MagnifyMoneyhttps://www.magnifymoney.com/blogThe Fine Print Blog and NewsFri, 16 Nov 2018 15:14:09 +0000en-CAhourly1https://wordpress.org/?v=4.9.8How to File for Chapter 11 Bankruptcyhttps://www.magnifymoney.com/blog/pay-down-my-debt/how-to-file-for-chapter-11-bankruptcy/Fri, 16 Nov 2018 14:20:05 +0000https://www.magnifymoney.com/blog/?p=92408Business owners struggling to keep their companies afloat don’t necessarily want to close down and liquidate assets or sell the business to the highest bidder. Instead, many may want to create a plan that helps them reduce debt and deal with the issues that caused the financial distress they are currently facing, ultimately saving their … Continue reading How to File for Chapter 11 Bankruptcy

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business owner
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Business owners struggling to keep their companies afloat don’t necessarily want to close down and liquidate assets or sell the business to the highest bidder. Instead, many may want to create a plan that helps them reduce debt and deal with the issues that caused the financial distress they are currently facing, ultimately saving their company. Any rates or fees listed below are accurate as of the date of publishing.

For these business owners, filing Chapter 11 bankruptcy may be the right solution. According to the American Bankruptcy Institute, there have been over 70,000 Chapter 11 filings across the U.S. since 2009; nearly 4,000 companies have filed in the first three quarters of 2018. In recent years, you may remember hearing about large companies like Sears and Toys “R” Us filing for Chapter 11. But what about you and your company? Could Chapter 11 be a viable option?

How Chapter 11 bankruptcy works

Like Chapter 13, Chapter 11 bankruptcy is a reorganization. Unlike Chapter 13, Chapter 11 is mainly for businesses and related to business debt.

“The filer can be a sole proprietor, S corporation, an LLC,” Robert W. Dremluk, a New York-based partner at the law firm Culhane Meadows, told MagnifyMoney. “Any format is okay, but the [filer] will primarily be addressing the business-related activities of the individual.”

While many business owners file a voluntary petition for Chapter 11, creditors can also file against a debtor, which turns it into an involuntary petition. Unlike Chapters 7 and 13 bankruptcy, there isn’t usually a trustee appointed at the start of a Chapter 11 filing. Instead, after filing, the business owner becomes the “debtor in possession” (DIP), allowing the debtor to retain control over the business assets during the term of the reorganization, which can take months or years to execute. This also allows them to make decisions about what to do with assets.

As an example, Dremluk mentioned a retailer who can choose to close underperforming stores and have a sale on the inventory but to continue operating successful locations.

Once a business owner has filed a petition for bankruptcy, an automatic stay is enacted, ensuring that collection activities, repossessions and foreclosures are suspended. In some cases, however — such as when the underlying property in question isn’t necessary for the reorganization or the owner has no equity in it — a creditor may request that the court lift the stay and allow them to foreclose.

While they are the debtor in possession, the business owner has 120 days to create and submit a plan for reorganization. The plan, which will outline how each class of claims (secured and unsecured) is to be handled, must then be filed with the court. A disclosure statement is then sent to creditors to allow them to evaluate the plan. Creditors who, according to the plan, will not get the full value of the debt they are owed or whose contracts are going to be modified under the reorganization, can vote against the plan.

When developing the plan, a business owner doesn’t go it alone. In addition to having their attorney to help, there is also a creditors committee comprised of representatives of the seven largest unsecured creditors. The committee helps to develop the plan and investigates the conduct of the business owner to help ensure proper management of assets.

Generally, a business owner’s personal assets are left out of a Chapter 11, but, as Dremluk noted, that’s not always the case. “Sometimes, an individual personally guarantees or pledges personal assets on behalf of the company, in a closely held company. An aggressive lender may call collateral, it depends,” he said. In addition, if the business is a sole proprietorship or a partnership, personal assets may be at risk.

When to consider filing Chapter 11

According to Dremluk, there are a number of events that can prompt a company to file for Chapter 11. In some cases, it could be due to the company facing financial difficulties or operational issues.

“Companies [sometimes] end up considering bankruptcy because they are in financial distress, and part of the reason for that may be that management is unable or unskilled in grappling with problems the company is facing,” said Dremluk. Whether the issue is that company management isn’t proficient at solving problems or that the company has overexpanded and isn’t able to correctly operate a business this large with their current structure, Dremluk said that bankruptcy gives them the opportunity to correct their course.

“Bankruptcy gives the business a chance for a pause and to reassess what they’re doing and how to do it better,“ he said.

What debt is erased in Chapter 11?

“Secured and unsecured debt whether public or private can be discharged,” said Dremluk. Unlike Chapter 7 bankruptcy, where unsecured creditors often walk away without receiving payment, Chapter 11 allows a business to set up a reorganization that pays creditors, although sometimes they receive less than the company owed them or the debt is paid over a longer period of time than the original contract specified. While secured creditors are prioritized in the reorganization, vendors who supply services and materials that are integral to the ongoing operation of the company (called “critical vendors”) may see their unsecured debt getting paid off during the bankruptcy.

What makes Chapter 11 so powerful is that it allows a company time to get their business on the right footing. With Chapter 11, said Dremlock, “[a] company can deal with asset/secured claims and sell assets over a period of time instead of in fire sale situation.”

How to file Chapter 11 bankruptcy

The first step a filer should take is reaching out to an attorney; as Dremluk noted, it is mandatory that a business owner filing for Chapter 11 “must be represented by counsel.” In addition, because each district court may have its own added requirements, an attorney can ensure you file everything necessary.

Business debtors who wish to file will be utilizing a multitude of forms in the 200-series, beginning with Official Form 201, “Voluntary Petition for Non-Individuals Filing for Bankruptcy.”

Next, business owners need to compile a list of the names and addresses of all their creditors. This list should be formatted however the court in your district requires.

Another official form that needs to be completed is Form 204, “Chapter 11 Cases: List of Creditors Who Have the 20 Largest Unsecured Claims Against Debtor and Are Not Insiders.”

“The list of creditors is submitted to the court for purposes of selecting a potential creditors committee,” said Dremluk. “You don’t want people on that committee who are conflicted because they are an officer or shareholder.”

Finally, for those business owners required to file periodic reports with the Securities and Exchange Commission (SEC), Form 201A, “Attachment to Voluntary Petition for Non-Individuals Filing for Bankruptcy Under Chapter 11,” should be completed.

Within 14 days of filing Form 201, the debtor will need to file the rest of the forms for their bankruptcy, which are:

  • Official Form 206, “Schedules of Assets and Liabilities”
  • Official Form 206A/B, “Schedule A/B: Real and Personal Property”
  • Official Form 206D, “Schedule D: Creditors Who Have Claims Secured by Property”
  • Official Form 206E/F, “Schedule E/F: Creditors Who Have Unsecured Claims”
  • Official Form 206G, “Schedule G: Executory Contracts and Unexpired Leases”
  • Official Form 206H, “Schedule H: Codebtors”
  • Official Form 206Sum, “Summary of Assets and Liabilities for Non-Individuals”
  • Official Form 202–Declaration, “Declaration Under Penalty of Perjury for Non-Individual Debtors”
  • Official Form 207, “Statement of Financial Affairs for Non-Individuals Filing for Bankruptcy”
  • Director’s Form 2030 (unless your court requests otherwise), “ Disclosure of Compensation to Debtor’s Attorney”

If the business owner declaring Chapter 11 meets the criteria to be considered a small business debtor, they must also include a balance sheet, statement of operations, cash-flow statement and federal income tax return. If the small business owner doesn’t have these documents, they can submit a statement under penalty of perjury that they have not prepared the documents or filed a federal tax return.

To determine whether a filer is a small business debtor, the criteria they must meet involves two elements. First, it must be ensured that the debts are no more than $2,566,050, and the business cannot be focused primarily on owning or operating real property. Second, a creditors’ committee has either not been appointed to the case, or has not properly provided necessary oversight, as determined by the court.

When filing, business owners can expect to be charged a $1,167 filing fee and $550 as a miscellaneous administrative fee. On top of that, a debtor must pay attorney fees, which can get weighty.

“Chapter 11 has become too expensive for most companies to file, and lenders have also reached the point in their analysis where they don’t want to support a company for a long time. They’d rather have a company liquidate and take their losses,” said Dremluk, who added that fee arrangements and advanced budgets for attorney fees might help a filing company’s chances of success.

Within 120 days of petitioning the court for Chapter 11 bankruptcy, the company needs to submit its plan for reorganization. The plan will generally include provisions for how the reorganization will be implemented, including how business will continue, how funding will occur, how each class of creditor will be paid, the interest paid to them and so on.

One important aspect of the reorganization plan is that it needs to be in the best interest of creditors in order to get approved. “The plan needs to be in the best interest of creditors, so treatment of creditors under the plan must be better than they’d get in a liquidation,” said Dremluk.

Dremluk added that, ideally, through the reorganization “the company will be able to discharge debt, resolve claims and emerge with a cleaner balance sheet and a lot of its other issues behind it.” Small businesses can submit this plan on Form 425A, “Plan of Reorganization for Small Business Under Chapter 11,” along with the disclosure 425B, “Disclosure Statement for Small Business Under Chapter 11.”

Initial Filing

Official Form 201

Voluntary Petition for Non-Individuals Filing for Bankruptcy

Compile a list of the names and addresses of all their creditors.

This list should be formatted however the court in your district requires

Official Form 204

Chapter 11 Cases: List of Creditors Who Have the 20 Largest Unsecured Claims Against Debtor and Are Not Insiders

Official Form 201A

Attachment to Voluntary Petition for Non-Individuals Filing for Bankruptcy Under Chapter 11 (for those business owners who are required to file periodic reports with the SEC)

Within 14 Days of Filing Form 201

Official Form 206

Schedules of Assets and Liabilities

Official Form 206A/B

Schedule A/B: Real and Personal Property

Official Form 206D

Schedule D: Creditors Who Have Claims Secured by Property

Official Form 206E/F

Schedule E/F: Creditors Who Have Unsecured Claims

Official Form 206G

Schedule G: Executory Contracts and Unexpired Leases

Official Form 206H

Schedule H: Codebtors

Official Form 206Sum

Summary of Assets and Liabilities for Non-Individuals

Official Form 202–Declaration Official

Declaration Under Penalty of Perjury for Non-Individual Debtors

Form 207

Statement of Financial Affairs for Non-Individuals Filing for Bankruptcy

Director’s Form 2030 (unless your court requests otherwise)

Disclosure of Compensation to Debtor’s Attorney

Small Business Debtors
  • Balance sheet

  • Statement of operations

  • Cash-flow statement

  • Federal income tax return

If the small business owner doesn’t have these documents, they can submit a statement under penalty of perjury that they have not prepared the documents, nor filed a federal tax return

425A (within 120 days of filing form 201)

Plan of Reorganization for Small Business Under Chapter 11

425B (within 120 days of filing form 201)

Disclosure Statement for Small Business Under Chapter 11

Within 120 Days of Filing Form 201

Reorganization Plan

Plan of reorganization (no official forms unless it’s a small business debtor)

After filing Chapter 11: What happens next?

One of the initial benefits a business owner will experience after voluntarily filing for Chapter 11 is that an automatic stay is placed on all collection, foreclosure and repossession activities. But this is no time to relax and enjoy that removed pressure — instead, it’s time to create a viable plan for a successful reorganization.

Creating this plan is the most important part of the process, according to Dremluk, because it gives the company a target to reach for. “Without a target or exit strategy, I’ve seen companies file Chapter 11 and then flounder because they are directionless,” he said.

Dremluk said that companies creating a reorganization plan need to explore all the what-ifs, including the possibility of selling or resolving outstanding litigation. If these options are part of the plan for reorganization and they fall through, Dremluk said that the reorganization plan may no longer be viable and this could mean the case is converted to a Chapter 7 and an appointed trustee may operate the business or liquidate assets and close the case, potentially leaving the business owner without the option of emerging with their business intact.

Ideally, the goal is to emerge from a Chapter 11 successfully — of course, success can mean different things to different companies. Dremluk noted that generally, the objective is to have a company able to reorganize its business and emerge from bankruptcy with its problems behind it.

But in some cases, it may be about reducing debt so the business can be sold. According to Dremluk, in those situations, “[the] company would file bankruptcy to clean up problems and become attractive to another buyer. Soon after filing it would put itself up for sale, more often than not have a stalking-horse bidder — a buyer who is prepared to buy.” When there is a stalking-horse bidder (one who is bidding on a bankrupt company’s assets), the offer is still presented to the court and subject to higher and better offers. In the end, the successful bidder would own the company and its assets and the debtor will be out of the picture.

Is it time to file for Chapter 11?

When a business is in financial trouble, it may not immediately be time to file for Chapter 11, but it could be time to contact an attorney and start reviewing options. “As soon as signs of financial distress appear, a company should consider its options. Bankruptcy may be one,” said Dremluk.

For some business owners, however, out-of-court workouts — where a debtor works out a deal with a creditor without involving the court, filing bankruptcy or selling the company — may be better alternatives. It depends on whether the business owner wants to keep going, how amenable their creditors are to a workout and how much money they might lose selling their company as-is, with all its current difficulties.

Dremluk noted that one of the biggest mistakes he sees business owners make is waiting too long to reach out to an attorney: “Waiting until the last minute to reach out [makes successful emergence] much more difficult. If you’re an owner of a company and you’re starting to see problems, reach out sooner rather than later.”

FAQ

If the individual owner of a closely-held company made a personal pledge on a debt, that could impact their personal assets during the Chapter 11. Owners of sole proprietorships and partnerships may also have some personal asset exposure.

One of the most important things any business owner can do is get all their financial documents together. As Dremluk noted: “When you plan to file, gather key documents like leases, contact financial advisors to prepare income statements, list creditors and think about key suppliers and relationships and how they will be handled going forward.”

Time is of the essence, and the more time you give yourself, the better your chances are for recovery — so it’s best to reach out to an attorney as soon as your company starts having financial problems. Bankruptcy might not be the best solution at that time, but you can also discuss alternatives with counsel.

One of the most important factors, according to Dremluk, is the attorney’s level of experience. “Look for a professional that has experience with cases as opposed to someone in another practice area that occasionally does bankruptcy,” he said.

Dremluk also said to look for an attorney willing to make arrangements, and that business owners should be careful when comparing rates because an attorney with a below-market rate who charges for a high amount of hours can cost more than an attorney charging an average rate but who charges for a smaller number of hours.

Conclusion

The word bankruptcy conjures a lot of different feelings for people and very often those feelings are negative. But when it comes to a business filing Chapter 11, it’s hard not to see the positive potential in allowing that company the time and space to reorganize and find effective ways to deal with the problems that helped push it into financial distress.

Still, bankruptcy isn’t the right choice for every business owner, which is why it’s important to have an experienced attorney working on your case.

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Why You Shouldn’t Take Out an 84-Month Auto Loanhttps://www.magnifymoney.com/blog/auto-loan/why-you-shouldnt-take-out-an-84-month-auto-loan342196018/https://www.magnifymoney.com/blog/auto-loan/why-you-shouldnt-take-out-an-84-month-auto-loan342196018/#respondFri, 16 Nov 2018 05:00:46 +0000https://www.magnifymoney.com/blog/?p=38671Part I: The Truth About Long Term Auto Loans When it makes sense to get an 84-month auto loan How to make the most of a long-term loan How to lower your costs of borrowing Part II: Understanding the auto loan process How to get pre-approved for an auto loan Getting a cosigner for an auto … Continue reading Why You Shouldn’t Take Out an 84-Month Auto Loan

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Part I: The Truth About Long Term Auto Loans

When poor credit and high monthly payments are keeping you from buying the car you need, it may be tempting to lower your payments by signing up for a 72-, 84- or even 96-month term loan. Before you do, it’s important to know exactly what you’re signing up for — and be sure you’re making the right move for your finances.

Lower car payments with longer terms mean you’re paying more in interest, and loan companies love this for obvious reasons. Evidently, consumers do, too. In the first quarter of 2017, new car loans with terms from 73 to 84 months represented 34.9 percent of all auto financing. For used cars, they represented 19.5 percent.

Most of the big dealerships offer 84-month financing through banks like Ally Financial or Santander. Local dealers are also known to offer longer term financing offers, typically through third party financing companies, credit unions, or insurers like Nationwide.

Let’s take a look at what you’re getting into when you choose a longer term on your auto loan…

Note: These numbers don’t include tax, title, or registration, which will only increase the amount of interest you pay if you include those costs in the total amount you borrow. These numbers also don’t include any down payment or trade-in you may have, which will decrease the amount of the loan and the amount of interest paid.

5 reasons long auto loan terms are a bad idea

  1. More interest. As you saw in the example above, you’re going to pay a lot more interest on a car loan with a longer term. If you spend more than those average amounts on a new or used car, the amount of interest you pay is only going to go up.
  2. Your loan will outlast your warranty. Most manufacturer’s warranties last 3 to 5 years, so you’ll be paying on your loan for an additional 2 to 4 years after the warranty runs out. Which leads to…
  3. New car payment, old car repair costs. Think about this. You’re going to be making your car payment for the next seven years. With a shorter term, you’d have paid off your vehicle before you started paying for costly repairs. But with an 84-month loan, you’re going to be paying both your monthly loan and the inevitable repair costs that come with an older vehicle.
  4. Negative equity. Stretching out a car loan over time means you’re paying less on the principal and more in interest with each payment. As your vehicle continues to decline in value each year, you’ll continue to be upside-down on your loan unless you made a significant down payment.
  5. Unable to refinance. If you’re upside-down on your loan, meaning you owe more on your loan than the vehicle is worth, you’ll be unable to refinance your loan.

