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Personal Loans

RocketLoans Personal Loan Review

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.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

APR

5.98%
To
29.99%

Credit Req.

640

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

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Rocketloans is a digital finance business that is part of the Quicken Loans family. ... Read More

RocketLoans personal loan details
 

Fees and penalties

  • Terms: 36 or 60 Months
  • APR Range: 5.98%-29.99%
  • Loan amounts: $2,000-$45,000
  • Time to Funding: Same day funding for up to $25,000
  • Hard pull/soft pull: Soft Pull to see offers. Hard credit pull once you submit an application..
  • Origination fee: 1.00% - 6.00%
  • Prepayment fee: None
  • Late payment fee: $15 per occurrence
  • ACH return fee/Returned check fee: $15 per occurrence

Eligibility requirements

  • Minimum credit score: 640 (Using a FICO® 9 model)
  • Minimum credit history: 2 years
  • Maximum debt-to-income ratio: 40% excluding mortgage and 70% including mortgage
  • Minimum income: $24,000 annually (from any source)

Rocket Loans does not lend in North Carolina, Iowa, West Virginia or Nevada. You must be at least 18 years old to apply for the loan (19 in Alabama and Nebraska). Your credit score, existing debt load, or income may disqualify you from a loan from RocketLoans. Your loan rates will be based off of your income, your credit history, your debt-to-income ratio, homeownership and the size of the loan.

You may be required to submit documents to verify the accuracy of your information (such as pay stubs or tax forms).

Applying for a personal loan from RocketLoans

From start to finish, applying for a personal loan from RocketLoans takes just a few minutes.

Before you can see any offers, RocketLoans requires you to enter your personal information, including your name, address, Social Security number, phone number, employment status, income and homeownership status. RocketLoans uses this information to do a “Soft Pull,” which will allow it to analyze your credit history, debt-to-income ratio, and overall debt burden. The credit pull will not show up on your credit report.

After a minute or two, RocketLoans presents a list of personalized loan offers. The offers include the loan amount monthly payment, length, interest rate (Autopay rate) and the APR (which includes the funding fee). As long as you’re able to provide income and address verification, RocketLoans will underwrite the loan with the terms presented.

*Terms may differ from above example

After choosing a loan option, RocketLoans will verify your identity and income information. It may request that you submit documents (pay stubs, driver’s license, tax returns etc.). RocketLoans will also have you log into the bank account where you want to receive the funds. The company does this to make sure it sends funds to the right place. During the verification process, RocketLoans will do a hard credit inquiry. This hard credit pull could impact your credit score.

Once RocketLoans verifies all of your information, you’ll be instructed to sign the loan documents online. Then, RocketLoans will transfer the loan to your bank account via an electronic, automated clearing house transfer (ACH transfer). Funds up to $25,000 may be available the same business day, but funding could take up to three business days based on your bank’s rules.

Pros and cons of a RocketLoans personal loan

Pros:

Cons:

  • Fast: RocketLoans has an easy online application that minimizes the need to find extra documentation. If you qualify, you could receive the funds the day you apply.
  • 24/7/365: RocketLoans doesn’t take days or evenings off. Their loan offers are fully underwritten, so you can apply and be approved for a loan at your convenience. Loan funding only happens on business days.
  • Individualized offers: RocketLoans only shows individualized offers. You don’t have to wonder what your interest rate will be — RocketLoans will show multiple offers based on your ability to repay.
  • Originations fees: Personal loans from RocketLoans carry a 1.00% - 6.00% origination fee. In contrast, many digital lenders have no origination fees.
  • Moderate to high interest rates: Borrowers with excellent credit can see rates as low as 5.98%, but other lenders offer better rates. Some borrowers can face interest rates as high as 29.99% APR.
  • Limited options for repayment terms: Borrowers can choose between 36 or 60 month payback periods. Other lenders offer more repayment options based on a borrower’s ability to repay.
  • Poor credit borrowers may not qualify. With a minimum FICO score requirement of 36 or 60, people with poor credit may not qualify.

