Tag: Cash Back

Truth About Reward and Store Credit Cards

by Phillip Warren

On the surface, reward cards are a great way to make a few extra dollars or grab some air miles without increasing your spending or your debt. If you spend a lot of money at a particular shop, store cards will seem like an equally beneficial prospect. But these cards exist for a reason—they’re there to make more money for the providers and the retailers, not you.

Sure, reward/store cards have other benefits if you use them properly, but there are a host of disadvantages and hidden terms that you need to be aware of before signing on the dotted line. 

What are Store Cards?

Store cards are tied to specific stores and offered by chains of retailers. These cards work just like traditional cards and are often branded by networks like Visa and MasterCard. The difference is that they can only be used in the issuing stores and their rewards are tied to those stores.

In essence, they are store loyalty cards that come with a lien of credit attached. 

What are Reward Cards?

Reward cards are also tied to credit card networks, including American Express and Discover, as well as Visa and MasterCard. They award points every time they’re used for qualifying purchases and these points can then be swapped for air travel and other benefits. 

Some reward schemes award a specific amount of cash back, often fixed to 1% or 2% of purchases made on specific items, such as groceries or utility bills.

How Can Providers Offer These Rewards?

If a provider offers you cash back every time you spend money on your credit card, someone has to foot the bill. Many consumers assume that the credit card network covers the cost, and to an extent, they do. But it’s not quite as simple as that.

Every time you use your credit card to make a purchase, the retailer is charged a fee, often between 1% and 3% of the purchase. This is the network’s charge. With reward cards, this fee increases, and the extra money is used to fund the rewards program.

As a result, retailers are not exactly happy with these programs as they drive their costs up and reduce their profits. The only way around this, is to increase the cost of the product or, more likely, to reward customers who pay with cash/debit. Retailers are not allowed to add a surcharge for credit card use, but there’s nothing stopping them from choosing which cards they do and don’t accept.

Your local Mom & Pop enterprise isn’t being antiquated and old-fashioned by refusing credit cards. They just can’t cover the costs. 5% may not sound like a big deal, but for retailers with minimal buying power and the massive overheads of running a brick-and-mortar store, 5% can be a deal breaker.

Smaller retailers are fighting back against reward cards while bigger ones are embracing them by adopting their own store cards. With a store card, they have more say, more control, and they know that those small losses will be offset by the increased purchases.

Issues with Store Credit Cards

Store cards carry a big risk and have far few benefits than reward cards. The advantages of these cards are obvious: If you shop a lot in a particular place, you can save money via the cash back schemes. 

They can also help with emergency purchases, providing you clear the balance in full. But, while the benefits are obvious, the same can’t be said about the disadvantages.

Con 1: They Have High Interest Rates

The average credit card interest rate in the United States is around 16%. The average rate for store cards is over 20%. That 4% may not seem like much, but if you don’t repay your balance every month that interest will compound, grow, and cost you a small fortune. 

At 16% with a $10,000 balance and a 60-month repayment term, you’ll pay $243 a month and over $4,000 in total interest.

Increase that rate to 20% and your monthly payment grows by $20 while your total interest increases by nearly $1,500. The longer you leave it and the smaller your monthly payments are, the greater that difference will be.

For example, if you repay just $200 a month on that balance, the difference between 16% and 20% is 26 extra months and close to $5,000. Of course, store cards rarely offer such high limits, but this is just as example to show you how much of a difference even the slightest percentage increase can cause.

It’s worth keeping this in mind if you ever apply for a traditional rewards card. Getting rewards in return for a higher APR is great if you repay your balance in full every month and terrible if you don’t.

Con 2: They Have High Penalty Rates

If you miss a payment on your store credit card you could be hit with a penalty APR as high as 29.99%, as well as a late payment fee of $39. The rates are high to begin with, but these penalty rates are astronomical and will make a bad situation worse.

That’s not all, as some providers are known to be very unforgiven when it comes to missed and late payments. In some cases, your account will default even if you underpay just once and just by a few dollars. 

Con 3: They Have Low Credit Limits

Retailers are not lenders. They don’t have the time, funds or patience to chase debts and deal with collection agencies. As a result, they don’t offer high credit limits and generally you’ll get a fraction of what an unsecured credit card might provide you with.

This might not seem like much of an issue. After all, a smaller credit limit means you’re less likely to accumulate large amounts of debts. However, this has a massively negative impact on your credit score that few borrowers consider.

30% of your credit score is based on something known as a credit utilization ratio. This looks at the total available credit and compares it to the debt that you have accumulated. If you have several cards with a combined credit limit of $10,000 and a balance of $5,000, then your ratio is 50%, which is considered to be quite high.

If a store card is your only account and you spend $450 on a $500 limit, then you have a credit utilization ratio of 90%, which will reduce your score. Your credit report is also negatively affected by maxed-out credit cards, a feat that’s much easier to achieve when you have a low credit limit.

Con 4: There Are Better Options

It’s better to have one good reward card than multiple store cards. The former will provide you with far better interest rates and terms, while the latter will hit your credit report with several hard inquiries and new accounts. 

A rewards card will still benefit you when shopping at those stores and will also provide you with a wealth of other benefits.

Con 5: You May Spend More

Store cards are not designed to make your life easier and give you a few freebies. Regardless of what the store tells you, they’re not made to reward loyalty, they’re made to encourage spending. 

This doesn’t always work, and research suggests that many individuals use reward cards just like they would normal cards. But for a small minority, the idea of acquiring points is enough to convince them to spend more than they usually would.

Some good can be good debt, such as when it’s used to acquire an asset or something that won’t depreciate. But very rarely do we use credit cards for this purpose and generally, if you’re spending more on a store card it means you’re wasting more money on things you don’t need.

Con 6: You Can’t Use Them Anywhere Else

A store card can only be used in that particular store. This renders it redundant as an emergency card and also means you’re encouraged to shop in that one place. You don’t have a chance to shop around and find the cheapest price; you may spend more just to use your card and get the benefits, with those benefits rarely covering the additional money you spend.

What About Reward Cards?

Some reward cards have very high rates as these rates are used to offset the rewards program. However, this isn’t always the case, because, as discussed above, networks often charge retailers more to offset these purchases and therefore don’t always need to cover the costs themselves.

Some credit cards, such as the Discover It, offer solid reward schemes and would also be included on any list of the best non-reward credit cards. It’s a solid all-rounder and it’s not alone. However, many reward cards charge high annual fees and penalty rates, just like you’ll find with a store card.

It’s important to study the small print and make sure the card is viable. If you’re going to clear the balance every month, a slightly higher interest rate won’t hurt, especially if it comes with some generous rewards. But if there is any doubt and even the slightest chance that you won’t clear the balance, it’s always best to focus on a low-interest rate first.

Even the most generous 5% cash back reward card will not offset the losses occurred by paying a few more percentage points of interest.

Will Reward/Store Cards Affect my Credit Score?

Credit cards trigger hard inquiries, which can reduce your credit score by up to 5 points. This is true for every credit card that you apply for. Rate shopping can combine multiple inquiries into one if they are for the same type of credit, but this doesn’t apply to credit cards.

A new account will also impact your score. This impact is often minimal and if you keep up with your repayments then it will vanish in time. However, if you miss a payment, max-out your card or increase your credit utilization score, it could have a detrimental effect on your score and your finances.

