate on State Farm’s Consumer Savings Account may be higher than some brick-and-mortar banks, but it can’t compete with online savings options.

Minimum balance amount

APY

$0 - $9,999

0.10%

$10,000 - $24,999

0.10%

$25,000 - $49,999

0.15%

$50,000 - $99,999

0.25%

$100,000 - $249,999

0.30%

$250,000 - $24,999,999

0.30%

$25,000,000+

0.30%

Rates effective as June 13, 2018

  • ATM fee: None.
  • ATM fee refund for foreign transactions: Up to $10
  • Overdraft fee: $25, up to 3 per day. Eligible for $3 overdraft protection from a linked State Farm Bank account.

The minimum deposit to open a savings account is $100. If the main account holder is over age 18, there is a minimum balance requirement of $100; if the balance falls below $100, a $3 fee will be charged.

This could be a good starter savings account for those under age 18 who are looking to earn a little interest on their money, especially since there’s no minimum balance fee for main account holders under age 18. That said, there are other online savings accounts with much higher interest rates available.

How to get State Farm’s savings account

A savings account can be opened online if you are over age 18 and a minor won’t be listed as an account holder. However, if a minor will be an account holder, you must open the account by phone or by working with a State Farm agent.

To be eligible for a State Farm savings account, you have to have a Social Security Number, Tax Identification Number, or an Individual Taxpayer Identification Number.

LEARN MORE Secured

on State Farm Bank’s secure website

Health Savings Account (HSA)

Having a HSA is a nice option for State Farm Bank customers; however, higher interest rates can be found elsewhere.

Minimum balance amount

APY

$0 - $2,499

0.05%

$2,500 - $9,999

0.15%

$10,000+

0.40%

Rates effective as June 13, 2018

  • Annual fee: $25
  • ATM fee: None
  • ATM fee refund for foreign transactions: None

An HSA can be a good way to get tax benefits and earn a little interest at the same time. State Farm’s HSA works essentially like a checking account, but it’s only to be used for qualified medical expenses.

There is no minimum balance fee associated with this HSA account, and after opening, you can make deposits at any time. There is an annual fee of $25 on the first anniversary of your account opening and every year thereafter.

Having an HSA can be a good idea, but you can likely find one with a better interest rate.

How to Get State Farm’s HSA

If you want to open an HSA with State Farm, call 877-734-2265. There is no option to apply online.

By federal law, you can only use an HSA in combination with a high-deductible health insurance plan.

LEARN MORE Secured

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How State Farm’s savings accounts compare

While it is a good idea to have a savings account, you can earn more interest on your savings by using a different institution. Savings interest rates with State Farm are low, especially when compared to online savings accounts.

State Farm Bank’s Money Market account

Consumer Money Market Account

If you’re new to State Farm Bank, this is the best way to earn extra interest on your initial account opening and deposit. There is an introductory interest rate of 2.00% (1.17% APY) for your first deposit up to $249,999.

Minimum balance amount

APY

$0 - $9,999

0.30%

$10,000 - $24,999

0.40%

$25,000 - $49,999

0.45%

$50,000 - $99,999

0.45%

$100,000 - $249,999

0.45%

$250,000 - $24,999,999

0.45%

$25,000,000+

0.45%

Rates effective as June 13, 2018

  • ATM fee: None.
  • ATM fee refund for foreign transactions: Up to $10
  • Overdraft fee: $25, up to 3 per day. Eligible for $3 overdraft protection from a linked State Farm bank account

A State Farm Money Market Savings account will help you earn more interest than a traditional savings account with State Farm. If you have the funds available to do a large introductory deposit, you can earn extra interest versus depositing smaller amounts over time because of State Farm’s special introductory offer.

The minimum amount required to open an account is $1,000. However, if you withdraw a portion of your funds later, keep in mind that there is a minimum balance fee of $10 that will be imposed if the average daily balance is below $500.

Like other savings accounts, there is a limit of six transfers from your account each month, including automatic transfer, bill pay, etc. If you go beyond six transfers, State Farm has the right refuse your transaction or even shut down your account. You may also be subject to a $10 fee for excessive transactions. There is also a requirement that you must provide written notice at least seven days before any withdrawal or transfer from the account.

How to get State Farm’s Consumer Money Market Account

You can apply for an account online. To be eligible, you must have a Social Security Number, Tax Identification Number, or Individual Taxpayer Identification Number. One account owner must be over age 18. If a minor will be an account owner, the account must be opened over the phone or via a State Farm agent.

LEARN MORE Secured

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How State Farm’s money market account compares

While the regular rates on State Farm’s Money Market Savings are not as high as the special introductory rate, they’re much higher than with State Farm’s regular savings account. However, there are still higher money market rates available at other banks. We think it’s a good idea to shop around for a better rate.

Overall review of State Farm banking products

State Farm does have decent terms and interest rates on their products, but they’re certainly not the lowest rates on the market. However, if your main concern is getting the most interest for your money, we recommend finding another bank to house your funds. State Farm is consistently outperformed by other banks that offer higher rates and similar (if not better) terms.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Kayla Sloan
Kayla Sloan |

Kayla Sloan is a writer at MagnifyMoney. You can email Kayla here

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Reviews

Dollar Savings Direct Review

Editorial Note: 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 prior to publication.

Year Established1850
Total Assets$6.3B
LEARN MORE on DollarSavingsDirect’s secure website

Everyone wants to earn more interest on their savings. After all, it’s basically free money just for maintaining your account balance. If you already have money saved up for emergencies or future planned expenses, it makes sense to try and earn some interest while your money sits there.

However, many banks only offer interest rates of 0.01%, which isn’t going to add up any time soon, no matter how much money you have socked away. This is why it’s a good idea to shop around for an online bank that offers higher interest rates on savings accounts.

If you’ve done your research, you might have heard of DollarSavingsDirect, an online division of Emigrant Bank located in New York. But, before you agree to open a savings account with its current high interest rate of 1.80% APY, make sure you understand what you’d be getting into.

DollarSavingsDirect’s Most Popular Accounts

APY

Account Type

Account Name

Compare Rates from Similar Accounts

1.80%

Savings

DollarSavingsDirect Dollar Savings Account

1.75%

Ally Bank Online Savings Account

on Ally Bank’s secure website

Opening an account

You can open a Dollar Savings Account™ online by providing your basic information, like your tax identification number and your address. Customers have to be age 18 or older, and you have to have a personal checking account with a U.S. bank that you can link to your new Dollar Savings Account™.If your online application is approved, you will be able to login and see your information immediately. However, if more information is needed, Dollar Savings Direct will contact you in two to three business days, according to its website.

Funding your account

Your linked checking account can be used to fund your new Dollar Savings Account™; however, you can also choose to fund your account with a physical check by mail.When you apply, you must select this option and then you will receive instructions about where to mail your check. Your check must be written from the same linked checking account. Checks are only accepted for your initial deposit. You must make any future deposits or withdrawals via electronic transfer.

There is no minimum deposit required to start your Dollar Savings Account™, nor is there a minimum balance required after the account has been established.

Accessing your money

After you’ve opened and funded your Dollar Savings Account™, you can transfer funds electronically in or out of your account by logging in online. Online access is available 24 hours a day, seven days a week. However, you may feel disappointed by the digital experience offered by Emigrant Bank and its subsidiaries, including Dollar Savings Direct. There is no mobile app you can use to access your account easily while on-the-go, and the website itself has a dated look and feel.

Keep in mind that your Dollar Savings Account™ is subject to the Federal Reserve Board’s Regulation D, which allows a maximum of six transfers or withdrawals per statement period. If you make more than six transfers or withdrawals per statement period, your bank can charge you a fee, convert your account to a checking account or close it. This is not unique to your Dollar Savings Account™. It applies to all savings accounts and money market accounts at any bank.

If you funded your account with a check, there is a 10-business-day hold before you may withdraw your funds. All electronic transfers, or ACH deposits, have a five-business-day hold, no matter if it’s your initial deposit or a future deposit.

