Category: Credit Cards

5 steps to build credit to qualify for a car loan

Dear Erica,

My granddaughter just got a secured credit card with a $200 limit. She wants to finance a new car for $19,000 in a year or earlier. What does she have to do to obtain this? – Harry

Dear Harry,
You are kind to ask on your granddaughter’s behalf. The short answer is yes, she can get a car loan of that size, but only after she builds a reputation of being a responsible borrower. That takes time and effort. She also must prove to a lender that she can afford the monthly payments, which means she needs an income that is enough to cover all her expenses as well as a hefty car payment.

Here is the strategy for your granddaughter. As a (presumably) young adult, she needs to take control over her own financial life, starting today.

1. Charge in small, steady increments

It’s great that your granddaughter has a secured credit card because I would have recommended it! Now what she needs to do is use the card in a very specific way.

Credit reports need to list a steady stream of positive activity, so on a monthly basis, she needs to keep her credit utilization ratio as low as possible. For a credit line of $200, I’d recommend she spend a maximum of $60. That will prevent her score from getting dinged for using too much of her credit line.

A credit score can be calculated at any point of a billing cycle. If you owe too much, even if you plan on paying it off completely, points will be shaved off your scores. (FICO and VantageScore are the two most common scoring companies, and their scores range from 300 to 850.)

2. Pay on time

No matter what, get payments in by or before the due date.

The credit card issuer will then send that information to the credit reporting agencies, and it will be factored into her scores favorably. Consecutive on-time payments will result in a higher credit score, so as each month passes without a break in that payment history, her scores are sure to increase.

3. Delete the debt every month

With a credit card, you do have the option to pay partially – but don’t. Instead, your granddaughter should send the credit card issuer every penny of the balance.

Remember, she’s proving to a future car lender (as well as any other creditor, such as a landlord or business) that she’s financially smart and stable. By never carrying over a balance, she’s showing exactly that.

4. Keep a sharp eye on all credit activity and progress

Your granddaughter should check her online credit card statement at least weekly. Her credit card statement will indicate where she charged and how much she currently owes, and checking her statement gives her the opportunity to scale back charging if she’s close to the 30% credit utilization mark.

After using the secured card for about six months, your granddaughter can pull her credit reports from AnnualCreditReport.com. There are three credit reporting agencies (TransUnion, Equifax and Experian) and she’s entitled by law to get all three reports from those bureaus for free once per year. The bureaus are also offering free credit reports every week through April 2022 due to the COVID-19 pandemic.

She should read her credit reports to make sure they’re correct, and if she sees anything wrong, she should dispute it. She does not want to be turned down for her dream car over a mistake on her credit report.

5. Get a second credit card

After a year of following this credit-building plan, her scores should be on an upward trajectory. To really hike the numbers, though, your granddaughter should consider applying for an unsecured credit card and using it in the same fashion.

Your granddaughter should seek a credit card that fits her credit rating, so she won’t get denied. Applying for a credit card or loan will result in a hard inquiry on her credit reports, which will lower her credit score a bit temporarily, so she should only seek credit when she needs it. When your granddaughter has two credit accounts, she should use both as she has been using the one.

Eventually, your granddaughter’s credit scores should be in the mid-700s, and at that point, most lenders will consider her to be an appealing borrower. As long as her income is sufficient and secure, she is free to go vehicle shopping.

Just be aware that it’s also easy to bite off more car loan than you can handle financially. To reduce the amount borrowed as well as the monthly payments, make a large down payment. If she hasn’t yet started saving for that, she should do it now.

As your granddaughter’s credit stands now, she most likely won’t qualify for the best car loan rates if she can qualify for a loan at all. I would encourage her to follow the steps outlined above that will help her get the car she wants but know that it will take some time and patience to build a decent credit profile for her to qualify for a substantial car loan.

See related: Buying a car with no credit: 6 things to know

Source: creditcards.com

By Leon Hoffman July 13, 2021. Account Management, Elderly Care Tips Account management, build credit, Business, car, Cashing In Q&A columns, COVID-19, Credit, Credit Cards, credit report, credit score, Debt, Debt Management, down payment, Expert Q&A, Finance, Financial Wize, FinancialWize, Life, loan, Make, News, Saving, second, Shopping, will

How entrepreneurs can protect themselves from credit card fraud

The gig economy has led to an explosion of entrepreneurs looking to start their own businesses. In fact, QuickBooks’ 2020 State of the Self-Employed report found 28.4% of U.S. adults identified as self-employed at one point or another during 2019.

One incredibly important aspect of running your own business is security and fraud prevention. Yet, unfortunately, many small business owners underestimate the risk of bad actors and thieves targeting their establishments – whether it be cyberattacks (43% of all data breaches include small businesses, according to a recent Verizon study), cash theft, shoplifting or credit card fraud (an estimated 27% of online sales with merchants were found to be fraudulent transactions in a 2019 American Express survey).

While large businesses typically have hefty budgets to spend on fraud prevention, as a self-employed person or the owner of a small mom-and-pop shop, you may not have a lot of resources at your disposal – especially at the tail end of a global pandemic. However, there are some steps you can take to protect your business from credit card fraud no matter its size and lower the risk of fraud overall.

Protect your point-of-sale (POS) system

“When it comes to point-of-sale fraud, what businesses are most likely to run across is card skimming,” said Jason Glassberg, cybersecurity expert and co-founder of Redmond, Washington-based Casaba Security, in a previous interview.

This could be physical, such as when a chip is inserted into the POS device by a local criminal, or it could be digital, where the POS system is infected with card number-stealing malware. There is also the ever-present threat of card skimmers and shimmers, which are devices that can capture card data from EMV chip cards.

To combat this threat, provide as much physical security to your POS system as possible, Glassberg said.

“That means locking up POS devices during closed hours so they can’t be accessed by anyone except a manager,” he said.

Also, inspect POS devices at least a couple of times a week, “looking for anything out of the ordinary such as loose housing, exposed wire, bulky fitting or anything that seems out of place on the device,” Glassberg noted.

Finally, stay up to date on any software updates to your POS system.

See related: How small businesses can safely store card details

Card-not-present (CNP) fraud occurs when someone fraudulently uses a credit card number online, over the phone or in another manner where they don’t have to show you the physical card. In fact, a study out of Javelin Strategy found that CNP fraud is 81% more likely to occur compared to POS fraud. Further, retailers could lose as much as $130 billion from CNP fraud by 2023.

One of the best things you can do as a business owner to prevent CNP fraud is to require the consumer to have the card verification value (CVV) number for their card, whether the order is placed over the phone or online, said Glassberg. This three or four-digit number can typically be found on the back of the card.

“You can also ask for the ZIP code associated with the card to weed out many of these fraudulent attempts,” Glassberg said.

Also, be on the lookout for potential “friendly fraud,” or credit card chargebacks initiated by customers looking to reverse a charge on their account for fraudulent purposes, in turn hurting the business they purchased from. In genuine circumstances, a customer can dispute a purchase if their bill was incorrect, the item is damaged, etc. For more information on what to do in these situations, consider reading the following expert business credit column on false disputes.

See related: Can a collector target my business bank account over personal credit card debt?

Get third-party help

According to Keeper Security’s 2019 SMB Cyberthreat Study, 60% of small business owners said they “do not have a cyberattack prevention plan” and 25% “don’t even know where to start with cybersecurity.”

Even if you don’t have money to hire a cybersecurity staff, you don’t have to shoulder all the risk alone. There are companies, such as NoFraud and Signifyd, that specialize in fraud detection to help online merchants identify a possible risk before the sale goes through.