Keep store cards to a minimum and only sign up if you’re 100% sure you’re getting a good deal that will benefit you in the short-term and the long-term.

Truth About Reward and Store Credit Cards is a post from Pocket Your Dollars.


Source: pocketyourdollars.com

Gemini Teases 3% Back Cryptocurrency Credit Card

by Phillip Warren

Cryptocurrency trading platform has released details of the ‘Gemini Credit Card‘. Currently this card is not available to sign up to, but you can join the waitlist. The card promises:

  • Up to 3% back in Bitcoin or other crypto on all purchases
  • No exchange fees on crypto rewards

We’ve seen time and time again that cards that earn 2%+ cash back are not sustainable. I can’t see how this card would be any different, although we don’t have the full details yet (it also says up to 3%, so probably only on specific categories and not interesting categories). For example there could be an annual fee or the exchange rate could be poor (they say no exchange fees, but if the rate is poor it’s effectively a fee as well). We’ve also seen a lot of products similar to this create a waitlist only for the product to never materialize or be dramatically different when it does go live.


Source: doctorofcredit.com

Best credit cards for Airbnb

by Phillip Warren

Many of us are avoiding travel during the pandemic.

But if you have to shelter in place under quarantine once you get to your destination, wouldn’t you rather do it in an environment that at least seems more within your control?

If the choice is between a hotel where you must trust your experience to a faceless corporation or a local host you can talk to through homestay sites like Airbnb and Vrbo, the latter may be the better option for these times (provided you don’t violate their party guidelines).

Whatever option you choose, credit card issuers now reward homestays with points and cash back in the same way they’ve long doled out rewards for hotels and other travel expenses.

These are the best cards on the market for homestays like Airbnb.

See related: Strategies for planning 2021 travel

Wells Fargo Propel American Express® card: Best no-annual-fee, high rewards option
  • Chase Sapphire Reserve: Best introductory bonus
  • Bank of America® Premium Rewards® credit card: Best for bonus rewards
  • Capital One Venture Rewards Credit Card: Best flat-rate miles card
  • Amazon Prime Rewards Visa Signature card: Best for online shopping
  • Discover it® Miles: Best no-fee option
  • Wells Fargo Propel American Express® card: Best no-annual-fee, high rewards option

    The Wells Fargo Propel American Express card includes arguably one of the highest rates of return on points for some of the most popular redemption categories out there, including homestays like Airbnb and Vrbo.

    The greatest advantages of this card – besides earning 3 points per dollar spent on some popular spending categories – are that there’s no point limit or expiration, no annual fee and no rotating categories that you constantly have to remind yourself to activate. You get three times the points in the relevant categories all the time without restriction, with travel – including all homestays – and transit being one of those prominent categories.

    The card also charges no foreign currency conversion fee, so buying things abroad is less expensive. If that weren’t enough, here’s what you also get:

    • 3 points per dollar spent on travel and transit purchases
    • 3 points per dollar spent on eating out and ordering in
    • 3 points per dollar spent on gas and rideshares
    • 3 points per dollar spent on select streaming services such as Hulu, Netflix, Sirius XM and Spotify Premium
    • 1 point per dollar spent everywhere else
    • No annual fee
    • No points limit or expiration
    • Premium access to presale tickets, offers and protections from American Express
    • 20,000 points when you spend $1,000 in the first three months
    ProudMoney.

    Chase Sapphire Reserve: Best introductory bonus

    Before the Wells Fargo Propel card debuted, Chase Sapphire Reserve was the go-to credit card option for Airbnb fans. It offers a 50,000-point introductory bonus when you spend $4,000 in your first three months of membership. Those points are worth up to $750 when you book travel through Chase Ultimate Rewards.

    Though equipped with fewer spending categories offering 3X points and carrying a large annual fee of $550, the benefits of the Chase Sapphire Reserve card are more specifically geared toward frequent travelers.

    At the same time, that large annual fee is offset by a $300 annual credit that will reimburse any travel expense – including Airbnb. And from June 1, 2020, to June 30, 2021, gas station and grocery store purchases count toward the travel credit.

    Add to that a $100 credit covering the application to Global Entry/TSA Precheck every four years and the annual fee is almost completely offset in the first year.

    Meanwhile, there are even more travel benefits:

    • 50,000 bonus points after you spend $4,000 in the first three months (worth up to $750 in travel)
    • 3 points per dollar spent on travel (excluding purchases covered by the $300 travel credit)
    • 3 points per dollar spent on dining (including delivery and takeout) and travel; $1,000 in grocery purchases, including eligible pick-up and delivery services, from Nov. 1, 2020 to April 30, 2021
    • Complimentary airport lounge access through Priority Pass Select Membership
    • Trip cancellation/interruption insurance
    • Primary car rental insurance
    • Lost luggage reimbursement

    Bank of America® Premium Rewards® credit card: Best for bonus rewards

    While the points per dollar offered by Bank of America Premium Rewards credit card on travel and Airbnb are fewer than the credit cards above, the sign-up bonus and up to $200 in annual statement credits make it a decent option, even with less flexibility on what qualifies as a credit than the credit cards above.

    This card should absolutely move to the top of your list if you are already a Bank of America Preferred Rewards client. That designation automatically increases your return even higher than what the other credit cards above offer on travel and dining – you can get a rewards bonus of up to 75%.

    Combine that with a generous sign-up bonus and the Bank of America Premium Rewards is one of the most potent rewards cards for Preferred Rewards clients.

    The card includes:

    • Introductory bonus: 50,000 points when you spend $3,000 in the first 90 days (worth up to $500 in free travel)
    • 2 points per dollar spent on dining and travel purchases, including Airbnb and Vrbo
    • 1.5 points per dollar spent on everything else
    • Get up to $200 in travel statement credit rewards, including $100 for incidental spending per year and $100 toward a TSA Precheck/Global Entry application every four years
    • No foreign transaction fees
    • Bank of America Preferred Rewards clients earn up to 3.5 points per dollar on travel and dining purchases and up to 2.62 points per dollar on all other purchases
    • $95 annual fee
    Travel loyalty programs offer extended perks in pandemic

    Capital One Venture Rewards Credit Card: Best flat-rate miles option

    The Capital One Venture Rewards Credit Card is remarkably similar to Bank of America’s Premium Rewards card, right down to the $95 annual fee, but without the additional benefits afforded to Bank of America Preferred Rewards clients.

    However, Capital One Venture Rewards offers 2 points per dollar spent on every purchase, not just travel and dining.

    • Earn 60,000 travel miles after you spend $3,000 in purchases in the first three months – equaling $600 in travel credit
    • Earn 2 miles per dollar spent on every purchase, every day
    • Points can be redeemed for statement credit on travel purchases, including Airbnb
    • $95 annual fee
    • No foreign transaction fees

    Amazon Prime Rewards Visa Signature card: Best for online shopping

    You may be wondering why the Amazon Prime Rewards Visa Signature card is on a list highlighting the best credit cards for AirBnb, Vrbo and other homestays.

    Shouldn’t this card be limited to the “best credit cards for online shopping” list? Not when Amazon offers Airbnb gift cards and the Amazon Prime Rewards card gives you 5% cash back on Amazon.com purchases as long as you have a Prime membership, which essentially acts as the annual fee ($119).