After you initiate your withdrawal online, it can take between two and four business days to appear in your connected external checking account. It will also take the same amount of time to transfer money into your Dollar Savings Account™.

Why Dollar Savings Direct may not be the best choice for your savings

Dollar Savings Direct offers the Dollar Savings Account™ with no minimum deposit required and no fees or service charges. This, combined with “America’s Highest Rate” at 1.80% APY (annual percentage yield) makes it seem like an attractive option to new customers.However, even though a 1.80% APY on your savings account is hard to beat, Emigrant Bank, the parent of Dollar Savings Direct, has a habit of using high interest rates to attract new customers and deposits to its sub-brands before lowering the rates significantly once they’ve achieved their goals.

Source: DepositAccounts.com (DepositAccounts.com, like MagnifyMoney, is owned by LendingTree)

Dollar Savings Direct and Emigrant Bank, along with any other bank, are fully within their legal right to change the APY on savings accounts at any time. But, this bait-and-switch tactic is not in the best interest of their customers.

In general, a more stable APY will generate more interest on savings over time.

If you do decide to open a Dollar Savings Account™ to take advantage of their 1.80% APY, keep an eye on the rate over time. You may want to withdraw your funds and store them elsewhere if rates drop significantly, as they have done historically.

Competitors to consider

Luckily, there are plenty of other high yield online savings accounts to consider that tend to have more stable interest rates over time. Here are a few to consider:
Institution
APY
Minimum Deposit Amount
High Yield Savings from Synchrony Bank
Synchrony Bank

1.75%

$0

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on Synchrony Bank’s secure website

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We'll receive a referral fee if you click here. This does not impact our rankings or recommendations

Synchrony Bank, a direct competitor to Dollar Savings Direct, has a savings account with a decent interest rate and also offers their account without a minimum balance or monthly fees. Plus, you can also get an ATM card to access your funds. Synchrony Bank also has a mobile app.
Institution
APY
Minimum Deposit Amount
Online Savings Account from Ally Bank
Ally Bank

1.75%

$0

LEARN MORE Secured

on Ally Bank’s secure website

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We'll receive a referral fee if you click here. This does not impact our rankings or recommendations

Another top competitor is Ally Bank. Ally offers a good APY with no minimum balance. It also offers a free checking account (also with no minimum balance required), which makes it even easier to manage your money all in one place.

Bottom line

Again, it’s tough to beat a 1.80% APY on a savings account. However, sticking with an account that offers a slightly lower APY but is more consistent with their rate would make it easier to manage getting the best return on the money you store in a savings account.

If you open a Dollar Savings Account™, you’ll want to keep a constant eye on the rate, knowing that it may drop significantly in a few months, based on Emigrant Bank’s past practices. If you don’t transfer your funds out of your Dollar Savings Account™ when the rate drops, the advantages of opening a high yield savings account will be lost.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Kayla Sloan
Kayla Sloan |

Kayla Sloan is a writer at MagnifyMoney. You can email Kayla here

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Personal Loans

Discover Personal Loan Review

Editorial Note: 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 prior to publication.

Discover Personal Loans
APR

6.99%
To
24.99%

Credit Req.

660

Minimum Credit Score

Terms

36 to 84

months

Fees

No origination fee

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Discover’s personal loan gives you all the benefits that come with a traditional lender – fixed rates, availability in all 50 states, and flexible payment options. In fact, you can get up to 84 months to repay your loan, which is one of the longest repayment terms available. Discover does have a more in-depth application process than others and you may need to speak with a loan specialist to qualify.

Discover Personal Loan Details
 

Fees and penalties

  • Terms: Discover Personal Loan terms range from 36 to 84 months.
  • APR Range: The APR ranges from 6.99% to 24.99% depending on creditworthiness.
  • Loan amounts: Loan amounts can be anywhere from $2,500 to $35,000.
  • Time to funding: You can get a loan decision as quickly as the same day of your application. Funds may be received as early as the next business day. It may take up to seven days if your application has errors, is funded on a weekend or holiday, or you request funds with some disbursement methods.
  • Hard pull/soft pull: Checking your rate will result in a Soft Pull that won’t impact your credit score.
  • Origination fee: None
  • Prepayment fee: None
  • Late payment fee: $39 if payment is not received in full by the due date.
  • Other fees: None

Discover Personal Loans have no fees as long as you make your monthly payments in full and on time. To help avoid late payments, you can set up automatic payment for free at any time. You can also set up the automatic payment to withdraw more than the monthly payment amount if you want to pay off your loan early.

The repayment terms with Discover Personal Loans are more flexible than most personal loan lenders, with 36 to 84 months to repay your loan.

A cool perk that is offered by Discover for anyone to take advantage of (you don’t even have to be a customer of Discover) is the free Credit Scorecard with your FICO® Score. This is a free way to find out your credit score without a hard pull, which means checking your score with Discover won’t lower it.

Discover Personal Loans also offers a 30-day money-back guarantee. This means you have 30 days after the date your loan is funded to return the entire amount without fees or interest and the loan will be canceled. However, this does not apply to loans where funds are disbursed directly to other creditors to consolidate existing debt.

Funds can be used for many different purposes, including vacations, financing a wedding, home improvements, moving costs, medical bills, debt consolidation and more.

Eligibility requirements

  • Minimum credit score: Discover seeks applicants with “good credit”
  • Minimum credit history: Discover seeks applicants with a “strong financial history”
  • Maximum debt-to-income ratio: Not specified

Discover Personal Loans doesn’t specify a minimum credit score, minimum credit history or maximum debt-to-income ratio required to qualify for a loan. However, their website does say their personal loans “may be an ideal solution for people with good credit and a strong financial history.” The exact definition of a good credit history is subjective.

Discover does specify that in order to be eligible for a personal loan, you must:

  • be a U.S. citizen or permanent resident
  • be at least 18 years old
  • have a minimum household income of $25,000

Applying for a personal loan from Discover

You can apply for a personal loan from Discover on their website, or you can call 1-866-248-1255 and apply over the phone. If you received an invitation in the mail to apply, you can also fill out and mail the application.

On their website, you do have the option to view your interest rate and monthly payment without a hard pull on your credit. You have to fill out your requested loan amount, state the funds will be used for, the length of term you’d like, as well as your personal information like your address, etc.

After reviewing this information, you can then decide to finish your application or not.

Make sure you have the following information handy to complete your application:

  • An invitation number if you received an invitation by mail or email to apply
  • Income information
  • Employment history
  • Bank account number and routing number for depositing funds via direct deposit
  • Creditor information (balances and account numbers) if funds will be sent directly to creditors to consolidate debt

According to their website, after your loan application is received, a loan specialist may call to confirm and verify your information.

If your information is all correct and free of errors, you can receive a decision the same business day. Funds may be disbursed as quickly as the next business day depending on the disbursement method you’ve chosen.

Pros and cons of a Discover personal loan

Pros:

Cons:

  • Flexible terms. A repayment term of 36 to 84 months is among the longest for most personal loan lenders.
  • Few fees. No origination fee and no prepayment fees. Fees only apply if payments are late or not paid in full.
  • Check your rate with a soft pull before applying. This means shopping around to see your rate won’t impact your credit score.
  • Interest rates higher than some lenders. It may be a good idea to shop around for a better rate. Definitely take advantage of their pre-qualification form so you can compare your rate with other offers.
  • Application process may be more stringent than other lenders. You may receive a phone call after applying to review and verify your information. This seems more stringent than some other lenders.

Who’s the best fit for a Discover Personal Loan?

If you have high-interest debt to consolidate, a personal loan from Discover may help you get a lower interest rate with a flat monthly payment, which also makes budgeting easier than with fluctuating monthly payments. The longer terms offered by Discover may also result in lower monthly payments than shorter-term personal loan options with other lenders.

Alternative personal loan options

Here are some loan alternatives:

Upgrade

Upgrade
APR

6.87%
To
35.97%

Credit Req.

