Posted on

Does It Ever Make Sense To Lease A Car?

Most people view leasing with the same attitude as renting a house or apartment. Each monthly payment makes the wallet of the owner a little thicker while the renter has nothing to show for it. At the end of the lease agreement, the lessee (tenant) owns as much of the property as they did before they made the down payment – 0%. If you see a need to lease custom kitchen cabinets in austin for a remodel that’s another article for another day.

The monthly lease payments essentially offset the depreciation value of the vehicle. Just as it always doesn’t make the best financial sense to buy a house, such as only living somewhere for one or two years, there are also times when it might not make sense to buy a car.

car loan refinancing

To lease a car is to rent a vehicle. You will make an initial down payment that can include a refundable security deposit equal to the first monthly payment, any applicable fees or taxes, additional funds to prepay the lease balance to lower the monthly payments, and the first monthly payment.

It won’t be uncommon to pay at least $2,000 just to drive the car off the lot. Most dealers expect an initial down payment of 10% of the capitalized cost (the MSRP and additional dealer fees) of the car. Similar fees are expected when you purchase a vehicle, the primary difference is that you own the vehicle at the conclusion of the financing agreement.

When It Might Make Sense To Lease A Car

Get A New Every Two

If you are one who likes to buy a new vehicle every two or three years when the “new car smell” disappears, leasing can be a better option. Every vehicle depreciates the most within the first few years after it rolls off the assembly line. Some vehicles can depreciate as much as 50% from the original sticker value at the end of three years. Depending on the annual mileage and routine maintenance schedule, cars also start costing a lot more to maintain after the 2 or 3-year mark too.

Leasing is more convenient than buying a vehicle and selling it after 36 months. Instead of trying to sell or trade-in and find the highest bidder, a lessee can drive the vehicle to the dealer lot at the end of the term and drive home in a new one. Part of the lease agreement might also include complimentary routine maintenance at the dealer location. You still might have to pay for normal wear-and-tear expenses such as tires or brakes, but, maintenance can be a “hidden cost” that most people do not budget for on the sales floor.

Lower Monthly Payments

In general, leases have lower monthly payments than car loan payments. For example, the estimated monthly lease for a brand new Ford Focus with an estimated cost of $18,100 before discounts is $181 per month for 36 months. A 36-month loan at 0% APR has an estimated monthly payment of $425. The lower monthly payment can be an affordable way to drive a new vehicle. One expense to consider that might not be included in the monthly lease payment is a product called “GAP Protection.”

Some dealers or insurance providers might require Guaranteed Asset/Auto (GAP) Protection for leased vehicles to cover the difference between the initial lease balance and the payments made so far. In the unfortunate event that the leased vehicle is “totaled” during an accident, this type of coverage will pay the dealer the remaining balance for the vehicle so that the driver will not have to finish paying off that lease and find a way to afford a replacement vehicle.

To save even more money, look out for budget-friendly insurance, which will vary from state to state, city to city. For instance, the best cheap car insurance rates in Austin, Texas will likely be very different from rates in a state that sees plenty of snow and tough rough conditions.

Only Plan to Live Somewhere For A Few Years

Perhaps you need to live abroad for several years for business before returning stateside or bounce around the country every couple of years. Just as you probably wouldn’t buy a house for a 3-year stint as the potential appreciation normally doesn’t offset the fees associated with buying and selling the house, it might be the same thing for a car.

It’s not affordable to ship your car on a barge with your other belongings when you return. Or it might be impractical to own a sports car after moving from the southern U.S. to the northern U.S. with harsh winter conditions. Once again, leasing is a convenient option as you know exactly how much you will pay when you drive the car off the lot.

Factory Overstock Leases

Sometimes dealers will offer lease specials to help clear inventory. This makes the monthly payment even lower than a regular lease payment. At the end of any lease, the driver normally has the option to purchase the vehicle for market value at the end of the lease term. With factory overstock leases, it can make sense to “lease-to-own” as the lease payments can be lower than depreciation. The financing for the remaining value will carry a lower monthly payment than if the vehicle had been financed brand-new.

For this strategy to work, you need to be intentional about banking the extra savings and setting it aside into a “no-touch” fund to buy the car at the end of the lease term. If you decide to purchase the vehicle you will need to pay the appropriate taxes and any loan down payment if you will not pay cash for the car.

Tax Rebates or Factory Subsidies

Sometimes local or state governments can make it cheaper to lease a new vehicle than buy a new vehicle.  This is most common with alternative fuel vehicles such as electric cars or hybrids where governments try to attract new customers to drive these vehicles. Dealers might also add additional subsidies for additional incentives to sign the lease. In addition to eco-friendly cars, certain dealers also offer incentives for high-end luxury vehicles. For some, it might be the only affordable way to drive a luxury car.

Lease For Business

If the leased vehicle will primarily be used for business purposes, it can also make sense to lease as the monthly payments can be tax-deductible. The guidelines are rather strict. It’s a good idea to talk to a tax professional or the accounting department before making this business decision.

lease a car

When It Doesn’t Make Sense To Lease A Car

Drivers who like to “buy and hold” their car until the wheels fall off should never lease. For these types of drivers, it doesn’t make financial sense to constantly be paying a monthly payment to the dealer when that money can be used for traveling, investing, or becoming debt-free. The two most affordable ways to purchase a vehicle that you intend to drive for more than 2-4 years is to buy a late model vehicle that is no more than 6 years old that can be purchased in whole and is still low-mileage.

Even if you need to obtain financing, it will be significantly cheaper than if you had bought the car with 1 mile on the odometer because of depreciation. A low-mileage late model vehicle can still be driven reliably for another 10 years or more, in most instances.

It also might not make sense to lease a brand new vehicle if you can afford the monthly loan payments. Instead of only renting the vehicle for three years (36 months) and returning it to the dealer so they can sell it to somebody else, you actually own the car and can sell it for the same price as the dealer. You won’t get the depreciation value (as the dealer did with lease payments) but it’s still more cost-effective than leasing.

Should You Buy Or Lease a Car?

If you are undecided whether to buy or lease a car, the Edmunds True Cost to Own calculator can help you crunch the numbers.  You should also get buy and lease quotes from your insurance provider as well.  Having realistic cost projections and knowing your preference for convenience (leasing) or ownership, can help make the decision easier.