    Just purchase an AirBnb gift card from Amazon with the card, and it’s as if you are getting 5% cash back for your AirBnb stay when you apply the gift card towards it. It’s the highest rate on this list, Amazon or not.

    You’ll receive the following additional benefits:

    • 5% cash back on Whole Foods and Amazon purchases (with Prime membership)
    • 2% cash back on purchases at drugstores, gas stations and restaurants
    • 1% cash back on all other purchases
    • A $100 Amazon gift card upon credit card application approval
    • No foreign transaction fees
    • $500,000 travel accident insurance
    • $3,000 per passenger lost luggage reimbursement
    • Baggage delay insurance of up to $100 a day for three days
    • Extended warranty coverage for an additional year

    See related: How to pay off Amazon purchases over time

    Discover it® Miles: Best no-fee option

    Though the points per dollar on this card are lower than any other credit card on the list, Discover it Miles gives you much more freedom in how you can manage your points and account.

    You can redeem miles in any amount, your miles don’t expire even if you close your account and 1% of your miles can be converted directly into cash for your bank account.

    Discover it Miles offers:

    • 1.5 miles for every dollar spent on every purchase (matched at the end of the first year)
    • Points can be redeemed for statement credit on travel expenses, including Airbnb, gas stations and restaurants.
    • Miles can be converted into cash at rate of 1 cent per mile and transferred directly into your bank account
    • Redeem miles in any amount
    • Miles never expire and you don’t lose them even when you close your account
    • No late payment fee or penalty APR on your first late payment, up to $40 thereafter
    • No foreign transaction fees
    • No annual fee
    • 0% APR on purchases for 14 months (11.99% to 22.99% variable APR after that)
    creditcards.com

    How Does Cash Back Work?

    by Phillip Warren

    How Does Cash Back Work?

    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 author’s alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

    Credit card companies typically offer a plethora of rewards options for their cardholders to take advantage of. But cash back has long been a favorite of many, as it gives you the chance to earn cold, hard money for making everyday purchases. If you’re confused about how cash back works, read on for a full explanation.

    How Cash Back Works

    At its core, cash back refers to a predetermined percentage of a purchase you make being returned to you as cash rewards. Cash back rates typically range between 1% and 5%, though there are some outliers to be mindful of. Credit card issuers will usually clearly label what types of purchases earn what level of cash back. But like anything in the credit card industry, you must read the fine print.

    This is mainly because all purchases and cash back rewards are governed by merchant category codes, or MCCs. Credit card companies ultimately determine these designations, with Mastercard, Visa, American Express and Discover calling the shots. Some common codes are “restaurant,” “department store,” “airline” and “entertainment,” among others. So if you earn 5% bonus cash back at restaurants and you go to Burger King — which has a restaurant MCC — you’ll get that 5% back.

    But what these limiting MCCs sometimes don’t take into account are businesses that could fit into more than one category. Included in this group are hotels, superstores like Walmart, tourist attractions like museums and other multi-faceted establishments. In turn, you could lose out on cash back if you’re confused about which category a purchase you made falls into.

    As an example, let’s say your family orders room service while on vacation in The Bahamas. You pay with your credit card thinking you’ll get the advertised 3% cash back on dining. When your credit card statement comes in the mail, however, you’ve only received the base 1% earnings. This is because the MCC of your hotel is just that, a hotel, which leaves your credit card issuer blind to what you really bought.

    Unfortunately situations like these often offer very little recourse, as your card’s issuer has no ability to change these codes. In fact, only the major credit companies can change their own code selections.

    New cardholders will often receive cash back promotions and bonuses. These offers can either be recurring — monthly, quarterly, yearly, etc. — or simply for just one period of time, usually at the beginning of your account’s life. Hypothetically, a recurring bonus might look like this: “Earn 3% cash back at supermarkets and wholesale clubs, up to $1,500 in purchases each quarter.” On the other hand, a one-time promotion might allow for 5% cash back on airfare purchases made during the first three months you’re a cardholder.

    Depending on your card, cash back may be capped or it could expire after a period of time. While some cards feature both an earnings limit and expiration dates, others may have no restrictions. All cash back cards have their own, unique system surrounding them. So it’s important to refer to your documentation whenever you have a particular question.

    Using Your Cash Back Earnings

    How Does Cash Back Work?

    The vast majority of cash back credit cards offer variations of the same choices for redeeming rewards. Most often, you’ll see statement credits, checks, bank account deposits, gift cards and charitable donations available to you.

    • Statement credit – Instead of receiving your cash back in-hand, you can apply it to your upcoming monthly bill, saving you money in the process.
    • Check – As one of the more direct ways of redeeming cash back, checks allow you to basically do whatever you want with its value.
    • Bank deposits – Eligible accounts usually include checking accounts, savings accounts or investment accounts.
    • Gift cards – With this option, you can convert cash back into retail credit at a store or website at which you want to shop.
    • Donations – Many card issuers have open relations with charities. These partnerships open the door for you to aid your favorite causes with real money.

    It’s by far the easiest to redeem cash back through your card issuer’s website that it provides. Here you’ll not only see your rewards status, you will also know every possible redemption you could make. If you’d rather talk to a real person, most companies still have rewards phone lines you can call, as well.

    Those who’d rather not have to worry about where their rewards currently stand will find that a redemption threshold might be helpful. Not all cards offer this feature. But if yours does, set a threshold at which your cash back is automatically redeemed in any manner you desire. Additionally, some cards require you to attain a certain amount of cash back before redeeming is possible.

    Cash Back With Each Major Credit Card Company

    what is cash back

    There are tons of different cash back cards, depending on your credit score you may be eligible for some but not others. While it’s impossible to give universal specifics for each credit card company, below we’ve provided overviews of some of the most popular cash back cards.

    Citi Double Cash Card (Mastercard)

    Cash Back Rate: 1% at the time of purchase, 1% when you pay them off

    Limit or Expiration: No limit; Expires if no eligible purchases are made for 12 months

    Redemption Options: As a check, statement credit or gift card

    The “double cash” nature of the Citi Double Cash Card means you effectively earn cash back twice: first when you make the initial purchase and again when you pay your credit card bill. The 12-month expiration is fairly standard and the lack of limits on how much cash back you can earn is generous. Statement credits, checks and gift cards are three of the most common redemption choices, so it’s no surprise to see them offered here.

    Bank of America® Cash Rewards credit card (Mastercard)

    Cash Back Rate: 3% in the category of your choice, 2% on purchases at grocery stores and wholesale clubs, 1% on other purchases

    Limit or Expiration: Cash back on choice category, grocery stores and wholesale club purchases is limited on up to $2,500 in combined purchases each quarter; No expiration dates

    Redemption Options: Once you have $25 or more, you can redeem as a statement credit, a check or a deposit to an eligible Bank of America® or Merrill Lynch® account

    Take note of the combined $2,500 quarterly limit on 3% and 2% cash back in category of choice and at grocery stores and wholesale clubs, respectively. The Bank of America® Cash Rewards credit card also requires cardholders to have a minimum of $25 in earned cash back before they can redeem.