620

Minimum Credit Score

Terms

36 or 60

months

Fees

1.00% - 6.00%

LEARN MORE Secured

on LendingTree’s secure website

Loans made through Upgrade feature APRs of 6.87%-35.97%. All loans have a 1% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay. For example, a $10,000 loan with a 36 month term and a 17.97% APR (which includes a 5% origination fee) has a required monthly payment of $343.28. Upgrade is available in all states except: Connecticut, Colorado, Iowa, Massachusetts, Vermont, West Virginia.

While Upgrade charges an origination fee and offers few options for loan terms, you may be able to get a slightly lower APR than with Discover. You may also be able to get a loan more easily with Upgrade since the credit score requirement is low.

Marcus by Goldman Sachs®

Marcus by Goldman Sachs®
APR

6.99%
To
24.99%

Credit Req.

Varies

Minimum Credit Score

Terms

36 to 72

months

Fees

No origination fee

LEARN MORE Secured

on LendingTree’s secure website

Marcus by Goldman Sachs® offers personal loans for up to $40,000 for debt consolidation and credit consolidation. ... Read More

Marcus by Goldman Sachs® offers slightly higher amounts for borrowers. With Discover, you can borrow up to $35,000, while you can borrow up to $40,000with Marcus. However, the shorter repayment terms means that you monthly payments will likely be higher with Marcus.

LightStream

LightStream
APR

3.09%
To
14.24%

Credit Req.

660

Minimum Credit Score

Terms

24 to 144

months

Fees

No origination fee

LEARN MORE Secured

on LendingTree’s secure website

Advertiser Disclosure

LightStream is the online lending division of SunTrust Bank.... Read More


Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.09% APR with a term of 3 years would result in 36 monthly payments of $291.21.

*Rates with .50% autopay discount.

With low APRs available for qualified borrowers and longer terms on personal loans, LightStream is a highly competitive lender. However, there’s no preapproval process to check rates with a soft pull like there is with Discover, so you have to apply and take a hit on your credit report if you want to see your rate. Plus, in order to get the best rates, you have to sign up for autopay to receive an interest rate discount.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Kayla Sloan
Kayla Sloan |

Kayla Sloan is a writer at MagnifyMoney. You can email Kayla here

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Won’t impact your credit score

Advertiser Disclosure

Personal Loans

iLoan Personal Loan Review

Editorial Note: 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 prior to publication.

If you’re looking for a personal loan, no matter what your reason, one of the first places you may start to look is online. These days, there are plenty of online personal loan lenders to choose from so you can get approved for a personal loan without having to step into a brick-and-mortar institution.

Online personal loan lending makes it faster and easier than ever before to apply, qualify and receive funds in as little as a day or two. Online lender iLoan, for example, says its application takes five minutes, and you may receive funds in your checking account by the next business day.

iLoan
APR

17.60%
To
35.99%

Credit Req.

600

Minimum Credit Score

Terms

24 to 60

months

Fees

Varies

LEARN MORE Secured

on LendingTree’s secure website

Loan approval and actual loan terms depend on your ability to meet our standard credit criteria (including credit history, income and debts) and the availability of collateral in certain states. Loan amounts subject to state specific minimum or maximum size restrictions. Collateral offered must meet our criteria. Loans through the iLoan website are made and serviced by OneMain Consumer Loan, Inc., a Delaware corporation.

iLoan personal loan details
 

Fees and penalties

  • Terms: 24 to 60 months
  • APR range: 17.60%-35.99%
  • Loan amounts: $2,550-$25,000
  • Time to funding: Funds are usually deposited the next business day by ACH, if you sign the loan agreement by 4 p.m. CST.
  • Hard pull/soft pull: Hard Pull
  • Origination fee: Varies by state
  • Prepayment fee: None
  • Late payment fee: Varies by state

If you have an existing loan with iLoan or OneMain, you won’t be able to take out another loan until the first one is repaid. Then, you must wait 10 days before applying for a new personal loan.

One of the reasons people take out personal loans is to consolidate high interest credit card debt into one monthly payment, hopefully with a lower interest rate. However, the high interest rates on iLoan personal loans may not result in much interest savings.

Plus, iLoan doesn’t offer any special features or tools to help make it easy to consolidate debt like some personal loan lenders do. With iLoan, you’d be responsible for disbursing the funds from your checking account to pay off your other existing loans if you want to consolidate your debt. This may be a tough barrier if you’re not yet disciplined when it comes to paying off debt.

Eligibility requirements

  • Minimum credit score: 600
  • Minimum credit history: Not provided
  • Maximum debt-to-income ratio: Not provided

iLoan’s website doesn’t get into specifics about the eligibility requirements needed to qualify for a personal loan.

An iLoans customer service representative told MagnifyMoney that the majority of the loan-making decision is based on your repayment history, rather than a specific credit score, and your ability to repay the loan, based on income. iLoan representatives also said that a credit history of about six months to one year is needed to establish a payment history to qualify for a loan.

However, like most personal loan applications, you will have to provide proof of identity, proof of income and proof of residence. You also need to supply your checking account number and routing information in order to receive the funds if your application is approved.

In order to be approved for a personal loan with iLoan, you must also live in one of the 13 states in which they operate.

Applying for a personal loan from iLoan

iLoan offers a simple personal loan application process. You can start your application on the iLoan website.

To apply, you will need to enter your requested loan amount, the purpose of the loan and your personal details, including a valid ID, proof of income, proof of residence and checking account information.

iLoan offers personal loans for lots of different purposes, including debt consolidation, medical and dental bills, auto repair, major purchases, moving and relocation, vacation, special events, monthly bills and more.

During the application process, you will be asked a series of questions to help verify your identity. You can also choose to use Instant Income Verification, which is a free service that can help speed up your loan application. With Instant Income Verification, iLoan will be able to access a summary of your bank account in order to see your income deposits. If your bank supports iLoan’s Instant Income Verification process, it serves as an alternative to providing W-2 tax forms for income verification purposes.

After you complete the application, iLoan says it normally delivers a loan decision in an hour or less during business hours. If your application is approved, the funds may be available in your checking account the next business day.

If your application is denied, you will receive a Notice of Adverse Action within three days informing you about the reasons the lender rejected your application, per the Fair Credit Reporting Act.

Pros and cons of an iLoan personal loan

Pros:

Cons:

  • Fast decisions. iLoan says it generally makes credit decisions within an hour of receiving applications.
  • Quick access to funds. If your application is approved, iLoan disburses funds quickly to your checking account.
  • High interest rates. High interest rates mean you won’t be saving any money with an iLoan personal loan.
  • No specific eligibility requirements listed. iLoan doesn’t list specific eligibility requirements on their website, which can make it difficult to know if you can qualify.
  • Hard credit pull. Applying for a personal loan from iLoan will create a hard inquiry on your credit report and may lower your credit score, even if you don’t qualify and take out a personal loan. There is no soft-pull option to see if you pre-qualify.

Who’s the best fit for an iLoan personal loan?

If you have good credit, you should definitely shop around for better interest rates than those offered by iLoan. Although there are no specific credit requirements listed on iLoan’s website, the high interest rates seem to indicate that they are willing to work with borrowers who have low credit scores.

If you need money quickly and you have less-than-stellar credit, iLoan may be an option to help you get the money you need as soon as the next day.

Alternative personal loan options

There are lots of other online personal loan lenders to choose from. Here are a few to consider.

Lending Club

Lending Club
APR

6.16%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Fees

1.00% - 6.00%

LEARN MORE Secured

on LendingTree’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores as low as 600.... Read More

Lending Club is a peer-to-peer lending platform, which means the funds you receive come from from individual or institutional investors who fund the loans for borrowers. Interest rates range from 6.16% and 35.89% APR, which may be lower than you can qualify for with iLoan. You can also check your rate without harming your credit score if you want to shop around to see what you can qualify for.