As you can see, while owning a vehicle (like owning a house) is the most popular option. Sometimes it does make more sense to lease.

Posted on

How To Prevent Your Card Being Canceled By Credit Grantor

Not everyone uses their credit cards on a regular basis. Imagine the shock of needing to use your credit card only to find that it has been canceled by a credit grantor. You hear horror stories of people vacationing overseas and discovering this problem, then spending hours trying to fix it.

Unfortunately, the credit card grantor reserves the “right” to cancel or change the terms and conditions at any time. While they are supposed to notify you, this could be lost in the mail, sent to your email spam folder, or simply overlooked.

There are a few main reasons why your credit card might be canceled by a credit grantor. Let’s review the most common ones to prevent this from happening to you.

Not Using Your Credit Card Enough

A credit card company issues a card to you so that they can make money. Not only will they make money when you pay interest and fees, but they do make a small amount of money on each transaction that you use the card for.

This is the most common reason for a credit card to be canceled.

When you do not use the card at all, or only for emergencies, the credit card company makes no money from having you as a customer. Fortunately, this is a problem that is extremely easy to avoid. Simply use the card for the occasional purchase. Try to use it at least once every few months so your account will remain open and active.

You can always use one of the best credit cards with no annual fee to help you keep your account active without having to worry about coughing up the money for any fees.

New Debt

Have you recently taken on new debt? Bought an expensive car or a new home? These are changes that can quickly raise your debt level, change your credit utilization ratio (how much of your available credit you owe), and affect your credit score.

The credit card company may see this new debt and quickly cancel your card. New debt on a credit card changes your credit utilization. But taking out a large loan may affect you as well. The credit card grantor may determine that you have too much outstanding debt to pay promptly.

Changes in Your Credit Score

Any time that your credit score changes or drops, you are at risk for having your credit card canceled by credit grantor. This is one of the most important reasons to keep regular tabs on your credit score. You can avoid having your card unexpectedly canceled. It’s also good to know in case of identity theft.

They Don’t Need a Reason

As mentioned before, credit card companies have the right to cancel your card, for no reason, at any time. Having a credit card is not actually your “right.” The credit card company gets to decide who they want to extend credit to. While this might be you, it could change at any time.

They are supposed to give you notice, but, might not always do so. Sadly, getting a credit card canceled, for any reason, looks pretty bad on your credit report. You definitely want to try and avoid having this happen if you can.

What You Can Do To Prevent Being Canceled By Credit Grantor

First, make sure that you at least occasionally use your credit card so that the account does not go completely dormant. Second, make sure that you keep an eye on how much you owe. Keep your credit utilization as low as you possibly can. Third, follow your credit report on a regular basis (at least once per year) to ensure everything is accurate.

Your credit is important and should be treated as such. You can prepare yourself for the unexpected by following all of the rules and staying on top of your debt carefully.

Posted on

Top 5 Money Mistakes All Freshmen Make

A survey by Walletpath revealed that even though 65% of college grads wished they knew more about personal finance, they seemed to be doing pretty well for themselves. However, things are a bit different when it comes to college freshmen across the United States. As per a 2013 Higher One study, a good percentage of them were found to be not as financially responsible as they were expected to be.

freshmen-money-mistakes

Let’s take you through the top 5 money mistakes that freshmen make during their student years.

1. Incurring credit card debt

While a large number of students take student loans and set themselves up for years and years of repayments, some go a step further and also add credit card debt into the mix. Although it’s gotten pretty harder for credit card issuers to pursue students on college campuses, they continue to use all possible means for marketing their offerings to these freshmen, especially during the initial few months of their college.

On the one hand, responsible credit card usage during one’s college years can help a student significantly in building a healthy credit score. Using one of the best first credit cards can help you build your credit so that you can eventually upgrade to one of the more popular flexible travel credit cards, such as the Chase Sapphire Preferred vs Capital One Venture credit cards to help meet your travel goals.

On the other, things can go quickly out of control if the same card is used for splurging on unwanted things, or for filling up budgetary gaps.

Furthermore, as students are normally issued starter credit cards, these have higher interest rates than what’s charged to people with healthy credit scores. So, any irresponsible usage can bury them in huge piles of debt in no time; not to forget the damage it can do to their credit scores in the long run.

Use a credit card during your college years only if you don’t treat it as free money. Keep your credit utilization low, ideally below 10%. Pay off your balances in full every month. Last but not least, pay your credit card bills on time.

2. Resorting to private loans

The freshmen are generally recommended to first max out their federal loans, for which they can become eligible by filling out FAFSA or Free Application for Federal Student Aid, and only then apply for any private student loans. The reason for this is pretty simple – the interest rates charged on federal loans aren’t determined based on credit checks, hence, you are offered the same rate that’s offered to everyone else.

In addition, federal loans come with solid borrower protections such as deferment & forbearance options and income-based repayment plans, which can come in pretty handy if you face any troubles in making monthly payments in the future. As private student loans are incomparable to such federal loans, especially when it comes to such perks, they should only be used as a last resort.

3. Working minimum wage jobs

Plenty of students, especially the international ones, have to find their way through school education by taking up minimum wage jobs. They get so engrossed in such occupations that they forget about other ways they can enjoy a flexible schedule and also make more money.

For instance, any student who has done fairly well in his/her high school can tutor local high school students, and get paid a handsome fee ranging from $ 15 – $ 30 per hour for such services. Students must make the most of their talents and use them effectively for earning a living. For example, anyone good at music can play weekend gigs at local clubs, or anyone good at taking pictures can take up wedding photography assignments.

Students can even leverage their college education skills and use them to earn handsomely during their freshman years. For instance, anyone enrolled in for computer education can create websites, do graphic design work or run social media campaigns for small businesses in his/her free time.

It’s all about thinking out of the box and making every hour count!

4. Not seeking scholarships anymore

Another commonly known mistake that many freshmen make during their college years is that they stop seeking scholarships. Although there are a good number of scholarships available to high school seniors, there are many, in fact running into hundreds of millions of dollars’ worth that can be availed by college students too.