    Blue Cash Everyday American Express Card (American Express)

    Cash Back Rate: 3% on U.S. supermarket purchases, 2% on U.S. gas stations and select U.S. department store purchases, 1% on other purchases

    Limit or Expiration: 3% rate at U.S. supermarkets is limited to $6,000 a year in purchases then drops to 1%; No expiration dates

    Redemption Options: After earning at least $25, redeem as a statement credit in $25 increments; Gift cards and merchandise redemptions from time to time

    Amex offers some of the strongest rewards cards around, and the Blue Cash Everyday American Express Card is no exception. It does come with some limits; namely the 3% cash back rate on U.S. grocery store purchases is capped at $6,000 in purchases a year. At that time, cardholders earn 1% in cash back on groceries.

    Discover it® Card (Discover)

    Cash Back Rate: 5% in rotating categories like gas station, supermarket, restaurant, Amazon.com and wholesale club purchases, 1% on other purchases; Full cash back match at the end of your first year

    Limit or Expiration: $1,500 cap on purchases that earn the 5% rate each quarter; No expiration dates

    Redemption Options: Statement credits, deposits to a bank account, gift cards and eCertificates, pay with cash back at select merchants and charitable donations

    Discover cards offer great first-year cash back matches and distinctive cash back categories. These traits are on full display with the Discover it® Card. This includes 5% cash back on purchases ranging from dining to Amazon.com. However, there are limits for this rate and you have to opt in to categories each quarter to qualify. This card also offers five redemption options — the most on this list.

    Tips to Maximize Cash Back Potential and Minimize Credit Risk
    • Cash back is one of the most prolific perks that the modern credit card market has to offer. But it’s important that you don’t overspend outside of your means just for the sake of rewards. Because many cash back cards come with higher annual percentage rates (APRs), this could force you into large, unsustainable interest payments.
    • Whenever possible, swipe your card for purchases in bonus categories. Not all cards have these to offer, but most do. So make sure you know which cards in your wallet offer bonuses at places like gas stations and supermarkets.
    • Know what types of redemptions — statement credits, bank account deposits, gift cards etc. — work best for you. This will drastically narrow down your card options, making the decision process much simpler.

    Photo Credit: ©iStock.com/4×6, Â©iStock.com/Pgiam, Â©iStock.com/Ridofranz

    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 author’s alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

    Advertiser Disclosure: The card offers that appear on this site are from companies from which SmartAsset.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). SmartAsset.com does not include all card companies or all card offers available in the marketplace.

    The post How Does Cash Back Work? appeared first on SmartAsset Blog.


    Source: smartasset.com

    Best Credit Cards for Bad Credit

    by Phillip Warren

    When it comes to excuses consumers give for their poor credit scores, banks and lenders have heard it all. 

    Maybe you lost your job and couldn’t pay your student loan payment for a few months. Or perhaps you thought you’d gotten a deferment but were too busy job hunting to find out for sure. 

    Maybe you thought you paid your credit card bill but it’s actually sitting on your kitchen counter waiting for the mail.

    Whatever the reason for your low credit score, one thing is for certain — lenders don’t care.

    In fact, banks and other lenders lean on your credit score and other factors to determine whether they should approve you for a credit card or a loan — and that’s about it. Your personal situation is never considered, nor should it be.

    It would be wonderful if credit card companies understood that “life happens” and made special exceptions to help people out, but that’s not the world we live in.  As most of us already know, that’s not typically how credit works. Credit cards are backed by banks, and banks have rules for a reason.

    Now, here’s the good news: Credit cards can help rebuild your credit, earn cash back for each dollar you spend, make travel easier, and serve as an emergency fund if you’re stuck paying a huge bill at the last minute. This is true even if you have poor credit, although the selection of credit cards you can qualify for may be somewhat limited. 

    Keep reading to learn about the best credit cards for bad credit, how they work, and how you can get approved.

    Best Cards for Bad Credit This Year

    Before you give up on building credit, you should check out all the credit cards that are available to consumers who need some help. Our list of the best credit cards for bad credit includes some of the top offers with the lowest fees and fair terms.

    • Total Visa®
    • Discover it® Secured
    • Credit One Bank® Visa® Credit Card
    • Secured Mastercard® from Capital One®
    • Milestone® Gold Mastercard®
    • Credit One Bank® Unsecured Visa® with Cash Back Rewards

    #1: Total Visa®

    The Total Visa® is one of the easiest credit cards to get approved for in today’s market, and it’s easy to use all over the world since it’s a true Visa credit card. However, this card does come with high rates and fees since it’s available to consumers with poor credit or a limited credit history.

    Processing your application will cost $89, which is extremely high when you consider the fact that most credit cards don’t charge an application fee. You’ll also pay an initial annual fee of $75 and a $48 annual fee for each year thereafter.

    Once you sign up, you’ll be able to pick your preferred card design and your credit card payments will be reported to all three credit reporting agencies — Experian, Equifax, and TransUnion. This is the main benefit of this card since your on-time payments can easily help boost your credit score over time. 

    For the most part, the Total Visa® is best for consumers who don’t mind paying a few fees to access an unsecured line of credit. Since this card doesn’t dole out rewards, however, there are few cardholder perks to look forward to. 

    • APR: 35.99% APR
    • Fees: Application fee and annual fee
    • Minimum Credit Score: Not specified
    • Rewards: No

    #2: Discover it® Secured

    While secured cards don’t offer an unsecured line of credit like unsecured credit cards do, they are extremely easy to qualify for. The Discover it® Secured may not be ideal for everyone, but it does offer a simple online application process and the ability to get approved with little to no credit history.

    Keep in mind, however, that secured cards do work differently than traditional credit cards. With a secured credit card, you’re required to put down a cash deposit upfront as collateral. However, you will get your cash deposit back when you close your account in good standing.

    Amazingly, the Discover it® Secured lets you earn rewards with no annual fee. You’ll start by earning 2% back on up to $1,000 spent each quarter in dining and gas. You’ll also earn an unlimited 1% back on everything else you buy.

    The Discover it® Secured doesn’t charge an application fee or an annual fee, although you’ll need to come up with the cash for your initial deposit upfront. For the most part, this card is best for consumers who have little to no credit and want to build their credit history while earning rewards.

    • APR: 24.74%
    • Fees: No annual fee or monthly fees
    • Minimum Credit Score: Not specified
    • Rewards: Yes

    #3: Credit One Bank® Visa® Credit Card

    The Credit One Bank® Visa® Credit Card is another credit card for bad credit that lets you earn rewards on your everyday spending. You’ll earn a flat 1% cash back for every dollar you spend with this credit card, and since it’s unsecured, you don’t have to put down a cash deposit to get started.

    Other benefits include the fact you can get pre-qualified for this card online without a hard inquiry on your credit report — and that you get a free copy of your Experian credit score on your online account management page.

    You may be required to pay an annual fee up to $95 for this card for the first year, but it depends on your creditworthiness. After that, your annual fee could be between $0 and $99.

    • APR: 19.99% to 25.99%
    • Fees: Annual fee up to $95 the first year depending on creditworthiness; after that $0 to $99
    • Minimum Credit Score: Not specified
    • Rewards: Yes

    #4: Secured Mastercard® from Capital One®

    The Secured Mastercard® from Capital One® is another secured credit card that extends a line of credit to consumers who can put down a cash deposit as collateral. This card is geared to people with bad credit or no credit history, so it’s easy to get approved for. One downside, however, is that your initial line of credit will likely be just $200 — and that doesn’t give you much to work with. 