When it makes sense to get an 84-month auto loan

  • You absolutely can’t afford a car any other way. This is probably the number one reason why people choose longer terms on their auto loan. An 84-month auto loan will lower your monthly payment, allowing you to purchase that vehicle that otherwise would be just out of reach. However, you should consider whether you’re borrowing too much if you can’t afford the monthly payment on a shorter term loan. Can you compromise by buying a used car at a lower price point? Or, could you scrounge up more money for a larger down payment to reduce the amount you need to borrow?
  • You have higher interest debt to worry about. If you have other loans at a higher interest rate, it may make sense to get a lower monthly loan payment so you can free up capital each month. That way, you can use the extra money you’re saving to pay down higher interest loans.

How to make the most of a long-term loan

  • Compare rates. Companies like LendingTree and MagnifyMoney allow you to compare auto loan rates from multiple lenders. So you can make sure you’re getting the best deal and a low APR. (Disclosure: LendingTree is the parent company of MagnifyMoney)
  • Buy now, refinance later. If you’re absolutely bent on getting a certain car now, you can always choose to refinance down the road, when your financial situation improves.
  • Make a larger down payment. Getting out of a bad car loan can be difficult when you’re upside-down. By putting more down on your vehicle up front, you’ll prevent this from happening while saving money in interest and avoiding gap insurance.
  • Buy used. The average used car payment is $145 less than the average new car payment, according to Experian, so save yourself some money with a more affordable monthly payment by buying a used vehicle.

5 tips to lower your costs of borrowing

  1. Keep your car after it’s paid off. Once your car is paid off, keep it — especially if it’s reliable and gets good gas mileage.
  2. Make an extra payment each month. By paying an extra $100 per month, you could save $1,819 in interest and own your car in a little over five years when you buy a $30,534 new car with an 84-month loan. When it comes to that $19,126 used car, you’d save $1,598 in interest and pay it off in under five years.
  3. Compare rates. Shop around for the best rates, and get multiple offers from lenders to compare. A difference of 3 percent on your interest rate could save you $3,689 on that 84-month new car loan of $30,534 and $2424 on that $19,126 used car.
  4. Buy used. With used car payments an average of $145 less than new, you’ll save a lot when you buy used over new.
  5. Don’t finance extras. Pay up front for your license, tax, and registration. If you purchase an extended warranty or prepaid maintenance package, don’t finance those into your loan either.

Part II: Understanding the Auto Loan Process

84-month auto loan
Source: iStock

Most people do it backward — they go shopping for a car first, then shop for a loan. When you do this, you’re making yourself vulnerable to high-pressure sales associates and putting yourself at a disadvantage when it comes to financing your vehicle.

When you get pre-approved for auto loans before heading to a dealership, you have an understanding of how much money you can qualify for, so you’re not shopping for vehicles that are too expensive. You also have a loan amount and interest rate to compare any other financing that’s offered to you.

How to get pre-approved for an auto loan

You can get pre-approved with a bank, credit union, auto finance company, or dealership finance center.

  1. Research rates online. Many sites, like MagnifyMoney’s parent company Lendingtree.com, will offer auto loan rates online. It’s a good idea to check them out so you have an idea of what’s being offered. Keep in mind that your creditworthiness will affect the rates you’re able to qualify for, and the credit score for an auto loan is a little different from other loans.
  2. Gather your documents. Get everything you need together before calling or taking a visit to your lender. This may include:
    1. Personal information, like your name, address, phone number, and Social Security number.
    2. Employment information, like your employer’s name and address, your title and your salary
    3. Financial information, including what kind of credit you have available now, your current debts and your credit score.
  3. Apply. Choose a few lenders and apply online or in person for your auto loan.
  4. Get a quote. Once you’ve completed the loan application and you’ve been pre-approved, you’ll receive a loan quote showing how much you qualify for, the interest rate and the length of the loan. You can take this to the dealership with you when you’re shopping and use it as a negotiating tool.

For more information on your loan choices, check out these resources:

Getting a cosigner for an auto loan

Having a co-signer can help you qualify for a loan you wouldn’t otherwise get. As long as the co-signer has a strong credit score, it’s likely you’ll qualify for a better interest rate using a co-signer too. And making on-time payments on this type of loan will help build your credit.

The drawbacks of having a co-signer are that the cosigner is responsible for the loan if you fail to pay. If this happens, chances are you’ll negatively affect your relationship with whoever cosigned for you. If that’s a friend or family member, (which it usually is) look out! Think twice about the responsibilities of having a co-signer, and the importance of paying back the loan, so you don’t leave your cosigner on the hook for money you borrowed.

Understanding your auto loan contract

Here are some key terms you’ll need to know when it comes time to signing a contract.

  • Sticker Price – A manufacturer’s suggested retail price that is printed on a sticker and affixed to a new automobile
  • Purchase Price – This may be less than the sticker price, and is the price you agree to purchase the vehicle for from the dealer.
  • Amount Financed – This is how much money you are borrowing and the amount you’ll pay interest on. Be careful about financing extras into your loan, as doing so may put you upside-down in the vehicle.
  • Down Payment – An amount of cash provided at the time of vehicle purchase and credited toward the purchase price of the vehicle to reduce the amount financed.
  • Interest Rate – The amount of money charged for loaning money, expressed as a percentage of the Amount Financed.
  • Fixed-Rate Financing – With a fixed rate, your interest rate will never change and you’ll always pay the same amount each month.
  • Variable Rate Financing – A variable interest rate is subject to change and may increase your monthly payment amount.
  • Monthly Payment Amount – This is how much you’ll pay each month.
  • Finance Charge – This is a fee, charged by the lender, for extending you credit.
  • Annual Percentage Rate (APR)APR includes both the interest and fees expressed as a percentage, making it easier for you to compare multiple loan offers.
  • Term — This is the length of the loan expressed in months, usually 36, 48, or 60.
  • Extended Warranty Contract – An extended warranty covers the vehicle beyond the manufacturer’s warranty for a fee.
  • Guaranteed Auto Protection (GAP) – If you owe more than the car is worth, you’ll be offered GAP insurance, which will cover the difference if the vehicle is lost, stolen, or totaled.
  • DMV Fees – These may include title, license, and registration.
  • Title — The legal document proving ownership of a vehicle.

Auto loan contract traps

Here are few traps dealers can use against you. Know them so you can protect yourself and avoid getting ripped off

  • Rate mark ups. Your dealer is getting financing from a bank, and they mark up the rate, charging you an extra percentage or two when you could have just gone directly to the bank in the first place.
  • Yo-yo financing. The dealer says you’re approved and you drive away. Later, the dealer says you were denied, and asks for a larger down payment or increases the interest rate. If you refuse, you must return the vehicle, and the dealer may try to keep any deposit you made.
  • Falsified credit application. Sometimes dealers will falsify information on your credit application, like increasing your income, to help you qualify for a vehicle you wouldn’t otherwise qualify for. Be sure to check your credit application before signing.
  • Selling extras. Whether it’s GAP insurance, prepaid maintenance, or extended warranties, the dealership is going to try to upsell you on some extras to rack up the charges and, if you agree to roll it into your financing, increase the amount of interest you pay. Be careful when selecting these extras and make sure you understand what you’re getting and know it’s worth the expense.
  • Negative equity financing. If you owe more on your trade-in vehicle than it’s worth, dealers will try to offer you a deal where you roll the negative equity into your new auto loan.
  • Extra charges. Look over your contract for any extra charges. One way to spot these is if they’re pre-printed on the contract. Many of these charges are not required and can be negotiated down.

Using an auto loan to improve your credit

If you’re working toward improving your credit, there are two rules you must follow. And while going from good to excellent isn’t easy, there are a few ways your auto loan can help you improve your score.

  • Payment history. On-time payments are 35 percent of your FICO score, so paying your auto loan on time will help with your payment history.
  • Credit mix. Because having a mix of different types of credit (home loans, personal loans, credit cards) makes up 10 percent of your FICO, throwing an auto loan in there will certainly improve your mix.
  • Report to credit bureaus. Make sure the lender you’re working with reports your payments to the three major credit bureaus. Beware of “Buy here, pay here” dealerships who may or may not report your payments to the credit bureaus.

And if you want to prevent your credit from getting worse, make sure you don’t do any of the following:

  • Make late payments on your auto loan.
  • Stop making payments and get sent to collections or have your car repossessed.
  • Include your car loan in your bankruptcy (if applicable).

When it makes sense to lease vs. buy a car

If you’re taking out a longer term loan in order to lower the monthly payment, you may want to consider leasing as an option. There are some things you should know before leasing a car, especially if you’re comparing leasing to buying. And while leasing isn’t for everyone, it can be a viable alternative to taking out an 84-month lease. in fact, according to Experian data, the number of people taking out a lease continues to increase.

“Another reason why we see consumers increasingly choose to lease, is they’re generating around $100 lower payment. And the biggest difference is in non-prime, [where there’s a] $109 difference between a loan and a lease,” says Melinda Zabritski, senior director of sales at Experian.

The Pros and Cons of Leasing a Car

Pros:

  • Lower monthly payment. The payment to lease is an average of $100 less than buying according to Experian’s 2017 report.
  • Warranty coverage. The average lease lasts 36 months and during that time, you’ll have full warranty coverage for anything that goes wrong with the vehicle.

Cons:

  • Mileage penalties. Most leases have a limit on how many miles you can drive (10,000 per year for an average lease), and you’ll pay for additional miles you drive unless you secure an extra-mileage or unlimited-mileage lease upfront.
  • Wear-and-tear fees. Nicks, scratches, stains — they all amount to extra wear and tear on your leased vehicle, and you’ll pay for them at the end of your lease. So if you’re hard on your vehicles, buying may save you some money here.

The Pros and Cons of Buying a Car

Pros:

  • Ownership. Once you’ve paid off your loan, the vehicle is yours.
  • No mileage penalties. Drive as much as you like, you won’t pay a dime for “extra” miles you drive like you would with a lease.

Cons:

  • Maintenance and repairs. With ownership comes responsibility. In addition to being responsible for the maintenance, once the manufacturer’s warranty expires, you’ll be responsible for all any repair costs needed. That’s why some people consider buying an extended warranty.
  • Loss of value. Although you won’t pay fees for wear and tear, or extra miles you put on the car, those things will still lower the value of the vehicle when it comes time to sell it. And every year you own it, the value of the vehicle is likely to continue to decrease.

The Bottom Line: Is an 84-month auto loan ever a good idea?

In our opinion, no. Most people make the choice to take out a longer term auto loan in order to lower their monthly payments to afford the car they want. ‘Want’ being the operative word here. Chances are, you can purchase a less expensive car that would give you the same monthly payment. Although it’s difficult, putting your emotions aside can really help you make a financially sound decision when it comes to choosing the terms of your auto loan. If you know this is an area where you struggle, ask for help from a friend or family member who can be the voice of reason.

If you do choose to go with an 84-month auto loan, just understand that you’ll be paying more interest on your loan. And hopefully, you have a good job for the next seven years to help you pay for it.

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How Often Can You Refinance Your Car Loan?https://www.magnifymoney.com/blog/auto-loan/how-often-can-you-refinance-your-car-loan38444683/https://www.magnifymoney.com/blog/auto-loan/how-often-can-you-refinance-your-car-loan38444683/#respondFri, 16 Nov 2018 05:00:40 +0000https://www.magnifymoney.com/blog/?p=42078Refinancing your auto loan can be a wise decision, especially if you do the math and realize you have something to gain. You may find more attractive interest rates, have improved credit, or be struggling to afford your payments and want a way to ease your monthly auto bill. The real issue is whether a … Continue reading How Often Can You Refinance Your Car Loan?

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Refinancing your auto loan can be a wise decision, especially if you do the math and realize you have something to gain. You may find more attractive interest rates, have improved credit, or be struggling to afford your payments and want a way to ease your monthly auto bill. The real issue is whether a new loan and its attendant fees will result in savings during the time it takes to own the car outright.

But what happens if you’ve refinanced before and you’re looking to refinance your auto loan yet again?

How long to wait before refinancing your auto loan

Good news: Consumers can refinance their car as many times as they want and as often as they can find a lender willing to approve them for a new loan.

You can even refinance your car loan the moment you get it home from the dealership if you realize you can land a better loan. There are no legal restrictions on financing a car later on, although it may be harder to find a willing lender as the years and miles accrue on the vehicle. Each lender has its own set of requirements. At Bank of America, for example, the car must be less than 10 years old and have fewer than 125,000 miles on it to qualify for refinancing.

Just because you can refinance doesn’t necessarily mean it’ll be easy.

Look at your original loan contract to see if you have to jump through any hoops first. The Federal Trade Commission (FTC) warns that finance companies and banks can impose “prepayment penalties” on their contracts, which are fees they charge if you decide to pay off your loan earlier than planned. And, of course, by refinancing with a new lender, you are doing exactly that.

According to online auto retailer Cars Direct, prepayment penalties are allowed by the government in the District of Columbia and 36 states.

7 Reasons It Makes Sense to Refinance an Auto Loan

There are many cases in which it might be a good idea to refinance your auto loan.

Perhaps you need a lower monthly payment to offset a tight budget, or you need to save the total amount the car financing will ultimately cost. We’ll break down a few factors that can make it profitable to refinance now.

1. You qualify for a loan with a lower interest rate

Many car shoppers never shop around or compare auto loan offers, and that can be a costly mistake. If you’re in that group, then you may walk off the lot with a terrible rate and realize late that you could have gotten a much better deal. That’s a good reason to refinance.

In another scenario, if interest rates have dropped a few percentage points since the car was originally financed, there’s a chance auto rates might be lower as well. You may save money on refinancing the vehicle. Consumers can search for auto refinancing rates at competitive lending sites like LendingTree, the parent company of MagnifyMoney, which may offer interest rates as low as 1.99% APR on terms of two, three, four and five years. Lenders may offer the best rates to consumers with good-to-excellent credit scores (700-800).

2. You want a lower monthly payment

Even consumers with clear credit histories and top scores may not like the cost of their current monthly payments. You might find that you can get a longer term loan (and, thus, a lower payment) by getting pre-approved financing from a bank, credit union or private lender. You should compare a new loan with the terms and rates of your existing financing. LendingTree’s Auto Refinance Calculator crunches monthly payment figures, allowing buyers to type in different interest rates and loan terms to find the sweet spot.

Just beware of choosing a loan with a longer term. It may save you money on your monthly payment, but you will ultimately pay more interest over time.

Here’s an example to show you how much more you’ll pay with a longer-term loan.

For those who can increase their monthly payment without too much stress, shortening the term may be a good strategy. Monthly payments will be higher, but the car will be paid off sooner, lowering the total amount of paid interest. The bottom line: If you’re considering changing the term in refinancing, be sure the interest rate and refinancing charges are low enough to make it worthwhile.

3. You want to remove or add a co-signer

There may be business or personal reasons to add or remove a co-signer from the original auto financing. In a divorce, the primary owner may want to remove the ex-spouse co-signer from the loan and title. Or someone may want to add a co-borrower with better credit to qualify for a lower refinancing rate. Either way, those modifications are going to require refinancing.

Unfortunately, it’s going to be difficult to remove yourself as a co-signer if the person who financed the car stops making payments. So if that’s your case, check out our guide on how to get out of a bad car loan.

4. Your credit score has improved and you can qualify for a lower rate

Congrats on improving your score! According to our parent company, LendingTree, if you raise your credit into the next tier in the FICO Score range you may see appreciable savings. Auto lenders rank consumer credit into Tiers A, B, C, D and F. Financing to applicants with D- and F-tier scores may only be offered as subprime or bad credit loans:

  • Tier A: 781 – 850
  • Tier B: 661 – 780
  • Tier C: 601 – 660
  • Tier D: 501 – 600
  • Tier F: 300 – 500

Borrowers falling into the D and F tiers should review MagnifyMoney’s guide on bad credit loans.

5. You earn a lot less or a lot more than you used to

There may be two key financial reasons supporting car refinancing:

  • You earn more than you did when you bought the vehicle and want to pay it off sooner
  • You earn less than you did and cannot meet the monthly payments

Those who have improved finances may choose to refinance to shorten the loan term, increasing their monthly payments but slashing the amount of total required payments to pay off the car. Owners who have experienced a financial setback (change or loss of income) can refinance their vehicles to a longer term, lowering the amount of their monthly payments. Refinancing your loan to a lower rate with the same or more favorable interest rate will lower the total cost of the car.

6. Your car is worth less than what you owe

If a consumer owes more money on their car than it’s worth, they have an “upside-down” loan. This can happen if you buy a car with a very low down payment and finance the rest. Your car simply loses value over time and you wind up paying on a loan that was determined based on its value months or even years earlier. If your car loan is underwater, you don’t have a good chance of getting refinanced since the lender will take a hit on the collateral if you default. A way to stave off disaster is to make extra payments on the original loan or take out a home equity or personal loan to pay off the vehicle.

7. Your car is getting older

If you want to refinance before your car gets too old to qualify, you should.

Lenders set their own limits on how many miles and years on the road qualify cars for refinancing. For example, Nationwide Bank will not refinance vehicles that are 20 years or older, or 150,000 miles on the odometer. Bank of America will not refinance cars 10 years or older and won’t touch vehicles with 125,000 miles or more.

Risks To Consider Before You Refinance

Impact on credit

When you apply for refinancing, a “hard inquiry” is reported to the credit agencies. Multiple hard inquiries on refinancing (and other loan requests) can drop credit scores by a few points, but the impact can be offset if you make consistent payments on time, which will help boost your score.

Also, you won’t get dinged if you shop for an auto loan over a short period of time — say two weeks or so. In that case, credit bureaus should treat all those hard inquiries as just one inquiry.

Long-term loans can cost more in the long run

Today, you can get auto loans for as long as 84 months. Extending terms through a refinance may look good when the monthly payment comes due. But the added interest over the term can cost you more in the end. Term and APR sit on opposite sides of the seesaw.