Dave Hermansen, CEO of e-commerce training company Store Coach, depends on such services to give incoming orders a “pass” or “fail” grade based on advanced algorithms, order histories tied to email addresses and other fraud detection methods.

“If an order gets a ‘pass,’ any loss you incur due to fraud is covered by [the fraud detection service],” said Hermansen in a previous interview. “If it is labeled, ‘fail,’ it’s up to you whether or not you want to ship the order – you will not be covered for fraud on those orders.”

Hermansen said his firm immediately cancels and refunds any orders that are marked “fail.”

See related: Retailers will lose billions to online fraud by 2023: Could a new Amex tool help?

Prevent fraud through training

If you have employees, their habits can put your business at risk (especially as many employees have transitioned to a work-from-home environment sans an in-office security team, guaranteed VPN or in-person “phishing 101” lectures). Make sure employees are aware of threats and train them on what to do and what not to do, said Yair Levy, professor of information systems and cybersecurity at Nova Southeastern University, in a previous interview.

How to dispute fraudulent charges on a corporate credit card

Make the move to mobile

As consumers increasingly use their smartphones to shop, there’s a security benefit to small business owners choosing to upgrade their equipment to accept mobile payments.

If you can accept payments from mobile wallets like Samsung Pay, Apple Pay and Google Pay, there is no credit card to be inserted into the payment terminal, which can cut down your risk of fraud, Glassberg said.

Consider cyber insurance – and a vulnerability test

As fraudsters and scammers are constantly changing their tactics and evolving, no business is 100% safe. A cyber insurance policy could save your small business from potential bankruptcy, considering it would pay for legal fees, customer notifications and other costs incurred if you do experience a data breach.

“As an added measure, if you have the means to do so, I would also highly recommend hiring a cybersecurity firm to carry out a ‘penetration test’ of your business network and POS system to see how vulnerable you really are to an attack,” Glassberg said.

An ounce of prevention could not only protect your customers, but it could save your business as well.

See related: Is your small business protected by cyber insurance? It should be

The bottom line

With the tips provided above, you can take the steps to protect your small business from fraud of all kinds, including credit card fraud, and ensure your information (and that of your patrons) is protected.

Should you ever experience other security threats related to your business (think: if your business credit card is stolen) be sure to contact your credit card issuer immediately, place a hold on the card and file a dispute if necessary; you should be able to easily contact your issuer using the number of the back of the physical credit card.

Source: creditcards.com

Residual interest: What it is and how it works

You’ve been running a credit card balance for a few months, but finally, you have enough cash on hand to zero out the statement balance.

With great relief – and not a little pride – you pay it off. Thank goodness you’re done with that debt.

But wait: did you also pay the residual interest?

What is residual interest?

Residual interest is the interest that’s accrued on the unpaid credit card balance all this time that you’ve not been paying it. It’s also called trailing interest – because it trails into the next month.

The federal Consumer Financial Protection Bureau investigated residual interest charges on credit cards in 2015 as part of its biennial credit card report to Congress.

“We recognized, based on our research, that there is some confusion about this so-called ‘ghost charge,’ said Wei Zhang, the bureau’s credit card program manager. “People wanted to know, ‘What is this? Why is it happening?’”

The bureau did not find issuers doing anything illegal; however, they did discover that many details were buried in the fine print of credit card agreements. Card owners often were unaware of or did not fully understand what happened if they failed to pay their bill in full or how interest on the balance was calculated.

Before we get into those details any further, though, let’s start by explaining some terms:

Billing cycle – That’s the time between two bills. Many billing cycles are about a month long.
Closing date – That’s the date on which the billing cycle ends. When the closing date occurs, the card will post a statement balance. That’s the amount of purchases you charged during this billing cycle.
Grace period – This is the period of time between when the billing cycle closes and your payment is due. This can be a few weeks, or even up to a month.
Due date – This is the last possible day to make your payment without penalty. After this day, interest will start to accrue on the balance.

That interest that accrues? That’s residual interest.

See related: How to lower your credit card interest rate

How does residual interest work?

Here’s an example of how residual interest comes into play:

You have a credit card with a billing cycle that closes on the 15th of every month. On March 15, your statement balance is $1,200.
Your due date on the bill is April 14th. But when the date arrives, you can only afford to pay $900 – meaning you leave a balance of $300 on the credit card.
That $300 starts accruing interest the very next day. How much interest? Depends on your particular credit card. Let’s say, for this example, your card charges an APR of 22%.
To figure out how much that will be, divide the APR by the number of days in the year. So 22 divided by 365 – 0.0602%.
Multiply this by your current $300 balance, and you get 18.06 cents. That’s the amount of residual interest you will get charged on the balance each day.
By the time the next month’s due date rolls around, 30 days later, you will owe $5.41 in residual interest.

This is where things get tricky. Maybe you decided to clean up your financial act. You’ve only charged $200 this month, and now you can afford to pay off both the new balance and the $300 from last month. Everything’s squared away, right? Nope, not so fast. You still owe that $5.41. And if you don’t notice it and neglect to pay it, it will continue to accrue interest.

Or, you do pay the entire bill by sending a check in the mail. Interest may continue to accrue on the balance between the time you mail the check and the time the bank receives it and cashes it. Remember, once you enter the land of accruing interest, there is no more grace period.

“Because it accrues after the billing period closes, [residual interest] won’t appear on your current statement – meaning that this could be a surprise amount you discover in your next statement,” said Megumi Smisson, who discusses personal finance on her podcast Ms. Money Moves and her website, Money With Megumi. “Or, worst case, you think you’ve paid off your card, don’t check your next statement to make a payment, and incur a late fee and potentially damage your credit.”

See related: What happens when you miss a credit card payment?

Do all cards charge residual interest?

Residual interest is a common credit card feature. Supposedly, there are banks that don’t charge it, though those are increasingly hard to find.

“I’m not saying it’s impossible, but … [scoring a credit card that doesn’t charge residual interest] is kind of like finding the pot of gold at the end of the rainbow with a unicorn standing next to it,” said Bruce McClary, spokesman for the National Foundation for Credit Counseling in Washington, D.C.

There are many credit cards that offer 0% APR on new and transferred balances for a number of months. To find out how your card deals with leftover balances, look at the back of the statement. It probably won’t say “residual interest” in those words.

Scan instead for writing like “finance charges may be assessed even if we receive payment in full in the current billing cycle.” Other ways to get this information, and discover what the APR is for your card, are to look at your card’s terms and conditions, go to the card issuer’s website or call the issuer.

How to avoid residual interest

There’s no reason you should have to pay months’ worth of residual interest on your credit card for a balance that’s quickly resolved. Here’s how to make sure this isn’t a problem for you.

Pay your card in full each month. “The No. 1 rule, the best advice for avoiding residual interest altogether, is to pay off your purchases immediately,” McClary said.
First timer? See if you can get a break. There’s no harm in calling your credit card issuer and asking if you can get an extension on your payment deadline, so you can avoid late fees, finance charges and any residual interest on this one cycle. “You never know what you’ll get until you ask,” McClary said.
If that’s not possible, check your balance and pay it online. The credit card issuer should post real-time information about your leftover balance and any accruing interest.
Get confirmation from the card issuer. This is particularly important if you are paying your balance by mail, either from a paper statement or from what you see online. Interest on the balance continues to accrue until the moment the bank cashes your check. If the check is insufficient because it doesn’t include those extra few days of interest, interest will accrue on the unpaid balance. Instead, before you write the check, pick up the phone and ask the credit card issuer for the payoff balance. “That is the best, the most foolproof way to accurately know the balance that would pay off the account,” McClary said. He advises overestimating the day the payment will arrive by a day or two; the company will repay you any overpayment but will charge more interest if you fall short again.