    On the upside, this card doesn’t charge an annual fee or any application fees. That makes it a good option if you don’t want to pay any fees you won’t get back.

    You’ll also get access to 24/7 customer service, $0 fraud liability, and other cardholder perks.

    • APR: 26.49%
    • Fees: No ongoing fees
    • Minimum Credit Score: Not specified
    • Rewards: No

    #5: Milestone® Gold Mastercard®

    The Milestone® Gold Mastercard® is an unsecured credit card that lets you get pre-qualified online without a hard inquiry on your credit report. You won’t earn any rewards on your purchases, but you do get benefits like the ability to select your card’s design, chip and pin technology, and easy online account access.

    You will have to pay a one-time fee of $25 to open your account, and there’s an annual fee of $50 the first year and $99 for each year after that.

    • APR: 24.90%
    • Fees: Account opening fee and annual fees
    • Minimum Credit Score: Not specified
    • Rewards: No

    #6: Credit One Bank® Unsecured Visa® with Cash Back Rewards

    The Credit One Bank® Unsecured Visa® with Cash Back Rewards lets you earn 1% back on every purchase you make with no limits or exclusions. There’s no annual fee or application fee either, which makes this card a winner for consumers who don’t want to get hit with a lot of out-of-pocket costs.

    As a cardholder, you’ll get free access to your Experian credit score, zero fraud liability, and access to a mobile app that makes tracking your purchases and rewards a breeze. You can also get pre-qualified online without a hard inquiry on your credit report.

    • APR: 25.99%
    • Fees: No annual fee or application fee
    • Minimum Credit Score: Not specified
    • Rewards: Yes

    The Downside of Credit Cards with Bad Credit

    While your odds of getting approved for one of the credit cards for bad credit listed above are high, you should be aware that there are plenty of pitfalls to be aware of. Here are the major downsides you’ll find with these credit cards for bad credit and others comparable cards:

    • Higher fees: While someone with excellent credit can shop around for credit cards without any fees, this isn’t the case of you have bad credit. If your credit score is poor or you have a thin credit profile, you should expect to pay higher fees and more of them.
    • Higher interest rates: While some credit cards come with 0% interest for a limited time or lower interest rates overall, consumers with poor credit typically have to pay the highest interest rates available today. Some credit cards for bad credit even come with APRs as high as 35%.
    • No perks: Looking for cardholder benefits like cash back on purchases or points toward airfare or movie tickets? You’ll need to wait until your credit score climbs back into “good” or “great” territory. Even if you can find a card for applicants with bad credit that offers cash back, your rewards may not make up for the higher fees.
    • No balance transfers: If you’re looking for relief from other out-of-control credit card balances, look elsewhere. Credit cards for bad credit typically don’t offer balance transfers. If they do, the terms make them cost-prohibitive.
    • Low credit limits: Credit cards for bad credit tend to offer initial credit limits in the $300 to $500 range with the possibility of increasing to $2,000 after a year of on-time monthly payments. If you need to borrow a lot more than that, you’ll have to consider other options.
    • Security deposit requirement: Secured credit cards require you to put down a cash deposit to secure your line of credit. While this shouldn’t necessarily be a deal-breaker — and it may be required if you can’t get approved for an unsecured credit card — you’ll need to come up with a few hundred dollars before you apply.
    • Checking account requirement: Most new credit card accounts now require cardholders to pay bills online, which means you’ll need a checking account. If you’re mostly “unbanked,” you may need to open a traditional bank account before you apply.

    Benefits of Improving Your Credit Score

    People with bad credit often consider their personal finances a lost cause. The road to better credit can seem long and stressful, and it’s sometimes easier to give up then it is to try to fix credit mistakes you’ve made in the past.

    But, there are some real advantages that come with having at least “good” credit, which typically means any FICO score of 670 or above. Here are some of the real-life benefits better credit can mean for your life and your lifestyle:

    • Higher credit limits: The higher your credit score goes, the more money banks are typically willing to lend. With good credit, you’ll have a better chance at qualifying for a car loan, taking out a personal loan, or getting a credit card with a reasonable limit.
    • Lower interest rates: A higher credit score tells lenders you’re not as risky as a borrower —a sign that typically translates into lower interest rates. When you pay a lower APR each time you borrow, you can save huge amounts of money on interest over time.
    • Lower payments: Borrowing money with a lower interest rate typically means you can usually get lower payments all your loans, including a home loan or a car loan.
    • Ability to shop around: When you’re an ideal candidate for a loan, you can shop around to get the best deals on credit cards, mortgages, personal loans, and more.
    • Ability to help others: If your kid wants to buy a car but doesn’t have any credit history, better credit puts you in the position to help him or her out. If your credit is poor, you won’t be in the position to help anyone.
    • More options in life: Your credit score can also impact your ability to open a bank account or rent a new apartment. Since employers can request to see a modified version of your credit report before they hire you, excellent credit can also give you a leg up when it comes to beating out other candidates for a job. 

    In addition to the benefits listed above, most insurance companies now consider your credit score when you apply for coverage. For that reason, life, auto, and home insurance rates tend to be lower for people with higher credit scores.

    This may seem unfair, but you have to remember that research has shown people with high credit scores tend to file fewer insurance claims.

    How to Improve Your Credit: Slow and Steady

    When you have a low credit score, there are two ways to handle it. If you don’t mind the consequences of poor credit enough to do anything about it, you can wait a decade until the bad marks age off your credit report. Depending on when your creditors give up and write off your debt, you may not even need to wait that long.

    If you don’t like the idea of letting your credit decay while you wait it out, you can also try to fix your past credit mistakes. This typically means paying off debt — and especially delinquent debts — but it can also mean applying for new loan products that are geared to people who need to repair their credit.

    If you decide to take actionable steps to build credit fast, the credit cards on this page can help. They’ll give you an opportunity to show the credit bureaus that you’ve changed your ways.

    Before you take steps to improve your credit score, however, keep in mind all the different factors used to determine your standing in the first place. The FICO scoring method considers the following factors when assigning your score:

    • On-time payments: Paying all your bills on time, including credit cards, makes up 35% of your FICO score. For that reason, paying all your bills early or on time is absolutely essential.
    • Outstanding debts: How much you owe matters, which is why paying off your credit cards each month or as often as possible helps your score. According to myFICO.com, the amounts you owe in relation to your credit limits make up another 30% of your FICO score.
    • New credit: Apply for too many new cards or accounts at once can impact your score in a negative way. In fact, this determinant makes up another 10% of your FICO score.
    • Credit mix: Having a variety of open accounts impresses the credit bureau algorithm Gods. If all you have are personal loans right now, mixing in a credit card can help. If you already have four or five credit cards, it may be wise to back off a little.
    • Length of credit history: The length of your credit history also plays a role in your score. The longer your credit history, the better off you are.

    If you want to improve your credit score, consider all the factors above and how you can change your behavior to score higher in each category. It’s pretty easy to see how paying all your bills early or on time and paying off debt could make a big positive impact on your credit score when you consider that these two factors alone make up 65% of your FICO score.

    If you want a way to track your progress, also look into an app like Credit Karma, one of my favorite tools. This app lets you monitor your credit progress over time and even receive notifications when your score has changed. Best of all, it’s free.