OneMain Financial

OneMain Financial
APR

16.05%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Fees

Varies

APPLY NOW Secured

on OneMain Financial’s secure website

If you have a credit score below 600, OneMain Financial is one of the few lenders that you can use to get a personal loan.... Read More

OneMain Financial is the parent company of iLoan, but it should be considered as an alternative as well, because it has more flexibility. OneMain Financial offers both personal loans and auto loans with terms between 24 and 60 months, which means you may be able to pay off your loan faster than with iLoan. They also offer lower amounts, too, with a minimum loan of $1,500. Like iLoan, the maximum is $30,000. You can still apply online and you may be able to receive funds the same day your application is approved.

LendingPoint

LendingPoint
APR

15.49%
To
35.99%

Credit Req.

585

Minimum Credit Score

Terms

24 to 48

months

Fees

Fee Varies

LEARN MORE Secured

on LendingTree’s secure website

LendingPoint offers personal loans for a wide variety of reasons, including paying for home repairs, consolidating credit card debt, or to make a large purchase. Their online process can help you to quickly apply for a personal loan, get qualified, and receive funding. While their interest rates can be higher than others, they do offer fast approval and can transfer funds to your bank account in 24 hours.

LendingPoint may be a good option to consider if your credit score is as low as 585 it looks at more than just your credit score when considering your application. Like iLoan, you can apply online and receive your funds the next business day.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Kayla Sloan
Kayla Sloan |

Kayla Sloan is a writer at MagnifyMoney. You can email Kayla here

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Get A Pre-Approved Personal Loan

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Won’t impact your credit score

Advertiser Disclosure

Personal Loans

Should You Use Your Assets to Get a Collateral Loan?

Editorial Note: 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 prior to publication.

iStock

If you need a loan for any reason, whether you’re refinancing high-interest debt or paying for home improvements, you may be considering a personal loan. However, qualifying for an unsecured personal loan can be difficult if you don’t have a stellar financial history, credit score or debt-to-income ratio.

If that’s the case, you might be tempted to apply for a secured loan instead. We’ll tell you everything you need to about collateral loans here.

What is a collateral loan?

A secured loan, or collateral-backed loan, is one backed by your assets, which could include things like a vehicle, a savings account or a piece of property, or real estate.

A person with less-than-stellar credit might have a better chance of qualifying for a collateral loan because the lender knows they can seize that person’s assets if he or she defaults and misses payments on the loan.

Many people may not have heard the term collateral loan in everyday life, but that’s because they’re rarely called by that name specifically. Chances are you’re familiar with some of the most common collateral loans — a home loan (aka a mortgage) and car loans. These types of loans are generally secured by the asset being purchased with the loan.

It’s also not uncommon for people to take out a collateralized personal loan using an asset they’ve already owned for some time. For example, you’ve probably heard of a title loan, which is a type of loan that requires the title of a paid-off vehicle as collateral to back it.

How a collateral loan works

Collateral loans and unsecured loans work primarily the same way. You’ll be required to fill out a loan application detailing how much funding you’re requesting, what it will be used for and sharing your personal and financial details, like your employment history, proof of income and authorization to pull your credit score and history.

After you are approved for your loan, you’ll receive the funds and you’ll be on the hook to make monthly payments until the end of the term, or until the loan is paid off in full. After the loan is paid off, the term of your loan ends, even if you pay it off early.

The main difference between a secured collateral loan and an unsecured loan is that the asset you’ve pledged can be repossessed by your lender if you default on the loan. For example, if you put your car down as the asset against your loan and you stop making your payments, a tow truck can show up in your driveway to haul your car away.

Qualifying for a collateralized loan is easier than qualifying for an unsecured loan because the approval of your application is based on both the value of your asset and your credit worthiness says Michael Dinich, a Registered Financial Consultant from Sayre, Pa.

With an unsecured loan, your credit worthiness is mainly used to evaluate your application. This makes a collateral loan a better option if you don’t have a strong credit score.

You will have to prove the value of your asset to be used for a collateral loan and be able to prove ownership with a title for vehicles or property, or by having your name on the account if you pledge savings or an investment portfolio.

Dinich says specific criteria needed to qualify for a collateral loan will vary by lender and the amount of money you are attempting to borrow.

Types of collateral you can use to secure loans

As mentioned, there are many different types of collateral loans you can apply for different purposes.

Below is a list and summary of some of the most popular types of collateral loans, categorized by the asset used to back them.

A home

Using your home as collateral for a loan is common. A few types of loans that may use your home as collateral include:

  • A new mortgage loan
  • Refinancing an existing mortgage
  • Taking out a second mortgage
  • Home equity line of credit (HELOC)

Home loans such as these can be obtained at most brick-and-mortar banks, or even online by filling out an application and going through the mortgage or HELOC processes.

Loan terms on a traditional mortgage or mortgage refinance can vary from 15 to 30 years. The length of the loan, along with many other factors, will affect the interest rate you receive.

Using your home to secure a loan is something that should be carefully considered to ensure you have the ability to pay the loan payment each month. If you default and your home is foreclosed on, you could find yourself living on the street.

A vehicle

Auto loan. Most commonly, your car will be used to secure the auto loan against its purchase. But, if your car is already paid off, you may be able to use it as collateral against a personal loan instead.

The value of your car will help determine how much funding you can receive when you are using your car as the collateral for a personal or auto loan. The value of your car will be determined by the lender. It may be based on an estimate from a website like Kelley Blue Book, or by finding the sales prices on similar vehicles in your area.

Shop around at several different banks and credit unions to get the best interest rate and terms for your auto or personal loan. The rates can vary quite a bit depending on the lender’s policies.

Terms for auto loans can be as long as seven years, which will lower your monthly payment, but cost more in interest over the life of the loan.

Title loan

Car title loans are also secured using your car as collateral. But in this case, you have to surrender the title of your car to the lender in order to get your funds for a short term of 15 to 30 days. The interest rates on car title loans tend to be very high, in the triple digits, so you should avoid them if possible.

Investments and savings

Using your investment account as collateral on a loan can be a bit more tricky, especially if you want to use a tax-deferred investment, like an annuity, as collateral for a loan.

“Before you use your annuity, ask the bank how they will file the paperwork, and check with your annuity to make sure you can use it as collateral,” said Dinich.

The reason is because tax-deferred investments may be subject to tax penalties if they are used as collateral on a loan.

“That would be a double whammy,” said Dinich. “You’d be paying interest to the bank, as well taxes on the annuity interest.”

That said, banks and credit unions do offer loans on nonqualified investments, such as:

  • Savings and Certificates of Deposits (CDs)
  • Annuities
  • Mutual Funds
  • Money Markets
  • Qualified investments, which are pre-tax investments like 401(k)s, 403(b)s, IRAs, etc.

Dinich said one reason people may get a loan against their savings or investments is to help build their credit history.

Life insurance

Similarly, Dinich says you may be able to borrow against the cash value of your life insurance policy.

“Some people buy cash-value life insurance just to have the option to borrow against it later,” says Dinich.

According to Dinich, this concept is also known as “infinite banking”. The interest paid during the loan term will be put back into the cash value of the insurance policy.

Savings

Although it may sound counterproductive at first, banks and credit unions will also loan money against your savings account balance as collateral.

“Some people wonder why you should borrow against your savings if you have the money,” says Dinich. “But, there are a few instances where it makes sense.”

One example given by Dinich is if your bank or credit union offers perks based on your savings account balance, such as a lower rate on a mortgage loan if your savings balance is $20,000 or greater.

Later, if you’re in a cash crunch, you may not want to take money out of your savings account if it would put you below the $20,000 threshold. Instead, you might decide to take out a loan against your savings as collateral.

Dinich says taking a short-term loan against your savings could also be a way to build or establish credit.

Your paycheck

Future paychecks are most often used as collateral for payday loans. This is the most costly type of collateralized loan available.
According to Dinich, the interest rates can be as high as 400%.