See related: Should I pay off my credit card all at once?

Bottom line

Remember, if you’ve let a balance carry from one statement to the next, you don’t just have to pay off the balance on your statement. You may also owe residual interest that is not included in your current statement. Check your total online. Call the card issuer to double-check. You can also check your credit card agreement to find out about residual interest or minimum finance charges.

And after you’ve paid what you believe you owe, check again, to be sure.

“Don’t just anticipate ‘I’m off the hook’ next month,” Zhang said. “In many cases, you are probably not off the hook. Make sure there are not any residual balances next month.”

Source: creditcards.com

By Leon Hoffman June 10, 2021. Account Management, Elderly Care Tips Account management, Credit, Credit Cards, Debt, Fees, Finance, Financial Wize, FinancialWize, How To, Make, money, News, Personal Finance, will

[Targeted] Chase Southwest Plus Card: 30,000 Points + Companion Pass Through 2/28/22

The Offer

No direct link to offer

Chase is offering some the following bonus on the Southwest Plus card. Bonus is as follows 30,000 points +Â companion pass good through 2/28/22.

Card Details

Chase 5/24 rule does apply to this card
How Much Are Southwest Rapid Rewards Points Worth?
Everything You Ever Wanted To Know About The Southwest Companion Pass

Our Verdict

They offered a similar thing back at the start of 2019 and at the end of last year. You only need 100,000 points to get the companion pass this year.Â Youâre much better off signing up for a personal and business card to hit the 100,000 points required for the pass. This would give you a lot more points and also a companion pass through the end of 2022.

Hat tip toÂ FM

Source: doctorofcredit.com

By Leon Hoffman February 3, 2021. Credit Cards chase, chase southwest, Credit Cards, Financial Wize, FinancialWize, Rewards, southwest

Tips to Consolidate Credit Card Debt

Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the authorâs alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

If left unchecked, extensive amounts of credit card debt can cripple your finances. The good news is there are many ways to handle debt, though each requires a dedicated effort on your part. But if you can manage to consolidate credit card debt, you will reduce your burden relatively quickly. In the process, youâll avoid the exorbitant interest rates that accompany most credit cards. Below we take a look at some of the most effective techniques you can use to make this goal a reality.

Find Out Your Credit Score

Before you can work on improving your credit and minimizing your debt, you have to know where you currently stand.

Many credit card issuers allow cardholders to see their FICOÂ® credit score free of charge once a month, so check out if any of your cards include that free credit score. The three major credit bureaus â TransUnion, Experian and Equifax â also give out free annual credit reports. If thatâs not enough, websites like Credit Karmaâ¢ and Credit Sesame provide a free look at your credit score and reports as well.

It is vital to review your credit report with a fine-tooth comb to ensure the accuracy of the information. If you find errors be sure to let the credit bureau in question know so the issue can be eradicated as soon as possible.

Zero Interest Balance Transfer Cards

Although it might seem counterintuitive to apply for another credit card to lessen your debt, a zero interest balance transfer card could really help. These cards typically include an introductory 0% balance transfer Annual Percentage Rate (APR) for six months or more. This ultimately allows you to move debt from one account to another without incurring more interest. However, once the introductory offer concludes, any leftover balances will revert to your base APR.

These offers arenât totally free, though. Most cards also charge a balance transfer fee thatâs usually between 3% and 5% of the transfer. Even with this initial payment, you will almost always still save money over leaving your debt where it stands currently.

If you want to consolidate credit card debt, here are three different balance transfer credit cards you could apply for, with varying introductory interest rates and transfer fees:

Balance Transfer Credit Cards Card Intro Balance Transfer APR Balance Transfer Fee Chase Slate 0% APR for first 15 months; then 16.49% to 25.24% Variable APR, depending on your creditworthiness No fee for first 60 days; then $5 or 5% of each transfer, whichever is greater Citi Double Cash Card 0% introductory APR for 18 months from date of first transfer when transfers are completed within 4 months from date of account opening; then 15.49% to 25.49% Variable APR, depending on your creditworthiness $5 or 3% of each transfer, whichever is greater BankAmericardÂ® credit card 0% APR for first 15 billing cycles; then 14.49% to 24.49% Variable APR, depending on your creditworthiness No fee for first 60 days; then $10 or 3% of each transfer, whichever is greater Take Out a Personal Loan

Tips to Consolidate Credit Card Debt

The thought of taking out another loan probably doesnât sound too appetizing to consolidate credit card debt. But a personal debt consolidation loan is one of the speediest ways to rid yourself of credit card debt. More specifically, you can use it to pay off most or all of your debt in one lump sum. That way, your payments are all merged into a single account with your lender.

The APR and length of the offered loan and the minimum credit score needed for approval are the main factors that should go into your final decision on a lender. By concentrating on these three components of the loan, you can map out what your monthly payments will be. As a result, you can more easily implement them into your financial life.

Applying for a personal consolidation loan can have a detrimental effect on your credit. Unfortunately, most institutions will run a hard credit check on you prior to approval. However, many online lenders donât do this, which might ease your mind depending on the severity of your debt situation.

These loans are available through a wide variety of financial institutions, including banks, online lenders and credit unions. Here are a few examples of some of the most common debt consolidation lenders:

Common Debt Consolidation Lenders Banks Wells Fargo, U.S. Bank, Fifth Third Bank Online Lenders Lending Club, Prosper, Best Egg Credit Unions Navy Federal Credit Union, Unify Financial Credit Union, Affinity Federal Credit Union Auto or Home Equity Loan

If you own assets like a home or car, you can take out a lump-sum loan based on the equity you hold in them to consolidate credit card debt. This is a great way to reuse money you paid toward an existing loan to take care of your debt. When paying back your auto or home equity loan, youâll usually pay in fixed amounts at a relatively low interest rate. Even if this rate isnât great, itâs likely much better than any offer youâd receive from a card issuer.

Equity loans are technically a second mortgage or loan, meaning your house or car will become the loanâs collateral. That means you could lose your house or car if you cannot keep up with your equity loan payments.

Create a Budget

Tips to Consolidate Credit Card Debt

To build a budget, you first need to figure out your approximate monthly net income. Donât forget to take into account taxes when youâre doing this.

You can then start subtracting your variable and fixed expenses that are expected for the upcoming month. This is where you will likely be able to identify where youâre overspending, whether itâs on food, entertainment or travel. Once youâve completed this, you can begin cutting back where you need to. Then, use your surplus cash to pay off your debt one month at a time.

It shouldnât matter if youâre dealing with substantial credit card debt or not. A monthly spending budget should always be a part of how you manage your finances. While this is likely the slowest way to eliminate debt, itâs also the most financially sound. At its core, it attempts to fix the problem without taking funding from an outside source. This should leave very little financial strife in the aftermath of paying off your debt.

Professional Debt Counseling

Perhaps since youâve found yourself in serious debt, you feel like you want professional help getting out of it. Well the National Foundation for Credit CounselingÂ® (NFCCÂ®) is available for just that reason. The NFCCÂ® has member offices all around the U.S. that are certified in helping you consolidate credit card debt.

These counselors wonât only address your current financial issues and debt. Theyâll also work to create a plan that will help you avoid this situation again in the future.

Agencies that are accredited by the NFCCÂ® will have it clearly displayed on their website or at their offices. If youâre not sure where to look, the foundation created an agency locator thatâll help you find a counselor nearby.