    Should You Use a Credit Card to Rebuild Your Credit Score?

    If you’re on the fence about picking up a credit card for bad credit, your first step should be thinking over your goals. What exactly are you trying to accomplish?

    If you’re looking for spending power, the cards on this list probably won’t help. Some are secured cards, meaning you need a cash deposit to put down as collateral. Others offer low credit limits and high fees and interest rates, making them costly to use over the long-term.

    If you really want to start over from scratch and repair credit mistakes made in the past, on the other hand, one of these cards may be exactly what you need. If you’re determined to improve your score, they can speed things along.

    You may pay higher fees and interest rates along the way, but it’s important to remember that none of the cards on this list need to be your top card forever. Ideally, you’ll use a credit card for poor credit to rebuild your credit and boost your score. Once you’ve reached your goal, you can upgrade to a new card with better benefits and terms.

    The post Best Credit Cards for Bad Credit appeared first on Good Financial Cents®.


    Source: goodfinancialcents.com

    How I Paid Off $40,000 In Student Loans in 7 Months

    by Phillip Warren

    Want to learn how to pay off student loans? With my student loan repayment plan, I was able to pay off $40,000 in student loan debt in 7 months!Want to learn how to pay off student loans? With my student loan repayment plan, I was able to pay off $40,000 in student loan debt in 7 months! One of the best ways to save money is to finally get rid of those pesky loans that are hurting your financial situation.

    Learning how to pay off student loans can lead to many positives, such as:

    • You may finally feel less financial stress.
    • You may be able to use that money towards something more important, such as saving for retirement.
    • Getting rid of your student loans may allow you to pursue other goals in life, such as traveling more or looking for a better job.

    I know these things are true because learning how to pay off my student loans is one of the best decisions that I've ever made.

    No, it wasn't easy to pay off my student loans that quickly, but it was definitely worth it. No longer having those monthly payments hanging over my head is a HUGE relief, and it allowed me to eventually leave my day job and travel full-time.

    Related posts on how to pay off student loans:

    • 6 Ways I Saved Money On College Costs
    • How Blogging Paid Off My Student Loans
    • The Benefits Of Paying Off Student Loan Debt Early
    • 30+ Ways To Save Money Each Month
    • 12 Work From Home Jobs That Can Earn You $1,000+ Each Month
    • How Do Student Loans Work?

    How to pay off student loans and create a great student loan repayment plan:

     

    Total how much student loan debt you have.

    The very first thing that I recommend you do if you want to learn how to pay off student loans is to add up the total amount of student loans that you have.

    When you total your student loans, do not just estimate how much student loan debt you have.

    You should actually pull up each student loan and tally everything, down to the penny. By doing so, you will have a much more realistic view of exactly how much you're dealing with.

    Plus, the average person has no idea how much student loan debt they have! Usually, they have far more than they originally thought.

     

    Understand your student loans better.

    There are many people who simply do not understand their student loans. There are many things to research so that you can create the best student loan repayment plan, and this will also help you understand your loans and interest rates.

    You should understand:

    • Your interest rate. Some student loans have fixed interest rates, whereas others might have variable rates. You'll want to figure out what the interest rate on your loans are because that may impact the student loan repayment plan you decide on. For example, you might choose to pay off your student loans that have the highest interest rates first so that you can pay less money over time.
    • What a monthly payment means. Many people believe that a monthly payment is all that you have to pay, are allowed to pay, or that by paying just the minimum monthly payment you won't owe any interest. These three things are so incorrect! Even if you pay the minimum monthly payment, you will most likely still owe interest charges (unless your interest rate is 0% – but that is very unlikely with student loans).
    • Student loan reimbursements. Some employers will give you money to put towards your student loans, but you should always do your research when it comes to this area. Some employers require that you work for them for a certain amount of time, you have great grades, good attendance, and they might have other requirements as well. There are many employers out there who will pay your student loans back (fully or partially), so definitely look into this option.
    • Auto-payment plans. For most student loans, you can probably auto-pay them and receive a discount. Always look into this as you may be able to lower your interest rate by 0.25% on each of your student loans.

    I recommend that you check out Personal Capital (a free service) if you are interested in gaining control of your financial situation. Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation, your cash flow, detailed graphs, and more. You can also connect accounts, such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more. Plus, it's FREE.

     

    Determine if refinancing your student loans is right for you.

    Student loan refinancing is when you apply for a new loan that is then used to pay off your other student loans. This may be a good option if your credit history or credit score is better than when you originally took out your student loans.

    By refinancing your student loans, you may qualify for better repayment terms, a lower interest rate, and more. This is great because it may help you pay off your student loans quicker.

    The positives of refinancing student loans include:

    • One monthly payment to simplify your finances.
    • Lower monthly payments.
    • Lower interest rates, and more.

    Some companies, like Credible, allow you to refinance your federal student loans as well as your private student loans into one. On average, refinancing can save you thousands of dollars on your loan, which is amazing!

    However, before refinancing a federal student loan, you will want to think about different federal benefits that you may be giving up. You may give up income-based repayment plans and loan forgiveness for those who have certain public service jobs (such as jobs at public schools, the military, Peace Corps, and more). By refinancing federal student loans, you are giving up any future option to these.

    Read further at: Consolidating And Refinancing Student Loans – What You Should Know.

    Related tip on how to pay off student loans: I highly recommend Credible for student loan refinancing. They are the top student loan refinancing company and have great customer service! You can significantly lower the interest rate on your student loans which may help you shave thousands off your student loan bill over time. Through Credible, you may be able to refinance your student loans at a rate as low as 2.14%! Plus, it's free to apply and Credible is giving Making Sense of Cents readers a $100 bonus when they refinance.

     

    Reduce your interest rate for your student loan repayment plan.

    As I stated earlier, if you automatically pay your student loans each month or consolidate them, then sometimes you can get an interest rate reduction.

    With Sallie Mae, I believe the reduction is 0.25%.

    That may not seem significant, but it is something! Remember, every little bit counts when it comes to having a good student loan repayment plan.

     

    Create the best budget.

    If you don't have one already, then you should create a budget immediately. This will help you learn how to pay off student loans as you'll learn how to manage your money better.

    Budgets are great, because they keep you mindful of your income and expenses. With a budget, you will know exactly how much you can spend in a category each month, how much you have to work with, what spending areas need to be evaluated, among other things.

    Learn more at How To Create a Budget That Works.

     

    Look for more ways to earn money.

    Making extra money can allow you to pay off your students loans quickly because there is no limit to how much money you can make.

    Finding ways to make extra money is how I was able to pay off my student loans so quickly!

    And trust me, you probably do have time in your day to make extra money.

    Just think about it: The average person watches 35 hours of TV a week and spends around 15 hours a week on social media. If you could use that time better and make more money with those extra hours, you'll be able to pay off your student loans in no time!