Doing the math, compare these costs when the terms are extended:

  • A $30,000 car financed at 6% for five years: $34,799
  • Financing the same car and rate for seven years: $36,813

If you drag out your loan term, you could wind up upside down on the loan

During the first years of ownership, financing on a new car is already upside down. That’s because the monthly payments are largely paid on interest rather than on the principal. Meanwhile, the new car is losing value. If the consumer has a downward turn in finances, the loan can go off the deep end. With an older vehicle, there’s still a risk with a long extension. By the time the refinancing is paid off, the car will have amassed high mileage that can diminish its use as a trade-in.

Fees

Each state charges a titling fee when a new loan is made on the vehicle. Check your state’s Department of Motor Vehicles (DMV) to find out the fees. In New York, for example, the titling fee is $50. It’s unlawful for the dealership to make a profit on the titling. Remember, frequent refinancing customers pay for titling each time.

There are no requirements or charges for an appraisal when refinancing, but the borrower may be assessed lender fees for loan originations and processing. Get all charges — in writing — in your contract. Some lenders may be open to negotiations on some fees. Be wary of upfront fees that may be charged with any loan application at the bank, credit union or finance company.

How To Compare Auto Refi Offers

Always shop around for the best auto loan deal before you head to the dealership. If you walk in the dealership with an offer in hand, they will have to negotiate with you if they want your business — and they will, because they do.

Here’s what to compare when you’re looking at different loans:

  • Price
  • Down payment requirement
  • Amount financed
  • Annual percentage rate
  • Finance charges
  • Term length in months
  • Number of payments
  • Monthly payment amount

Try comparing loans with the same term to find the best APR. Or view the same APR across multiple terms to see the financial impact on monthly payments. Take your comparative checklist when visiting lenders or bank and credit union websites. Our parent company LendingTree serves up free offers on auto refinancing in a comparative format.

Pre-approvals on a car loan are good from 30 to 90 days, depending on the lender.

What if I can’t get approved for an auto refi?

The first step in responding to a loan denial is to learn why you were turned down. The Equal Credit Opportunity Act requires lenders to notify borrowers in writing the reasons the application was denied. Reasons for denial may involve the credit score or red flags in your credit history. Too many hard credit inquiries might indicate that you’re desperate for a loan. Turn-down letters provide an opportunity to view the credit report that the loan underwriters evaluated.

You may have to wait awhile before applying for refinancing again, since it will result in another ding on your credit. Or, if you’re in the subprime and bad credit tiers, look at options of getting financing from banks, credit unions or financing companies that specialize in loans for Tier D and F categories. Learn more about the subprime options at MagnifyMoney.

Finally, you could take time out from refinancing while you report errors on your credit report and set about improving your credit score. MagnifyMoney has sound advice on building the highest credit scores. Steps include:

  1. Get a line of credit
  2. Keep a low credit utilization rate
  3. Pay your creditors in full and on time with each monthly statement
  4. Avoid or reduce credit card debt
  5. Protect your score

Helpful resources

The following links offer a wealth of financing information that can keep you out of trouble:

Auto Loans

The Consumer Financial Protection Bureau offers answers to frequently asked questions on car financing, including a section on how to avert repossessions.

Auto Loans Modification Scams

The FTC warns about companies that claim to change the loan to avoid repossessions and fines. They may charge significant upfront fees and do nothing on your behalf.

Auto Loans Advice, LendingTree

This collection of LendingTree articles on car loans covers a range of issues, including financing options, bad credit, financing a classic car, bankruptcy, car ownership, certified pre-owned cars, and more.

Credit Repair: How to Help Yourself

The FTC’s Consumer Information division has published an extensive guide to repairing credit, including information on credit report disputes, finding legitimate credit counselors, and consumer rights.

How to Get a Car Loan with Bad Credit

View MagnifyMoney’s comprehensive guide to refinancing bad-credit loans, getting a co-signer, and tips for avoiding financing scams.

National Auto Lending Study

A study by MagnifyMoney and Google Consumer Surveys found that seven-year terms can be a ticket to the horror upside-down loans, especially for subprime borrowers. Read the rest of the findings.

Understanding Vehicle Financing

The American Financial Services Association Education Foundation (AFSAEF), the National Automobile Dealers Association (NADA), and the Federal Trade Commission (FTC) have prepared this 16-page brochure to help consumers understand financing terms, laws regulating dealership financing, and strategies for visiting dealerships.

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What Credit Score Do I Need for a Personal Loan?https://www.magnifymoney.com/blog/personal-loans/credit-score-needed-for-a-personal-loan/Fri, 16 Nov 2018 05:00:21 +0000https://www.magnifymoney.com/blog/?p=92577Most people know their credit score is a three-digit number that represents their credit health, but that doesn’t mean they know how their credit score is determined or why it’s so important. Many consumers also fail to realize they have some power over their credit scores, including the ability to improve their score time. If … Continue reading What Credit Score Do I Need for a Personal Loan?

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checking credit score for personal loan
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Most people know their credit score is a three-digit number that represents their credit health, but that doesn’t mean they know how their credit score is determined or why it’s so important. Many consumers also fail to realize they have some power over their credit scores, including the ability to improve their score time.

If you’re wondering about the credit score needed for a personal loan, it’s crucial to understand the inner workings of your credit score and how it might impact your ability to qualify for the cash you need.

In this guide, we offer up information on the minimum credit score required for a personal loan, along with additional details on credit scores and where you can get yours for free.

What is a credit score?

While the term “credit score” is used widely to describe the score you’re assigned based on your creditworthiness, there are several different types of credit scores available. The most popular credit score is the FICO Score, which was created by the Fair Isaac Corporation. This score, measured on a scale from 300 to 850, is used by 90% of lenders who are making credit-related decisions each year, according to FICO.

VantageScore is the biggest competitor to FICO and its most current version, V3, uses the same 300-850 range of scores to describe consumer creditworthiness. Other credit scores include TransRisk, Experian’s National Equivalency Score, CreditXpert Credit Score, CE Credit Score, and Insurance Score.

While each type of credit score works differently, they all consider a similar set of information to determine where you stand. The big differences between them are based on how much weight they give each factor they compare.

As an example, the FICO scoring model uses the following criteria to determine your credit score:

  • Payment history: 35%
  • Debts/amounts owed: 30%
  • Age of credit history: 15%
  • New credit: 10%
  • Credit mix: 10%

With Vantage Score, on the other hand, different factors play a larger role in the score you’re assigned. Look how Vantage Score is determined, and you’ll see what we mean:

6 factors in your VantageScore

Factor

Weight

Age and type of credit

Extreme

Credit utilization (amounts owed)

Extreme

Payment history

High

Total balances

Medium

Recent behavior

Low

Available credit

Extremely low

If you don’t know your credit score but want to find out what it is right now, you can get your free credit score using My LendingTree. The services help you monitor your credit and find ways to improve it.

Some credit cards, like the Discover it® Cash Back, provide a free FICO® score on your monthly statement as a cardholder perk. You can also get your FICO® score for free with a service called Credit Scorecard. This service is available to you whether you are a Discover customer or not.

How do banks use credit scores?

When you apply for a personal loan, your lender will pull one of your credit scores from at least one of the credit reporting agencies — Experian, Equifax, or TransUnion. At that point, they will take a close look at your score to determine your creditworthiness.

“Credit scores are used to determine the risk of doing business with an applicant,” said credit expert John Ulzheimer. “If your score or scores are good enough and you have a sufficient income, then you’re likely to be approved.”

Keep in mind, however, that your credit score is only one factor a lender will consider when deciding whether to approve you for a personal loan.

“Banks also look at your entire credit report, your debt-to-income ratio (DTI), employment history, any items you own that can be used as collateral, and so on,” said Beverly Harzog, credit card expert and consumer finance analyst for U.S. News & World Report.

In summary, you will likely need to have more than a sufficient credit score for a personal loan if you hope to qualify. You will also need to have a proof of income and employment, an acceptable debt-to-income ratio (a DTI below 35 percent is a good goal to shoot for), and a solid credit history that shows you have used credit responsibly in the past.

What credit score is needed for a personal loan?

When it comes to minimum credit score requirements for personal loans, there is no hard and fast rule. According to myFICO.com, a credit score of 670 or above is generally considered “good” and acceptable. This means that an applicant who applies for a personal loan with a score of 670 may qualify, but they may or may not receive the best interest rate or terms.

But that doesn’t mean a consumer with a credit score of 620 can’t get a loan, said Harzog; “it just means that the interest rate will be high.”

That’s because, generally speaking, those with low credit scores usually pay much higher interest rates if they can qualify for a loan. However, the opposite is also true since a high credit score will usually get you a loan with the lowest interest rates and best terms.

How much will your interest rate vary based on your credit score? That depends on your lender, where you live, and other factors. For example, at Wells Fargo, a $5,000 personal loan with a repayment period of sixty months offers the following rates based on a calculator they offer on their website as of November 14, 2018:

  • Excellent credit (score of 760 or above): 11.49% to 13.74%
  • Good credit (score of 700 to 759): 11.49% to 18.49%
  • Fair credit (score of 621 to 699): 18.49% to 24.49%
  • Poor credit (score of 620 or below): 19.99% to 24.49%

In terms of transparency, not all lenders offer the type of detail Wells Fargo does with their loan payment calculator. While some lenders list their credit score requirements online, others remain vague or refuse to commit to a minimum credit score cutoff altogether.

For example, Goldman Sachs Bank USA lists that only consumers with “excellent credit” qualify for their personal loans with the lowest rates, but they don’t list a minimum credit score requirement or explain their minimum cutoff for a great credit score. On the other hand, student loan refinance company and personal loan lender Earnest lists directly on their website a minimum credit score requirement of 680.

If you’d like to explore personal loan options, you can use this tool from LendingTree to see offers from up to five different lenders. You’ll input information about yourself and what you want out of a loan. If you qualify, the tool with spit out lender offers you can review.

As you begin comparing lenders for a personal loan, it’s important to keep in mind that credit score requirements, interest rates and transparency about internal processes will vary greatly. Ulzheimer also said that requirements also vary by lender since some “target a higher risk population.”

“For some lenders, a 580 may be good enough,” he said. “It’s not uniform.” (You can see personal loans for bad credit here.)

What can you do if your credit score is too low for a loan?

If you can’t qualify for the personal loan you want, it’s crucial to be aware of some of the risks that come with personal loan alternatives. Payday loans and title loans may make it easy to access cash, but they do so at an exorbitant cost. Interest rates on payday loans can surge up to 780% when you factor in fees, and title loans can lead to you having your car repossessed if you don’t pay them back in full when they’re due.

Consequently, it’s smart to avoid borrowing money unless you absolutely must.

“If you’re in a position where you need to rebuild your credit, it’s not a good idea to take on more debt,” said Harzog. “Instead, you should take some steps to improve your credit score over time, such as paying down debt to decrease your utilization, making sure all your bills are paid early or on time, and refraining from opening or closing accounts while you try to boost your score.

Harzog also noted that you should check your credit report for free with all three credit reporting agencies on AnnualCreditReport.com. If you find a negative note on your report that is inaccurate and take the time to dispute it, this could help your credit score tremendously.

In lieu of taking the time to improve your credit score before you apply for a loan, here are a few additional options to consider:

  • Get quotes from bad credit lenders. While lenders who focus on people with bad credit should be an option of last resort, you can consider them. Just remember that you may pay an extremely high interest rate if your credit is poor. With NetCredit Personal Loans, for example, your APR could be as high as 179.00%.
  • Get a cosigner. If you’re able to convince a family member or trusted friend with great credit to cosign on your loan, you could have a better chance at qualifying with a lower interest rate.
  • Apply for a secured loan. Secured loans require you to put down collateral, but they tend to offer lower rates and may be easier to qualify for. If you have home equity you can borrow against, a car that is paid off, or a retirement account with a healthy balance, for example, you may be able to take out a secured loan.
  • Borrow from family and friends. If a lender won’t give you the time of day or you want to avoid high interest rates, you can also try borrowing money from family or friends. Just make sure you have the means to pay your loan back — if you default and blow them off, you risk jeopardizing your relationship.
LendingTree
APR

5.99%
To
35.99%

Credit Req.

Minimum 500 FICO

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender.

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Best Credit Cards for Black Friday and Cyber Monday 2018https://www.magnifymoney.com/blog/credit-cards-2/best-credit-cards-for-black-friday-cyber-monday/Thu, 15 Nov 2018 21:45:06 +0000https://www.magnifymoney.com/blog/?p=93056Black Friday and Cyber Monday are fast approaching. Last holiday season, the majority of shoppers (85%) used a credit card or store card to buy their holiday items. That’s an 8% increase from 2016, and if the trend continues, credit card use will increase again this holiday season. Folks who are trying to decide which … Continue reading Best Credit Cards for Black Friday and Cyber Monday 2018

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Black Friday and Cyber Monday are fast approaching. Last holiday season, the majority of shoppers (85%) used a credit card or store card to buy their holiday items. That’s an 8% increase from 2016, and if the trend continues, credit card use will increase again this holiday season.

Folks who are trying to decide which credit card to take with them on their holiday shopping spree would do well to choose — and spend — wisely.

Some 44% of shoppers accrued over $1,000 in holiday debt in 2017, according to a MagnifyMoney survey, — and the majority of debt sufferers didn’t plan on it. Falling into unexpected debt can damper your holiday season and it may take you a long time to finally dig yourself out of debt.

But, if you use the right credit card along with responsible credit behavior, you can have a successful, debt-free holiday shopping season.

There are credit cards tailored to various holiday expenses such as supermarket purchases, online shopping at Amazon.com, purchases at department stores and much more. By using the right card, you can earn rewards to reduce the cost of your bills and even finance your holiday shopping so you avoid falling into debt.

In this roundup, we found the best credit cards that you can use on Black Friday and Cyber Monday, so you can maximize rewards regardless of where you plan to shop. We’ve also included several cards that offer 0% intro periods that can help you finance big-ticket purchases and even several smaller purchases.

Best for Amazon

The online shopping giant offers pretty much anything you can ask for, from electronics, to clothes, to food — perfect for a one-stop destination to get all your holiday shopping needs. You can use one of their Amazon-branded credit cards or a cashback card that rewards you for Amazon.com purchases. Rewards can be redeemed for a statement credit that helps to reduce your bill, and may be redeemable for future Amazon.com purchases.

Amazon Prime Rewards Visa® Signature Card

The information related to Amazon Prime Rewards Visa® Signature Card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Amazon Prime Rewards Visa® Signature Card

Regular Purchase APR
16.24% - 24.24% Variable
Annual fee
$0
Rewards Rate
Earn 5% back at Amazon.com and Whole Foods Market with eligible Prime membership, 2% back at restaurants, gas stations, and drugstores, and 1% back on all other purchases.
Credit required
good-credit

Good

The Amazon Prime Rewards Visa® Signature Card offers the most rewards for your Amazon.com spending of any card around — Earn 5% back at Amazon.com and Whole Foods Market with eligible Prime membership, 2% back at restaurants, gas stations, and drugstores, and 1% back on all other purchases. This is a fantastic rate that’s great for people looking to do the majority of their Black Friday and Cyber Monday shopping on Amazon.com. Plus, if you’re already a Prime member, this card is a no-brainer since there’s a $0 annual fee. However, if you’re not currently a Prime member, the cost is currently $119 for an annual membership. There is a new cardmember offer that helps offset the annual fee — Get a $70 Amazon.com Gift Card instantly upon credit card approval.

Amazon Rewards Visa® Signature Card

The information related to Amazon Rewards Visa® Signature Card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Amazon Rewards Visa® Signature Card

Regular Purchase APR
16.24% - 24.24% Variable
Annual fee
$0
Rewards Rate
Earn 3% back at Amazon.com and Whole Foods Market, 2% back at restaurants, gas stations, and drugstores, and 1% back on all other purchases.
Credit required
good-credit
Excellent/Good

If you don’t want to become a Prime member, there is a version of this card that doesn’t require a Prime membership — the Amazon Rewards Visa® Signature Card. However, you’ll earn a lower rewards rate at Amazon.com and receive a lower new cardmember offer. Earn 3% back at Amazon.com and Whole Foods Market, 2% back at restaurants, gas stations, and drugstores, and 1% back on all other purchases. Get a $50 Amazon.com Gift Card instantly upon credit card approval.

Discover it® Cash Back

APPLY NOW Secured

on Discover Bank’s secure website

Rates & Fees

Read Full Review

Discover it® Cash Back

Regular APR
13.99% - 24.99% Variable
Intro Purchase APR
0% for 14 months
Intro BT APR
0% for 14 months
Annual fee
$0
Rewards Rate
5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate, 1% unlimited cash back on all other purchases - automatically.
Balance Transfer Fee
3%
Credit required
good-credit
Excellent/Good Credit

An alternative to an Amazon-branded store card is a cashback card that offers Amazon.com as a bonus category. The Discover it® Cash Back has Amazon.com and wholesale clubs as a bonus category from October to December 2018 — which is perfect for your holiday shopping. You’ll 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 each time you activate. One percent unlimited cash back automatically on all other purchases.

There is a $1,500 quarterly maximum for the bonus categories, which comes out to $75 cash back at the 5% rate before it drops to 1%. Depending on how much you plan to spend at Amazon.com and wholesale clubs, this may not be an issue. But, if you think you’ll spend over $1,500 in these two categories this October to December, you should consider the Amazon Prime Rewards Visa® Signature Card since it doesn’t have a quarterly maximum.

Best for department stores

If you do the majority of your Black Friday and Cyber Monday shopping at department stores like Macy’s and Bloomingdale’s, a card that offers a competitive rewards rate on these purchases can come in handy. Department stores typically offer their own store cards, but you can only use them at their store. Therefore, if you plan on shopping at multiple department stores, you’d need a store card for each store. This can be a hassle, so we’ve recommended credit cards that can be used anywhere and still earn above average rewards at eligible department stores.

The two cards we recommend offer high rewards rates at select department stores including Macy’s and Bloomingdale’s, plus tons of other stores. We do want to point out that the Chase Freedom® has more qualifying department stores than the Blue Cash Preferred® Card from American Express — providing more flexibility.