Who’s the best fit for a RocketLoans personal loan?

So long as you’ve shopped around and compared offers from several personal loan lenders, you’re ready to make an educated decision about which lender is right for you. RocketLoans makes it easy to shop because you can get individualized offers based on your personal information before you even have to apply.

In the end, RocketLoans may not offer the best rates or terms, but it will give you a point of comparison. Plus, checking your rates on RocketLoans won’t hurt your credit. After you check your rate, you can compare RocketLoans’ offers with rates from other lenders. Since you know from our review that RocketLoans carries a 1.00% - 6.00% origination fee, which is paid upfront, you should look for loans that not only offer a better rate but don’t carry an upfront fee. If you can’t find a better deal elsewhere, RocketLoans may be the best option for you.

People who need their loan funded fast will find RocketLoans most valuable. The application process takes just a few minutes (especially if you have pay stubs or tax documents handy). Once your loan is approved (which can happen almost immediately), RocketLoans will send the funds to your bank. Depending on your bank’s rules, you can gain access to the funds the same day.

Alternative personal loan options

LightStream

LightStream is the online personal lending branch of Suntrust Bank. It sets itself apart by offering no-fee loans (including no late fees and No origination fee). Loans from Lightstream carry some of the best interest rates on the market, with rates ranging from 3.99%–16.99%. People with excellent credit can borrow $5,000–$100,000 from LightStream for 24 to 144 months.

APR

3.99%
To
16.99%

Credit Req.

660

Minimum Credit Score

Terms

24 to 144

months

Origination Fee

No origination fee

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on LendingTree’s secure website

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


Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.99% APR with a term of 3 years would result in 36 monthly payments of $295.20.

SoFi

SoFi is another online-only lender with decent interest rates (5.99%–16.49% for fixed-rate loans and 6.40%-12.70% on variable-rate loans) and No origination fee. Personal loans from SoFi have terms ranging from 24 to 84 months. SoFi is one of the only lenders that offers “unemployment protection” on all personal loans. Borrowers who lose a job will be allowed to temporarily stop payments (for up to 12 months). SoFi also offers nontraditional perks to its members including free career coaching and networking events.

SoFi
APR

5.99%
To
16.49%

Credit Req.

680

Minimum Credit Score

Terms

24 to 84

months

Origination Fee

No origination fee

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on LendingTree’s secure website

Advertiser Disclosure

SoFi offers some of the best rates and terms on the market. ... Read More


Fixed rates from 5.990% APR to 16.490% APR (with AutoPay). Variable rates from 5.74% APR to 14.60% APR (with AutoPay). SoFi rate ranges are current as of February 15, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.74% APR assumes current 1-month LIBOR rate of 2.51% plus 4.28% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.

See Consumer Licenses.

SoFi Personal Loans are not available to residents of MS. Maximum interest rate on loans for residents of AK and WY is 9.99% APR, for residents of IL with loans over $40,000 is 8.99% APR, for residents of TX is 9.99% APR on terms greater than 5 years, for residents of CO, CT, HI, VA, SC is 11.99% APR, and for residents of ME is 12.24% APR. Personal loans not available to residents of MI who already have a student loan with SoFi. Personal Loans minimum loan amount is $5,000. Residents of AZ, MA, and NH have a minimum loan amount of $10,001. Residents of KY have a minimum loan amount of $15,001. Residents of PA have a minimum loan amount of $25,001. Variable rates not available to residents of AK, TX, VA, WY, or for residents of IL for loans greater than $40,000.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

Prosper

Prosper is a peer-to-peer lending place that offers 36 or 60 months fixed-rate personal loans for $2,000–$40,000. Rates at Propser range from 6.95%–35.99% APR which includes the cost of a closing fee (also known as an origination fee). People with good or excellent credit may find better rates from other lenders, but people with bad credit have a chance to be approved for a loan at Prosper.

APR

6.95%
To
35.99%

Credit Req.