Borrow From Your Retirement

Taking money early from your employer-sponsored retirement account obviously isnât ideal. Thatâs means borrowing from your retirement is a last-ditch alternative. But if your credit card debt has become such a handicap that itâs affecting all other facets of your life, it is a viable option to consolidate credit card debt.

Because you are technically loaning money to yourself, this will not show up on your credit report. Major tax and penalty charges await anyone who has trouble making payments on these loans though. To make matters worse, if you quit your job or are fired, youâre typically only given 60 days to finish paying it off to avoid incurring a penalty.

Tips To Consolidate Credit Card Debt

If you take the time to come up with a budget, donât let it go to waste. While you might find it tough to stick to, especially if youâre trying to cut back, it is the best way to manage your money correctly. Even if a budget becomes habit, stay vigilant with where your money is being spent.
Although a financial advisor will cost money, he or she might be able to help you keep your finances in check while ultimately helping you plan for the future as well. However, if this isnât an option for you financially, stay on track with your NFCCÂ® debt counselorâs plan.
There are so many ways to gain access to your credit score that thereâs virtually no excuse for not knowing it. It doesnât matter if you do it through one of the top three credit bureaus, FICOÂ® or one of your card issuers. Just remember to pay attention to those ever-important three digits as often as possible.

Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the authorâs alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

Photo credit: Â©iStock.com/Liderina, Â©iStock.com/ferrantraite, Â©iStock.com/cnythzl

The post Tips to Consolidate Credit Card Debt appeared first on SmartAsset Blog.

Source: smartasset.com

Can you send money with a credit card?

Sending cash to friends and family? Before you reach for that credit card, grab a calculator. Itâs time to do a little math.

With most everything you purchase online or through apps, credit cards have the edge. With plastic, you have chargeback rights. If youâre overcharged or receive the wrong item, broken merchandise or nothing at all, your card issuer will make it right. And if you use a rewards card, you collect points or miles, too. Win-win.

But itâs different story when youâre sending money through peer-to-peer platforms. Many of them (like Google Pay, Popmoney and Zelle), donât allow consumers to use a credit card to send cash.

Others (like Cash App, PayPal and Venmo), allow credit cards but also charge a fee for the privilege â often about 3%.

See related: How to choose a P2P payment service

The hidden costs of using credit cards to send money

Choose a credit card to send money and you might also end up paying additional fees to your card issuer. Thatâs because the combination of some peer-to-peer apps with certain cards are coded as cash advances, rather than purchases.

For many cards, that cash advance code triggers a higher interest rate that kicks in the moment you make the transaction, as well as a separate cash advance fee thatâs often $10 or 5% of the transaction â whichever is higher. (Currently, the average interest rate for cash advances is 24.8%, while the average APR for purchases is 16.05%.)

So the combination of peer-to-peer service fees, credit card cash advance fees and that higher interest rate (with no grace period) could make sending a few hundred dollars a bit more costly than youâd planned.

No chargeback rights with credit cards

The real kicker: Unlike other venues, you donât have chargeback rights when you use credit cards to make peer-to-peer money transfers.

When you present your credit card in an online or brick-and-mortar store, thereâs a merchant involved â and the law provides chargeback rights for your protection in case you donât get what you were promised in the deal. But in a peer-to-peer money transfer, thereâs no merchant, so currently the laws donât give consumers any chargeback rights, says Christina Tetreault, manager of financial policy for Consumer Reports.

âThe chargeback right requires a merchant,â says Tetreault. âOne of the hoops a consumer has to jump through is to try and work it out with the merchant.â

If you use a peer-to-peer service and send the wrong amount or send the money to the wrong person, most platforms advise that the only way to get it back is to contact the recipient and ask them to return it. And thatâs often the same whether you use a credit card, debit card, bank account or funded account on the platform.

âBe doubly sure when youâre sending the money that youâre putting in the correct information,â says John Breyault, vice president of public policy, telecommunications and fraud for the National Consumers League. âItâs still a buyer beware world when it comes to peer-to-peer.â

The solution

If youâre sending money and want to use a credit card, it pays to do a little sleuthing first. Check out the peer-to-peer site. Does it allow users to send money with a credit card? If so what, if any, fees does it charge?

On some platforms (PayPal is one), you could see similar fees for using a debit card â while sending from a bank account or funded account on the platform is free.

The good news is that many peer-to-peer platforms clearly disclose it when thereâs an extra charge to use a credit card, says Tetreault. With Venmo, for example, youâll get a pop-up message.

Harder to decipher: Will credit card transactions on the platform be treated as a cash advance? If your preferred platform doesnât post this information, you might need to contact customer service. (And how quickly and easily you get an answer can tell you a lot, too.)

Ask your card issuer the same question: Are peer-to-peer money transfers on the platform youâve chosen treated as a cash advance? If they are, whatâs the interest rate, and whatâs the cash advance fee?

âWhat I would suggest is to ask that question, via email, of your financial institution,â says Tetreault. âIt may be in their FAQs. And you want to save that email. If you have it in writing, if thereâs an issue later, youâre better positioned to contest that fee.â

But âthe hard truth is you may not be able to find out ahead of time,â she says.

Another solution: Opt to use a credit card issued by a credit union.

âWith credit unions, the APR is usually the sameâ for purchases and cash advances, says John Bratsakis, president and CEO of the Maryland and District of Columbia Credit Union Association.

Likewise, with American Express cards you pay your regular interest rate and no cash advance fees on peer-to-peer transfers, says Elizabeth Crosta, vice president of public affairs for American Express.

And credit cards from U.S. Bank register peer-to-peer money transfers as regular purchases â with no cash advance fees or cash advance APRs, says Rick Rothacker, spokesperson for the bank.

See related: How do credit card APRs work?

Whatâs your reason for using a credit card?

Take a good look at the reason youâre using a credit card, too. If you want chargeback rights, thatâs not an option. If youâre doing it for the rewards, will the value of those points or miles be eaten up by extra fees or a higher interest rate you have to pay to use the card?

And if youâre using a card because you donât have the cash, that might be a good reason to rethink the idea of sending money in the first place.

Thatâs a huge red flag, says Bruce McClary, vice president of public relations at theÂ National Foundation for Credit Counseling.

âThe need to convert credit into cash is what really gets my attention â because that hints at a lack of savings,â he said. âItâs a reality a lot of people are facing, especially now.â

Cash advances arenât as expensive or risky as payday loans and car title loans, but they should be among your last resorts. If you’re looking for short-term relief, you could ask your credit card issuer for help, or find out if you qualify for a personal loan. You could also borrow from a family member or trusted friend, but be wary of the potential relationship toll if you can’t pay them back.

Getting cash from credit cards

Fifty-two percent of Americans report that the pandemic has damaged their finances, according to a recent survey by the NFCC. More than a fifth of those had to tap savings for everyday expenses, while 16% increased their credit card spending.

And thatâs a sign of financial stress, says McClary. âIt means that, in some situations, they have run out of savings.â

There are ways you can use your card to get cash, though.

Cashing in rewards

Some rewards cards from issuers such as Chase, Bank of America and US Bank let you deposit cash-back rewards directly to your bank account.

And Wells Fargo also will let you deposit its Go Far Rewards directly into another Wells Fargo customerâs account, says Sarah DuBois, spokesperson for the bank.

Gift cards

Many credit cards let you convert rewards into retail gift cards. So a pile of points can help a friend or family member buy much-needed groceries or a few holiday presents.