Chase Freedom®

APPLY NOW Secured

on Chase Bank’s secure website

Read Full Review

Chase Freedom®

Regular Purchase APR
16.99% - 25.74% Variable
Intro Purchase APR
0% Intro APR on Purchases for 15 months
Intro BT APR
0% Intro APR on Balance Transfers for 15 months
Annual fee
$0
Rewards Rate
Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases.
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater
Credit required
good-credit
Excellent/Good

The Chase Freedom® is a rotating cashback card that allows cardholders to Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases. From October to December 2018, department stores, wholesale clubs and Chase Pay® are 5% bonus categories. You can earn a great rate on those purchases, but take note that spending at the 5% cashback rate is limited to $1,500 a quarter before it drops down to 1% cash back. If you want a wide selection of department stores to earn 5% cash back (up to a quarterly max of $1,500, then 1%) and don’t mind activating the bonus categories, the Chase Freedom® can be a good choice for your Black Friday and Cyber Monday department store shopping.

Eligible department stores include:

  • Aliexpress*
  • Beall’s of Florida
  • Belk
  • Bergdorf Goodman*
  • Bergners*
  • Bloomingdale’s
  • Boscov’s Department Store
  • Boston Store*
  • Carson’s*
  • Dillard’s
  • Elder-Beerman*
  • Goody’s*
  • Gordmans*
  • Gump’s*
  • Herberger’s*
  • J.C. Penney
  • Kohl’s
  • Lord & Taylor
  • Macy’s
  • Neiman Marcus
  • Nordstrom & Nordstrom Rack
  • Peebles Dept Store*
  • Saks Fifth Ave & Off Fifth
  • Sears
  • Stage Stores*
  • Stein Mart
  • The Bon Ton
  • Von Maur*
  • Younkers*

*Not an eligible department store with the Blue Cash Preferred® Card from American Express.

Blue Cash Preferred® Card from American Express

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on American Express’s secure website

Terms Apply

Rates & Fees

Read Full Review

Blue Cash Preferred® Card from American Express

Regular Purchase APR
14.99%-25.99% Variable
Intro Purchase APR
0% for 12 months
Intro BT APR
0% for 12 months
Annual fee
$95
Rewards Rate
6% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%). 3% cash back at U.S. gas stations, 1% cash back on other purchases.
Balance Transfer Fee
Either $5 or 3% of the amount of each transfer, whichever is greater.
Credit required
good-credit
Excellent/Good

The Blue Cash Preferred® Card from American Express doesn’t offer as high a rewards rate at select U.S. department stores compared with the Chase Freedom®, but it has the advantage of no quarterly limits or activation. Cardholders earn 6% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%). 3% cash back at U.S. gas stations, 1% cash back on other purchases. This card does have a $95 annual fee, but if you spend $3,167 a year at select U.S. department stores, you’ll earn enough cash back to cover the annual fee.

Eligible department stores include:

  • Bealls
  • Belk
  • Bloomingdale’s
  • Bon Ton Stores
  • Boscov’s
  • Century 21 Department Stores*
  • Dillard’s
  • J.C. Penney (JCP)
  • Kohl’s
  • Lord & Taylor
  • Macy’s
  • Neiman Marcus
  • Nordstrom
  • Saks Fifth Avenue
  • Sears
  • Stein Mart

*Not an eligible department store with the Chase Freedom®.

Best for general shopping

When you go holiday shopping, you typically won’t just shop at one store, you most likely will need to make a few stops in store or online to get everything you need. To maximize your rewards on all your purchases, you’ll either need several credit cards or you can simply use a flat-rate cashback card that earns the same rewards rate on all your shopping — whether it’s online, in department stores, wholesale clubs or elsewhere.

Citi® Double Cash Card – 18 month BT offer

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on Citibank’s secure website

Read Full Review

Citi® Double Cash Card – 18 month BT offer

Regular Purchase APR
15.49% - 25.49%* (Variable)
Intro Purchase APR
N/A
Intro BT APR
0% for 18 months on Balance Transfers*
Annual fee
$0
Rewards Rate
Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay
Balance Transfer Fee
3% of each balance transfer; $5 minimum.
Credit required
good-credit
Excellent, Good

The Citi® Double Cash Card – 18 month BT offer is consistently our top choice for a flat-rate cashback card since you earn 2% cash back on purchases: 1% when you buy plus 1% as you pay. That’s double the amount a traditional rewards card earns on everyday purchases and can simplify your wallet. You can use this card on all your purchases and earn competitive rewards without worrying which card to use. However, if you do have several credit cards, use them for the transactions they earn the most rewards in, and then use the Citi® Double Cash Card – 18 month BT offer on all other purchases.

In addition to a cashback program, this card has the Citi® Price Rewind benefit. When you register eligible items with Citi® Price Rewind, Citi will conduct a 60-day search from purchase date to see if there’s a lower price. If a lower price is found, you may be reimbursed for the difference between what you paid and the lower price. You can also submit a claim if you find a lower price. Note, the Citi® Price Rewind benefit is limited to $200 an item and $1,000 per calendar year.

Best for wholesale clubs

During the holidays you most likely will be traveling to visit family and friends or entertaining guests at your home. Shopping at wholesale clubs can be a great way to stock up on needed items for entertaining, cooking and gift-giving. Wholesale clubs like BJ’s, Costco, and Sam’s Club offer their own co-branded credit cards that members can use to earn rewards. There are also some cards from major issuers that offer wholesale clubs as a bonus category during the holiday months. Just remember that if you plan on shopping regularly at wholesale clubs, you’ll need an active membership. However, many clubs offer free one-day passes where you can shop around without a membership, and you can also piggyback off a friend or family member’s membership.

From October to December 2018, two cards are offering wholesale clubs as a bonus category — the Chase Freedom® and the Discover it® Cash Back. Keep in mind you need to activate the bonus categories for the 5% cash back to take effect. And, the amount of cash back you can earn at the 5% cashback rate has a $1,500 quarterly maximum before the cashback rate drops to 1%. So, that’s up to $75 cash back at the 5% rate. You can use these cards for your wholesale club shopping this holiday season and reap the rewards. If you’re a member of multiple wholesale clubs or don’t want a club-specific credit card, these cards are a good choice.

Discover it® Cash Back

APPLY NOW Secured

on Discover Bank’s secure website

Rates & Fees

Read Full Review

Discover it® Cash Back

Regular APR
13.99% - 24.99% Variable
Intro Purchase APR
0% for 14 months
Intro BT APR
0% for 14 months
Annual fee
$0
Rewards Rate
5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate, 1% unlimited cash back on all other purchases - automatically.
Balance Transfer Fee
3%
Credit required
good-credit
Excellent/Good Credit

Chase Freedom®

APPLY NOW Secured

on Chase Bank’s secure website

Read Full Review

Chase Freedom®

Regular Purchase APR
16.99% - 25.74% Variable
Intro Purchase APR
0% Intro APR on Purchases for 15 months
Intro BT APR
0% Intro APR on Balance Transfers for 15 months
Annual fee
$0
Rewards Rate
Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases.
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater
Credit required
good-credit
Excellent/Good

Best for supermarkets

While shopping at your local supermarket on Black Friday won’t likely be on the top of your list, getting a good supermarket rewards card can help ease the sting of holiday grocery bills. The Blue Cash Preferred® Card from American Express has a rewards program tailored to U.S. supermarket spending with 6% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%). 3% cash back at U.S. gas stations, 1% cash back on other purchases. However, this card comes with a $95 annual fee that isn’t worthwhile for everyone.

There is a $0 annual fee version of this card, the Blue Cash Everyday® Card from American Express. But, that card offers half as much cash back with 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. If you don’t want to pay an annual fee, then it can be a better choice.

You should consider how much you spend each month at U.S. supermarkets before you settle on a card. If you spend over $264 a month ($61 a week) at U.S. supermarkets, you’ll see more benefit from the Blue Cash Preferred® Card from American Express. But, if you spend less than $264 a month at U.S. supermarkets, then you should stick with the $95 annual fee Blue Cash Everyday® Card from American Express.

Take note that superstores, convenience stores and warehouse clubs like BJ’s, Target and Walmart aren’t considered U.S. supermarkets and will earn 1% cash back.

Blue Cash Preferred® Card from American Express

APPLY NOW Secured

on American Express’s secure website

Terms Apply

Rates & Fees

Read Full Review

Blue Cash Preferred® Card from American Express

Regular Purchase APR
14.99%-25.99% Variable
Intro Purchase APR
0% for 12 months
Intro BT APR
0% for 12 months
Annual fee
$95
Rewards Rate
6% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%). 3% cash back at U.S. gas stations, 1% cash back on other purchases.
Balance Transfer Fee
Either $5 or 3% of the amount of each transfer, whichever is greater.
Credit required
good-credit
Excellent/Good

Blue Cash Everyday® Card from American Express

APPLY NOW Secured

on American Express’s secure website

Terms Apply

Rates & Fees

Read Full Review

Blue Cash Everyday® Card from American Express

Regular Purchase APR
14.99%-25.99% Variable
Intro Purchase APR
0% for 15 months
Intro BT APR
0% for 15 months
Annual fee
$0
Rewards Rate
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.
Balance Transfer Fee
Either $5 or 3% of the amount of each transfer, whichever is greater.
Credit required
good-credit
Excellent/Good

Best 0% intro offers on purchases

Shopping for everyone on your list this holiday season can cost you a lot of money. With the average holiday shopper incurring $1,054 in debt last year, you’ll want to think about taking preventative measures so you don’t fall into debt. You should consider credit cards offering 0% intro periods for new purchases that help you avoid interest charges when you carry a balance during the intro period. There are cards that offer as long as 20 months interest-free.

Here are our top picks for cards with 0% intro periods:

U.S. Bank Visa® Platinum Card

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on US Bank’s secure website

U.S. Bank Visa® Platinum Card

Regular Purchase APR
11.99% to 23.99% Variable
Intro Purchase APR
0% introductory APR for the first 20 billing cycles
Intro BT APR
0% introductory APR for the first 20 billing cycles for balances transferred within 60 days from account opening
Annual fee
$0
Balance Transfer Fee
Either 3% of the amount of each transfer or $5 minimum, whichever is greater.
Credit required
good-credit
Excellent/Good

TruWest Visa Platinum Card

APPLY NOW Secured

on TruWest Credit Union’s secure website

TruWest Visa Platinum Card

Regular Purchase APR
7.95% - 21.95% Variable
Intro Purchase APR
0% introductory APR for 18 months
Intro BT APR
0% introductory APR for 18 months
Annual fee
$0
Balance Transfer Fee
3% of the amount of each balance transfer

Chase Freedom®

APPLY NOW Secured

on Chase Bank’s secure website

Read Full Review

Chase Freedom®

Regular Purchase APR
16.99% - 25.74% Variable
Intro Purchase APR
0% Intro APR on Purchases for 15 months
Intro BT APR
0% Intro APR on Balance Transfers for 15 months
Annual fee
$0
Rewards Rate
Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases.
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater
Credit required
good-credit
Excellent/Good

If you chose to use a 0% intro APR card, you should check in on your debt two months before your intro period ends. Check to see if you’re on track to pay off your balance before the intro period ends. If you’re behind schedule and don’t think your debt will be paid off in time, consider a balance transfer credit card. You can transfer debt from your existing card to a new card offering a 0% intro period for balance transfers. This saves you from interest charges compared with leaving your balance on your current card post intro period, and also gives you more time to pay off your debt. Just take note that balances can’t be transferred between cards from the same bank and you will typically incur a balance transfer fee — however this fee is often outweighed by the amount you save on interest — though there are cards with no balance transfer fees.

Here are our top picks for balance transfer credit cards:

Citi Simplicity® Card - No Late Fees Ever

APPLY NOW Secured

on Citibank’s secure website

Read Full Review

Citi Simplicity® Card - No Late Fees Ever

Regular Purchase APR
15.99% - 25.99%* (Variable)
Intro Purchase APR
0%* for 12 months on Purchases*
Intro BT APR
0%* for 21 months on Balance Transfers*
Annual fee
$0*
Balance Transfer Fee
5% of each balance transfer; $5 minimum
Credit required
good-credit
Excellent/Good

Citi® Double Cash Card – 18 month BT offer

APPLY NOW Secured

on Citibank’s secure website

Read Full Review

Citi® Double Cash Card – 18 month BT offer

Regular Purchase APR
15.49% - 25.49%* (Variable)
Intro Purchase APR
N/A
Intro BT APR
0% for 18 months on Balance Transfers*
Annual fee
$0
Rewards Rate
Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay
Balance Transfer Fee
3% of each balance transfer; $5 minimum.
Credit required
good-credit
Excellent, Good

Discover it® Balance Transfer

APPLY NOW Secured

on Discover Bank’s secure website

Rates & Fees

Read Full Review

Discover it® Balance Transfer

Regular APR
13.99% - 24.99% Variable
Intro Purchase APR
0% for 6 Months
Intro BT APR
0% for 18 Months
Annual fee
$0
Rewards Rate
5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate, 1% unlimited cash back on all other purchases - automatically.
Balance Transfer Fee
3%
Credit required
good-credit
Excellent/Good Credit

This article contains links to CompareCards, which like MagnifyMoney, is a subsidiary of LendingTree.

The post Best Credit Cards for Black Friday and Cyber Monday 2018 appeared first on MagnifyMoney.

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What Happens When You File for Bankruptcy?https://www.magnifymoney.com/blog/pay-down-my-debt/what-happens-when-you-file-for-bankruptcy/Thu, 15 Nov 2018 20:20:29 +0000https://www.magnifymoney.com/blog/?p=89667If you’re struggling with insurmountable debt, bankruptcy may be an action you’re thinking about taking. In this post, we explain what happens play-by-play when you file. One thing to note is that the process of bankruptcy can vary depending on the type of bankruptcy you file and the facts of your case. The following is … Continue reading What Happens When You File for Bankruptcy?

The post What Happens When You File for Bankruptcy? appeared first on MagnifyMoney.

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bankruptcy guide
iStock

If you’re struggling with insurmountable debt, bankruptcy may be an action you’re thinking about taking. In this post, we explain what happens play-by-play when you file. One thing to note is that the process of bankruptcy can vary depending on the type of bankruptcy you file and the facts of your case. The following is a general overview of how bankruptcy works for the most common forms filed by individuals. We’ll cover:

The basics of Chapter 7 and Chapter 13 bankruptcy

There are multiple forms of bankruptcy that can be filed by cities, businesses, farmers, and more. The two forms that individuals typically file are Chapter 7 and Chapter 13. Here’s an overview of both:

Chapter 7

Chapter 7 is the liquidation form of bankruptcy where your assets are taken to repay your creditors.

Some assets can be excluded from the liquidation, depending on your state and the bankruptcy agreement. Exempt items may include clothing and other household items. Unsecured debt, such as credit cards, personal loans, and debt in collections, are typically discharged.

To qualify for Chapter 7 bankruptcy, you have to pass what’s called a “means test” to prove you don’t have enough disposable income to repay your debts. You can learn more about the means test here.

Chapter 13

If you have sufficient income to repay some of your debt, Chapter 13 may be the type of bankruptcy you file. Chapter 13 establishes a debt repayment plan that lasts from three to five years.

You may be able to save your home from foreclosure through Chapter 13 by adding delinquent mortgage payments to the repayment plan. Certain debts may be discharged once you meet the conditions of your repayment plan.

What forms of debt can’t be discharged in bankruptcy?

A discharge is when you’re no longer personally liable for a debt. After discharge for both Chapter 7 and Chapter 13, creditors cannot pursue collection or legal action against you for the debt. However, the discharge can be reversed if it’s determined you were given the discharge based on fraudulent records.

Bankruptcy won’t wipe away all of your financial obligations, either. For example, you may be responsible for the following after bankruptcy:

The dischargeable debts will vary from case to case. It’s a good idea to consult with an attorney to find out what debts can and can’t be discharged. In general, unsecured consumer debts such as personal loans, loans from relatives, payday loans, and medical bills may be discharged. In certain situations, secured debts may be discharged if you’re willing to surrender the property backing the debt.

Filing for bankruptcy? Here’s what to expect

Moving on to what you can expect before filing, during the process, and after filing:

Before you file for bankruptcy

Open your mail
“I can’t tell you how many times clients have come in to my office with a big garbage bag full of unopened envelopes,” said Raquel S. White, a bankruptcy attorney based in Prince George’s County, Md. You’ll need to open your bills and understand where you’re at so you can come up with a resolution.

Get credit counseling
A credit counselor can help you decide whether bankruptcy is the right choice or if there are other options you can explore before filing — indeed, credit counseling from a government-approved credit counselor is already a requirement to file for bankruptcy. This session will help you review your money situation, and it suggests alternatives to bankruptcy that you may want to consider.

The length of the session is typically from 60 to 90 minutes and costs about $50. You’ll get a certificate that you must submit. You can check out an approved list of counselors here.

Hire an attorney
You don’t need to file bankruptcy with an attorney, but it is advised. An attorney can guide you through the process, file paperwork and represent you through proceedings. During proceedings, the trustee — the person overseeing your case — can try to squeeze as much money as possible out of you to repay debts. An attorney will work on your behalf to fight for your financial interests. You can shop around for lawyers on sites like Yelp, or riffle through attorney directories such as the one available on the American Bar Association website.

Despite the social stigma of filing for bankruptcy, White told MagnifyMoney that she no longer advertises her services — all of her clients come from referrals. If you feel comfortable, you can ask a friend or relative for a recommendation.

Gather your financial documents
Compile all of your asset and liability statements to give to your attorney. You need to have a list of your creditors, a list of your properties, your income, your debts, and your monthly expenses to complete the filing.

The attorney may ask you to fill out a bankruptcy questionnaire when you meet. The attorney will use information you provide to prepare the documents. Here’s a rundown of the documents needed throughout the bankruptcy process:

  • petition for bankruptcy
  • schedule of assets and liabilities
  • schedule of current income and expenses
  • statement of financial affairs
  • schedule of executory contracts and unexpired leases

You can review some of the forms on the United States Courts website.