“People get stuck in a cycle of being behind when they take out payday loans,” he said. “Then they have to pay fees on top of the interest in order to continue extending the term of their loan.”

Dinich said payday loans should only be used as a last resort in an emergency. If you must use your future paychecks to secure a payday loan, you should shop around to find an honest and reputable lender, and not be afraid to ask questions.

“The commission rate paid to sales people for payday loans is high, which can make them become pushy and try to hide the fine print about interest rates and fees,” said Dinich.

As an alternative, Dinich says to ask friends and family for a short-term loan, or seek assistance programs available from some employers who may give an advance on your paycheck.

Alternatives to secured personal loans

In addition to secured personal loans and the other types of loans listed above, you may consider trying to improve your credit history and reapply for an unsecured personal loan.

Keep in mind that an unsecured personal loan may have a higher interest rate than a secured loan, and you may be limited to borrowing a smaller amount of money. This is because unsecured loans are riskier for lenders.

LendingTree
APR

5.99%
To
35.99%

Credit Req.

Minimum 500 FICO

Minimum Credit Score

Terms

24 to 60

months

Fees

Varies

LEARN MORE Secured

on LendingTree’s secure website

LendingTree is our parent company.... Read More

If your credit card has a high enough limit, you may also be able to use it instead of taking out a new loan. However, the interest rate on your credit card is likely to be higher than most secured loan options. If you have poor credit, you may be able to qualify for a secured credit card to help build your credit history.

Another option to consider is to take out a loan from your 401(k) directly. This is not a collateralized loan in the sense that you will forfeit your 401(k) assets if you don’t pay back the loan. You are effectively borrowing from yourself. This can be advantageous because the interest paid on the loan will be put back into your 401(k) as you’re paying yourself to borrow money. However, there are other risks to consider. You’re going to miss out on potential growth for any funds you pull out your 401(k) and if you’re fired or leave your job, your loan will likely come due immediately.

Borrowing smart

Before you opt for any of the choices in this article, make sure you’re being smart with your borrowing. Don’t take on more debt than you afford to pay. Missing payments will not only harm your credit score and make it more difficult to qualify for a new loan in the future, but if you have a collateralized loan, your assets could also be seized to help pay back the loan.

You should also take your time to shop around for the best lender and product to fit your needs. Don’t be afraid to ask questions about any loan product before you apply. If any lender is too pushy, it’s a red flag.

The bottom line

Collateral loans aren’t your only option for getting funding. But, if you can’t qualify for an unsecured personal loan, they may be a good thing to consider.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Kayla Sloan
Kayla Sloan |

Kayla Sloan is a writer at MagnifyMoney. You can email Kayla here

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Life Events

7 Ways to Lower the Cost of Divorce

Editorial Note: 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 prior to publication.

iStock

As a newlywed, the very last thing on your mind is probably getting divorced. But, unfortunately, divorce is something you may encounter — there were over 813,000 divorces in 2014 alone, according to the latest CDC data, compared to 2.1 million new marriages.

The cost of getting divorced can be just as expensive as getting married. Some estimate the legal fees alone can cost thousands of dollars, not to mention other costs that may be involved in changing your life post-divorce.

The difference is, when you get married you likely had time to prepare your finances. This may not always be the case when you get ready to get divorced.

So, what can you do if you can’t afford to get divorced? Here are some options that may be able to help lower the high cost of divorce.

Shop around for the right attorney

Brette Hankin, a business development manager for S&T Communications in Colby, Kan., says she visited several divorce attorneys to find one that was within her price range.

“The first lawyer I talked to said the retainer fee would be $10,000,” she says. “There was no way I could afford that.”

Eventually, Hankin visited other attorneys in her community and was able to find one who was more affordable.

“The lawyer I chose had a $5,000 retainer fee and was willing to return whatever money was not used for my case,” she says.

Ask friends and family for referrals to good attorneys in your area, or see if your state’s bar association has a way to search for attorneys specializing in divorce/family law.

Work out a “limited scope” arrangement or a payment plan

To help clients who may not be able to pay for their entire legal fees up front, some attorneys may also be willing to take payment plans, or work in a limited scope. Limited scope means they only handle certain parts of your case and you can handle the others.

“In cases where a client cannot afford traditional representation, I will sometimes represent a client in what is referred to as limited scope representation,” says Darlene Wanger, Esq., an attorney based in Los Angeles. “This means that I could represent a client for a single hearing, and then I am no longer the attorney of record.”

To cut costs even more, Wanger says she sometimes acts behind the scenes as a consulting attorney, helping clients fill out paperwork and working through the process without appearing in court.

“Never appearing in court can save a very large expense,” Wanger says.

If you still feel sticker shock at the cost of your legal fees, ask your attorney if you can work out a payment plan. This can help relieve some of the pressure to pay their fees all at once.

Reduce your filing fees

If you’re the spouse filing the divorce petition, ask about the filing fee with your local courthouse. The fee for filing a divorce petition varies based on the state and county in which you live and file your divorce. Filing fees can vary from $70 in Wyoming to $435 in California.

For simple divorces, without children or a large amount of property, you can usually fill out the petition yourself. This can save you from paying attorney fees.

Many individuals who are unable to afford a divorce don’t realize that they can get the divorce petition filing fee waived as well. A judge will review a written affidavit stating your economic hardship so the filing fee can be waived.

Keep things amicable (if possible)

When people think that they can’t afford to get divorced, it’s usually because they’ve heard about long, drawn-out court battles that cost thousands. But if you work with your spouse as much as possible, you can save a lot of money on attorney fees and court costs.

For example, after the filing of a divorce petition, the responding spouse will generally file an answer, even if they agree with everything stated in the petition.

While this can speed up the divorce process, it will cost more money. Any time an answer is filed with the court, it is subject to another filing fee. You could apply for the fee to be waived again, or if you and your spouse are in agreement, the answer could be written as a formality but not filed with the court.

Filing a joint petition for divorce can also save money as neither spouse would have to be served by a sheriff or certified mail.

Get divorced for free

Lizzie Lau, a 47-year-old travel blogger, used as many resources as she could to help her save money during her divorce. She was able to get divorced for free in California, the state with the highest filing fee.

“Initially, I assumed I would have to pay several hundred dollars in filing fees even though I had no income and no support,” Lau says. “But I went to the courthouse and talked to them. I was told that based on my income the fee would be waived, and as long as we didn’t go to court, it would be free. Although, they told me it was pretty rare for a divorce to go through without going to court. I assured them that I was going to be the exception to the rule.”

Lau got the filing fee waived for her petition. Plus, she and her spouse worked together to avoid other costs. Because they were in agreement, he didn’t file a response, and they were able to get divorced without appearing in court, saving them from paying for attorneys and other court costs.

File a pro se divorce

Part of Lau’s strategy included filling out her own legal paperwork and representing herself for her divorce case. This is called a pro se divorce, meaning you represent yourself without an attorney.

This is not a strategy that would work well for divorce cases involving disputes over child custody or property and asset division.

There are a wealth of resources online that can assist people with filing pro se divorces by explaining things in common language.

Prepare for life after divorce

One of the other overlooked costs of getting divorced is the cost to set up a new household. In Hankin’s case, her ex-husband kept the family home while she moved to an apartment.

“He offered to let me stay in the family home, but I couldn’t afford the house payment,” she says. “Instead I got an income-based apartment.”

In other cases, assets may have to be sold if neither party can afford to keep them. Hankin says she got financial help from her parents and did her best to save money and live frugally.

“You don’t think about the costs of setting up a new household until you have to do it,” Hankin says. “Getting pots and pans, furniture, restocking your pantry. All of those things you never think about. We were married for 19 years before we got divorced.”

Hankin shopped at garage sales to save as much as possible. She also got a second job and cashed in her retirement savings. “I felt that it was my only option,” she says. “Now I’m starting from scratch to save for retirement again.”