Or simply âbuy a gift card for someone,â says Bratsakis.

Retailer-specific gift cards and gift cards issued through local and regional retail associations and malls often come with no fees â meaning every dollar you spend goes toward your gift.

Convenience checks

While you can get a cash advance or use convenience checks from your card issuer, both those options often come with fees and higher interest rates. Not a smart money move, especially in the current economy.

While some lenders may offer convenience checks with deferred interest, thatâs not the same as âno interest,â says Bratsakis. Also, if you donât pay the loan in full, will you owe the full interest retroactively?

âThatâs where consumers have to be careful,â he says. With a convenience check or even a cash advance, âthatâs usually where consumers can get themselves into trouble if they canât pay it off and get hit with deferred interest.â

See related: What is deferred interest?

Bottom line

When it comes to peer-to-peer payments, cash really is king. You can then put it into a funded account with the money transfer platform or your bank account. And most peer-to-peer platforms let you do this for free.

âThe safest way to use these services is to send money person-to-person and be diligent about getting all the details correct so it doesnât go to the wrong person,â says Tetreault.

Only send to people you trust and know in real life, she says. âAnd before sending money make sure you understand what, if any, fees you might incur.â

Source: creditcards.com

By Leon Hoffman February 2, 2021. Account Management, Cash Back, Education Account management, Buy, car, Cash Back, Convenience, Credit, Credit Cards, Debit Card, Family, Fees, Financial Wize, FinancialWize, interest rate, Interest Rates, Life, loan, loans, Make, money, Purchase, Rewards, savings, Spending

How to Run a Virtual Brainstorm that Actually Works

Fun fact about pandemic life: Zoom fatigue is real. And not just real, but “widely prevalent, intense, and completely new,” according to Psychiatric Times.

Although we might be avoiding Zoom these days when an email or even a phone call (is it 1986 again?) will suffice, there's one place where video conferencing still shines, and that's the good ol' brainstorm.

Old school brainstorming was creative and connective and interactive—all things difficult, but not impossible, to recreate virtually.

When I picture brainstorms of years past, I see images of big tables full of candy and fidget toys and pens and Post-Its galore. Old school brainstorming was creative and connective and interactive—all things difficult, but not impossible, to recreate virtually.

Today we’ll talk about some virtual brainstorming strategies I’ve seen work really well. And then hopefully, you’ll give one a try.

Choose your occasion wisely

brainstorms shouldn’t be a catch-all for any group conversation.

Back when our biggest workplace woe was a vending machine out of Diet Coke, many of us took brainstorming sessions for granted. But in a virtual world, it's harder to organize, facilitate, and get people engaged.

That's why brainstorms shouldn’t be a catch-all for any group conversation. (Often what you’re looking for is just a meeting.) Brainstorms are a very specific brand of discussion in which a collective of creative voices, ideas, and opinions are necessary inputs to achieve a valuable output.

Because of challenges like Zoom fatigue and burnout, I urge you to be stingy with your brainstorming sessions. They're a fabulous enabler of ideas and solutions, so do use them. But do so strategically and with clear intention.

Because of challenges like Zoom fatigue and burnout, I urge you to be stingy with your brainstorming sessions.

What are some great occasions to host a brainstorming session? Use them when you need to:

Add or refine product features
Define a path in a sticky situation
Solve a complex problem

These and many other scenarios call for a variety of perspectives in which there are no right or wrong answers, but only ideas.

In contrast, many other occasions don’t call for a brainstorm. Like when you need…

Approval or alignment
Receipt of a message or direction
Feedback on a mostly baked idea

These are not brainstorm moments—they're meetings with a much more defined outcome. See the difference?

Figure out the specific problem you want to address

Okay, so you've figured out that your situation calls for a brainstorming session. Now, it's time to make sure everybody who comes to the brainstorm is on the same page before you begin by creating a statement that lays out the specific problem and how you need to tackle it.

Your problem statement might be something like:

We’re losing market share on X product, and we need to define new features to attract Millennial customers.

And here's another example:

This client wasn’t happy with our last deliverable and we need to redefine how we’re engaging with them.

One of your goals is to keep the session short (because fatigue) while maximizing what you take away from it. A clear problem statement allows you to invite your brainstorming participants to get the creative juices flowing ahead of the actual session.

Assign some prework to get things rolling

Now that you've stated the problem or opportunity, it's time to let participants know you’re looking forward to a collaborative discussion and invite them to jot down some early ideas and send them your way.

You can then do some analysis ahead of the session. Did you spot any common themes? Any particular ideas you’re interested in having the group build upon?

Share your findings at the beginning of the brainstorming session. This will give you a strong foundation from which to build.

Get creative with tech

Love it or hate it, video conferencing technology is definitely your friend in a virtual brainstorm. It allows you to create a purposeful connection amongst participants. But you have to understand how to engage them.

When I used to run in-person meetings with leadership teams, I was always intentional about switching up the activities every 30 minutes or so. I’d facilitate a breakout, and then we’d do a quick poll, and then I’d have people plot Post-It notes around the room, and more.

Keeping things changing and moving is a great way to keep adults engaged. According to the Harvard Business Review: "If you don’t sustain a continual expectation of meaningful involvement, [people] will retreat into that alluring observer role."

So take the time to learn the features of whatever platform you’re using, and make the session engaging. Some tactics you might try?

Use polls to test out early ideas
Use small group breakout sessions to create mini-competitions between your participants
Use a whiteboard to replicate a poster board people can plot virtual Post-It notes on
Use voting to prioritize or stack rank

Of course, talking is part of any brainstorm. But using technology can keep participants from slipping into the shadows without contributing.

Establish norms that serve your purpose

A brainstorm isn’t successful because of how smart its participants are, but because of how much freedom and space their voices are given.

A client once told me this story about a packaging company that was struggling with productivity. Their products had to be wrapped in newspaper before being shipped. But often, as employees were packaging product, they’d accidentally start reading the newspaper, losing precious packing minutes. These minutes added up to lost productivity.

One day the leadership team was brainstorming solutions to this distraction problem and one executive said, “Well, what if we just poked their eyes out?”

Of course, he wasn't serious—the question was absurd and meant to add a little humor. But it triggered a new line of thinking. Eventually, the company established a partnership with a non-profit organization that finds jobs for blind people.

Is this story true? I’m honestly not sure. But it’s a great illustration of the importance of free-flowing ideas.

A brainstorm isn’t successful because of how smart its participants are, but because of how much freedom and space their voices are given.

As the facilitator, what norms can you put in place to ensure that all ideas get voiced without judgment and everyone has a chance to speak?

Here are a few you might consider:

Use the improv rule of “yes, and.” It means that ideas are never knocked down, only built upon. (Don’t worry, they can get voted down later, just not during the brainstorm)
Use the two- (or one- or five)-minute rule. Ask people to limit themselves to two minutes at a time, even if they need to stop mid-thought (they can finish on their next turn). This challenges people to be concise and ensures that everyone gets a chance to speak.
Use a round-robin technique. Circle around the Zoom participants, calling on each person as you go. If someone isn’t ready, they can pass. But this is a great way to prevent introverts from getting overlooked.

What other norms will keep you on track?

Close out thoughtfully

Save a few minutes at the end of your scheduled session to check in on the process. How did it feel for everyone? What worked well and what might you skip next time? Do they have other tactics to recommend?

The best answer to “How do I host a great virtual brainstorm?” is the answer that your own participants give you.

When scheduled for the right occasion and with the right people, brainstorms are a fabulous tool. Don’t be intimidated by them. Just be open to learning as you go.