During the bankruptcy process

Here’s how the filing process unfolds for Chapter 7 and Chapter 13.

What to expect in Chapter 7
Your attorney will help you prepare and file the bankruptcy petition. There are filing fees, administrative fees, and fees to be paid to the trustee. You may be able to pay the fees in installments; if you don’t have the means to pay the fees and your income is less than 150% of the poverty line, you may be able to have these fees waived.

Filing your petition puts an end to most collection calls and may even stop wage garnishments and lawsuits.

After 21 to 40 days of filing the petition, there will be a meeting of creditors that you attend with your attorney; the trustee and creditors will attend as well. At this meeting, you’ll answer questions about your finances. The trustee assigned to the case will liquidate assets to pay money back to creditors.

What to expect in Chapter 13
You file the petition for a Chapter 13 bankruptcy much like you do with the Chapter 7. There are filing fees, administrative fees, and trustee fees to pay. These fees can be paid in installments, or even waived if you make under a certain amount of income. The petition may stop the collections calls and foreclosure proceedings.

A meeting of creditors typically happens within 21 to 50 days after filing the petition. At this meeting, you’ll be asked questions about your finances. Your proposed repayment plan is filed. Afterward, there’s a confirmation hearing where creditors can raise objections about the repayment plan. Here is where having representation can come in handy. Your attorney will be fighting for your financial interests within the agreement. Adjustments may be made to the proposed plan before it’s finalized.

You make payments to the trustee. They send the money to the creditors on your behalf. There’s a hierarchy of debts that get paid through your repayment plan. Taxes and the costs required to go forward with the bankruptcy, like attorneys fees, are priority. The next debt in the priority hierarchy is secured debt. You need to satisfy payment terms on this debt because the creditor can take the property. The last debt in the hierarchy is unsecured debt, i.e. credit cards. Unsecured debt isn’t backed by collateral and may not be paid in full during the course of the repayment term.

According to White, creditors of unsecured debt can get back around $0.10 per dollar borrowed. At the end of the plan, remaining debts may be discharged as outlined in the agreement.

After filing for bankruptcy

The paperwork is in and you’ve gone to the required meetings — what’s next?

Complete a post-filing debtor education course
Course completion is required before your debt can be discharged. The post-filing debtor education course is one that teaches you how to manage money and credit responsibly moving forward. Like the pre-filing counseling session, this class has to be administered by an approved provider. The course can cost around $50 to $100 and you’ll get another certificate afterward. You may be able to do this course in person, over the phone, or online.

For Chapter 7, your debt will be discharged fairly quickly
The discharge order can take place within 60 to 90 days of the meeting of creditors unless creditors object to the discharge.

For Chapter 13, discharge happens after the repayment plan
The repayment plan agreement may be three to five years and your discharge will come after you satisfy the terms.

What happens to your credit
The credit hit is something you’re probably concerned about with a bankruptcy — but according to White, there’s a bit of good news here. Bankruptcy can have a longer impact on you if you’ve had a long history of nonpayment and credit problems leading up to filing. However, if you have great credit history and then a singular event causes you to file bankruptcy immediately, your credit will take a hit but it may bounce back faster.

“You have to remember, people are looking at your actual credit. They’re going to say, this person was doing great and then they had to file for bankruptcy — something outside of their control had to have happened,” said White. Creditors may be more willing to work with you if they see you’ve had a decent track record until this event. It often takes seven to 10 years for bankruptcy to fall off your report.

Is bankruptcy right for you?

Bankruptcy should be viewed as a final resort because of its financial ramifications. If you have a ton of equity in your home but you have, say, $30,000 sitting on an American Express credit card, White said bankruptcy is probably not the answer — your credit card debt can be resolved without resorting to it.

You can call up your credit card company and try to work out a payment plan. You could also refinance your debt with a balance transfer card or consolidate your debt with a personal loan. If you don’t feel comfortable managing all of this alone, you can contact a credit counselor to help you along the way. There are other resolutions that can come before bankruptcy, especially if the situation isn’t dire.

However, bankruptcy may be a step to consider if your debt is having a larger impact on your livelihood. Here are a few scenarios where bankruptcy could make sense:

If you’re facing foreclosure
Filing Chapter 13 bankruptcy is one way to stop foreclosure. Back payments can be included into your repayment plan so you can save the home. Other debts can be wiped out at the end of the repayment term to give you a fresh start.

If the repo man is calling
Similar to your home, filing bankruptcy could help you stop repossession and incessant collections calls when you’re in way over your head. If you set up a repayment arrangement through Chapter 13, the trustee will collect your payments and distribute to creditors for you so you don’t have to worry about communicating with collections agencies.

If you’ve experienced a life-changing event
Large unmanageable medical bills from an accident or illness could make your financial situation take a turn for the worst. Bankruptcy could be something to consider to get you back on track.

If you experienced a significant loss in income
Losing income unexpectedly can put you in a bind, and long-term unemployment can cause damage that you’re unable to repair. Filing bankruptcy could give you a clean slate.

Don’t Suffer in Silence

If you’re struggling with debt payments, don’t try to hide your bills under the rug. According to White, wage garnishments, bank garnishments, repossessions and foreclosures are all scenarios where you should run — not walk — to see an attorney or counselor for advice.

If you do end up deciding bankruptcy is the right course of action, it’s not the end of the world. The word sounds intimidating, but the steps are systematic and the overview in the post above gives you some insight into how it all works. Be sure to take advantage of the pre-filing and post-filing counseling because you may be able to learn valuable information about how to manage your finances and debt in the future.

The post What Happens When You File for Bankruptcy? appeared first on MagnifyMoney.

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Small Personal Loans: How to Find One and Qualifyhttps://www.magnifymoney.com/blog/personal-loans/small-personal-loans/Thu, 15 Nov 2018 19:39:25 +0000https://www.magnifymoney.com/blog/?p=92451Personal loans are the fastest-growing consumer debt in America, according to Experian. Where a mortgage goes toward buying a home and an auto loan goes toward the purchase of a car, a personal loan can be used in myriad ways. This article will define small personal loans and walk you through a variety of ways … Continue reading Small Personal Loans: How to Find One and Qualify

The post Small Personal Loans: How to Find One and Qualify appeared first on MagnifyMoney.

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getting a personal loan
iStock

Personal loans are the fastest-growing consumer debt in America, according to Experian.

Where a mortgage goes toward buying a home and an auto loan goes toward the purchase of a car, a personal loan can be used in myriad ways. This article will define small personal loans and walk you through a variety of ways to use and get them.

What is a small personal loan?

A small personal loan is defined as anything between $1,000 and $5,000, according to LendingTree, which owns MagnifyMoney. Because small personal loans usually have low interest rates for those with good credit and can be paid back over a relatively short amount of time (two to three years), they allow borrowers quick access to money that can be used at their discretion, unless otherwise specified.

When used wisely and paid back on time, small personal loans can reduce stress, help solve financial problems and build credit. If you’re in need of a few thousand dollars to cover an expense, a small personal loan is worth considering.

“When you have little to no credit history, a small, unsecured loan with a short term that is quickly repaid can help build a positive credit history,” said Tricia Cook, branch manager for First Utah Bank.

Small personal loans are commonly used to help consolidate debt into one manageable payment, but can also be used to pay for medical, dental or veterinary bills, remodels or home repairs, weddings or funeral costs and unexpected expenses, to name a few.

“Usually, small personal loans are applied for in emergency situations, for example, your roof is leaking and you need $5,000 to replace it before winter,” Cook said. “My experience at the bank has shown that small personal loan applications rarely feel like they are planned for and the applicant is desperate for money right now.”

Where to get a small personal loan online

Once you’ve determined you need a small personal loan to cover an expense, you’ll want to start shopping and comparing lenders.

LendingTree’s small personal loan comparison tool can point you in the right direction. Using it, you’ll input basic information about yourself and what you’re looking for in a loan. The tool may then spit out lenders and loan offers for you to consider.

LendingTree
APR

5.99%
To
35.99%

Credit Req.

Minimum 500 FICO

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender.

As you begin your search, consider these online lenders:

[UpstartPL]Upstart[/UpstartPL]

Upstart offers loans with interest rates low as 8.89% and terms of up to five years. Upstart can be a good choice for small personal loans because it can lend as little as $1,000, depending on the state in which you live. Upstart can also be a good choice because it assesses more than credit score and credit history when determining a rate. It looks at the borrower’s education, area of study and work history for a more holistic picture of the borrower and their ability to repay. If you have a strong education and work history, you’ll likely benefit from a loan with Upstart. Upstart also allows you to pay off your loan on your terms without penalizing you.

APR

8.89%
To
35.99%

Credit Req.

640

Minimum Credit Score

Terms

36 & 60

months

Origination Fee

0.00% - 8.00%

SEE OFFERS Secured

on LendingTree’s secure website

Upstart is an online lender created by ex-Googlers.... Read More

[AvantPL]Avant[/AvantPL]

Avant can be a smart option for those with a low credit score looking for a quick loan. If you qualify, funds can be accessed in as little as one business day. The minimum credit score required for an Avant loan is 580. If your credit score is hindering you from receiving a loan elsewhere, Avant may a good option for you. The minimum loan available is $2,000, with interest rates starting at 9.95% and terms up to 60 months.

APR

9.95%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Up to 4.75%

SEE OFFERS Secured

on LendingTree’s secure website

Avant branded credit products are issued by WebBank, member FDIC.

Avant is an online lender that offers personal loans ranging from $2,000 to $35,000. ... Read More

[LendingClubPL]LendingClub[/LendingClubPL]

LendingClub can offer small loans starting at $1,000 with interest rates as low as 6.95%. LendingClub offers loans to borrowers whose credit scores vary, but the minimum credit score is 600. If you’re looking for a small loan and have a strong credit history, this may be a smart option for you as you’ll likely get lower interest rates. But if you’re looking to receive your funds almost immediately, LendingClub may not be the best option as it takes about a week to receive your money.

APR

6.95%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

SEE OFFERS 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

[BesteggPL]Best Egg[/BesteggPL]

Best Egg may be the lender for you if you’re looking for a fast and easy loan application process. Funds are deposited in as little as a day, and Best Egg offers interest rates as low as 5.99% to those who qualify. Best Egg analyzes three years’ worth of credit history and requires a 660 minimum credit score, so it may not be the best option for those with poor credit. Best Egg offers terms for up to five years and will loan as little as $2,000.

APR

Up to 5.99%
To
29.99%

Credit Req.

660

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

0.99% - 5.99%

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

People looking for a process that is fast and straightforward can’t go wrong when applying through Best Egg for a personal loan. ... Read More


*The Annual Percentage Rate (APR) is the cost of credit as a yearly rate and ranges from 5.99%-29.99%, which may include an origination fee from 0.99% - 5.99%. Any origination fee on a 5-year loan will be at least 4.99% and is deducted from loan proceeds. The APR offered will depend on your credit score, income, debt payment obligations, loan amount, loan term, credit usage history and other factors, and therefore may be higher than our lowest advertised rate. Requests for the highest loan amount may resulting an APR higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest rate.

Best Egg loans are unsecured personal loans made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC. Equal Housing Lender. "Best Egg" is a trademark of Marlette Funding LLC. All uses of "Best Egg" on this site mean and shall refer to "the Best Egg personal loan" and/or "Best Egg on behalf of Cross River Bank, as originator of the Best Egg personal loan," as applicable. Loan amounts generally range from $2,000-$35,000. Offers up to $50,000 may be available for qualified customers who receive offer codes in the mail. The minimum individual annual income needed to qualify for a loan of $50,000 is $130,000. Borrowers may hold no more than two open Best Egg loans at any given time. In order to be eligible for a second Best Egg loan, your existing Best Egg loan must have been open for at least six months. Total existing Best Egg loan balances must not exceed $50,000. All loans in MA must exceed $6,000; in NM, OH must exceed $5,000; in GA must exceed $3,000.

Borrowers should refer to their loan agreement for specific terms and conditions. A loan example: a 5–year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3–year $5,000 loan with 5.99% APR has 36 scheduled monthly payments of $150.57. Your verifiable income must support your ability to repay your loan. Upon loan funding, the timing of available funds may vary depending upon your bank's policies.

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you.

Small loans from credit unions

Getting a small loan from a credit union is another option besides shopping for one online. Credit unions are regulated and insured nonprofits. They are often community-focused.

A credit union is a good place to get a small loan because you can become part of the credit union community, build relationships with the members and potentially get lower interests rates on your small loan.

When applying for a loan, credit unions will assess many factors, such as your credit report and ability to pay back the loan. When obtaining a loan from a credit union, come prepared with your Social Security number, proof of income and personal identification.

Check out personal loan offers at credit unions here.

Small loans from banks

Small loans can ease financial stress when used wisely. Working with a bank to get a small personal loan is a smart idea because the federal government heavily regulates banks. These regulations aim to protect the borrower from getting in too much debt.

Before granting you a loan, the bank will look at your financial history to assess how much money they can reasonably lend you. This will help ensure you are not in over your head when you get the money.

“The ability-to-repay rule [under the Truth in Lending Act] ensures that banks have looked at your current income and your current debt and are able to prove that you have the ability to repay the full balance, not just the monthly minimum payments,” Cook said. “A bank cannot lend to you in a way that would make you overextended.”

When shopping for a small loan from a major bank, you may consider local options such as Citibank or Wells Fargo. But you can review the best personal loans here.

Alternatives to a small personal loan

When you need to borrow money and do not wish to obtain a personal loan or cannot get one due to poor credit, there are a variety of other ways to get a loan. Here are four alternatives to a small personal loan from a bank or credit union.

1. Credit card

Using a credit card to make a purchase or pay off an expense is a viable option if you’re able to pay back the amount charged in full (and on time).

“Credit cards can be smart to have when you are smart with your spending and paying your bill to a zero balance each month,” Cook said. “People get into trouble when they use a credit card and buy things they truly can’t afford, even when the payments are split up over a few months.”

Most credit cards offer at least a 21-day grace period and will not charge interest in that time frame. After that period, if the balance is not paid in full, the cardholder will be charged interest on the remaining statement balance. Credit card interest averages 15%, so if you cannot pay it back quickly, a small personal loan is a better option as the interest rate is much lower and the monthly payment is fixed.

– Compare low interest credit cards here

2. Pawnshop loans

Pawnshop loans allow the borrower to take an item — often jewelry or electronics — to a pawnshop to be evaluated as collateral in exchange for quick cash.

“A pawnshop is a good choice if you want to sell something quickly and take the cash,” Cook said. “But if you truly intend to get your merchandise back, you’re in essence paying for that item twice. Ask yourself: ‘How much will I have paid for my belonging when I’m done?’”

The borrower typically has up to 90 days to repay a pawnshop loan — plus fees and interest, which can be upward of 200%. Pawnshop loans do not require a credit check, can be obtained quickly and do not negatively impact a borrower’s credit score if they are not paid back on time. While pawnshops are regulated by 15 federal laws, keep in mind that the interest rates incredibly high and you will likely lose your collateral should you default on the pawnshop loan.

3. Advance on paycheck

A payroll advance is a type of unsecured loan that allows an employer to release the employee’s pay ahead of time. Paycheck advances are usually used to cover an unexpected expense that must be paid immediately. If you can cover an expense with your upcoming paycheck but need it early, asking about an advance on the paycheck is worth considering.

Policies around paycheck advances differ by company, so it’s best to discuss terms with your HR department to see what options are available. But if using your entire advanced paycheck to cover an unexpected expense will disrupt your monthly budget, a small personal loan may still be your best option.

4. Borrowing from friends

Borrowing money from friends or family has its pros and cons. The upside of borrowing from a friend is you can set your own terms, negotiate interest rates (if any) and determine the repayment schedule. Friends or family who act as a lender may be more lenient with borrowing terms compared to a bank or credit union.

But asking someone close to you to borrow money can be awkward and potentially cause a strain on that relationship. Money can be a sensitive subject. When borrowing from a friend, ensure that both parties agree to the loan terms and are comfortable with the situation.

Avoid payday loans

Payday loans are short-term loans with incredibly high interest rates. Interest rates vary by state but can be upwards of 700% in some instances. Unless paid off in full on time, payday loans should be a last resort and avoided in most cases.

“The advice I’d give anyone is to stay away from a payday loan,” Cook said. “There is no one watching out for the borrower’s best interest. For example, you’ll see an ad that quotes their interest rate of 5%, which sounds good compared to the bank at 13%, but they fail to explain what’s in the fine print — that it’s 5% a month, not 5% APR (annual percentage rate).”

When you’re in need of a small personal loan, know that you have many options available to you.

The post Small Personal Loans: How to Find One and Qualify appeared first on MagnifyMoney.

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What to Expect When You Have Debt in Collectionshttps://www.magnifymoney.com/blog/consumer-watchdog/debt-in-collections/https://www.magnifymoney.com/blog/consumer-watchdog/debt-in-collections/#respondThu, 15 Nov 2018 19:17:21 +0000https://www.magnifymoney.com/blog/consumer-watchdog-7-things-you-need-to-know-if-you-have-debt-in-collectionsUpdated – November 15, 2018 If you’ve ever been sent to debt collections, you know it’s not fun. It can affect your credit score and negatively impact your financial health. Debt collectors don’t mess around, either: Few people have great experiences dealing with them. Dealing with a debt collection agency can be painful. The phone … Continue reading What to Expect When You Have Debt in Collections

The post What to Expect When You Have Debt in Collections appeared first on MagnifyMoney.

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debt collection
iStock

Updated – November 15, 2018

If you’ve ever been sent to debt collections, you know it’s not fun. It can affect your credit score and negatively impact your financial health. Debt collectors don’t mess around, either: Few people have great experiences dealing with them.