In order to learn more about such scholarships, the college students must approach their financial aid officers and let them know about their keenness for scholarship applications. The student will then be acquainted with the application process for institutional scholarships offered by the college. What more, he/she can contact them even if it’s a last-minute case.

Apart from these, freshmen must keep their search on for scholarships on the Internet too. Bagging even a few thousand dollars’ scholarship per year can make a major difference to their yearly budgets.

5. Not giving enough importance to budget

Going to college without having a well-thought-of budget in place can be the perfect recipe for disaster for any freshman. It’s not uncommon to see college students running out of money much before the completion of the college year, or in some cases even before the completion of the first term. This is where a budget can help.

But having a budget in place doesn’t automatically guarantee a financially comfortable ride. As high-school students’ expenses are usually paid for by their parents or guardians, they don’t actually understand the cost of every component in their education. As a result, any budget created by them may or may not take everything into consideration. Hence, even if a student has based his/her budget on the estimated cost of attending a college, the worked-out figure may be lower than the actual costs incurred by his/her parent/guardian.

For a student to create a more realistic budget, he/she must create a budget before the start of the college, and then revise it at a later stage, at least a month after starting attending the college. He/she might need to find an additional income stream, learn to live frugally or may need to cut back significantly on certain expenses if the actual expenses turn out to be higher than the budgeted monthly amount. Furthermore, such check must be made on a continuous basis every month.

Posted on 1 Comment

Best Online Bookkeeping Software for Small Businesses

If you tried hiring a bookkeeper before, then you know it can be expensive. You probably even considered DIYing it, but you know you can’t handle another task. You started your business so that you can do what you love, not all those administrative tasks. That’s why you need a bookkeeping software.

Bookkeeping software automatically tracks and categorizes your finances so you get a bite-sized view without the hassle of doing them yourself.

Here are some of the best bookkeeping software options that help small businesses focus on what’s important.

Best Online Bookkeeping Software: Bench

Bench helps entrepreneurs and small business owners through their cash-basis bookkeeping services. Founded in 2012, their software works on PC, Mac, and the iPhone app. You have the advantage of both software and dedicated bookkeepers working on your side with Bench.

Dedicated Bookkeepers

Working just like hired bookkeepers, Bench bookkeepers are in-house employees, so you don’t have to worry about your information being outsourced to someone overseas. Each bookkeeper at Bench goes through a rigorous background and criminal check, so rest assured that only trusted individuals have access to your books. They care about your business, want you to succeed, and work together as your virtual bookkeeping team.

Together, they work with an intuitive software to provide accurate, error-free books. For the first two months of your services, they’ll go over your books with you on the phone so you can better understand the process. These calls benefit both your team of bookkeepers and you because they get to better understand your business. 

Services

Your bookkeepers reconcile your accounts to catch any errors they may find, categorizes your transactions so you can see where you’re spending most of your money, and produces your financial statements which include an accurate income statement and balance sheet. If you make one-off transactions that your bookkeeping team can’t categorize, they’ll send you a quick message to ensure that your books are as accurate as possible. Your income statement and balance sheet (profit and loss) let you visualize how much you spend, have, and owe.

Bench connects with all major banks and leading paying platforms such as Square and Stripe. So, don’t worry about sending over your financial statements. Once you set it up, it’ll automatically sync every month. They understand that business gets tough so they won’t bother you every month for bank statements.

Timeframe

You can expect your books to be completed 15 business days after all financial documents are received. Once completed, your team will send you a message letting you know when you can review them. So, no more guessing about the status of your books.

If they see that your books aren’t adding up, they’ll make the necessary adjustments to ensure that they are tax-compliant. Additionally, if you’re behind on your books, no sweat. Bench helps you catch up on a year’s work in less than a month.

You get a Year-End Financial Package that takes all your financial information and has it ready for you and your accountant for tax season. You’ll have access to your income statement balance sheet, trial balance, journal entry summary, and general ledger.

Business taxes can be a tricky beast, which can make the process of choosing a tax provider overwhelming. Bench helps you tame it by connecting you with an expert that can help you file your taxes painlessly. If your CPA has any questions or needs to make a correction on your books, your bookkeeping team can work directly with them. It’ll save you the trouble of being the messenger. Also, everyone who needs to see your finances can log in to your account, making it easier for the job to get done.

Communication

The best online bookkeeping services will have multiple contact options. You can contact your team whenever you like via the Bench app and expect a reply within one business day. Real-time messaging lets you talk to your team and answer any questions that may be bugging you. 

Pricing

Bench services start at $135/month. But you can sign-up for a free trial to test it out. They understand that your business needs may change. If you ever need to transfer over to another software, you won’t be locked in with them. You can cancel at any time and take your books with you.

There are four pricing options that are based on monthly expenses: Micro, Boutique, Venture, Corporate. Each plan lets you customize pricing for multiple businesses, catch up on your books, and scalable plans to ensure that your business is getting the most out of their services.

Bench has your best interests in mind. While plans based on your monthly expenses may seem strange, it gives them a general understanding of how complex it’ll be to manage your books. Plus, it helps make their services more accessible to smaller businesses. 

Best Online Bookkeeping Close Second: Pilot

Pilot offers cash-basis and accrual bookkeeping services to startups and tech companies. It combines the strengths of both human and software to make sure your books are accurate and error-free. They’re a bookkeeping service that integrates a bookkeeping software that lets their team of bookkeepers use the software while you focus on your business.

Dedicated Bookkeepers

The best online bookkeeping service will have dedicated bookkeepers. Pilot is one of them. You’ll be working with the same in-house bookkeeper each month, so they’ll understand the ins-and-outs of your business. 

Services

Pilot integrates with the services you already use and automatically receives financial statements. You don’t have to worry about sending CSV files every month. They also do their bookkeeping with Quickbooks Online because most tax preps and other financial professionals know how to use the software.

Your bookkeeper works on profit and loss, balance sheet, cash flow statements, payroll, and balance sheet reconciliation. By the 15th of each month, you will receive a detailed report of your books. Once you receive your reports, your bookkeeper will also ask you any questions about the previous month financial statements.

When tax season comes, all your books will be in the Quickbooks Online software making it easy to use and access. Pilot also helps you during tax season by giving all the necessary information to a tax firm of your choice or recommending someone for you.