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

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Kayla Sloan is a writer at MagnifyMoney. You can email Kayla here

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Reviews

What You Should Know Before Using CareCredit to Pay for Medical Expenses

Editorial Note: 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 prior to publication.

Source: iStock

It’s no secret that medical expenses can be very costly in the United States. Since 2011, average family insurance premiums, even for people with employer-provided plans, have increased by 20 percent.

With out-of-pocket health care costs and insurance premiums skyrocketing, many people are turning to credit cards designated for medical expenses like CareCredit to help them pay for health care expenses over time.

But before you sign up for CareCredit to cover your next medical bill, here’s what you need to know.

A warning about those 0% financing offers

CareCredit is a credit card you can use at any of more than 200,000 health and wellness providers in the United States — from doctor’s offices to drugstores like Rite Aid.

Why turn to CareCredit instead of a regular credit card for medical expenses?

The biggest draw is the company’s frequent 0% financing specials for six to 24 months on qualifying purchases $200 or more, when you make the minimum monthly payments and pay the full amount due by the end of the promotional period.

The opportunity to put approved medical expenses on a 0% credit card and breathe easy for up to two years has huge appeal. But there’s one big caveat everyone should understand when it comes to CareCredit — deferred interest.

When you sign up for the CareCredit financing on a purchase of $200 to $999, deferred interest rate applies. This means that if you don’t have the full purchase paid off by the end of the promotional period, you will be charged retroactive interest at an APR of 26.99% from the date of your original purchase on the card. (We give an example of how the math works out below.)

Unfortunately, this is something customers could easily forget about, and it doesn’t help that the minimum monthly payment shown on your statement isn’t necessarily enough to get the entire balance paid off on or before the end of the special financing period. You should do the math yourself to make sure you’re paying enough each month to make the most of interest-free financing.

How CareCredit works

Now that you understand the risk that comes with a CareCredit account, let’s cover some of the details of what the company offers.

For larger purchases of $1,000 or more, CareCredit offers terms of up to 60 months with a reduced APR and fixed monthly payments until paid in full.

$200 to $999: Borrow at 0% for 6, 12, 18, and 24 months. Variable rate of 26.99% applies after promotional period ends.

$1,000 to $2,499: Borrow at 0% for 24, 36, or 48 months with an APR of 14.9%.

$2,500 and up: Borrow at 0% for 24, 36, 48, or 60 months with an APR of 16.9%.

How to apply

You can apply online on the CareCredit website or by phone at 1-800-677-0718. You can also apply at most health care providers’ offices if they are part of the network that accepts CareCredit to pay for services.

Like most credit card applications, you will need to supply your name, address, date of birth, Social Security number, net income and housing information. But unlike most credit card applications, you will also need to specify your doctor’s name and how you plan to use your CareCredit credit card if you aren’t applying in a doctor’s office. Once approved, you can use your CareCredit credit card again and again at participating health care providers.

CareCredit approvals are usually immediate, so you can find out right away if you can pay for your medical services with CareCredit. Synchrony, the bank that issues CareCredit, did not respond to phone and email requests for information on the credit standing needed to qualify for CareCredit.

What can CareCredit be used for?

As mentioned earlier, there are more than 200,000 enrolled providers that accept CareCredit in the United States. These include many different types of medical and health care providers and procedures, such as:

  • Chiropractic
  • Cosmetic
  • Dentistry
  • Hearing
  • LASIK and Vision
  • Primary and Urgent Care
  • Weight Loss
  • Health Care Specialists

You might even be able to use CareCredit to pay for veterinary care for your four-legged family members, if your veterinarian participates and accepts CareCredit in their office.

Fine print alert

While there’s no application fee or fee for using the special financing offered by CareCredit, there are still some things you need to watch out for.

The first, which we covered previously, is the high interest rate charged if you don’t pay your balance off in full by the end of the promotional period. The interest rate of 26.99% is very high, and as mentioned, it will be charged in arrears from the time you made your purchase.

For example, if you charge $1,200 to your CareCredit at 0% for six months and only pay the minimum payment each month (between $39 and $33), your balance will be $982 at the end of the six-month period, plus accrued interest of $152, totaling $1,134. If you continue making only the minimum payment, it will take you 96 months (eight years) to pay off your balance and cost you $2,693. However, if you paid $200 a month, you’d pay off the $1,200 bill within six months at no extra cost.

Source: CareCredit

The late payment fee for CareCredit can be up to $38. Plus, paying late even once may result in you losing your promotional 0% interest rate.

Who is CareCredit best for?

Because of the fact that CareCredit will charge interest from the time of your purchase if your balance is not paid in full by the end of a promotional period, the only time you should use CareCredit to finance your medical costs is if you are 100 percent certain you can pay it off within or before the end of that time frame.

This might be a good idea if you have already saved up the cash for a medical procedure and you can continue earning interest on it in your savings account. By earning interest on your savings and paying 0% interest with CareCredit, you can actually save money on your medical bill. This could still be risky: You never know if something might happen that could cause you to no longer be able to afford to pay off your CareCredit balance as you had planned.

Alternatives to CareCredit

Ask the billing department for a payment plan

Many health care providers offer patients no-interest payment plans, but you may not know about it unless you ask. Tell the billing department what you can afford to pay monthly and see what your options are for spreading out the cost of your treatment.

Use your emergency fund

If you know you incur a lot of medical bills or don’t want to rely on credit when they come around, make saving for medical expenses or adding to your emergency fund part of your regular budget. That way, if an emergency happens, you’re much less likely to go into debt paying for it.

Open a credit card with 0% financing for purchases or balance transfers

There are many credit cards available with 0% interest rates from six months to 21 months that don’t require you to pay off your purchase in full to avoid interest from back when you first made the purchase. Even if you can’t pay off the entire purchase before the end of the 0% interest period, you could try doing a balance transfer to keep your interest rate low, but even if you leave your balance on that credit card, it probably has a lower interest rate than the 26.99% offered by CareCredit. Here are some of your best options for a 0% credit card.

Take out a personal loan

If you can qualify for a personal loan with a low interest rate, you’ll have fixed monthly payments, and you may be able to extend them longer than the terms offered by CareCredit. We’ve rounded up some of the places you can get the best personal loan rates online, and you can read about them here.

Don’t get caught at the checkout counter at your doctor’s office and end up making the wrong decision. Make sure you’ve carefully considered your options before you decide if you want to sign up for CareCredit to pay for your medical costs.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

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Kayla Sloan is a writer at MagnifyMoney. You can email Kayla here

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Student Loan ReFi

Should You Refinance Your Student Loans with a Credit Card?

Editorial Note: 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 prior to publication.

Using a balance transfer credit card can be a great way to lower the interest rates on your debt to help you save money and pay your debt off faster. Most people only think about doing a balance transfer with high-interest credit card debt, but recently I’ve been considering a 0% interest balance transfer credit card to help me pay off my student loan.

After making my final credit card payment to be credit card debt free, I started thinking about how I could use a balance transfer offer extended by my creditor to help pay off other types of debt I still have. Since the highest interest debt I have remaining is my student loan, this is what I’m considering refinancing with a 0% interest balance transfer. My student loan only has a remaining balance of about $6,000, which means I could transfer the entire balance to the credit card and pay it off before the promotional rate expires, if I pay it off aggressively.

Of course, there are lots of reasons why you could choose to refinance or consolidate your student loans. I was curious whether or not a balance transfer could be a viable option as well.

Here are some of the pros and cons you should consider before deciding to refinance your student loans with a balance transfer credit card.

Benefits of Refinancing Student Loans with a Balance Transfer Credit Card

There are several benefits you could take advantage of by refinancing your student loans with a balance transfer credit card.

A Lower Interest Rate

One of the main reasons people choose to refinance student loans is to lock in a lower interest rate. For example, my student loans are at 6.8%. If I do a balance transfer to a 0% interest credit card, I could save hundreds of dollars on interest through the end of the 0% interest rate period on the balance transfer.