Dealing with a debt collection agency can be painful. The phone never stops ringing, and they won’t stop asking for money. Agencies have a reputation for pushing the boundaries of the law, using aggressive (and sometimes illegal) tactics, and bending the law to pressure people into making payments.

In fact, at the Consumer Finance Protection Bureau (a government agency that gathers financial services complaints), collection agencies are the fastest growing complaint category. And the main reason people complain: they don’t recognize the debt that is being collected. That complaint is often valid. There is no central registrar of debt, and sometimes the only “proof” that a collection agency has of your debt is that your name is on a spreadsheet. The debt collection market has a high risk of fraud, abuse and simple human error.

If your debt has been sent to collections, there are some things you need to know to protect yourself. If you’re armed with information, you can turn things around. Keep reading to find out everything you need to know about your debt being in collections. Next, take the proper steps to rectify the situation.

Understanding the debt collection process

What does it mean when your debt is in collections?

Being late on your debt payments is one thing, but having your debt to go collections is quite another. According to the Consumer Financial Protection Bureau (CFPB), a debt collector collects debts that are past due. There are different kinds of debt collectors, including individuals, lawyers and companies that buy debts from other creditors to try to get them paid. When your debt goes into collections, it means that a third party is trying to retrieve what you owe.

A debt collector may take certain steps to get you to pay.

  1. You will receive a debt collection letter: Banks and credit card companies usually make the collection calls themselves during the first 180 days. However, after 180 days of collection activity, the bank “writes off” the debt. At this point, most major banks will hire a collection agency to collect the debt. And after a few more months, the banks will typically sell the debt to a collection agency. When banks sells the debt, they wipes their hands of the relationship. But the timeline varies. You might receive a letter telling you the debt went to collections and asking for payment to avoid legal action. It is crucial that the letter contains information about your rights.
  2. Debt collection calls and letters will continue: The debt collector will continue to send letters and call you to “remind” you about the debt and ask you to pay it. Although you can negotiate most debt collections, you must work out a payment plan or settlement figure to avoid the legal phase.
  3. The debt collector might sue you: If you don’t make a plan with the collector, the agency might have an attorney file a suit against you. The court will notify you of the suit and give you an appearance date. Do yourself a favor and show up. If you don’t, you’ll lose by default and be legally responsible to pay.
  4. The court will decide on your debt: The court will send out its judgment. If you lose, you may be held responsible for additional expenses, such as attorney fees, collection costs and interest. Further, the debt collector will have additional tools to get back the money you owe, including the ability to garnish your wages or funds in your bank account or place a lien on property you own.

When can your debt be sent to collections?

You might be wondering when your overdue debt will be sent to collections. It’s a bit complicated. Martin Lynch, compliance manager and director of education at Cambridge Credit Counseling Corp. — a nonprofit in Agawam, Mass., dedicated to helping people get out of debt and stay that way — explained it in layman’s terms.

As soon as a debt is past due, it can be sent to a collector, though there’s seldom that kind of urgency, Lynch said. It’s the creditor’s call on how long it will try to collect on the account internally or turn it over to a commission-based collector. Most credit card accounts will charge-off after six months, for example, but mortgage loan servicers often carry delinquent loan holders longer than that.

“It’s more important to avoid these scenarios altogether since there’s no way of predicting whether your particular creditor is going to place your account with a collector or give you some time to catch up,” Lynch said. And there’s no federal requirement to notify a consumer when their account is being placed in collections.

“Our counselors won’t give any guidance on this point, as we don’t want the consumer to feel there’s no threat of collection/lawsuit activity after their account slips into default,” Lynch said. “The best thing to do is communicate with the lender or loan servicer as soon as you realize you can’t make the monthly payment. Waiting until you’ve missed several payments is like playing Russian roulette.”

It’s also important to understand the difference between a debt collector and a debt buyer, according to Lynch. A debt collector gets assigned to an account but doesn’t own the debt — he is collecting on a commission basis for the original creditor, who still owns the debt. A debt buyer, however, actually purchases debts from an original creditor or another collector.

Impact on your credit bureau

A collection item has a big impact on your credit bureau. The higher your score, the more points your score can drop. For example, if you have a 770 credit score, you could see your score drop 40 to 70 points from a single collection item.

A collection items stays on your credit report for seven years. Even if you pay the collection item, it doesn’t disappear.

Fortunately, this is changing with FICO 9. If you pay off a collection item, the item will no longer be included in your FICO score. However, it will be awhile before banks start using FICO 9.

In the current model, the only way for a collection item to disappear is to wait seven years from the date it is first reported. So, that means seven years from the date that you become 180 days past due.

The only way to have a collection item removed is for the collection agency to remove the debt. You can ask an agency for a “pay for delete” deal. This means that you agree an amount to pay, and then the agency will remove the collection item from your account. Some collection agencies will offer this (even though they technically are not supposed to do so). The closer you are to seven years, the more likely they are to deal with the debt. You can also dispute the item with the credit bureaus (online). If the debt collection agency does not respond with proof of the debt in 30 days, then the item would be removed. Here are the links to dispute:

What are your rights?

After the original creditor places the debt with a third party, the Fair Debt Collections Practices Act (FDCPA) protects consumers, Lynch advised. The FDCPA imposes a host of requirements on collectors, but the most important is probably the consumer’s right to request the debt’s validation.

“You should invoke this right when the collector first contacts you in writing, and remember that if the first contact is by phone, the collector has to send you a letter within five days,” Lynch said. The letter will provide some basic account details, and it must advise the consumer of their right to seek confirmation of the debt. All consumers should exercise this right.

“The best way to seek validation of the debt is through a certified letter to the collector,” Lynch said. “If you know the debt is yours and that the statute of limitations hasn’t expired, at least you’ll buy a little bit of time to put your budget together to determine how much you could put toward a monthly payment plan.”

The FDCPA also has other protections, and some states have imposed even more stringent limitations on the collections process, according to Lynch. For example, there are limits on when calls can be placed to the debtor’s phone — generally not before 8 a.m. or after 9 p.m., unless the debtor has granted permission to go beyond those hours.

You can also send a cease-and-desist letter to the collector and a prohibition request on calls to your place of employment, according to Lynch. “Collectors can’t threaten to publish your name, nor can they impersonate law enforcement officers or officers of the court during the collections process,” Lynch said. “As outrageous as these clauses sound, bear in mind that they only made it into law because unscrupulous collectors were actually using these tactics.”

If your collector violates any of these rules, you could sue them for up to $1,000 in small claims court. If the violations are much more egregious, rising to the level of harassment, you could bring a suit for considerably more, Lynch advised. “Consumers dealing with collection accounts should review the FDCPA, as well as their own state’s rules governing the collections process,” Lynch said. “At any time they feel a collector is violating those rules, they should contact their state attorney general’s office or department of consumer affairs.”

If you feel that a debt collector has done any of the above, you need to file a formal complaint. If they have engaged in prohibited practices, you can file that complaint with the CFPB,Federal Trade Commission (FTC), your attorney general and the Better Business Bureau (BBB).

7 Things to Know if you have debt in collections

  1. If you don’t think the debt is yours, then take action right away. Within 30 days of the first collection activity, write a letter (certified, copied, with proof of delivery) to the collection agency. Tell them that you do not owe the debt and they must cease and desist all collection activity. Collection activity must stop until the agency provides concrete proof that you owe the debt.
  2. If you don’t think the debt is yours, and the collection agency provides proof that you don’t agree with, then complain to the CFPB. The more documentation you have, the better.
  3. Dispute the items with the credit bureaus. You can dispute the items online at Transunion, Equifax and Experian. It is fast and easy to make a dispute. The burden of proof is now with the collection agency, and they often will just decline to provide further information. If they don’t provide proof within 30 days, the information disappears from your bureau.
  4. The item disappears from your credit report seven years after it is with a collection agency. That usually means seven years after you become 180 days past due. This is not the same as the date you opened your account. Sometimes the best option is to just wait for the item to disappear.
  5. Be careful when you communicate with the agencies. There is a statute of limitations, which varies by state. After the statute of limitation expires, you are protected from further legal action (wage garnishment, etc.). In some states, admitting that the debt is yours on the phone is enough to reset the statute.
  6. Just because you are outside of the statute of limitations doesn’t mean that the collection agency won’t try to sue you. And, if they do, make sure you defend yourself in court. It will be easy: you just reaffirm the statute of limitations. But, if you don’t defend yourself, you could end up with wage garnishment or a new judgment. In addition, complain to the FTC, because it is against the law for a collector to sue you or threaten to sue you on a time-barred debt.
  7. When all else fails, use this line with the collection agency: “I do not recognize this debt. I have provided a written request for you to cease and desist all collection activity. In addition, I have complained to the CFPB. After this conversation is complete, I will reach out to the CFPB to update my complaint with this conversation. Given that you have not provided adequate proof that I owe this debt obligation, I believe you have further incriminated yourself by making this phone call. I will also provide a written complaint to the FTC, as I believe you are violating the FDCPA. At this point, I am going to terminate the conversation, and I hope that you will respect the law and promptly cease and desist from all collection activities, and ensure that negative information is removed from all 3 credit bureau. Goodbye.”

How to get debts out of collections

Lynch said there are several options to get debt out of collections: pay in full, negotiate a payment plan or settle the debt for less than the principal balance. After that, the options are based on what type of debt you’re talking about. Lynch outlined the different types below.

You can cure your mortgage problem by paying the full amount due, plus interest and fees, to stave off foreclosure. If it hasn’t come to that, the loan servicer might accept a workout plan, which means the past-due amount is divided into equal parts and added to the regular mortgage payment, typically over six to 10 months, Lynch said.

A consumer struggling with high-interest credit card accounts might be able to have their interest rates dropped to the single digits, Lynch said, by working with a nonprofit consumer credit counseling agency. You can find an agency in your state by visiting the Fair Counseling Association of America website.

If you’re behind on a federal student loan, you might be able to switch to an income-based repayment plan, rather than pursuing a deferment or forbearance, which doesn’t solve the problem. You also might be able to consolidate out of default, though you should discuss the pros and cons of that option with a counselor. Finally, federal student loan rehabilitation might also be an option, but, again, a conversation with a certified counselor would be in order first.

If the debt is older and the relevant statute of limitations has expired (or is about to), you must be careful not to revive the statute or waive its protections. Making a payment toward a time-barred debt restarts the statute of limitations, giving the creditor a fresh opportunity to sue, Lynch said.

“In a few states, simply acknowledging that the debt is yours will restart the statute, so be wary of collectors offering a sweetheart deal to pay off an old debt,” Lynch said. “They may simply be trying to get you to make a payment and revive the statute of limitations.” The statute runs from the date of the most recent payment, so check your bank records.

Be on the lookout for a collector who “re-aged” the account, or marked it on the credit report as current. Only a payment can cause an account to be re-aged. Doing so without a payment having been made is a fraudulent attempt by the collector to make you think that the statute of limitations has more time to run, according to Lynch.

Some good news: “If you can pay off the account in full, then, under FICO 9, the newest version of FICO’s scoring formula, the account won’t be included in the calculation of your score,” Lynch said.

But if you settle the account for less than the principal balance owed, you’ll probably do significant damage to your score, which will raise a red flag for future lenders, at least for a while.

Finally, you might consider declaring bankruptcy. If you can show that you have significant hardship paying your debt — and can prove that there’s no way you can repay the debt and still maintain a basic standard of living — a court might enable you to declare bankruptcy. Keep in mind that bankruptcy can have long-lasting effects on your financial life for years, so use it as a last resort.

Debt collection: FAQs

You likely still have some questions about debt collections. Review these seven FAQs and see if any match yours.

Having debt collections on your credit report will lower your FICO score — and continue to affect it for up to seven years.

Debt collectors can’t contact you before 8 a.m. or after 9 p.m., and they can’t call you at work if you’ve said you cannot get calls there.

A debt collector can contact you via mail, email, text or phone.

Send a snail-mail letter and ask the debt collector to stop contacting you. Consider sending certified mail and paying for a return receipt so that you have proof you sent it. Once the collector receives your request, they can contact you only to let you know action is being taken. For example, a lawyer might be filing suit against you. If you have an attorney, the debt collector must communicate only with that person, not you.

A debt collector can discuss your debt only with you, your spouse or your attorney. They can also contact other people to find out where you live or work and what your phone number is, but that contact is typically limited to once per person.

The debt collector must send you, in writing, the amount of money you owe, to whom you owe it and what action to take if you think there has been a mistake.

Debt collectors are not allowed to harass you. They can’t use obscene language when they talk to you, call you incessantly or threaten you with violence. Also, they are not allowed to make any false claims, such as saying they are government representatives or lawyers.

The bottom line

It’s a stressful, tedious process to pay a bill once it has gone to collections. That said, you must persevere and get it done to avoid further dinging your credit. If you’re dealing with a collections agency that’s proving particularly uncooperative, consider hiring an attorney with experience in credit issues to represent you. Sometimes, collection agencies “listen” better to an attorney than a consumer.

If you feel you’ve been charged in error on a debt collection, report it immediately to the agency and ask that it validate the debt for you. Also, if you feel a debt collector has overstepped the line of acceptable behavior, make sure you report it to the CFPB, FTC, your attorney general and the BBB.

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Chemical Bank Review: Checking, Savings, CD, Money Market and IRA Accountshttps://www.magnifymoney.com/blog/reviews/chemical-bank/Thu, 15 Nov 2018 16:48:16 +0000https://www.magnifymoney.com/blog/?p=91646In this review, we’ll cover: Chemical Bank’s checking account options Chemical Bank’s savings account options Chemical Bank’s CD account options Chemical Bank’s money market account options Chemical Bank’s IRA account options Overall review of Chemical Bank’s products Chemical Bank’s checking account options [ChemicalBankChemBasicChecking]ChemBasic Checking[/ChemicalBankChemBasicChecking] Living up to its name, ChemBasic Checking is the bank’s entry-level, … Continue reading Chemical Bank Review: Checking, Savings, CD, Money Market and IRA Accounts

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Year Established1917
Total Assets$20.3B
LEARN MORE on Chemical Bank’s secure websiteMember FDIC

Founded in 1917, Chemical Bank is now the largest bank headquartered and operating in Michigan. Chemical Bank has 212 branches mainly in Michigan, northern Indiana and northeast Ohio. Parent company Chemical Financial Corporation has over $20.3 billion in assets and trades on the NASDAQ Stock Exchange. The bank offers various financial literacy aids, along with games and resources to teach kids about finance on its website and in its branches.

Chemical bank offers a wide range of consumer banking options, from numerous checking and savings options to various types of CDs, money markets and IRA accounts. Unfortunately, if you try to open an account online, you’ll be directed to a branch locator webpage, as the bank doesn’t provide the ability for customers to open accounts online. Here’s a breakdown of the services and accounts offered by Chemical Bank, including required minimum balances, fees, interest rates and other features and benefits.

Chemical Bank’s Most Popular Accounts

APY

Account Type

Account Name

Compare Rates from Similar Accounts

0.50%

CD Rates

Chemical Bank 12 Month Add-On CD

2.55%

Goldman Sachs Bank USA High-yield 12 Month CD

on Goldman Sachs Bank USA’s secure website

Member FDIC

0.90%

CD Rates

Chemical Bank 36 Month Raise-Your-Rate CD

2.85%

Synchrony Bank 36 Month CD

on Synchrony Bank’s secure website

Member FDIC

1.50%

CD Rates

Chemical Bank 60 Month Raise-Your-Rate CD

3.10%

Goldman Sachs Bank USA High-yield 5 Year CD

on Goldman Sachs Bank USA’s secure website

Member FDIC

Chemical Bank’s checking account options

[ChemicalBankChemBasicChecking]ChemBasic Checking[/ChemicalBankChemBasicChecking]

Living up to its name, ChemBasic Checking is the bank’s entry-level, no-frills checking account.
  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0 with eStatements ($3 with paper statements)
  • ATM fee: None; $2.50 per withdrawal from other/foreign ATM
  • ATM refund: None
  • Overdraft fee: $32; limit of 10 overdraft and NSF Fees ($320) per day; $10 per transfer with overdraft protection

ChemBasic Checking is targeted toward customers who don’t keep large balances in their checking account or frequently write checks. If you’re looking for a no-fee account and can’t qualify for a no-fee relationship checking account, this might be your best option.

Customers who don’t select the eStatement option with this account will be charged a $3 monthly fee for paper statements. The account offers certain features common with entry-level checking accounts, such as eBanking, eBill Pay, Voice Banking, Mobile Banking and Mobile Remote Deposit Capture. However, the bank also offers, on approval, a 0.25% discount on a personal loan. ATM fees are fairly standard, which means they are free for network ATMs but charge a fee for out-of-network withdrawals. Overdraft fees are high, though they can be reduced with overdraft protection.

LEARN MORE Secured

on Chemical Bank’s secure website

Member FDIC

[ChemicalBankChemPlusChecking]ChemPlus Checking[/ChemicalBankChemPlusChecking]

A standard checking account reserved for those 55 and older.
  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fee: None; $2.50 per withdrawal from other/foreign ATM
  • ATM refund: None
  • Overdraft fee: $32; limit of 10 overdraft and NSF Fees ($320) per day; $10 per transfer with overdraft protection

With the exception of the 55-and-over age requirement, the ChemPlus Checking account does provide a few additional features from that of the ChemBasic Checking account. For starters, this is the only Chemical Bank checking account that doesn’t charge a $3 fee for paper statements. Green-mint safety paper checks are also provided free of charge with this account, and customers can get a 50% discount on orders of other types of checks.

ChemPlus account holders are also entitled to free notary services and photocopies. Beyond that, the account comes with the standard eStatements, bill pay, mobile and telephone banking and the 0.25% personal loan discount.

