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Fine Print Alert

Fine Print Alert: CFPB Fines Regions Bank

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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In our weekly Fine Print Alert we call out news from the financial community and shine a spotlight on any sneaky changes in the fine print. We also share our favorite reads from the week.

FINE PRINT ALERT

Overdraft with Regions Bank? You may be getting some money back…

This week, the CFPB announced it will be fining Regions Bank 7.5 million dollars for unlawful overdraft practices. The bank had been charging consumers who had not opted into overdraft coverage as well as charging overdraft and non-sufficient funds fees on its deposit advance product despite claims that it would not. The bank is required to pay back all consumers affected by its practices and this isn’t the first time. Regions Bank has already paid out over $49 million in refunds to customers previously impacted by deceptive practices.

Read the full announcement on the CFPB website.

MAGNIFYMONEY IN THE NEWS

FAVORITE READS FROM AROUND THE WEB

Navigating the Thickets of Student Loan Counseling – And over the last two years, the nonprofit group TG, which collects payments on older federal loans and tries to keep borrowers out of trouble, has done its own examination of the government-supplied counseling lessons. It, too, had some tough-love analysis after it watched students put themselves through the process. Its reports note that students find much of the material “irrelevant” and that the government “assumes users know things they do not (and often cannot) know.” Ron Lieber shares insights into the student loan counseling process for the New York Times.

5 Foolproof Ways to Save for People Who Don’t Like to Save – Without a doubt, saving money takes discipline – and some of us are more disciplined than others. If you know you need to save but are having trouble actually doing so, there are several tools that can make it easy. We asked personal finance bloggers and money experts to share their favorite ways to automate savings. Cameron Huddleston shares the results on Kiplinger.

Biggest 401(k) blunder millennials makeThink of retirement savings as a huge bucket of water, into which retirement savers (employees) and plan sponsors (employers) pour hundreds of billions of dollars a year. As the bucket fills up, savers become more and better prepared for living out their later years in comfort. That’s the good news. The bad news is that this bucket also has three holes in it, each of which causes savings to “leak” out — cash-outs, hardship withdrawals and loans. Cash-outs are by far the largest form of “leakage” (an industry term for retirement savings that prematurely leave the system). Spencer Williams shares strategies to evade retirement blunders on MarketWatch.

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

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at [email protected]

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Balance Transfer, Consumer Watchdog

Consumer Watchdog: Don’t Fear a Balance Transfer Fee

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Fewer financial experiences are more demoralizing than putting money towards credit card debt, but barely seeing the principal balance decrease. If you continue to pay the minimum, or just above the minimum, your money is mostly going towards interest. A simple way to reduce credit card debt is utilizing a balance transfer. And yet, people are still wary of completing one because of the balance transfer fee.

Let’s Do the Math

You have $7,500 in credit card debt. There’s an 18% interest rate and you can only afford to pay $300 towards your debt a month.

Scenario A: You keep diligently paying $300 a month; it will take 32 months and cost you $1968 in interest to get debt free.

Scenario B: You do a balance transfer that offers 0% for 24 months with a 4% fee. The interest goes up to 15% after the 24 months period. You’ll pay $311 in fees and interest.

By opting with Scenario B, even with a 4% fee, you’ll save yourself $1,657.

Do Research to Save Even More

Obviously, it would be best to avoid paying any sort of balance transfer fee and it’s an option.

Let’s say Bank B offers a 0% balance transfer for 15 months with no fee. Let’s see how much that will save you using the scenario above.

$7,500 in credit card debt at 0% and no fee for 15 months and then 15% APR starting in month 16 would cost you $222 in interest. This is $89 cheaper than the version paying a 4% fee.

Rolling Balance Transfers (Even from No Fee to Fee)

But with more debt, it becomes important to use a no fee card as a starting point and then roll the remaining debt onto a second balance transfer card, even one with a fee.

Hike your debt to $10,000 at 18% APR and let’s say you can afford to pay $320 instead of $300.

By leaving this money with just one balance transfer until you completed your repayment, you’d end up paying $648 in interest.

Instead, you can roll the debt in month 16 after the 0% offer ends and put it on a card like the Citi® Diamond Preferred® Credit Card which offers an intro 0%* for 18 months on Balance Transfers*. It also has a balance transfer fee of 5% of each balance transfer; $5 minimum. You’ll end up paying $407 in interest and fees.

If you rolled to the Sphere® Credit Card from Santander with a balance transfer fee of $10 or 4% of the amount of each transaction, whichever is greater, it would cost you an extra $102.

Santander Bank, N.A. is not accepting credit card applications at this time.

What Makes You Eligible

Balance transfers are typically reserved for people with good to excellent credit. You want to be in the 700+ credit score range for the best odds of being approved. We recommend checking to see if you’re pre-approved for credit cards in order to minimize your chance of rejection.

Yes, applying for a balance transfer will be a hard inquiry on your credit report and thus ding your credit score. But your credit score isn’t a trophy; it’s meant to be used to save you money. So use it to save hundreds to thousands on your credit card debt repayment.

You need to be rolling your debt from a different bank. For example, if your debt is already at Citi, you won’t be eligible for a Citi balance transfer offer.

See How Much You Can Save

First, use our balance transfer marketplace to compare offers.

Second, use our balance transfer calculator to see how much doing a balance transfer, or multiple balance transfers, will save you.

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

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at [email protected]

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