    Here are some ways to make more money so that you can learn how to pay off student loans:

    • Start a blog. Blogging is how I make a living and just a few years ago I never thought it would be possible. I earn around $100,000 a month through blogging. You can create your own blog here with my easy-to-use tutorial. You can start your blog for as low as $2.95 per month, plus you get a free domain if you sign-up through my tutorial.
    • Start a business. There are many business ideas that you could start in order to make extra money.
    • Sell your stuff. There are many things you can do to make money by selling items. We all have extra things laying around that can be sold, or you can even search for items that can be bought and resold for a profit.
    • Rent an extra room in your home. If you have extra space in your house, then you may want to rent it out. Read A Complete Guide To Renting A Room For Extra Money.
    • Answer surveys. Survey companies I recommend include Swagbucks, Survey Junkie, Pinecone Research, Opinion Outpost, Prize Rebel, and Harris Poll Online. They're free to join and free to use! You get paid to answer surveys and to test products. It's best to sign up for as many as you can as that way you can receive the most surveys and make the most money.
    • Become an Uber or Lyft driver. Driving others around in your spare time can be a great money maker. Read more about this in my post – How To Become An Uber Or Lyft Driver. Click here to join Uber and start making money ASAP.
    • Find a part-time job. There are many part-time jobs that you may be able to find. You can find a job on sites such as Snagajob, Craigslist (yes, I've found a legitimate job through there before), Monster, and so on.

    Related articles that will help you learn how to pay off student loans:

    • 75+ Ways To Make Extra Money
    • 8 Things To Sell To Make Money
    • 10 Ways To Make Money Online From The Comfort of Your Home
    • 10 Things I've Done To Make Extra Money
    • Ways To Make An Extra $1,000 A Month

     

    How to pay off your student loans – Find ways to reduce your expenses.

    The next step is to cut your budget so that you can have a faster student loan repayment plan. Even though you may have a budget, you should go through it line by line and see what you really do not need to be spending money on.

    There's probably something that you're wasting your money on.

    Until you write it down in your budget, you may not realize how much money you are wasting on things you don't need. And, remember, it's never too late to start trimming your budget and to put your money towards important things like paying off student loans!

    Even if all you can cut is $100 each month, that is better than nothing. That's $1,200 a year right there!

    Some expenses you may be able to cut include:

    • Lower your cell phone bill. Instead of paying the $150 or more that you currently spend on your cell phone bill, there are companies out there like Republic Wireless that offer cell phone service starting at $15. YES, I SAID $15! If you use my Republic Wireless affiliate link, you can change your life and start saving thousands of dollars a year on your cell phone service. If you are interested in hearing more, I created a full review on Republic Wireless. I've been using them for over a year and they are great.
    • ATM fees. You don't need to pay ATM fees, but for some reason so many people do!
    • Sign up for a website like Ebates where you can earn CASH BACK for spending how you normally would online. The service is free too! Plus, when you sign up through my link, you also receive a free $10 cash back!
    • Pay bills on time. This way you can avoid late fees.
    • Shop around for insurance. This includes health insurance, car insurance, life insurance, home insurance, and so on. Insurance pricing can vary significantly from one company to the next. The last time we were shopping for car insurance, we found that our old company wanted something like $205 to insure one car for one month, whereas the company we have now charges $50 a month for the same exact coverage. INSANE!
    • Save money on food. I recently joined $5 Meal Plan in order to help me eat at home more and cut my food spending. It's only $5 a month (the first four weeks are free) and they send meal plans straight to you along with the exact shopping list you need in order to create the meals. Each meal costs around $2 or less per person. This allows you to save time because you won't have to meal plan anymore, and it will save you money as well!
    • Fuel savings. Combine your car trips, drive more efficiently, get a fuel efficient car, etc.
    • Trade in your car for a cheaper one. For us, we are car people. Cars are one of our splurges. However, if you only have a nice car to keep up with the Joneses, then you might want to get rid of it and get something that makes more sense.
    • Live in a cheaper home. I'm not saying that you need to live in a box, but if you live in a McMansion, then you may want to think about a smaller home. This way you can save money on utility bills and your mortgage payment.
    • Learn to have more frugal fun. We don't spend anywhere near the same amount of money on entertainment as we used to. There are plenty of ways to have frugal fun.
    • Look for coupon codes. I search for coupon codes for everything. Today, I have two for you. I have a $20 Airbnb coupon code and a free taxi ride with Uber. Both are great services that I have personally used.

     

    See if your employer will reimburse your student loan debt.

    Some companies will pay your student loans quickly if you work for them. I even know of someone who receives a $2 bonus for each hour that she works to put towards her student loans.

    $2 may not seem like a lot, but if you work full-time, then that's over $300 a month. $300 a month for student loans is a good amount! And, because it's free money, it can all be put towards paying off your student loans quickly.

     

    Create a plan to pay off your student loans.

    After you have completed the steps above, you'll want to put it all together and create a plan.

    Without a plan, you would just be all over the place, making it difficult to reach your goal of learning how to pay off student loans.

    You should create a plan that details the steps you need in order to pay off your student loans, what will happen as you reach each step, when and how you will track your progress, and more.

    Being detailed with your plan will help you reach your goal and become successful.

     

    Stay motivated with your student loan repayment plan.

    Finding motivation can be a hard task for anyone. Motivation is important because it can help you keep your eye on the goal even when you want to quit. Motivation will help you continue to work hard towards your goal, even when it seems impossible. Motivation is what keeps you going so that you do not quit.

    Yes, student loan repayment can seem very stressful when you think about it. Many people owe thousands and thousands in student loans.

    And, no matter how young or old you are, learning how to pay off student loans can seem difficult or even near impossible. However, think about your goal and how good life will be once all of your student loan debt is gone.

    Please try to not let your student loans get you down. Think positively and attack that debt so that you can pay off your student loans fast!

    Trust me, once you finally pay off those pesky student loans, you'll be happier than ever!

    Related post on how to pay off student loans: 8 Ways To Get Motivated And Reach Your Goals

     

    Pay more than the minimum if you want to learn how to pay off student loans!

    The point of what I've written above is to help you pay off your student loans. However, you can always go a little bit further and pay off your student loans more quickly.

    The key to speeding up your student loan repayment process is that you will need to pay more than the minimum each month.

    It may sound hard, but it really doesn't have to be. Whatever extra you can afford, you should think about putting it towards your student loans. You may be able to shave years off your student loans!

    What other ways can a person learn how to pay off student loans? What's your student loan repayment plan?

    The post How I Paid Off $40,000 In Student Loans in 7 Months appeared first on Making Sense Of Cents.


    Source: makingsenseofcents.com

    Activate Chase Freedom cash back categories for Q1 2021 now

    by Phillip Warren

    Chase has announced the 5% cash back categories on the Chase Freedom Flex℠ and the retired Freedom card for the first quarter of 2021.

    From Jan. 1 through March. 31, 2021, Freedom and Freedom Flex cardholders can earn 5% cash back on select streaming services, internet, cable and phone services and wholesale club purchases (up to $1,500 in combined purchases) after activation.

    Besides that, the new Flex card offers 5% cash back on travel booked through the Chase Ultimate Rewards portal, 3% on dining and drugstore purchases and 1% on everything else. All other purchases earn 1% cash back.

    See related: Chase to launch new Freedom Flex card, add new categories to Freedom Unlimited

    Activation for first-quarter categories on both the Freedom and Freedom Flex launched on Dec. 15, 2020, and will be open until March 14, 2021.