But keep in mind that not all balance transfers are created equal. You might get all kinds of different balance transfer offers from companies trying to entice you to sign up for a new credit card, or even transfer a balance to a card you already have. Some of these transfer offers will be better than others. You might encounter offers that have a 1% to 3% interest rate for a certain period of time, usually 12, 18, or 24 months. But the best balance transfer offers have a 0% interest rate, obviously saving you more on interest than the others.

Pay Off Student Loans Faster

Transferring student loan debt to a credit card can save money, but only as long as you get the balance transfer paid off before the promotional interest rate expires. This time limit is a big motivation for people to pay extra on their student loans to make sure the balance transfer is paid off before it expires. If you struggle with being motivated to make extra payments, the reality that your interest rate may spike up to 15% or more after a few months may be just the motivation you need to get serious about paying off debt. It’s worked well for me in the past when I’ve transferred high-interest credit card debt to a 0% balance transfer credit card, helping me to pay off $5,284.18 much faster than I would have otherwise.

Drawbacks of Refinancing Student Loans with a Balance Transfer Credit Card

Although using a balance transfer to help pay off your student loans sounds like a great way to save money and pay your debt off faster, there are some potential downsides you should be aware of.

Balance Transfer Fees

A lower interest rate makes balance transfer credit cards an attractive option for those looking to refinance debt, but you need to consider more than just the interest rate before deciding to refinance your student loans with a balance transfer credit card. Make sure you consider the balance transfer fee that many credit cards charge. This can eat away at the amount of money you save on interest. Luckily, some credit cards do have a cap on this fee at $50 or $75, which can be helpful if you plan to transfer a large balance that would otherwise result in a fee higher than that cap. But at that point, it could be difficult to get your student loan transfer paid off before the promotional interest rate on the balance transfer expires.

There are balance transfers without fees, but your options may be limited. If you find a no-fee, 0% interest transfer option you qualify for, it’s almost a no-brainer to use it to pay off other debt.

Potential Loss of Savings on Interest

As mentioned, it’s imperative that you pay off your entire balance transfer before the promotional interest rate expires in 12, 18, or 24 months. If you don’t, the high interest rate after the transfer expires will quickly negate any interest savings you earned by doing the transfer in the first place. In fact, you may end up paying more in interest than if you’d skipped the balance transfer in the first place.

You May Not Qualify

In order to use a balance transfer credit card to refinance your student loans, you first have to qualify for one. In order to qualify for many balance transfer credit cards you must have a credit score of at least 680.

Applying Could Ding Your Credit Score

If you don’t already have a credit card with a balance transfer offer available, you may need to apply for a new card. Anytime you apply for a new line of credit, it will ding your credit score slightly. This may or may not be an important factor depending on what your score is and if you plan to apply for any other credit cards or loans in the near future.

Loss of Federal Student Borrower Protections

A final and very important consideration to think about before you decide to refinance your student loans with a balance transfer credit card is the loss of student loan protections you may have. If you are refinancing federal student loans, you will lose the protections that are offered to you as a borrower, such as:

  • Income-driven repayment plans
  • The opportunity for student loan forgiveness
  • Deferment or forbearance
  • Discharge upon permanent disability or death

Some credit card companies may be willing to work with you in an emergency situation, but chances are high that even in those situations the flexibility offered to federal student loan borrowers is far greater. In some cases, you may be better off not refinancing your student loans in order to maintain your borrower protections.

With most low or 0% interest balance transfer credit cards, you can’t miss a payment or pay late. If you do, your promotional interest rate may be void and you will be subject to the regular interest rate, which could be 15% or more depending on the card and your credit score.

Despite these drawbacks, doing a balance transfer to help pay off your student loans can be a good idea if your goal is to get out of debt quickly while saving money on interest.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

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Kayla Sloan is a writer at MagnifyMoney. You can email Kayla here

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Credit Cards, Reviews

Walmart Credit Card and Walmart MasterCard Review

Editorial Note: 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 prior to publication. This site may be compensated through a credit card partnership.

Walmart Credit Card®

If you are a regular shopper of Walmart, you’ve probably also seen their ads plastered in the store for the Walmart Credit Card.

Walmart offers two types of credit cards: the Walmart MasterCard offered by Synchrony Bank, which can be used wherever MasterCard credit cards are accepted; and the Walmart Credit Card, which can only be used at Walmart stores, Walmart Supercenters, Walmart Neighborhood Markets, Walmart.com, Walmart and Murphy USA gas stations, and Sam’s Clubs.

For heavy Walmart shoppers who can pay their balance in full each month, either card’s rewards might be sweet enough to justify signing up. Neither has an annual fee, and you’ll earn cash back in Walmart stores (3%). The regular Walmart Credit Card, however, can be especially appealing to those with low or fair credit scores who have trouble getting approved for other credit cards. In that case, the Walmart credit card can be a useful way to build credit, so long as you spend carefully and pay your bill in full each month.

But before you apply for a Walmart MasterCard or Walmart Credit Card, there are a few things you should be aware of as the Walmart Credit Card may not necessarily be the best choice for your spending habits.

Promotional Offers and Rewards

Dangling a sign-up bonus is a clever way to entice shoppers to sign up for the credit card at checkout. But given how high retail credit card interest rates can be, it’s never a good idea to sign up for a card because of the sign-up reward alone. The Walmart MasterCard and Walmart Credit Card are not exceptions. Unless you’re able to use and pay off your card in full each month, the cards’ painfully high interest rates (we’ll get to that later in this review) can easily eat away at any tangible cash back or sign-up bonus offers.

Weak Sign-up Bonus

Currently, Walmart is offering a one-time offer where you can save $25 when you open a Walmart Credit Card and spend $25. To take advantage of this discount, you must make a purchase on the same day you are approved for your new credit card. The discount cannot be used for cash advances, gift cards, money orders, or gas purchases. It may also be confusing to new cardholders as it says “Save $25,” but you don’t actually get a discount at the register. Instead, it’s applied later as a statement credit.

3-2-1 Save Rewards Program

The 3-2-1 Save Rewards Program allows you to save 3% on Walmart.com purchases, 2% at Murphy USA and Walmart gas stations, and 1% at Walmart and anywhere your card is accepted if you are Walmart MasterCard holder.

If you’re a heavy Walmart shopper, their 3-2-1 rewards program might be just tantalizing enough to justify signing up for their credit cards. There really isn’t another credit card on the market that can get you a 3% return at Walmart; however, there are certainly other cash back credit cards for people who shop at a range of supermarkets looking for a wider range of benefits.

The Blue Cash Everyday® Card from American Express, for example, has no annual fee and gets you 3% cash back at U.S supermarkets (on up to $6,000 per year in purchases, then 1%). However, if you do your grocery shopping at a store like Walmart or Target that is not specifically a stand-alone supermarket, you will only early 1% cash back. You also get 2% back at U.S gas stations and at select U.S. department stores, and 1% on everything else. So if you’re not a heavy Walmart shopper, the Blue Cash Everyday® Card from American Express may be a better idea.

Walmart Credit Card and Walmart MasterCard holders are automatically enrolled in Walmart’s 3-2-1 Save Rewards Program. Walmart Business and Community accounts are not eligible.

You are eligible to earn these rewards as long as your account is open and in good standing, and there are no limits on the rewards that can be earned. Rewards never expire, and you can check your balance by logging in to your account here.

These savings are paid as a statement credit each month on net purchases after adjusting for any possible returns. Cash advances, quick cash advances, fees, and interest do not qualify for these savings rewards. Unfortunately, these benefits also cannot be stacked with the 10% discount for the first purchase for new cardholders.

The Fine Print

The Walmart Credit Card and Walmart MasterCard do not have an annual fee. However, the interest rate on the Walmart Credit Card is where it gets scary. The current APR is 24.40%. The Walmart MasterCard interest rates range from 18.40% to 24.40%, depending on your creditworthiness.

You can avoid paying interest on your charges by paying your entire balance in full every month. Your due date will be at least 23 days after the close of each billing cycle.