Communication

Support is included in the price. When you need to contact support, you’ll talk to, the person who is actually doing your books. Your bookkeeper will normally respond to your query in one business day.

Pricing

Pilot services start at $195/month. One thing to note is that when your business grows, the amount you’ll have to pay each month will grow as well. They don’t try to make you stay with them, even if you subscribed to their annual plan.

If you feel that you don’t need their services anymore, they’ll refund you for the remainder of the year. Since your books were done with Quickbooks Online you get immediate access to your books when you leave once you subscribe to Quickbooks.

Plans are based on your monthly expenses.

Best Online Bookkeeping Honorable Mention: RemoteBooksOnline

best online bookkeeping

RemoteBooksOnline is a bookkeeping and accounting service for small business owners.

Dedicated Bookkeepers

Bookkeepers at RemoteBooksOnline are certified in Quickbooks and work alongside the accountant leads to ensure that your bookkeeping is perfected.

Services

RemoteBooksOnline offers bookkeeping and accounting services. Your bookkeeper will track your financial records, invoices, and review your books weekly. They’ll enter and prepare your payroll for tax season and update year-end inventory and capital assets. They’ll also reconcile all bank and credit card accounts, create monthly profit and loss and balance sheet statements, update monthly inventory, sales, and other reports.

If you’re backed up on your books, then RemoteBooksOnline will have a year’s worth of books up-to-date in a week. Once your books are finished for the year, your lead accountant will go over them with you. If you’re happy with it and understand what’s going on, you’ll receive your Year End Financial Package for when you go file your taxes. Also, if your CPA has any questions about your books, then your lead accountant will talk to them directly.

Communication

Your lead accountant will be the person you contact with their bookkeeping questions. You’ll be able to contact them by phone or message. But if they’re not available and your question is pressing, then you can contact the support team for same day assistance as well.

You’ll hear from your lead accountant every quarter for a review meeting. During this meeting, you can discuss what’s going on in your business, financially.

Pricing

RemoteBooksOnline prices start at $95/month. Unlike the previous bookkeeping services, this one price by checking accounts. So, if you’re running one business checking account, you’ll pay the lower-tier plan. Most businesses, however, will fall into the intermediate plan which is between $130/month and $585/month.

Final Thoughts On the Best Online Bookkeeping

The best online bookkeeping service will be user-friendly and accessible. Bookkeeping doesn’t have to be an overwhelming task that leaves you frustrated. Our top choices here have plenty to offer aside from being innovative services. They can help you manage your finances without being overly complicated. Find the one that works for you and get started today.

Posted on

Is it Common for Married Couples to have Separate Bank Accounts?

marriage - joint bank accounts question

Congratulations! You’ve made the leap into a lifetime together, and now you’ve joined your families, your friends and … your back accounts? Financials are an important topic in any relationship and become even more important as you make big steps towards building a life together. But, how do you do that? Is one joint account the answer, or should your keep your own accounts?

marriage - joint bank accounts question

Some newly-weds are concerned that separate bank accounts make it easier to keep your lives separate and to split up in the case of a rough-spot in your marriage. However, it is not uncommon to have married couples having separate accounts. A 2014 TD Bank Survey of people married or in long-term relationships who have joint bank accounts also have separate bank accounts. So, there’s no right or wrong answer for your banking set-up. What works for the couple next store doesn’t necessarily work for you. There are a few important steps to make sure that you’re your love and money both have a happily ever after.

Talk it Out

Before heading down the aisle, talking about the future is important. Amongst the discussions of career and family, the important though less exciting financial talks should happen. If you have yet to have The Money Talk, then make a date and get started. Everyone manages their money differently. Some people save every penny, while others splurge at every opportunity, and there’s every style in between. In The Money Talk, you both need to define and describe how you deal with money. And you have to do it honestly. Of course, we would all like to be that person who only spends responsibly and has healthy savings accounts. However, you can’t plan your financial future for yourself and for your new life partner without a clear understanding of your monetary ways.

When you both have an honest picture of your finances, share them with each other. How do you like to spend your money? Do you have credit card debt? What’s your credit history like? What are your savings goals? When would you like to retire? What is your current bank and what kinds of accounts do you have? Do you want to rent or buy a home? If you want to buy, when and how much do you want to have saved before buying? Do you have student loans? Do you want to go back to school? Do you want to travel the world? These kinds of questions are important to ask. You won’t have answers to them all, but the asking them is an important step. Be patient and don’t worry if you find some answers surprising. It’s normal. Finances can be a stressful topic. Some people are happy to review every penny and others freak out at the thought their accounts. The talk might be simple or complicated, but either way, the hardest part will be over with: starting The Money Talk.

Once you have an understanding of your financial situation along with your personal and couple goals, then you should talk to your banker. The first meeting with your banker (or bankers, if your accounts are at different institutions) is an informational one. No papers should be signed and no accounts opened or closed. Simply ask what your options are for both joint and separate accounts. Understand the logistics and costs. With this information, you’ll know a bit more of what to expect from the accounts aspect.

Decision Time

Based on your discussions and the information provided by your bankers, you can now make a decision about what kind of accounts you would like set-up. There are a range of options, though the three most basics ones are: one joint account, one joint account with two separate accounts, or two separate accounts. Any of these choices are great so long as you and your partner are comfortable with it. Pick the best option for the two of you, based on your needs and financial styles, not based on what you think you should have.

Set-up Your Accounts

When your decision is made, you can then start planning your accounts. Perhaps nothing will change. Perhaps you’ll combine your spending accounts for bills and monthly expenses, but keep separate savings ones. Perhaps you’ll merge everything, including some of your investments. Whatever the combination, you need to set-up certain check-ins. Responsibilities of who pays which monthly bill need to be decided. For large purchases, like a shopping trip or new computer, some couples will want to have a check-in before the purchase. For joint savings efforts, like vacations or a home down payment, some couples will want to discuss contributions, or even set up automatic ones. With these roles defined, you can move forward with your new financially joined lives.