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[ChemicalBankClassicChecking]Classic Checking[/ChemicalBankClassicChecking]

Classic Checking is Chemical Bank’s “traditional” checking account.
  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $5; $0 with a daily minimum balance of $500
  • ATM fee: None; $2.50 per withdrawal from other/foreign ATM
  • ATM refund: None
  • Overdraft fee: $32; limit of 10 overdraft and NSF Fees ($320) per day; $10 per transfer with overdraft protection

Classic Checking has the same features and benefits of the bank’s ChemBasic checking, with the only difference being the minimum balance requirements. Although technically there is no minimum opening deposit, customers are required to deposit $500 within 30 days of the account being opened to avoid a monthly maintenance fee.

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[ChemicalBankAdvantageChecking]Advantage Checking[/ChemicalBankAdvantageChecking]

Advantage Checking is the only Chemical Bank checking account that pays interest.
APYMinimum Balance to Earn APY
0.02%$0
0.02%$10,000
0.02%$25,000
  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $7; $0 with a daily minimum balance of $1,000, an average daily minimum balance of $1,500, the maintenance of a Midwest Savings Account or an aggregated daily minimum balance of $10,000 in other Chemical Bank deposit accounts
  • ATM fee: None; $2.50 per withdrawal from other/foreign ATM
  • ATM refund: None
  • Overdraft fee: $32; limit of 10 overdraft and NSF Fees ($320) per day; $10 per transfer with overdraft protection

Advantage Checking pays interest in three tiers, with the top tier for deposits of $25,000 or more. However, at the current time, the interest rate is the same for all tiers. Customers have 30 days after opening the account to deposit enough funds or open a Midwest Savings account to waive the monthly maintenance fee.

This account provides the same basic account features as other Chemical Bank checking accounts, including mobile, online, and telephone banking, along with the 0.25% discount on personal loans.

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[ChemicalBankGreenChecking]Green Checking[/ChemicalBankGreenChecking]

Green Checking is an environmentally friendly, completely paper-free account.
  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fee: None; $2.50 per withdrawal from other/foreign ATMs; $0 foreign ATM fees if 20 debit card signature-based transactions are completed within each monthly cycle
  • ATM refund: None
  • Overdraft fee: $32; limit of 10 overdraft and NSF Fees ($320) per day; $10 per transfer with overdraft protection

Chemical Bank’s Green Checking account is best suited for customers that either want to have a small carbon footprint or who otherwise don’t need check-writing capabilities. Account holders access their funds via electronic means or by using a debit card, rather than by writing checks. In that sense, Green Checking isn’t so much a “checking” account as a savings account with unlimited withdrawal capabilities. Other features of the account are the same as the bank’s other checking accounts, including online and mobile capabilities and the 0.25% discount on personal loans.

How to get Chemical Bank’s checking accounts

As noted above, Chemical Bank does not permit accounts to be opened online. To get any of the bank’s checking accounts, you’ll have to visit a Chemical Bank branch.

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How Chemical’s checking accounts compare

Chemical Bank’s checking accounts are mostly variations on the same theme. Nearly every account offers the same basic benefits, with a few tweaks here and there. For example, there’s a dedicated account for those 55 and older, one for those who want to earn interest and one for those who want to go “green” and paperless, but beyond those distinctions, the accounts are mostly similar.

The sole account that pays interest, the Advantage Checking account, pays a low rate across the board, far lower than you can get even with the average checking account nationwide. Those looking for an interest-bearing account should search elsewhere, as Chemical’s rates are a world away from the best nationwide rates for checking accounts.

Chemical Bank’s savings account options

[ChemicalBankClassicChecking]Classic Savings[/ChemicalBankClassicChecking]

Classic Savings is Chemical Bank’s traditional savings account, good for first-time savers or for those not in need of additional features.
  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $3; $0 with a daily minimum balance of $300
  • ATM fee: None; $2.50 per withdrawal from other/foreign ATM
  • ATM refund: None
  • Overdraft fee: $32.00; limit of 10 overdraft and NSF Fees ($320) per day; $10 per transfer with overdraft protection

Classic Savings has no minimum opening deposit requirement, but a small maintaining balance is suggested to eliminate the small monthly fee. The ATM structure of the account is like the bank’s checking accounts, with free withdrawals from in-network ATMs and a small fee for others. Interest is paid on all balances with this account, but rates are not listed on the bank’s website, so you’ll have to visit a branch or talk to a banker to get the current APY. Withdrawals and transfers are limited to six per month, and additional transactions incur a $1 fee each.

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[ChemicalBankClassicSavings]Classic Savings for Minors[/ChemicalBankClassicSavings]

Chemical Bank’s Classic Savings account is also available in this format for minors.
  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fee: None; $2.50 per withdrawal from other/foreign ATM*
  • ATM refund: None
  • Overdraft fee: $32.00; limit of 10 overdraft and NSF Fees ($320) per day; $10 per transfer with overdraft protection

Chemical Bank offers a special version of Classic Savings for minors, with the most important distinction being that this account carries no monthly maintenance fee, regardless of balance. This account also requires special permission from a branch to have an ATM card issued. As with the Classic Savings account, a fee is charged for non-Chemical ATM withdrawals, and certain withdrawals and transfers in excess of six per month incur a $1 fee per transaction. Overdrafts also have the same fee structure as with Classic Savings.

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[ChemicalBankCommunitySavings]Community Savings[/ChemicalBankCommunitySavings]

Community Savings is a rare bird — a savings account that doesn’t pay any interest.
  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $3; $0 with a daily minimum balance of $300
  • ATM fee: None; $2.50 per withdrawal from other/foreign ATM
  • ATM refund: None
  • Overdraft fee: $32; limit of 10 overdraft and NSF Fees ($320) per day; $10 per transfer with overdraft protection

Community Savings seems like the account that Chemical Bank can do without. In terms of its overall structure, it’s nearly identical to the bank’s Classic Savings account, with no fee on in-network ATM withdrawals, no minimum required opening deposit and a small maintenance fee that can be avoided with a small balance. However, the account doesn’t pay interest. With the same cost and requirements as the Classic Savings account, customers would be better served opening that account — and earning interest — rather than keeping a Community Savings account.

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[ChemicalBankHolidaySavings]Holiday Savings[/ChemicalBankHolidaySavings]

Holiday Savings is a typical club account, with interest earned on deposits until a mandatory distribution date near the end of the year.
  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fee: N/A
  • ATM refund: N/A
  • Overdraft fee: N/A

Chemical’s Holiday Savings account allows customers to make regular contributions the account over the course of the year, with a mandatory payout on either Oct. 10th or Oct. 31st. Any withdrawals made before this distribution date will trigger account closure. Interest is paid on Holiday Savings deposits, but you’ll have to contact a banker to get the current rates, as they are not available on the bank’s website.

Customers typically use this account to save for special occasions, such as weddings, vacations or holiday spending. Voice Banking, eBanking and Mobile Banking services are all available with this account.

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[ChemicalBankMidwestSavings]Midwest Savings[/ChemicalBankMidwestSavings]

Midwest Savings is Chemical Bank’s top-tier checking account, good for those with higher balances who want to earn interest and gain a complementary checking account.
APYMinimum Balance to Earn APY
0.05%$0
0.05%$5,000
0.15%$10,000
0.20%$25,000
0.05%$50,000
0.05%$100,000
  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fee: None
  • ATM refund: None
  • Overdraft fee: $32; limit of 10 overdraft and NSF Fees ($320) per day; $10 per transfer with overdraft protection

Opening a Midwest Savings account is one of the ways to get Chemical Bank’s Advantage Checking account without a monthly fee; it’s also a way to earn tiered interest on your savings. Somewhat unusual, the bank doesn’t pay its highest rates on the largest deposits. Once your account size reaches $50,000 or more, your money earns the same low rate paid on deposits of up to $10,000.

This account has no monthly fee and requires no balance to open, but withdrawals are limited to just four per month. After that, a $1 fee is assessed per transaction. Beyond these differences, Midwest Savings also offers the same features that can be found across Chemical Bank accounts, from online and mobile banking to a 0.25% APY discount on personal loans.

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[ChemicalBankHealthSavings]Health Savings[/ChemicalBankHealthSavings]

Chemical Bank’s Health Savings account is a typical HSA.
  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $3; $0 with eStatements
  • ATM fee: N/A
  • ATM refund: N/A
  • Overdraft fee: N/A

Chemical’s HSA requires no minimum deposit but does charge a small fee if you don’t sign up for eStatements. You can access the account via check writing or a debit card, but you won’t have ATM access. You also will not be allowed to overdraw the account. As with all HSAs, you must meet certain requirements to qualify for this account, such as being under age 65 and participating in a high-deductible health plan.

How to get Chemical Bank’s savings accounts

As mentioned above, Chemical Bank has no online account application. You must visit a branch to open an account.

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How Chemical Bank’s savings account compares

As with the bank’s checking account roster, there is no shortage of available savings accounts at Chemical Bank. Whether you’re looking for a traditional savings account, one for a minor, a holiday savings account or an HSA, you can find it at Chemical. Unfortunately, rates and features of all the accounts are a bit sparse.

When compared with the national average, none of Chemical Bank’s savings accounts can measure up, with each account failing to hit that benchmark. The best available savings rates can be found at other institutions.

Chemical Bank’s CD account options

[ChemicalBankRegularCDs]Regular CDs[/ChemicalBankRegularCDs]

Chemical Bank offers an attractive range of CD maturities, with low minimums.
TermAPYMinimum Balance to Earn APY
15 months0.50%$100
18 months0.50%$100
24 months 0.50%$100
30 months0.55%$100
  • Minimum opening deposit: $100
  • Minimum balance to earn APY: $100
  • Early withdrawal penalty: 3 months’ interest for maturities of 3 to 12 months; 6 months’ interest for maturities of 13 to 35 months; 12 months’ interest for maturities of 36 to 60 months

For a large bank, Chemical offers a pretty low minimum balance requirement to open a regular CD account. Unless you’re looking for an extremely long maturity, you can likely find a term suiting your needs in Chemical’s regular CD lineup. Chemical offers both single maturity and automatic renewal certificates, with interest payments monthly, quarterly or at maturity. Chemical offers terms from 3 to 60 months but doesn’t advertise all of the rates. You need to call the bank for the complete list of rates.

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[ChemicalBankRaiseYourRateCD]Raise-Your-Rate CD[/ChemicalBankRaiseYourRateCD]

The Raise-Your-Rate CD allows you to adjust the yield on your CD to the current rate.
TermAPYMinimum Balance to Earn APY
36 months0.90%$100
48 months1.20%$100
60 months1.50%$100
  • Minimum opening deposit: $100
  • Minimum balance to earn APY: $100
  • Early withdrawal penalty: 12 months’ interest

Chemical’s Raise-Your-Rate CDs are only offered in 3 year, 4 year and 5 year maturities. Once per term, you can call the bank and have your rate raised to the then-current rate, up to a maximum increase of 1%. Minimums and withdrawal penalties are otherwise the same as with the bank’s regular CDs.

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[ChemicalBankAddOnCD]Add-On CD[/ChemicalBankAddOnCD]

Chemical Bank’s Add-On CD is a single-maturity CD that allows additional deposits before maturity.
TermAPYMinimum Balance to Earn APY
12 months0.50%$100
  • Minimum opening deposit: $100
  • Minimum balance to earn APY: $100
  • Early withdrawal penalty: 3 months’ interest

In all respects but one, Chemical Bank’s Add-On CD is a regular CD, including the minimum opening deposit and the early withdrawal penalty. The distinction is an important one, however. This 12 month CD allows customer to continue making deposits into the account until it matures. The only restriction is that deposits must be at least $100.

How to get Chemical Bank’s CDs

As mentioned above, you can’t open any Chemical Bank CDs online. You must visit a branch.

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How Chemical Bank’s CD rates compare

Overall, Chemical Bank’s CDs are nothing to write home about. Although it’s nice to have the option to choose a Raise-Your-Rate or Add-On CD, the rates paid on Chemical’s CDs of all types are below average. While not all banks can compete with the very best available national CD rates, even the average CD rate tops those offered at Chemical Bank, for every maturity.

Chemical Bank’s money market account options

[ChemicalBankMoneyMarket]Money Market[/ChemicalBankMoneyMarket]

This account is Chemical Bank’s traditional money market account, combining features of both checking and savings accounts.
APYMinimum Balance to Earn APY
0.05%$0
0.15%$10,000
0.15%$25,000
0.15%$50,000
0.20%$100,000
  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $10; $0 with $2,500 average daily minimum balance
  • ATM fee: None; $2.50 per withdrawal from other/foreign ATM
  • ATM refund: None
  • Overdraft fee: $32; limit of 10 overdraft and NSF Fees ($320) per day; $10 per transfer with overdraft protection

Chemical Bank’s Money Market account has a fairly high monthly maintenance fee, but you can avoid it with a $2,500 average daily balance. Per Federal Regulation D, certain transactions, including pre-authorized withdrawals or transfers, are limited up to six per month. Interest is paid in tiers, with the highest rates paid on deposits of at least $100,000.

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[ChemicalBankPremierMoneyMarket]Premier Money Market[/ChemicalBankPremierMoneyMarket]

Chemical Bank’s Premier Money Market account allows customers the opportunity to earn higher interest rates but requires a larger maintaining balance.
APYMinimum Balance to Earn APY
0.05%$0
0.10%$10,000
0.20%$50,000
0.40%$100,000
  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $30; $0 with average daily minimum balance of $35,000
  • ATM fee: $0; $2.50 per withdrawal from other/foreign ATM
  • ATM refund: None
  • Overdraft fee: $32; limit of 10 overdraft and NSF Fees ($320) per day; $10 per transfer with overdraft protection

Chemical Bank knows how to put the “premier” into its Premier Money Market account. True, the account pays higher interest rates than those in its regular Money Market account. However, it takes a lot of money to get that benefit. The $30 monthly maintenance fee is one of the highest bank account fees you can find. To avoid it, you’ll need to deposit 14 times the amount required for the bank’s regular Money Market account, and you’ll need to keep it there. Otherwise, the accounts are identical.

How to get Chemical Bank’s money market account

As mentioned above, you’ll have to visit a branch if you want to open a Chemical Bank money market account.

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How Chemical Bank’s money market accounts compare

While the Chemical Bank Money Market account is a perfectly normal, serviceable money market account, the Premier Money Market is one of the most expensive accounts you can find.

With an astronomical annual fee that can only be waived with a significant and ongoing minimum balance, the interest rates paid should be commensurately higher. Sadly, that is not the case. Rates on the Premier Money Market account only climb above the national average on deposits of $100,000 or more, and even this “top” rate is nowhere near the best available money market rates nationwide.

Chemical Bank’s IRA account options

[ChemicalBankIRARegularCDs]IRA Regular CDs[/ChemicalBankIRARegularCDs]

Chemical Bank’s IRA CD lineup has varying rates and maturities, but you’ll have to check with a bank to get all current options.
TermAPYMinimum Balance to Earn APY
15 months0.50%$100
18 months0.50%$100
24 months0.50%$100
30 months0.55%$100
  • Minimum opening deposit: $100
  • Minimum balance to earn APY: $100
  • Early withdrawal penalty: 3 months’ interest for maturities of 3 to 12 months; 6 months’ interest for maturities of 13 to 35 months; 12 months’ interest for maturities of 36 to 60 months

Chemical’s IRA CDs are similar to the lineup in its non-IRA accounts, but there are a few differences in terms of available maturities. Only a few of the bank’s rates are published on the website. For complete details, you’ll have to contact the bank directly. Chemical offers both single maturity and automatic renewal certificates in its IRAs, with interest payments monthly, quarterly or at maturity.

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[ChemicalBankIRAVariableRateCD]IRA Variable-Rate CD[/ChemicalBankIRAVariableRateCD]

Chemical Bank offers a Variable-Rate IRA CD in a single maturity; this CD is not available in the bank’s taxable accounts.
TermAPYMinimum Balance to Earn APY
6 months0.25%$100
  • Minimum opening deposit: $100
  • Minimum balance to earn APY: $100
  • Early withdrawal penalty: 3 months’ interest

Chemical Bank’s IRA Variable-Rate CD is an unusual product. Coming in a single, short maturity of six months, the CD pays a rate that can be adjusted after purchase by the bank, but not by the customer. The rate on this variable CD is currently the same as with a regular six-month IRA CD. Minimums and penalties on this account are the same as with regular IRA CDs.

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[ChemicalBankIRARaiseYourRate]IRA Raise-Your-Rate[/ChemicalBankIRARaiseYourRate]

The IRA Raise-Your-Rate CD is a carbon copy of the bank’s non-IRA CD of the same name.
TermAPYMinimum Balance to Earn APY
36 months0.90%$100
48 months1.20%$100
60 months1.50%$100
  • Minimum opening deposit: $100
  • Minimum balance to earn APY: $100
  • Early withdrawal penalty: 12 months’ interest

Chemical’s Raise-Your-Rate IRA CDs are offered in 3 year, 4 year and 5 year maturities, just like the non-IRA version. Once per term, you can call the bank and have your rate raised to the then-current rate, up to a maximum increase of 1%. Minimums and withdrawal penalties are otherwise the same as with the bank’s regular IRA CDs.

How to get Chemical Bank’s IRA accounts

As with the bank’s non-IRA products, if you want to open an IRA account at Chemical Bank, you’ll have to visit a branch.

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How Chemical Bank’s IRA accounts compare

Chemical Bank’s IRA CDs share the same lackluster yields as the bank’s regular CD lineup. You’ll be able to find better IRA CD rates elsewhere.

Overall review of Chemical Bank’s products

Chemical Bank offers a large number of both checking and savings accounts, but not one of them particularly stand out. Only a single checking account pays interest, and its rates — along with the rates on all of Chemical’s savings accounts — are below average.When it comes to the bank’s money market and CD accounts, sub-par rates continue to prevail.

New customers looking for a bank with a wide range of account options might be curious about Chemical Bank, as they offer accounts for seemingly any need. However, upon comparison shopping, it’s clear that higher rates can be had elsewhere for nearly any type of account. You can find better options at competitor banks.