640

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

2.41% - 5.00%

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Prosper is a peer-to-peer lending platform that offers a quick and convenient way to get personal loans with fixed and low interest rates. ... Read More


For example, a three-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR. You would receive $9,759 and make 36 scheduled monthly payments of $301.10. A five-year $10,000 loan with a Prosper Rating of A would have an interest rate of 8.39% and a 5.00% origination fee with a 10.59% APR. You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%. APRs through Prosper range from 6.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest rates for the most creditworthy borrowers. Eligibility for loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All loans made by WebBank, member FDIC.

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.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here

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Personal Loans

Here’s Why You Should Avoid Cosigning a Loan for a Friend

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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You’re in a tricky situation: your friend, who you love and care about deeply, has come to you asking for your help getting a loan that they desperately need. You know the loan could benefit your friend, but you’re also unsure of the risks behind cosigning a loan.

The most important step you can take is to learn why cosigning a loan for a friend is rarely a good idea. That way, you can understand why you probably should avoid it.

Should you cosign a loan for a friend?

In general, you may want to avoid cosign a loan for a friend. Here’s why:

  • You become legally responsible for the loan. In the eyes of the lender, the full loan amount is 100% yours. That means if your friend doesn’t make payments, the two of you will be held responsible.
  • Your credit score could be affected. Should your friend miss even one payment, your credit score could be negatively impacted since the loan is considered to be in your name too. And if the borrower defaults on the loan completely, it could impact your credit score even more.
  • You could damage your friendship. Consider the risks to the relationship with the person you are cosigning a loan for if they are unable to pay back the loan. Is the risk of ruining your friendship worth it?
  • You could lose personal property. If a loan — such as a personal loan — requires any collateral, such as your car, house or other personal asset, you are at risk of losing your property should your friend default on the loan.

Reasons why you may or may not choose to cosign a loan

Here’s a more comprehensive look at reasons why you might choose not to cosign a loan:

  • You can’t afford the loan. You should not take the risk on of cosigning a loan unless you can afford to pay the loan in its entirety. Otherwise, you could liable in court or even have your assets seized as part of your state’s collection practices.
  • You need a loan for yourself. If you know you will need your own loan soon, cosigning a friend’s loan could prevent you from being eligible for a loan for yourself.
  • You’re concerned about your credit score. If you’ve had a history of bad credit, are trying to build up your own credit or just don’t want to see your credit score negatively affected, you need to be aware that cosigning a loan could hurt your own credit score if your friend misses payments or defaults on the loan all together.
  • Your friend has a history of bad financial decisions. You should know why your friend needs a loan. It’s within your right to decide that you won’t cosign a loan if you don’t agree with how they’ll use loan funds. If your friend tends to rack up debt, you’re also free to explain to your friend that you don’t feel confident they need the added debt.

That being said, there may be a few circumstances where it is acceptable to cosign a loan for a friend. For example:

  • You can afford to pay the loan completely. If you cosign a loan, you are agreeing to be responsible for the loan amount in the event that your friend is unable to pay it. So, if you can afford to pay off the entire loan amount and are willing to do so, you could cosign a loan with less risk of hurting your own finances. Aside from the money you’d be out for the loan amount, of course.
  • The loan is for both of you. If you are purchasing something together, cosigning a loan might be a logical move, as you will both be utilizing the item or asset. For family members, a parent might choose to cosign a loan so their child could potentially consolidate student loan debt at a lower interest rate.
  • You’re willing to take on the risk. Maybe you feel like your friend has no other options, this is a necessary step and you are fully aware of the risks involved. In that case, cosigning a loan is a personal decision that only you can make.