Keep On Talking

Of course, finances change as life does. With promotions and layoffs, holidays and vacations, births and deaths, different situations require emotional and pragmatic consideration. When these changes arise, you’ll need to address how that will affect your spending. For good or for bad, these conversations need to happen. No one likes surprises (unless it’s the surprise of winning the lottery!), so it’s essential to have an open dialogue about money matters. Be prepared to share your concerns and expectations, and to change your earning and spending based on what’s needed for your relationship.

Conclusion

There is no one correct way to set up your financial systems as a married couple. With a range of options, you need to figure out the best one for you two. And there’s nothing to say that you might change your account set-up in the future. As your marriage evolves, your finances will, too. It’s important to stay honest, to be clear and direct. Your banking style can be wildly different from your partner’s, but with good communication and planning, that difference will not only not be a problem, but could provide valuable new perspective. Building a happy marriage takes lots of love and hard work. Put some of that hard work towards your collective finances and it will certainly pay off.

Posted on

Best Balance Transfer Credit Cards To Apply For in 2019

best balance transfer credit cards

What is a Balance Transfer Credit Card?

A balance transfer credit card is a great option for those of us looking to consolidate debt in 2019 and move closer to financial freedom. Balance transfer credit cards simply allow you to transfer your debt from a high-interest credit card to one with a lower interest rate, sometimes 0% for up to a year.

When is a Balance Transfer the Right Option?

Balance transfers are a good idea for someone that has a reasonable amount of credit card debt on a high-interest credit card. The majority of reputable balance transfer credit cards require that the applicant have good to excellent credit (around 690 – 850). This isn’t a great debt consolidation option for someone hoping to repair their credit.

How Does a Balance Transfer Work?

Your existing credit card issuer will first need to approve all or part of the balance transfer request. It can take up to 3 – 5 weeks for a balance transfer to take effect, so you will need to continue making payments on your old account until the transfer has been completed.

There are some fees and limitations that apply to balance transfer credit cards. These include:

  • Balance Transfer Fees: Balance transfer fees are typically 3% to 5% of the transfer amount.
  • Interest Rates: Most balance transfer credit cards offer a 0% APR introductory rate; however, interest rates apply after this introductory period, just as they would for any other credit card.
  • Annual Fees: Ideally, a balance transfer card won’t include annual fees; however, a few do. It is important to be aware of this when looking for cards.

The criteria above are highlighted for each of the cards we’ve identified in this post.

The Top Balance Transfer Credit Cards for 2019

BankAmeriCard Credit Card

Balance Transfer Fee: 3% of the amount transferred, with a minimum of $10.

Introductory APR: 0% on purchases for 15 months.

Regular APR: 12.99% to 22.99% variable

Annual Fee: $0

Recommended Credit Score: 690 – 850

Rewards: Access to FICO score for free once per month.

Pros: No annual fee and a great introductory offer – $0 balance transfer fee on transfers made within the first 60 days of opening an account. If you are able to pay down your debt quickly, you may not incur any interest or pay any fees.

Cons: Comparatively high balance transfer fee after the introductory period, and a comparatively shorter introductory APR period. There are also no additional rewards associated with this card.

Chase Slate Credit Card

Balance Transfer Fee: 5% of the amount transferred, with a minimum of $5.

Introductory APR: 0% on purchases for 15 months.

Regular APR: 15.99% to 24.74% variable

Annual Fee: $0

Recommended Credit Score: 630 – 719

Rewards: No rewards, but cardholders can check their FICO score once a month for free.

Pros: No annual fee and a great introductory offer – $0 balance transfer fee on transfers made within the first 60 days of opening an account. This card is also available to those with average credit, compared to the rest of the cards on this list, which require excellent credit.

Cons: No rewards, and account holders can’t transfer balances from other Chase credit cards or non-credit-card debt. Transfers can’t exceed $15,000 in total, so this card isn’t a good option for someone with relatively high credit card debt. It also has a comparatively short introductory APR period.

Citi Simplicity Card

Balance Transfer Fee: 3% of the amount transferred, with a minimum of $5.

Introductory APR: 0% on purchases for 21 months.

Regular APR: 14.99% to 24.99% variable

Annual Fee: $0

Recommended Credit Score: 690 – 850

Rewards: None.

Pros: No annual fees, no late fees, and an extremely long introductory APR offer. This card is ideal for someone that needs a little longer to pay down their debt. Citi also allows you to transfer any type of debt to your card, including non-credit-card debt such as student loans and auto loans.

Cons: No rewards, and account holders can’t transfer balances from other Citi credit cards.

Citi Diamond Preferred Card

Balance Transfer Fee: 3% of the amount transferred, with a minimum of $5.

Introductory APR: 0% on purchases for 21 months.

Regular APR: 13.99% to 23.99% variable

Annual Fee: $0

Recommended Credit Score: 690 – 850

Rewards: None.

Pros: No annual fee, and a comparatively long 21-month introductory period. This is an excellent card for someone that needs longer to pay back their debt.

Cons: No rewards, and account holders can’t transfer balances from other Citi credit cards.

Discover it Card

Balance Transfer Fee: 0% on balance transfers for 18 months.

Introductory APR: 0% on purchases for 6 months.

Regular APR: 11.99% to 23.99% variable

Annual Fee: $0

Recommended Credit Score: 690 – 850

Rewards: Earn 5% cash back at gas stations, grocery stores, Amazon.com, or wholesale clubs each quarter. Cash back can be redeemed at any time, it never expires.

Pros: This is the only balance transfer card on this list that offers robust cash back rewards, so it is worth holding onto long after your debt has been paid off. If you have good to excellent credit and are able to pay down your debt quickly, this card is an excellent option. There are also new-cardholder bonuses that grow the more often you use your card for everyday purchases.

The 18 month 0% balance transfer fee period isn’t as long as the two 21-month options offered through Citi, but it still stacks up nicely against introductory offers from other balance transfer credit cards.

Cons: Comparatively short introductory period. Unless you can pay your debt off within six months, you will likely incur interest charges with this card.

Top Recommendations of Balance Transfer Credit Cards

Best Long-Term Value

The Discover it MasterCard is by far the best long-term value. It is the only card that offers rewards on everyday purchases, and its 18-month 0% transfer charge is a strong introductory offer.