The post Chemical Bank Review: Checking, Savings, CD, Money Market and IRA Accounts appeared first on MagnifyMoney.

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Synovus Bank Review: Checking, Savings, CD, Money Market and IRA Accountshttps://www.magnifymoney.com/blog/reviews/synovus-bank/Thu, 15 Nov 2018 16:26:02 +0000https://www.magnifymoney.com/blog/?p=90827Headquartered in Columbus, Ga., Synovus Bank started when a factory executive at a textile mill offered to keep a worker’s money in the company vault, plus pay her interest. What grew to a service that helped all employers at the textile mill turned into a bank that has more than 250 locations throughout Alabama, Florida, … Continue reading Synovus Bank Review: Checking, Savings, CD, Money Market and IRA Accounts

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Headquartered in Columbus, Ga., Synovus Bank started when a factory executive at a textile mill offered to keep a worker’s money in the company vault, plus pay her interest. What grew to a service that helped all employers at the textile mill turned into a bank that has more than 250 locations throughout Alabama, Florida, Georgia, South Carolina and Tennessee.

Synovus Bank is primarily a brick-and-mortar bank, so you’ll need to open its accounts in person. Also, rates may differ by location.

Synovus Bank’s checking account options

[SynovusBankFreeChecking]Free Checking[/SynovusBankFreeChecking]

A simple checking account that offers no interest on your deposits.
  • Minimum opening deposit: $100
  • Monthly account maintenance fee: $0
  • ATM fee: $2.50 for out-of-network ATMs
  • ATM fee refund: None
  • Overdraft fee: $36

While it’s great that Synovus Bank doesn’t charge you a monthly maintenance fee, it’s also a noninterest-bearing account. It’s probably best for those who intend on using this an account for daily use or don’t plan on keeping a lot of money in it.

All checking accounts come with bill pay and online and mobile banking. You also get a Visa check card that you can add to Apple Pay®, Google Pay™ or Samsung Pay®. You can use this card to access Synovus Bank ATMs, as well as over 1,190 surcharge-free ATMs through the Publix Presto! network.

How to get Synovus Bank’s Free Checking account

You’ll need to head a branch to open an account. You’ll most likely need to provide your state-issued ID and Social Security number to do so.

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[SynovusBankPreferredAccount]Preferred Account[/SynovusBankPreferredAccount]

The monthly maintenance fee seems a bit steep, but it can be waived.
  • Minimum opening deposit: $100
  • Monthly account maintenance fee: $25 (this can be waived)
  • ATM fee: $2.50 for out-of-network ATMs
  • ATM fee refund: Up to four a month
  • Overdraft fee: $36

If you’re looking for more from a checking account, this could be a good choice for you. The rates could change depending on whether you have multiple accounts with Synovus Bank. The rates aren’t advertised on the bank’s website, so it’s best to call to find out the current ones.You may also get bonus rates depending on your average daily balance amounts. If you can maintain $15,000 across your deposit, loan and credit card accounts, you can earn an extra 0.05%. For those who can reach a $25,000 average daily balance across Synovus Bank accounts, you can earn a 0.15% bonus rate.

Other features of the account include free standard checks, up to four ATM withdrawal refunds a month and online and mobile banking. You’ll also get discounts such as 50% off designer checks and safe deposit box rentals. The Visa Platinum check card comes with benefits such as purchase security and lost luggage insurance.

The monthly maintenance fee seems steep considering there are no-fee accounts out there, but you can get it waived in a variety of ways. You can either maintain a $5,000 minimum average balance in the Preferred Account, a $15,000 average daily balance across your deposit, loan and credit card accounts, or $25,000 if you want to include your CD or IRA accounts.

If you do end up paying the monthly maintenance fee, you can knock off $2 if you’re registered for e-statements and online and mobile banking. You also can waive monthly fees on two other Synovus checking or money market accounts. To do so, you’ll need to contact the bank.

How to get Synovus Bank’s Preferred Account

To open a Preferred Account, you’ll need to head to a branch. Synovus Bank will likely ask you for a way to fund the account, proof of ID and your Social Security number. To find out more, call customer service at 888-796-6887.

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[SynovusBankGoldChecking]Gold Checking[/SynovusBankGoldChecking]

If you’re 55 or older, you can open this account and take advantage of fee features such as notary services and unlimited check-writing.
  • Minimum opening deposit: $100
  • Monthly account maintenance fee: $10 (this can be waived)
  • ATM fee: $2.50 for out-of-network ATMs
  • ATM fee refund: None
  • Overdraft fee: $36

This account is for those who are at least 55. The cool part is you can get some savings compared to the Preferred Account — perks such as a lower monthly maintenance fee and free notary services. You also get a box of standard checks for free and other benefits such as zero liability protection with your Visa check card. You do earn some interest with this account, but it isn’t advertised on its website, meaning you’ll need to contact Synovus Bank for details.Like the Preferred Account, you can waive the monthly maintenance fee with the Gold Checking account. To do so, you’ll need to maintain a minimum average daily balance of $1,000 or have at least $500 in monthly direct deposits each month. If you registered for e-statements and online and mobile banking, you can get a $2 credit each month if you are paying the monthly maintenance fee.

How to get Synovus Bank’s Gold Checking account

You’ll need to go to a branch to open an account. To find out more, call customer service at 888-796-6887, but you’ll most likely be asked to bring documentation such as your Social Security card and state-issued ID.

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[SynovusBankMilitaryInterestChecking]Military Interest Checking[/SynovusBankMilitaryInterestChecking]

Members of the military can enjoy benefits such as ATM refunds and lower overdraft fees.
  • Minimum opening deposit: $100
  • Monthly account maintenance fee: $7 (this can be waived)
  • ATM fee: None
  • ATM fee refund: Up to five each month ($1.50 per transaction)
  • Overdraft fee: $29

The Military Interest Checking account is only for active duty, retired or reserved personnel, which can include Department of Defense civilians. Account holders can get their first order of standard checks for free, e-statements and online and mobile banking. You’re not charged ATM fees and can get up to five out-of-network ATM refunds a month.Although there is a monthly maintenance fee, you can get that waived if you make a monthly direct deposit of at least $1 from your Defense Finance and Accounting Service paycheck. If you sign up for e-statements and Synovus digital banking, you can get a $2 credit toward your monthly maintenance fee — that is, if you need to pay it for any given month.

One more thing: You do earn interest, but the rates aren’t available on its website. To find out the rates, it’s best to contact Synovus Bank.

How to get Synovus Bank’s Military Interest Checking account

Show up at a Synovus Bank location to open an account. You’ll most likely need to provide funds to open the account, your Social Security number and proof of employment.

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How Synovus Bank’s checking accounts compare

We do like that you don’t need to have a large opening deposit amount, although some of the competitors from our list of the best online checking accounts don’t require one at all.

Other features we like include the Visa check card and the ability to waive monthly maintenance fees, but other banks offer similar features. Since Synovus Bank doesn’t advertise its rates, we can’t help you there. But the fact that you can only open an account in person leaves us thinking that you’re probably better off elsewhere.

Synovus Bank’s savings account options

[SynovusBankSignaturePersonalSavings]Signature Personal Savings[/SynovusBankSignaturePersonalSavings]

You can get more access to your cash with the ATM card that’s included with this account.
  • Minimum opening deposit: $100
  • Minimum balance to earn APY: 1 cent
  • Monthly account maintenance fee: $5 (this can be waived)
  • ATM fee: $2.50 for out-of-network ATMs
  • ATM fee refund: None
  • Overdraft fee: N/A

This account is a simple savings account that’s best for those who don’t want to worry about minimum balance amounts and are interested in getting ATM access. If you have a checking account, you can link your savings account and access your funds using your Visa check card. Otherwise, when we contacted Synovus Bank on Oct. 22, 2018, customer service mentioned you can request an ATM card. Either way, you have access to over 1,190 surcharge-free ATMs through the Publix Presto! ATM network.

Other features include bill pay, e-statements and online banking. Federal Reserve Regulation D allows up to six certain withdrawals a month, but Synovus Bank will charge you $3 each time you go over two withdrawals in a month.

How to get Synovus Bank’s Signature Personal Savings account

To open a Signature Personal Savings account, go to a Synovus Bank location. You’ll be asked for information such as your name, address and Social Security number, but you can call customer service 888-796-6887 to find out.

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[SynovusBankMinorSavings]Minor Savings[/SynovusBankMinorSavings]

You don’t need to worry about minimum balance amounts with this account.
  • Minimum opening deposit: None
  • Minimum balance to earn APY: 1 cent
  • Monthly account maintenance fee: None
  • ATM fee: N/A
  • ATM fee refund: N/A
  • Overdraft fee: N/A

The Minor Savings account is available to those younger than 18 (or 19 if you’re not married and residing in Alabama) who agree to have a parent or guardian as the joint owner. There is no ATM access, which Synovus Bank told us when we contacted it on Oct. 22, 2018. Once the minor reaches adulthood, this will be converted to a Signature Personal Savings account.

You don’t need to pay any fees unless you end up making more than two withdrawals a month. Go over that amount and you’re looking at $3 per withdrawal.

How to get Synovus Bank’s Minor Savings account

You and your child will need to head to a branch to open an account. You’ll both likely need to bring a state-issued ID and Social Security card. You’ll also need a method to fund the account.

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[SynovusBankHolidaySavings]Holiday Savings[/SynovusBankHolidaySavings]

This account may help you with your short-term savings goals.
  • Minimum opening deposit: None
  • Minimum balance to earn APY: 1 cent
  • Monthly account maintenance fee: None
  • ATM fee: N/A
  • ATM fee refund: N/A
  • Overdraft fee: N/A

If you’re after a savings account dedicated to your short-term savings goals, the Holiday Savings account is an option. Think of it like a certificate of deposit where you set aside money for a specific amount of time — in this case annually — and set automatic deposits to the account until the period is up. Synovus Bank will then automatically deposit your balance into your checking account, or you can have a check mailed to you.

Unfortunately, the rates aren’t advertised on the website, so you’ll need to do your own research and call Synovus Bank to find out. And, yes, you can take money out anytime, but you’re looking at a $5 fee each time you do so. Also, federal Regulation D allows you up to six certain withdrawals a month, meaning your account could be converted to a checking account if you continually make excessive withdrawals.

How to get Synovus Bank’s Holiday Savings account

Like all the other accounts so far, you’ll need to head to a branch to open this one. You may need to bring along items such as your Social Security card and state-issued ID.

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How Synovus Bank’s savings accounts compare

We would love to tell you how the rates compare to other competitors, but they aren’t advertised on its website. This could hinder a few folks who want to compare rates quickly — like the ones on our list of the best online savings accounts.

What we do like is that there are low (or no) minimum balance requirements and you get ATM access with some accounts. But other places offer no minimum opening deposits and you may be able to link to a checking account to get ATM access.

If you’re after an account you can open relatively quickly, you may be better off checking places where you can open an account online.

Synovus Bank’s CD rates

[SynovusBankCertificatesofdeposit]Certificates of deposit[/SynovusBankCertificatesofdeposit]

These are fixed-rate CDs that have different minimum opening deposits depending on if you want to take advantage of promo rates.
  • Minimum opening deposit: $1,000 (for regular rates) or $10,000 (for promo rates)
  • Minimum balance amount to earn APY: $1,000
  • Early withdrawal penalty: Depends on the length of the term:
    • Up to and including a year: Three months’ interest
    • 18 months to two years: Six months’ interest
    • Three years and up: Nine months’ interest

The fixed-rate CDs have a wide variety of terms — anywhere from less than three months to five years or more. Unfortunately, the rates aren’t advertised, including the current promo rates that require a higher minimum opening deposit. To find out, you can call customer service at 888-796-6887 or stop by one of Synovus Bank’s branches.

The interest you earn for the CD is compounded daily and credited monthly, though you can request other options. These CDs renew at maturity, though you can make changes during the 10-day grace period such as making additional deposits and withdrawals or renewing for another term.

How to get Synovus Bank’s CDs

The only way to open a Synovus Bank CD right now is to head to a branch. Documents you may need to bring include your Social Security card and state-issued ID, as well as funds to open the account. It’s probably best to call customer service at 888-796-6887 before you go.

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How Synovus Bank’s CD rates compare

It’s hard to tell how the rates compare without knowing exactly what they. If you’re interested in seeing the competition, we compiled a list of the best CD rates out there. While it’s great that Synovus Bank offers a wide range of terms, the minimum opening deposit can be a turnoff considering other places have lower minimum amounts. If you don’t have that much set aside to open a CD, it’s probably best to look elsewhere.

Synovus Bank’s money market account options

[SynovusBankSignatureMoneyMarket]Signature Money Market[/SynovusBankSignatureMoneyMarket]

Earn a higher APY with different rate tiers.
  • Minimum opening deposit: $1,000
  • Minimum balance to earn APY: $1,000
  • Monthly account maintenance fee: $10 (this can be waived)
  • ATM fee: N/A
  • ATM fee refund: N/A
  • Overdraft fee: N/A

The Signature Money Market account offers higher APYs the more you have on deposit, though you’ll need to contact customer service since the rates aren’t advertised on Synovus Bank’s website.

There is a monthly maintenance fee, but you can waive it if you can either maintain a $1,000 minimum daily balance or $2,500 average daily balance. We found out when we contacted the bank on Oct. 22, 2018, that you also get limited check-writing capabilities, as well as free notary services and online and mobile banking.

Since this is considered a savings account, Regulation D allows up to six certain withdrawals a month. Otherwise, you’re looking at a $15 excessive transaction fee for each withdrawal you go over.

How to get Synovus Bank’s Signature Money Market account

You’ll need to head to a branch to open a Signature Money Market account. Like other deposit accounts, you’ll most likely need your Social Security number and state-issued ID to open one.

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[SynovusBankPremiumMoneyMarket]Premium Money Market[/SynovusBankPremiumMoneyMarket]

You may be able to earn a higher rate, although there is a higher minimum opening deposit amount.
  • Minimum opening deposit: $10,000
  • Minimum balance to earn APY: $1,000
  • Monthly account maintenance fee: $15 (this can be waived)
  • ATM fee: N/A
  • ATM fee refund: N/A
  • Overdraft fee: N/A

The Premium Money Market account could offer higher rates, though you’ll need to contact Synovus Bank because they aren’t advertised on the website. But with higher rates comes a higher cost — a much bigger minimum opening deposit amount. This could be limiting for many, especially those who don’t have that much money sitting around. It’s something to consider before opening any money market account.

You don’t get ATM access but there are limited check-writing capabilities, according to an Oct. 22, 2018, conversation with customer service. You also get online and mobile banking access. As for the monthly maintenance fee, you can get that waived if you can maintain either a $20,000 average daily balance or a $10,000 minimum daily balance in your account. You’re also allowed up to six certain withdrawals a month thanks to Regulation D. You could be paying a $15 excessive transaction fee for each withdrawal one go over.

How to get Synovus Bank’s Premium Money Market account

To open the Premium Money Market account, go to a Synovus Bank location. You may be asked to provide your Social Security card and state-issued ID, so it’s best to be prepared.

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How Synovus Bank’s money market accounts compare

Synovus Bank offers a fairly high minimum opening balance that may be off-putting to those who may not have a lot of money to spare. Sure, there’s limited check-writing capabilities, but there are other places that offer ATM access. Some competitors also offer low to no minimum deposit amounts, which can be a great choice depending on how much money you want to use to open an account.

If you want to see what you could be earning with a money market account, consider looking at our list of the best money market rates and accounts.

Synovus Bank’s IRA account options

[SynovusBankIRACD]IRA CD[/SynovusBankIRACD]

This could be a great choice if you’re after a conservative retirement account.
  • Minimum opening deposit: $1,000
  • Minimum balance amount to earn APY: $1,000
  • Early withdrawal penalty: Depends on the length of the term:
    • Up to and including a year: Three months’ interest
    • 18 months to two years: Six months’ interest
    • Three years and up: Nine months’ interest

Synovus Bank’s IRA CD accounts are essentially the same as the regular CDs, except they’re either tax-sheltered or deferred. You may also be limited to how much you can contribute per year because of IRS regulations.

You can choose from a wide range of terms, though to find out the exact rates you’ll need to contact Synovus Bank. As for the interest, it’s compounded daily and credited either to your account annually or at maturity. The IRA CD will automatically renew unless you make changes during the 10-day grace period. This can include making withdrawals or additional deposits or renewing it for another term.

How to get Synovus Bank’s IRA CDs

You can open an account by going to a Synovus Bank location. It’s best to call customer service at 888-796-6887 to make sure, but you’ll most likely need to provide your Social Security number and a state-issued ID.

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How Synovus Bank’s IRA CD rates compare

We can’t comment on the rates as they’re not advertised on Synovus Bank’s website. But what we do notice is that the minimum opening balance seems to be on par or lower compared to others on our list of the best IRA CD rates.

Many of these financial institutions also offer a wide range of terms, and it looks like you should be able to open these accounts online. Considering the only way to open a Synovus Bank IRA CD is in person, that’s a pretty big barrier, especially if you don’t live near a branch.

Overall review of Synovus Bank’s banking products

We can’t say if the rates for Synovus Bank are great considering they aren’t advertised on the website, so this could be a deterrent.

What we do like is that most of its accounts, such as its checking and savings options, have a low minimum opening balance, meaning it can be accessible to most people. It’s also convenient that both types of accounts offer ATM access and surcharge-free ATMs through the Publix Presto! network.

Unfortunately, the money market and CDs do require a higher minimum opening deposit, which may be a stretch for some if you don’t have a lot of savings to make those initial deposits. Many competitors offer some great rates and have lower minimum opening balances.

What we’re getting at is that Synovus Bank may not be the best choice, considering you need to open accounts in person and its rates aren’t readily available. There are plenty of competitors happy to show you what you could earn in interest on its website.

The post Synovus Bank Review: Checking, Savings, CD, Money Market and IRA Accounts appeared first on MagnifyMoney.

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