How to protect yourself when cosigning a loan

If you do decide to cosign a loan with a friend or someone else, you should also take steps to protect yourself as much as possible before the loan is enacted. You can minimize your risk by taking actions such as:

  • Don’t put down personal assets as collateral. If you’re willing to cosign on a loan, you shouldn’t wager more than that. Using your home, car or other personal asset as collateral only increases your risk.
  • Establish expectations in advance. You should sit down with your friend to establish expectations for the loan and repayment. It’s helpful if you can set out a plan in writing about the consequences if your friend misses payments or is unable to fully repay the loan.
  • Stay on top of the loan. Although it is recommended that you keep close tabs on the borrower to ensure that they are repaying the loan on time each month, you could also ask the creditor to inform you of any missed or late payments automatically. If the lender has an online system, you and your friend could also share the account information. That way, you could easily log into your account to review payment information.
  • Try negotiating loan terms. Rules will vary by lender and state, but you may be able to negotiate what you’re responsible for as a cosigner, such as limiting your liability to the loan principal balance instead of the full principal and interest amount. You can also try to negotiate responsibility for late fees, attorney fees or accrued court costs.

Other ways of helping your friend

Outside of cosigning a loan for your friend, there may be other ways that you can help, such as:

  • Assisting with a down payment. Perhaps you can’t afford to take on the risk of cosigning an entire loan for your friend, but you may be able to help them put together a down payment so that they may qualify for a conventional loan.
  • Lend them the money directly. To ensure that you would not be legally responsible for your friend’s debt and to avoid possible damage to your own credit score, you could consider lending your friend the money they need directly, either as a lump sum or in installments. It is advisable to get all loan terms in writing and to have the loan contract notarized if you do choose to DIY a loan.

The bottom line

Although you may want to cosign a loan with a friend to help them, taking on the legal responsibility of someone else’s debt is usually not a good idea for most people. Agreeing to become a cosigner means you run the risk of being liable for the loan amount and the possibility of your own credit score taking a negative impact.

You should carefully consider the risks you are willing to take and take steps to minimize them before agreeing to cosign a loan for a friend. In most cases, unless you can fully afford and are willing to pay off the entire loan amount, the cons do outweigh the risk of cosigning on a loan for a friend.

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.

Chaunie Brusie
Chaunie Brusie |

Chaunie Brusie is a writer at MagnifyMoney. You can email Chaunie here

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Should You Use a Personal Loan to Build Credit? What to Consider

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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If you’ve been trying to build up your personal credit, you may have considered using a personal loan. Taking out a personal loan could show creditors that you can responsibly handle different kinds of debt and follow the terms to which you and your lender have agreed.

But how successful you are depends on your ability to pay the loan back within the given term limits. Here’s what you should consider before taking out a personal loan to build credit.

Pros vs. cons: Using a personal loan to build credit

There are both pros and cons to taking out a personal loan in an attempt to increase your credit score:

Pros

  • Add to your credit mix: A personal loan could help you diversify your credit mix, which accounts for 10% of your FICO score.
  • Stay current on payments: You could use a personal loan to refinance a debt or consolidate debts to a lower interest rate. Doing so could help ensure you stay current on payments, which positively impacts your credit.
  • May not have to put down collateral: An unsecured personal loan doesn’t require you to put up collateral to secure the loan. That means your house or other assets can’t be taken away if you default.
  • Lower your credit utilization ratio: A personal loan can also lower your credit utilization ratio if you pay off your credit card balance with your loan and keep the card open. Credit utilization is important factor in your FICO score, and it is basically the amount you owe divided by the total amount you have available to you. Personal loans don’t count toward it.

Cons

  • Fees, fees, fees: Depending on your credit score, you could be paying hefty interest fees over the length of the loan, in addition to any other fees your lender charges, such as prepayment penalties, late fees and origination fees.
  • Could increase your debt-to-income ratio: Taking out a personal loan could change your debt-to-income ratio. This could make future lenders less likely to let you borrow funds until some, or even most, of your personal loan is paid off.
  • Strict payment schedule: Personal loans are often issued for a period of between 24 to 60 months and offer little flexibility when it comes to adjusting payments. So if you lose your job or face other financial struggles, your lender may be unwilling to work with you to reduce or delay payments.

Is using a personal loan to build credit right for you?