Best Introductory Offer and Flexible Repayment Options

For those that may need longer to pay off their debt that also has the bulk of their debt in student loans or an auto loan, the Citi Simplicity card is the best option.

Posted on

How to Manage Multiple Credit Cards

For those entering into the credit card arena for the first time, how do you decide which card is right and best to use? There are just so many cards out there, each offering their own sets of rewards and incentives and bonuses, so from all of these options, how on earth do we pick just one card ? Well there’s great news for you, and that news is that you don’t have to stick with just one single credit card ever.

You can have as many cards as your credit will approve you for, but although you can have more cards to your name than you thought you ever could, this doesn’t by any means translate that you should apply and hold onto every card application that you see. Responsibly managing even a single card is hard work as it is, and with every card you add to your repertoire the job only gets harder and more complicated. Below is a breakdown of how you can manage multiple credit cards all at once, and do so responsibly.

 

Control the cards.

The biggest note to remember is that you need to remain in control of the cards and the “opportunity” that they represent. Yes, a credit card does mean that you spend credit rather than your own money when you purchase things, but like we remind you of quite a bit, credit is not your money but somebody else’s, and they are not looking to do you any favors by having you borrow their money.

When you do use your multiple cards, keep track of what you use them on, and the more cards you have and use, the more methodical you should be when pulling out the plastic. Don’t carelessly use cards based off which one you think haven’t used in a while or which one is your simply your favorite, but rather use them as they help you best.

This method of using cards that serve you best can be quantified by what kinds of purchases offer you the most rewards for specific purchases. Or, if the rewards are for the most part even all across the board for your general purchases, then use one card for every different area of spending: use one card just for fill ups at the gas station, one card just for groceries and necessity purchases of the like, and another card for recreational actives like movie tickets and things of that nature.

Keep the purchases you make on the cards organized, and this will help you keep mental track of how the cards are being used and how much you have spent on them recently that much easier come time to settle up on the monthly bill.

 

Know yourself.

Before you begin to sign up for multiple cards, you should first assess yourself and determine what kind of a spender you are. When you look in the mirror, do you honestly see the face of a responsible spender looking back at you? Even if you have answered yes to this question, you still should reconsider having multiple credit cards.

NOTE: When we say say multiple credit cards, we don’t mean two or three, but rather four or seven or anything more than that. Multiple cards. Second, having multiple cards does not mean that having more cards is a bad idea, because in fact, having multiple cards can be, when used responsibly, a huge help to attain purchases that otherwise would be impossible without upstanding available credit.

So before you consider adding more credit cards to your already existing line up, review how your spending has looked in the past with your credit cards. Is your credit history riddled with late and overdue payments, and even credit limits being reached? These factors are some pretty bright signals that should be considered in the conversation about whether or not you should invite more credit cards into your wallet. Know what kind of spender you are.

 

Know how credit cards work.

Remember how credit cards work: lenders let you use their money in exchange for the possibility of paying interest on late payments and over-drafting of allowed credit limits. So unless you want to pay up on fees that you very easily could avoid, keep your credit limit in mind when the cards have to come out, and keep your payments flowing on time, every time.

Banks and lenders only make money off of you when you let them, so stay on top of every single card that you have active that your payments are regular and frequent.

 

Does each card have a real reason to be there?

We all think we need more, and it doesn’t really matter what it is for, we just feel we need more. Yes, you can apply for as many cards as you want (keeping in mind your credit score is effected every time), but do you really need multiple cards? More cards can be useful for various situations, but to have multiple and active cards all at once just to have more can lead to more of a curse than a blessing.

So consider and reconsider if you truly need more cards than what is absolutely essential.

 

Do the pros outweigh the cons?

Before you open up another credit card, think about having this card forever and never being able to close it. Not that you cannot close out a credit card, thinking about having this card for the long term will help you determine if this card is truly worth signing onto.

Along those lines, you also should consider that some cards have annual fees, so be sure that the benefits and rewards outweigh the fees. Make sure you really are making a wise choice before you sign onto another credit card, and not just signing on to chase more rewards.

 

To summarize, consider and reconsider the amount of cards you own and be diligent with everything that you swipe on. Keep careful track of everything you place onto a card and try to keep your purchase history organized to specific cards, as this will help you remember what purchase was made on which card. While you swipe, keep in mind what your credit score looks like before and after you sign onto more cards. If not kept track of, your credit score could get ripped to shreds with an abundance of credit cards running unattended to.

As always, remember that credit is not your money, but money that is being lent to you with the condition that anything you spend outside of their restrictions result in you handing them over some of your own money. So regardless of how many cards you have, whether it’s one or 12, keep your payments on time and in full. If you can honestly and responsibly keep track of every single card you have in your wallet and keep them paid up and organized, then there is no reason you should run into any problems, regardless of how many cards you have. Stay alert out there, credit users.

Posted on

Tips to Raise Your FICO Credit Score

Your FICO credit score is one of the major factors a lender will consider when determining whether or not to approve you for credit. There are many things that go into your FICO score, which means that there are things that you can do to improve it. Careful attention to your FICO score can help you build your credit.

Here are tips that can help build and raise your FICO score

Apply for credit cards

You may be wondering if applying for credit cards can hurt your credit, but, just the opposite is true when you use them responsibly. The same goes for installment loans. Those with no credit will be a higher credit risk than someone who has demonstrated responsibility by making payments regularly and on time.

Make every payment on time

When you make your payments late, this shows up on your credit report. Lenders do not like to see you making a habit of late payments. As your FICO score is computed, 35% of the score is dependent upon you making timely payments for credit cards and loans. Never missing a payment is the best way to get the most from this factor. The longer the history that you have of making payments on time, the better this part of your score will be.

Pay off balances in full each month

While this is difficult for some, especially those who have accumulated large amounts of debt, making the largest payments you can afford is smart. This will help you lower the balances. Once you get your credit cards paid off, try to pay the entire amount that you owe each month. Never make less than the minimum payment required. The lower your overall balance, or credit utilization, the better your FICO score will be.

Communicate with creditors if there are problems

If you fall on hard times financially, contact your creditors before you begin to miss payments. Often they can work out a temporary solution, or negotiate a payment plan with you before your credit is adversely affected. When you are making regular payments, even when you are struggling financially, you can often keep your credit score from dropping too far.