Source: quickanddirtytips.com

By Leon Hoffman February 2, 2021. Credit Cards Financial Wize, FinancialWize, How To, Life, Make, moving, Products, School, Video

6 Tips for Successfully Managing a Checking Account in College

Heading off to college is exciting. Really exciting. You finally have freedom! You’re out on your own for the very first time, managing your studies, managing your social life and… managing your finances.

Despite being a big part of your newfound independence, personal finance is a subject you probably won’t find on your course schedule. If you didn’t take a personal finance class in high school and never had money lessons from your parents, you may not know how to manage a checking account as a college student.

“College students have very different needs for their checking account than their parents or other adults,” says Tommy Martin, CEO of Clear Path Financial Planning and a finance blogger at TommyMartin.com. If you live in a different city during the school year than you do during winter and summer breaks, for example, you may be after a bank for which location doesn’t matter.

Ok, so how do I manage my checking account in college, you ask? First, don’t get overwhelmed. Learning how to manage money while in college and getting a handle on checking account basics is simpler than you might think (oh, and the skills will serve you for years to come). Second, you can kick off your checking account education with these tips for managing a checking account in college:

1. Compare checking accounts before signing up

While your college life may center around your school campus, you should consider venturing off-campus to pick the right checking account for your lifestyle.

“Students typically sign up with a bank that’s on campus or close to campus,” says Sahil Vakil, a financial planner and president of MYRA Wealth in New Jersey. However, the nearest bank might not be the one that best fits your needs, he adds.

Wondering how to manage money while in college? Be sure to compare checking accounts to find one that meets your needs while you're in school.

Instead of picking a bank based solely on proximity, consider all of your options, including banks with off-campus locations and online-only banks.

Martin agrees, saying that learning how to manage money while in college means considering all of your banking options rather than “automatically enrolling or choosing the official school bank just because it has the school logo on it.” There are other ways to show your school pride, after all.

2. Learn about checking account fees and rewards

Vakil and Martin both say a tip for managing a checking account in college is to consider an account’s fees before signing up. Costly fees can eat into your savings and spending money, which can be a blow for students who are not working full-time. When you are choosing a checking account in college, consider fees for:

Monthly maintenance (essentially keeping your account open)
Minimum balance (not maintaining one)
ATM usage
New checks
Wire transfers
Online bill pay
Replacement debit cards

Martin says a checking account with no minimum balance requirement or minimum number of transactions could be a good fit for students. “It allows them to focus on their education” instead of worrying about incurring penalties, he says. “Even a $5 fee on a checking account with $60 in it can be devastating.”

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Costly fees can eat into your savings and spending money, which can be a blow for students who are not working full-time.

Martin also suggests finding an account that has a large network of no-fee ATMs located across the country to better manage your checking account as a college student. “Especially if you’re going to a school in a different state, the local bank from home might wind up costing you a lot in terms of ATM fees,” he says. If your parents plan to wire you money, find an account that doesn’t charge incoming wire fees, Martin adds.

While fees should be a focus when you are learning how to manage money while in college, don’t forget about incentives. You may be able to find a checking account that actually helps you grow your balance by paying interest or offering a cash back rewards program.

“If you have to pay for books or supplies, at least you can get some cash back and use it for a free dinner,” Martin says. Discover Cashback Debit, for example, offers 1% cash back on up to $3,000 in debit card purchases each month.¹

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3. Track your checking account balance

Luckily, you don’t need to take Banking 101 to figure out your funds, and tech makes tracking your balance and account activity easier than ever. Most banks let you log in to your account online (don’t get distracted in class!), and with a bank’s mobile app you can transfer money to friends, pay bills, deposit checks and check your balanceâall while you’re on the go.

Knowing your balance at all times is a tip for managing a checking account in college because it can help you avoid overdrafts and insufficient funds fees. It can also help you forecast your income and expenses to ensure you’ll have enough money to cover future costs. Surpriseâthat’s budgeting!

There’s no one-size-fits-all budgeting program or system, though. You can go old-school and track your budget on a printed-out budget sheet, or you can go tech-savvy with a budgeting and spending app. “What’s best for you is the one you’re actually going to use,” Martin says.

If you learn how to manage money while in college and make a practice of maintaining your budget, the habit will follow you after graduation.

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âCollege students have very different needs for their checking account than their parents or other adults.â

– Tommy Martin, CEO of Clear Path Financial Planning and finance blogger

4. Secure your account

One of Vakil’s tips for managing a checking account in college is to make sure your account stays secure. Create a unique account name and password that you use only for your checking account, and never share your credentials.

Vakil says you can also enable two-factor authentication if your bank offers it and you’re looking for another way to improve the management of your checking account as a college student. “This additional layer of protection safeguards your sensitive financial data and strengthens the security of your account by requiring two methods of verifying your identity.”

For example, if you log in to your account from a new device, you may be sent a text message with a code that you’ll need to enter to access your account.

5. Keep an eye out for debit card holds

No matter where you bank, a merchant may place a hold on funds in your checking account when you use your debit card. Generally, a hold is placed for travel-related purchasesâsuch as at rental car companies, hotels and gas stationsâand used by merchants to protect against fraud and errors.

To manage a checking account as a college student, keep an eye out for debit card holds, especially while traveling.

“Holds on a debit card can make it tricky for you to manage your finances,” Vakil says. For example, “when you rent a car, the car rental company might put a $500 hold on your account. If the balance in your account was $550, now you can only use another $50.”

Being aware of holds can be particularly important if you are managing a checking account as a college student and tend to have a low account balance.

If a merchant will be placing a hold, it will generally post a sign to notify customers. The hold will typically be removed after the funds are transferred to the merchant from your financial institution, typically within three to four days.

Knowing when a hold will be placed, the amount of the hold and how much money you have in your checking account can help you manage your checking account as a college student by avoiding overdrafts and missed bill payments due to insufficient funds.

6. Don’t let one mistake throw you off track

If you can learn how to manage a checking account as a college student, and more generally, how to manage money while in college, you can lay the groundwork for a solid financial future. Checking account mistakes may occasionally happen (oops, I didn’t budget enough for that spring break trip), but don’t let them discourage you to the point of apathy. Instead, try to continually expand your knowledge and practice healthy financial habits.

¹Â ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo^Â® and PayPal, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries. Venmo and PayPal are registered trademarks of PayPal, Inc.

The post 6 Tips for Successfully Managing a Checking Account in College appeared first on Discover Bank – Banking Topics Blog.

Source: discover.com

Accredited Asset Management Specialist (AAMS)

What is the AAMS certification? New financial advisors need something to help them stand out. Consequently, the AAMS does just that. Designed for newcomers to the financial advice business, the AAMS trains advisors to identify investment opportunities as well as help clients with other financial goals. It also gives more experienced advisors a fast and simple way to learn more about asset management and improve their credentials. Hereâs how it works.

AAMS Defined

An Accredited Asset Management Specialist (AAMS) can advise clients on college savings, taxes, and retirement savings. The course and tests for this certification are designed to ensure advisors can assist clients with their complete financial needs. It emphasizes evaluating the clientâs assets and making appropriate recommendations.

The AAMS certification is granted by the College for Financial Planning, a unit of the Kaplan Company. The college oversees a large number of financial certification programs, including the Certified Financial Planner designation, one of the most valued certifications in the field.

AAMS Certification Requirements

What is the AAMS certification?

To receive an AAMS, students first have to complete a 10-module education program provided by the College for Financial Planning. Then they have to pass an examination. Finally, they must agree to abide by a code of ethics and promise to continue their education.