A personal loan might make sense for you if your goal is to diversify your credit mix or lower your credit utilization ratio by paying off a credit card. It’s also a good option if you plan to use the funds at a lower interest rate to pay off other debt that’s charging you a higher interest rate.

A personal loan to build credit might not be a good option if you’re already struggling with paying off debt, if you have no prior credit history or if you could get a credit card with a lower rate of interest instead. If you can’t get a reasonable interest rate, a personal loan might not be a good choice, said David Gokhshtein, a New York-based member of the Forbes Finance Council.

“In most cases, people in this scenario already have lower credit scores, leading to very high interest rates they could be paying off indefinitely,” he said. “If the debt gets sent to a collection agency, it will further damage the person’s credit score.”

That said, it’s important you have a clear picture of your financial situation. Consider the following questions:

  • Is your credit score good enough to qualify for competitive interest rates?
  • Can you afford the cost of a personal loan?
  • Is taking out debt and repaying it with interest worth it to build your credit?
  • Do you have a good use for the funds?

Answering these questions could help you decide whether or not to move forward with this option.

How to take out a personal loan

The first thing you should do if you decide to get a personal loan is to check your credit score. A FICO score of 700, on a range that spans 300 to 850, indicates you have good credit and would be likely eligible for a variety of loan offers, including a personal loan at a reasonable rate of interest. Because FICO scores are seen as an accurate reflection of your creditworthiness, lenders rely on them in 90% of all decisions.

You’ll want to research your options for lenders before committing to a loan, as well. You can use MagnifyMoney’s personal loan marketplace to compare lenders. You may also look to local banks or credit unions.

If possible, apply for preapproval from your top lenders of choice. Preapproval will allow you to see rates and terms you might qualify for with a soft credit check, which won’t affect your credit score.

Consider the following when weighing your loan options:

  • Rates
  • Fees
  • Conditions
  • Lender perks, such as support in case of job loss

Once you decide on a lender, you can submit to a hard credit check to see your final rates and terms. Depending on the lender, you could get loan funds within a few business days.

Others strategies to improving your credit

Consider the following ways to build credit without accumulating any additional debt:

Get a credit builder loan. With this type of loan, the money you borrow is deposited into an interest-bearing account. As you make payments on the debt, your payments are reported to the credit bureaus. Once you pay off your debt, the loan funds and the interest they earned are released to you.

Charge only what you can pay in full each month. If you have a credit card, you could use to work on your credit. Just make sure you pay off the card in full each month. “It is imperative to create and use a simple budget to make sure you follow this rule,” said Freddie Huynh, the San Francisco-based vice president of credit risk analytics at Freedom Financial Network. “Being able to pay your bills on time is the most important factor in the calculation of your credit score, accounting for 35 percent.”

Review your credit reports regularly for accuracy and correct any errors you find. You can access credit reports from each of the three main credit reporting agencies once a year for free at www.annualcreditreport.com. “If any report shows any inaccuracy, follow the directions on each agency’s website to correct it,” Huynh said.

The bottom line

Carefully consider your options before taking out a personal loan. You should have a clear idea of how you’ll use the loan funds and what the total cost of the loan will be. Most importantly, if your credit has been damaged by poor financial habits in the past, you need to consider whether or not a personal loan is only a temporary solution to a larger problem.

“My biggest concern with anyone considering a personal loan to pay off high interest credit cards is that they are focusing on the symptom, not the cause,” said Todd Christensen, the Boise, Idaho-based education manager at Money Fit by DRS. “If the borrower is disciplined, it might make sense; otherwise, debt management through a nonprofit credit counseling agency could make more sense.”

While a personal loan can be one part of the credit building or repairing process, it’s not your only possible solution. In fact, Christensen said taking out a personal loan could be part of a multi-pronged strategy to boosting your credit. Still, a personal loan on its own could help depending on your finances — given that you properly research lenders, stay disciplined during repayment and take extra care of your money throughout the process.

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.

Barbara Balfour
Barbara Balfour |

Barbara Balfour is a writer at MagnifyMoney. You can email Barbara here

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