Don’t rush to close credit cards to raise your FICO score

Closing credit card accounts can actually have a negative impact on your FICO score, especially if you have had the credit card for a long time. If you close credit cards that are paid in full, yet you still have others open that you carry a balance on, then you are going to see your credit score drop because your credit utilization will increase. This means that you will be using a higher percentage of your available credit. You are going to be better off keeping cards open when they have a zero balance, particularly if you have a long history with that creditor.

Keep track of your credit utilization

If you have a high credit utilization or a high debt-to-credit ratio, contact your creditors to see if you can have your credit limit raised. This can help improve your ratio and also your FICO score.

Don’t open too many accounts too close together

This is especially important for new credit users. When you are just starting out, one or two cards is plenty. Even if you have well-established credit, opening too many credit cards in too short a time period will have a negative impact on your FICO score.

Make sure your creditors know how to reach you

Always notify your credit card companies if you have an address change. If you miss a bill because they moved, it will not be their fault. You will likely see a change in your FICO score as a result. This is a common mistake, and one that is completely avoidable.

Immediately report if your card is lost or stolen

Reporting a lost or stolen card as soon as you are aware of it is crucial. Most credit card companies will not hold you liable for unauthorized purchases under these circumstances. If you do not promptly report it, you could be held responsible for large purchases. This will also affect your FICO score.

Check your credit report regularly

You should check your credit report at least once a year. Make sure that there are no inaccuracies. Most free credit reports will get information from the three major credit bureaus—TransUnion, Equifax, and Experian. Checking your credit report will not hurt your credit score. It will help you keep tabs on any accounts that you are responsible for. If you notice any inaccuracies, contact those creditors immediately to have the issue resolved.

Your FICO score is important. You should know what it is and make efforts to keep it solid or improve it. Use these tips to keep your credit great!

Posted on

How Many Credit Cards is Too Many?

 

When it comes to your credit score, bigger, and more, is better. With the exception of how much debt you have (obviously you want that as small as possible if not gone completely), you always want bigger with your credit line. If you have more credit cards, then your credit limit rises, which means you can have that much more available credit to your name. Although more credit cards is a good thing, not being able to manage them wisely can end up being pretty devastating to your score. With all these pros and cons, how can you decide what the magic number of open and running credit cards is right for you and your situation?

Below are some factors to consider in deciding just how many active credit cards is right for you to have in your wallet at once.

 

Why would I want more available credit?

Credit lenders check to see that you are wise with the amount of credit you already have available and at your disposal, and you want them to see you as responsible as possible. A single credit card, for example, may give you $1000 in available credit, and if you are wise in your credit usage, you keep your usage to below 50%. That means that you only have about $500 dollars of for-the-most-part guilt free usable credit that won’t be too heavily scrutinized by credit lenders.

Now $500 dollars is not so bad in terms of guilt free credit for when you are first starting out, but as time goes by, the expenses that need to be immediately covered get taller and taller, and you may want to stretch out and use the other $500 dollars of available credit that you otherwise leave ignored and unused. Although it may seem that you are just using what it rightfully yours, if you spent $999 of an available $1000 credit limit, guess what that tells your lenders? “I like to spend as much money that isn’t mine as possible!”

Jokes aside, you don’t want to look like you abuse your credit. To avoid going over that sweet spot of 30% to no more than 50% of your credit, expand how much available credit you can use. You can do this by either appealing for a larger credit limit on you already existing credit card, or you can apply for more credit cards. For example, your already standing $1000 limit gets raised to $1500, and you add two more credit cards each offering a $500 limit, and you have $700 in expenses due. Your debt to credit ratio went from 70% of a $1000 limit, to 28% of $2500. By expanding how much credit is available to you, you dropped your ratio all the way from being in the danger zone (70%) safely into the green sweet spot (28%). Lots of numbers flying at you, we know. Just bear with us.

Your available credit works as a pool that you can constantly add to and grow, and if can realistically keep track of every available card that you add you your pool and keep accounts in balance and in check, then more cards can be a great help to you. However, the more cards you add, the more difficulty it becomes in keeping everything straight.

 

 

No one card is accepted everywhere

Keeping one single card is much easier to manage than five or six, to be sure. One single bill, one single payment, and one set of rewards to monitor and keep track of. The disadvantage of having a single card is that your limit can only get so high, and your credit service may not be accepted everywhere. Visa, MasterCard, Amex, and Discover are some of the major services, and as we’re sure you can recall from time spent out and about shopping for goods, not every location accepts the same cards.

Sadly there is no universal currency out there that is accepted by all vendors with absolutely no fees (other than cold hard cash, but who uses coins and paper anymore??), but when you are out to dinner and are rocking a cashless wallet with only an Amex, and they only accept Visa, what are you going to do? We’ve all had this nightmare at one point in time, and the only way to avoid this scenario, besides asking right up front what cards they accept every time you go outside, is to get the most common credit card services.

 

Don’t open cards just for the rewards

A misconception that may be reached here is that you can just keep opening accounts and rack up a whopping pool of available credit that you can dip into at any time the mood strikes you. If this sounds like a great way to live to you, know that every time you open an account, a lender checks your credit, which dings your score. To that end, if your account goes unused for too long, or is deemed to be too risky to keep open by the lender, your account will be closed which also dings your score. So before you think about applying for 40 or so new credit cards so that you can soak up all the rewards, think about your already fragile and delicate credit score and the stress that it will endure as you go about opening new accounts and closing old ones.

 

So how do I know how many cards I should have?

The bottom line is that there really isn’t a set number of cards that blankets everybody’s financial and credit situations. Some individuals can keep track of an endless list of pending payments and billings, and others can’t even keep track of the one credit card they already do own, and even though it is set to “Automatic Bill Pay” online, it still causes them stress. It depends on how well you can keep track of your expenses and bills.

Opening and having access to more credit cards, such as two or three, or even as high as six or seven can have its perks, but if you cannot handle the mental strain that ensues to keep track and balance all of your accounts and not miss or be late for a single payment, then keeping your card count down may be best for you. Same goes for having less cards. One single bill and one set of rewards to keep track of can be freeing and stress-less, but it does limit where you can use your card and what kind of rewards you can have at your disposal.