The courses are online and can be delivered in self-study or instructor-led formats. Courses are open-enrollment, therefore students can begin at any time without waiting for the next session. The 10 modules cover the following material:

1.:The Asset Management Process

2. Risk, Return & Investment Performance

3. Asset Allocation & Selection

4. Investment Strategies

5. Taxation of Investments

6. Investing for Retirement

7. Deferred Compensation and Other Benefit Plans

8. Insurance Products for Investment Clients

9. Estate Planning for Investment Clients

10. Fiduciary, Ethical, and Regulatory Issues for Advisors

The College of Financial Planning provides everything necessary to study for and complete the modules and take the test. Students have access to the study materials and tests through an online portal.

Streaming video lectures, audio files, and interactive quizzes also can be found through the collegeâs site. Meanwhile, students can access live classes online and contact professors with questions and issues.

The AAMS Test

To get the AAMS certification, students have to pass just one test. However, they have to make their first attempt at the test within six months of enrollment and pass it within a year.

The fee for the first attempt at taking the test is included in the course tuition. There are no prerequisites for signing up to take the AAMS course.

Time and Money Requirement

Tuition for the AAMS courses is $1,300. This includes the fee for the first attempt at passing the certification exam. It also includes all needed course materials. Each additional attempt costs $100.

Students employed with certain financial services firms may be able to get tuition discounts. The college may also provide scholarships.

The College for Financial Planning recommends students plan to spend 80 hours to 100 hours on the course. Since the course is self-study, this amount of time is flexible.

To maintain AAMS certification students have to commit to completing 16 continuing education credits every two years. Also, continuing education has to cover one or more of the topics covered in the AAMS coursework.

AAMS certificate holders also have to agree to follow a professional standard of conduct. As a result, they have to maintain integrity, objectivity, competency, confidentiality and professionalism in providing financial services.

AAMS Certificate Holder Jobs

AAMS certificates are generally earned by entry-level workers in the financial advice business. Consequently, AAMS holders are typically trainees. In some cases, they may provide support services to more experienced and highly credentialed advisors.

The AAMS designation does not confer any special powers or privileges. Instead, itâs an optional credential that students may obtain to advance their careers and enhance their knowledge of financial advice.

Comparable Certifications

What is the AAMS certification?

In addition to the AAMS, the College for Financial Planning offers an Accredited Wealth Manager Advisor (AWMA) certificate. This is a somewhat more advanced designation. As a result, it requires a course equivalent to three graduate level college credits and requires 90 hours to 135 hours to complete.

Chartered Mutual Fund Counselor (CMFC) is sponsored by the Investment Company Institute along with the College of Financial Planning. It is similar to the AAMS certificate except it focuses on mutual fund assets.

Accredited Financial Counselor (AFC) is a general personal finance advice certificate from the Association for Financial Counseling and Planning Education. First, it requires 1,000 hours of financial counseling experience. Secondly, it demands three letters of reference. Finally, applicants must both complete coursework and pass an exam.

Bottom Line

The AAMS designation is usually for newly minted financial advisors, but even experienced pros can use it to bulk up their credentials. The courses and tests associated with the AAMS teach advisors how to evaluate assets and make recommendations.

While this certification doesnât give an advisor any real powers, itâs a sign that they can identify investment opportunities specific to their clients. Above all else, it can be a great relief to a client who has a child going to college or a retirement house on their wish list. As a result of obtaining an AAMS, and advisor can point them toward the right investments for their goals.

Investing Tips

If youâre looking to identify investment opportunities, consider using an AAMS as your advisor. Finding the right financial advisor that fits your needs doesnât have to be hard. SmartAssetâs free tool matches you with financial advisors in your area in 5 minutes. If youâre ready to be matched with local advisors that will help you achieve your financial goals, get started now.
An AAMS can help you with college savings, taxes, and retirement savings if you know what your goals are. However, if you are unsure how much you want to invest, what your risk tolerance is, or how inflation and capital gains tax will affect your investment, SmartAssetâs investing guide can help you take the first steps.

The post Accredited Asset Management Specialist (AAMS) appeared first on SmartAsset Blog.

Source: smartasset.com

How to pay rent with a credit card

In an economic emergency, covering even basic yet important expenses can be tough. For example, in 2020, the coronavirus pandemic rocked the foundations of millions of Americans. The National Multifamily Housing Council found that by Jan. 20, 11.4% of tenants had not sent money for their rent.

The last thing you want is to be evicted from your home because of nonpayment of rent. When used correctly, a credit card can help you through hard situations. Since the card issuer only requires a small minimum payment, it can buy you time before getting back on your feet.

Here’s how to charge rent, not just during a financial crisis but under normal conditions as well, advantageously.

See related: How to earn rewards when paying monthly bills

How to pay rent with a credit card

How to pay through your landlord
How to pay through third-party services
Best credit cards to pay rent
Pros of paying rent with a credit card
Cons of paying rent with a credit card

How to pay through your landlord

First, ask your landlord if you can charge your rent. Some have software already set up to accept payments, so all you would need to do is provide your account information and your card will be charged. Larger property management companies are more apt to accept credit cards than individual landlords, but it’s worth an inquiry.

Bear in mind that there will be a processing fee, which typically falls between 2.5% and 2.99% of the transaction. The landlord will probably pass that cost to you, though it doesn’t hurt to ask if they’ll absorb the fee.

For example, if your rent is $1,800 and the fee is assessed at 2.99% of the transaction, the added cost would be $53.82. If the minimum credit card payment is 2% of the balance, your payment would be $36. Add the fee to it and all you’d need pay is $89.82 – a far cry from the $1,800 due.

If your landlord doesn’t offer this option, consider explaining your reason for wanting to charge the amount. If it’s not a permanent change to the rental agreement (which spells out the method and timing of your payments), your landlord may allow you to send the money via an app such as PayPal or Venmo on a temporary basis.

You would set up the app, attach your credit card to the account, and then follow through with the “pay-to” transaction:

Locate your landlord’s profile name.
Hit the “pay” function.
The money is deducted from your credit card and sent to your landlord’s bank account on file.
You receive the bill of the transaction amount plus the fee from your credit card company.

Yet another way to use your credit card to cover your rent is to take out a cash advance. It comes with some serious consequences that make this method your last choice, though:

Fees can be 5% of the amount you withdraw.
Interest rates are often higher on cash advances than they are on purchases.
There is no interest-free grace period, as there is for purchases.

Credit card issuers offer cardholders relief amid coronavirus fears

How to manage your credit cards during the coronavirus outbreak

Coronavirus: What to do if you’re unemployed and have credit card debt

How to pay through third-party services

An alternative to paying your landlord directly is to use a company that acts as an intermediary. The general process is simple:

Sign up with the company.
Identify your landlord.
Enter your rent amount and due date.
The company charges your card and sends your landlord the money in the form of a paper check or electronic transfer.
You receive a bill from your credit card company and can send any amount that is at least the minimum payment.

You should have no trouble paying any landlord this way if the third party sends your rent with a paper check. It’s the same as if it were coming straight from your own checkbook.

However, if the company sends payments electronically, your landlord would need to register for an account so the money can be deposited.

But charging rent with a third-party company is becoming popular.

“We’ve seen a 50% increase in the number of Plastiq customers that are paying for rent with their credit card [in 2019] compared to 2018,” says Eliot Buchanan, co-founder and CEO of the consumer-to-business bill-paying company.

“However, there are card processing fees involved, so rent payers should compare the costs and benefits of paying rent on a credit card to determine whether it makes sense to do in their particular situation.”