Other fees are fairly standard. Late payment fees are up to $38. There is a foreign transaction fee of 3% on the Walmart MasterCard, which means you definitely don’t want to rely on this card overseas. Cash advances for the same card cost $5 or 3%, whichever is greater. The interest rate for cash advances ranges from 21.40% to 27.40% depending on each account type. See cards Terms & Conditions for more information.

Applying for the Walmart Credit Card

You can apply for a Walmart Credit Card or Walmart MasterCard at any Walmart store register or jewelry kiosk, or online at Walmart.com. When you choose to apply, Synchrony Bank will pull your credit score and look at other factors, like your income level, debt level, employment, and more.

Applying for the Walmart Credit Card is pretty simple, and most of the time you can get an instant answer. But like any other credit card application, applying for a new card does require a hard pull on your credit, which will ding your credit score.

There is no preset credit score requirement listed to qualify. But many cardholders report qualifying for this credit card with a low credit score. The high interest rate is also an indicator that those who are working to build credit may qualify.

Applying in-store and being approved means you will receive a temporary shopping pass that is only good for 24 hours in that particular Walmart store location.

 

Pros and Cons

Pro: There’s no annual fee to worry about.

Con: A high interest rate. Carrying a balance on your account will quickly outweigh the savings benefits of this credit card.

Pro: No cap on regular rewards. You can earn as many rewards as you want for your purchases.

Con: Rewards cannot be stacked with other offers.

Pro: Those with low credit may be able to qualify and use this card for everyday purchases to help improve their credit score.

Con: Because there are so many stores and so many items, having a Walmart Credit Card could be a nasty temptation if you don’t have a handle on your finances.

Other Rewards Cards

The Walmart Credit Card limits you to purchases only at Walmart stores, Walmart Supercenters, Walmart Neighborhood Markets, Walmart.com, Walmart and Murphy USA gas stations, and Sam’s Clubs. This is why store cards may not be the best choice if you are looking to earn rewards. But even if you qualify for the Walmart MasterCard so you can use it to save on purchases at locations other than Walmart, there are still better rewards credit cards available.

Citi® Double Cash Card – 18 month BT offer – With the Citi® Double Cash Card, you can Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay. Plus, the Citi® Double Cash Card – 18 month BT offer has a $0* annual fee. But, you can use this card to earn rewards at superstores and warehouse stores like Walmart and Target.

Citi® Double Cash Card – 18 month BT offer

APPLY NOW Secured

on Citibank’s secure website

Discover it® Cash Back – With the Discover it® Cash Back credit card, you earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum (which is $1,500 of purchases) each time you activate. Earn 1% unlimited cash back automatically on all other purchases. Also, Discover will match ALL the cash back earned at the end of your first year, automatically.

Discover it® Cash Back

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on Discover Bank’s secure website

Rates & Fees

Blue Cash Everyday® Card from American Express: The Blue Cash Everyday® Card from American Express, for example, has a $0 annual fee and gets you 3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%). 2% cash back at U.S. gas stations and at select U.S. department stores. 1% cash back on other purchases. However, if you do your grocery shopping at a store like Walmart or Target that is not specifically a stand-alone supermarket, you will earn 1% cash back. If you’re not a heavy Walmart shopper, the Blue Cash Everyday® Card from American Express may be a better idea.

Blue Cash Everyday® Card from American Express

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on American Express’s secure website

Terms Apply

Rates & Fees

Who Will Benefit Most from the Walmart Credit Card?

While store cards are not usually a good idea for staying on budget, the Walmart Credit Card can be used for things like groceries and household necessities. The card may also be good for someone who is looking to rebuild their credit and can’t qualify for other credit cards as the required credit score to qualify for a Walmart Credit Card is typically low, although a specific score needed is not stated on their website.

On the other hand, it’s worth being cautious if you decide to apply for the Walmart Credit Card. With its high interest rate, carrying a balance will do more harm than good.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Kayla Sloan
Kayla Sloan |

Kayla Sloan is a writer at MagnifyMoney. You can email Kayla here

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Credit Cards

How to Use Your New Contactless Payment Card

Editorial Note: 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 prior to publication.

How to Use Your New Contactless Payment Card

If you’ve gotten a new debit or credit card lately, you might have received one that is able to be used as a contactless payment card. You’ll know you’ve gotten a new contactless card if there is a telltale contactless symbol somewhere on the card. It’s often mistaken for a WiFi signal symbol.

But before you use your new contactless payment card, there are a few things you need to know.

What Is a Contactless Payment Card?

“Tap and pay” technology isn’t new, having been around since about 2007, but it is becoming more popular worldwide with countries in Europe relying heavily on the technology more so than in the United States.

Similar to Apple Pay, Android Pay, and Samsung Pay, contactless payment cards are a faster way for customers to make small purchases, usually under $25 or $50, without the need for a PIN or signature. Contactless debit, credit, and prepaid cards can simply be tapped or waved on or near a payment terminal or register.

While most people might enjoy this new convenience, it can seem annoying to some. After all, you probably got a new “chip” debit or credit card after recent security breaches at major chain stores, such as the Target scandal, and now you’re being forced to learn another new system. If this seems like a hassle, keep in mind that these new security features are being introduced to help keep your money safe. As hackers learn new ways to steal your information, credit card companies are working hard to introduce new security features to thwart their attempts.

screen shot 2
This symbol indicates it is a contactless payment-enabled credit card.

Because the cards feature either a radio-frequency identification (RFID) signal or a near-field communication (NFC) signal to make a secure payment at close proximity, they are slightly different from the payment apps on your phone, like Apple Pay. These mobile payment apps use WiFi or cellular data and do not have to be physically close to a sales terminal to work.

Fraud and Security Concerns

According to Visa payWave questions and answers, you must wave your card within 1-2 inches of a terminal and be correctly oriented for transactions to go through, so there is no risk of contactless payment cards being accidently read from your purse or pocket.

This also cuts down on the risk of fraud from someone reading your financial information simply by passing an enabled card reader near you in a crowded street, which is a widely publicized fear internationally.

MasterCard’s website indicates that safeguards are in place to bill you only once for your purchase, even if you accidentally tap twice.

Contactless payments made by NFC are “just as secure” as payment made with chip-enabled cards, and probably more secure than payments made with stipe-enabled cards that must be swiped, according to both American Express and Visa payWave.

In fact, the risk of fraud is also reduced by using contactless payment cards because your payment device remains in your control during payment, rather than having to hand it to a store clerk to be swiped.

If you are a victim of fraud, your contactless transactions are covered by the same fraud protection as chip and PIN transactions.

Where Can You Get a Contactless Payment Card?Where Can You Get a Contactless Payment Card

Most major credit card companies, including Visa, MasterCard, and American Express, have contactless payment technology available; however, your financial institution may or may not yet offer contactless payment enabled cards. Contactless payment enabled cards do not have to be turned on or off, they are always on.

Where Can You Use Contactless Payment Cards?

Contactless payment cards can be used anywhere that has enabled terminals with the contactless symbol at checkout. This includes many popular restaurant chains, gas stations, big box stores, and more. But keep in mind that most locations have a small limit of $25 or $50 for contactless purchases. You won’t be able to make a large purchase with a contactless credit card anytime soon.

Contactless payment cards can still be used by inserting your chip or swiping if terminals are not enabled for contactless payments.

Who Can Benefit from Contactless Payment Cards?

Before you decide to get and use a contactless payment card, be certain you have a handle on your budget and finances. The ease of “tap and go” payments reduces the psychological pain you might feel if you were paying with cash or even having to sign or enter your PIN for a transaction. Merchants are counting on you using contactless payment cards to make transactions more quickly, without giving yourself time to think about your purchases.

If you are someone who’s constantly on the go, and you have your spending under control, you might benefit from contactless payment cards.

Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.

Kayla Sloan
Kayla Sloan |

Kayla Sloan is a writer at MagnifyMoney. You can email Kayla here

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