 

How many can you manage best?

These factors in mind, consider if you can handle having two to three credit cards. Having different cards opens the door to varying rewards, raises your usable credit limit and also protects you from the embarrassing but at some point inevitable “I’m sorry ma’am, but we don’t accept that kind of card here”. Only acquire what you can realistically handle, but if you do decide to get more cards, learning how to balance your accounts and remain on top of the ball is a useful skill to obtain.

 

So as of right now, how many cards and accounts do you think you can honestly manage and manage well?

Posted on

Top High Yield Online Savings Accounts For 2018

With the internet, we enjoy a considerable amount of freedom. Thanks to the convenience of online commerce, we shop, send money, sell, and bank all with the touch of a button. We can participate fully in e-commerce no matter where in the world we are, particularly in the area of the high yield online savings accounts.

Whole institutions have moved entirely online in the last few decades. Many businesses have moved online to keep overhead costs low, which results in lower costs to the customer. The banking industry is no exception. With the emergence of convenient online banking, customers can shop around for the best rates. And, they can do this all from the comfort of their own laptop or smartphone.

Top High Yield Online Savings Accounts

The area of online banking has been particularly beneficial for consumers is in high yield online savings accounts. Top high yield online savings accounts typically feature rates of 1% or more. This may not seem like much, but compared to the traditional bank average of 0.07%, the savings you’ll enjoy by going online will add up quickly.

We’re here to give you our top picks for the best deal in top high yield online savings accounts. We’ll help you decide for yourself with all the best information in hand. We took a deep dive into all of the pros and cons of each online banking institution and found some really great options. We’ll tell you which banks have the best interest rates. We’ll also tell you which ones have great rewards and who waives monthly fees.

Here’s a roundup of our top picks for the top high yield online savings accounts.

Best Interest Rate Performance
Synchrony 1.65% APY
Marcus (Goldman Sachs) 1.60% APY
Ally 1.60% APY
Great Interest Rate Performance
American Express National Bank 1.55% APY
CIT Bank 1.55% APY
Honorable Mentions
Alliant Credit Union 1.50% APY
Discover 1.50% APY

Best Interest Rate Performance of the Top High Yield Online Savings Accounts

Synchrony – 1.65% APY

A high yield online savings account interest rate isn’t the only thing you’ll be enjoying with Synchrony’s online savings account. Synchrony doesn’t require any minimum balance. Plus their 1.65% APY is what you’ll be earning on your funds, no matter what the account balance is.

Access this FDIC insured account via phone, web, or mobile device. The optional ATM card means you can also access your account locally to withdraw or deposit cash. ATM fees are reimbursed. You can withdraw money up to six times per billing cycle. Not too shabby, right?

Synchrony also provides several ways to keep this high yield savings account funded. Synchrony features automatic deposit set up and mobile check deposit service. Best yet, Synchrony charges no monthly fee.

Marcus by Goldman Sachs – 1.60% APY

Similar to Synchrony, Marcus features incredibly convenient online banking with their high yield online savings account. All you need is a minimum of $1 to open and maintain an account with Marcus. You can earn interest immediately and you’re permitted to deposit up to $1,000,000 to a single account.

Marcus charges no transaction fees. They allow up to six withdrawals per monthly banking cycle. Users can make deposits via interbank transfer, transfer from an external bank, domestic wire transfer, or check by mail. One thing Synchrony does feature that Marcus does not is an ATM card.

Ally Bank – 1.60% APY

Ally Bank recently increased their APY to 1.60% from 1.50%. The increase is just one of the many advantages of choosing Ally’s high yield online savings account. You’ll also be able to use Ally’s e-check deposit system to fund the account. You can also schedule deposits up to a year in advance via their online site or mobile app. Ally offers no monthly fees, unlimited deposits, and no minimum opening balance.

Great Interest Rate Performance of the Top High Yield Online Savings Accounts

American Express National Bank – 1.55% APY

Although not as enticing as Marcus or Synchrony, American Express National Bank still comes in strong with a 1.55% APY. However, there are no ATM banking or checks available with this high yield online savings account. But, there are also no minimum requirements and no monthly fees.

Deposits earn interest immediately. Up to six withdrawals per monthly cycle can be made over the phone or online. No mobile app is available for American Express savings accounts, but online banking can be accessed 24 hours a day.

CIT Bank – 1.55% APY

Like American Express National Bank, CIT boasts an enticing 1.55% APY with its high yield online banking account. Transferring money internally is not an option as CIT does not offer a checking account option. All of its online services are free, there are no monthly fees, and no minimum balance after the opening balance of $100 is deposited.

CIT is strong on online security. They offer transaction and activity monitoring, layered security, antivirus protection, firewalls, 128 bit SSL encryption, secure messaging, and automatic sign out.

Honorable Mentions of the Top High Yield Online Savings Accounts

Alliant Credit Union – 1.50% APY

Alliant may not offer a rate with its high yield online banking account as high as banks like Synchrony or Ally. But, it comes in strong with other benefits such as mobile and ATM banking. Mobile banking is available 24 hours a day, seven days a week. If you prefer depositing your checks via the mobile app, it’s accessible anytime.

There are no monthly fees as long as you enroll in Alliant’s e-statement service. The only hiccup with Alliant is that you have to qualify to become a member. But, Alliant does offer several ways of doing so.

Members of Alliant’s program “Foster Care To Success” include employees or retirees of qualifying companies, current members’ immediate family members, qualifying organization members, and qualifying communities’ members. They are all eligible to partake in Alliant’s high yield savings accounts.

Discover – 1.50% APY

Discover offers a big name in banking and an attractive APY on its high yield savings accounts. No monthly balance is required, with no minimum opening balance. There is also no monthly maintenance fee. Online banking is available 24/7 via Discover’s website.

Top High Yield Online Savings Accounts Conclusion

The top high yield online savings accounts featured above are some of the best for 2018. As with anything, do a little research to find the best option for you. Can you get by without an ATM card? Do you anticipate transferring funds often? What do you need to have from top high yield online savings accounts?

Want to learn more about money saving strategies? Check out Walletpath’s guide to becoming debt free.