Accepting credit cards for rent payments is a win-win, says Brian Davis, director of education for SparkRental.

“Landlords and property managers who accept rent by credit card offer more flexibility for their renters, with an option to stay current on their rent even if their bank account is short on the first on the month,” says Davis.

Review a variety of third-party companies before deciding on one, paying close attention to the fee structure and whatever unique benefits they may have.

Third-party service	Transaction fee	Benefits/Perks
Plastiq	2.85%	Up to 2% cash back on transactions, depending on your card.
RentMoola	2.99% – 3.99%	Earn “MoolaPerks” for deals on travel, shopping, home service providers, etc.
SparkRental	2.99% – 3.99%	Designed for landlords with a more challenging tenant base.
RentPayment	2.95%	Can pay via app, by replying to a text or by phone.
RadPad	2.99%	For landlords who prefer paper checks.
Cozy	2.75%	Can add low-cost renter’s insurance to the payment.

Best credit cards to pay rent

Some rewards cards offer generous introductory bonuses. You can open an account for the specific purpose of using that bonus to offset the fees involved in charging your rent.

To get the bonus, you have to meet the card’s required minimum spend within the first three months of opening the card. When you do, the reward is yours.

If you get cash back, you can use the money as a statement credit. For cards that give points or miles, you can trade them in for cash too, but you won’t get as much for them as you would for things like travel.

Whatever the case, the introductory bonus will nullify the amount you’re charged in fees when use your card for rent. After that, you’ll be earning rewards on purchases, which will also offset the fees, should you continue to charge your rent.

Just a few examples include:

Rewards credit card	Minimum spend	Introductory bonus
Wells Fargo Propel American Express® card	$1,000 in first 3 months	20,000 points ($200 cash value)
Blue Cash Preferred® Card from American Express	$1,000 in first 3 months	$250 statement credit
Citi Rewards+® Card	$1,000 in first 3 months	15,000 ThankYou points (redeemable for $150 in gift cards at ThankYou.com)
Chase Sapphire Preferred Card	$4,000 in first 3 months	60,000 points (redeemable for $750 toward travel when you go through Chase Ultimate Rewards)

See related: Best rewards credit cards

Another option is to open a credit card that comes with 0% APR for an extended period of time.

You won’t be charged interest on the debt you carry over until the rate rises to the regular rate. Therefore, if you charge your rent and can only afford to pay the minimum, the debt won’t escalate with financing fees.

A few good examples include:

0% APR credit card	Intro APR purchase period
ABOC Platinum Rewards Mastercard	12 months (12.90-22.90% variable thereafter)
Citi® Diamond Preferred® Card	18 months (14.74-24.74% variable thereafter)
Discover it® Cash Back	14 months (11.99-22.99% variable thereafter)

See related: Best 0% APR credit cards

Pros of paying rent with a credit card

Aside from helping you through an emergency, charging rent has a few other benefits:

Build and improve credit history

Charging regularly, paying on time and keeping the balance at zero are the swiftest ways to establish a positive credit rating. Rent is a necessary expense, so why not parlay it into a high credit score?

Arthur Ruth, vice president of operations of Memphis Maids, a house cleaning service in Memphis, Tennessee, has been paying rent with his credit card for over 15 years.

“Using your cards so much, if you pay them correctly, you can save money and even improve your credit score,” says Ruth. “That’s something really important in this day and age.”

Cash flow freedom

When Ni’Kesia Pannell, an Atlanta-based journalist and entrepreneur, was temporarily short on cash, she took advantage of the credit card option.

“I was in between freelance gigs and needed to pay bills,” says Pannell. “The fees were high, but at the time, it was worth it.”

Once her financial situation returned to normal, she resumed paying by check.

In the same vein, if your rent is due on the first of the month but your income is sporadic, you may need some extra time to accumulate it all without any stress.

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Avoid late fees

If you don’t pay your rent on time, the landlord may charge you a late fee – which can be assessed at 5% of your rent payment or more.

“It’s nice to have the flexibility to charge your rent as an option if you hit a particularly tough month,” says Davis. “If tenants find themselves stretched too thin financially one month, it’s cheaper to charge their rent than let it go late – and it keeps them from falling behind and souring their relationship with their landlord.”

Cons of paying rent with a credit card

While paying with a credit card has its advantages, there are a few drawbacks to consider as well:

Fees

In the event you are responsible for the credit card processing fee, you’re looking at an increase in your monthly obligation. If the value of your credit card rewards doesn’t surpass the fees, you will lose – not gain – money.

To know if it makes financial sense, look at your card’s rewards program and compare its earnings rates to the transaction fees you’ll be charged. If the fee is 2.5% of the transaction, and you’re earning 1.5% in cash back, you’re losing 1% every month. So, for example, you’ll be out $15 for a $1,500 rent payment.

“It may not sound like much, but over time, it adds up,” says Ande Frazier, former editor-in-chief of MyWorth, a financial education media company. “And if money is tight, [it will impact] what you should be spending on, [like] something essential.”

Credit card debt

As convenient as it is to rely on a substantial credit line when you need it, it’s also easy to over-borrow. Elevated interest rates and low payments will put you into a deep hole.

“It’s a vicious cycle,” says Frazier.“That debt will grow and grow, and the compounding interest will be huge. If you can’t afford your rent, you’re living in the wrong place.”

Credit damage

Credit scores consider the amount of debt you owe and weigh it against the amount you can borrow. If you hit your limit and the balance stays anywhere near it, your scores will sink. Skip payment cycles, and those scores plummet further.

This puts you in a terrible position if you have to move. Almost all landlords check credit reports to see if you’re a low-risk tenant. So, if they see excessive debt and a pattern of missed payments, they may pass you over for tenancy.

See related: How to rent an apartment with bad credit

Final thoughts

In extreme situations, charging your rent and then paying incrementally can keep you in positive position with your landlord. To avoid credit card debt spiraling out of control, pay as much as you possibly can to the balance each month. Then when life returns to normal and you want to continue to charge your rent, make sure you always have the money in your checking account to cover the payment when the bill is due.

Source: creditcards.com

1. Charge in small, steady increments

2. Pay on time

3. Delete the debt every month

4. Keep a sharp eye on all credit activity and progress

5. Get a second credit card

Protect your point-of-sale (POS) system

Get third-party help

Prevent fraud through training

Make the move to mobile

Consider cyber insurance – and a vulnerability test

The bottom line

What is residual interest?

How does residual interest work?

Do all cards charge residual interest?

How to avoid residual interest

Bottom line

The Offer

Card Details

Our Verdict

The hidden costs of using credit cards to send money

No chargeback rights with credit cards

The solution

Whatâs your reason for using a credit card?

Getting cash from credit cards

Cashing in rewards

Gift cards

Convenience checks

Bottom line

Choose your occasion wisely

Figure out the specific problem you want to address

Assign some prework to get things rolling

Get creative with tech

Establish norms that serve your purpose

Close out thoughtfully

1. Compare checking accounts before signing up

2. Learn about checking account fees and rewards

3. Track your checking account balance

4. Secure your account

5. Keep an eye out for debit card holds

6. Don’t let one mistake throw you off track

How to pay rent with a credit card

How to pay through your landlord

How to pay through third-party services

Best credit cards to pay rent

Pros of paying rent with a credit card

Build and improve credit history

Cash flow freedom

Avoid late fees

Cons of paying rent with a credit card

Fees

Credit card debt

Credit damage

Final thoughts

Whatâs your reason for using a credit card?