    Here’s what you need to know at a glance:

    • Activation of first-quarter bonus categories begins on Dec. 15 for both the Chase Freedom and Chase Freedom Flex.
    • Cardholders must activate by March 14 to earn the bonus rate.
    • From Jan. 1 to March 31, Freedom and Freedom Flex cardholders can earn 5% cash back on eligible streaming services, internet, cable and phone services and wholesale club purchases.
    • The 5% cash back bonus is capped at $1,500 in combined purchases per quarter.
    • As of Jan. 12, 2020, Chase Freedom cardholders earn 5% cash back on Lyft rides through March 2022.

    Chase 5% cash back calendar 2021

    Winter Spring Summer Holiday
    January – March

    (Activation closes on March 14)

    April – June

    (Activation closed)

    July – September

    (Activation closed)

    October – December

    (Activation closed)

    • Select streaming services
    • Phone, cable and internet services
    • Wholesale clubs

    TBA

    TBA

    TBA

    Chase only releases its quarterly bonus categories one quarter at a time, so we can’t yet predict what will be offered in the rest of the quarters in 2021. Here’s a quick look at some of the categories Chase has offered in the last year.

    Chase 5% cash back calendar 2020

    Winter Spring Summer Holiday
    January – March April – June July – September October – December
    • Select streaming services
    • Gas stations
    • Phone, cable and internet services
    • Gym memberships
    • Fitness clubs
    • Grocery stores
    • Select streaming services
    • Amazon
    • Whole Foods Market
    • Walmart
    • PayPal

    What is included and excluded in the ‘Select streaming services’ category?

    In this category, you can earn 5% cash back on select streaming services, including music and video streaming.  The eligible services include Disney+, Hulu, ESPN+, Netflix, Sling, Vudu, Fubo TV, Apple Music, SiriusXM, Pandora, Spotify and YouTube TV.

    What is included and excluded in the ‘Phone, cable and internet services’ category?

    You can earn cash back on your monthly bills, such as your cable, internet and phone services. To earn 5% cash back in the category, make sure to pay these bills with your Freedom or Freedom Flex card.

    Equipment purchases don’t qualify in this category. You may also not receive the bonus cash back if you pay for your phone, cable or internet service at a merchant’s store that’s not classified in the applicable services category.

    What is included and excluded in the ‘Wholesale clubs’ category?

    In this category, you can get 5% back when you’re shopping at wholesale clubs, including Sam’s and BJ’s. You can also use your Chase Freedom (no longer available for new applications) to earn bonus cash back at Costco. Since Costco only accepts Visa cards, the new Freedom Flex, which is a Mastercard, won’t be accepted. Mastercards are, however, accepted on Costco.com.

    See related: Best credit cards for Costco purchases

    earn 5% cash back on up to $1,500 in combined spending in rotating categories each quarter, upon enrollment, then 1%.

    Chase vs. Discover cash back categories 2021

    Chase Freedom Flex℠

    Discover it® Cash Back

    January – March Select streaming services, phone, cable and internet services, wholesale clubs Grocery stores, Walgreens and CVS
    April – June TBA Gas stations, Uber, Lyft and wholesale clubs
    July – September TBA Restaurants and PayPal
    October – December TBA Amazon.com, Target.com and Walmart.com

    Which card offers the best deal?

    The best card for you depends on where you plan to spend your money in the first quarter of 2021.

    Discover it® Cash Back offers bonus cash back at grocery stores at the beginning of the year. Since groceries are regular expenses that can get rather high, especially if you’re grocery shopping for a family, this category can be pretty lucrative.

    At the same time, if you have a wholesale club membership, it can be very easy for you to meet the spending cap in this category with your Chase card. This can make up for the other two underwhelming categories.

    For the rest of 2021, we can’t predict which card will be best for you, as while Discover has announced its categories for the next year, Chase only releases bonus categories one quarter at a time.


    Source: creditcards.com

    What You Need to Know to Pick a New Checking Account

    by Phillip Warren

    Perhaps you’ve found yourself driving across town to locate an ATM in your bank’s network. Or maybe you’ve been hearing about rewards checking accounts with benefits like cash back, which yours doesn’t offer. Oh, yeah. And what about that charge you saw on your last statement for not carrying a high enough balance? It’s pretty easy to feel like the only person on Earth with a checking account that’s just not cutting it.

    Robert Farrington, founder of the personal finance website The College Investor, says it’s important to routinely review your checking account to make sure it still meets your needs. “You might have opened a checking account in high school, college or when you got your first job, and you haven’t looked back,” Farrington says. “But banking has changed—and it’s likely that your needs have as well.”

    Given the growing crop of new checking accounts with flexible and appealing features, it’s probably time to take a closer look at your current account offerings: What are they doing for you? Do they align with your current financial situation? What benefits are you missing?

    However, with all the options out there, you’re probably thinking, “How do I choose a checking account?” It’s simple, really. Just consider these three needs: no fees, convenience and lifestyle compatibility.

    “You might have opened a checking account in high school, college or when you got your first job, and you haven’t looked back. But banking has changed—and it’s likely that your needs have as well.”

    – Robert Farrington, founder of The College Investor

    Read on for how to assess your checking account’s performance for each need, and, if it’s lacking, how to select a checking account:

    Find out if fees are eating away at your funds

    Fees are a big consideration when picking a new checking account. One way to determine whether your current checking account is treating you fairly in regards to fees is to review your statements from the past few months, Farrington says. You may be getting charged for things you aren’t aware of, such as not meeting a minimum balance.

    “If you have an account that requires a minimum balance or a certain number of transactions, then looking at past banking records can help you determine if you’re meeting those requirements,” he says. If keeping a minimum balance seems to be a challenge, you might want to consider alternative options to help you avoid checking account fees.

    Wondering how to choose a checking account? Ask yourself if fees are an issue with your current account.

    What else should you keep an eye out for fee-wise on your monthly statements if you’re considering picking a new checking account? How about charges for out-of-network ATM usage? When you withdraw cash out of network because your bank doesn’t have branches or ATMs that are convenient for you, those fees can add up. According to Bankrate’s 2018 checking account and ATM fee study, the average ATM surcharge (the fee from the ATM owner for non-customers) has gone up 19 times in the past 20 years, reaching $3.02, its highest amount at the time the report was published.

    A no-fee checking account means no charges for checks, online bill pay, monthly maintenance, replacement debit cards and even insufficient funds. That’s a lot of dough saved by picking a new checking account that comes with no fees.

    Online-only banks may offer some of the best deals for no-fee checking, since they don’t operate physical locations and can often pass those savings down to you. For example, Cashback Debit, Discover’s checking account, charges no account-related fees.1

    Know what conveniences you need

    If you’re like most people on the go, you’ll want to access your checking account fast and at any time. So convenience may be a checking account benefit that ranks high on your list when considering how to select a checking account.

    When it comes to how to choose a checking account, understanding what features banks offer to make their checking account convenient is important, says Chane Steiner, the CEO of Crediful, a personal finance and credit blog.

    Convenience can come in many forms—from easy access to your bank’s services and personnel, to proximity, to mobile features and more. Below is a list of services you should consider if convenience is a premium:

    • Customer service that’s available after hours or 24/7.
    • A large network of ATMs makes accessing your money quick and easy. So when picking a new checking account, consider the ATM network you’ll be able to use. For example, Discover’s Cashback Debit card can be used at over 60,000 no-fee ATMs nationwide. With a network this vast, you may be able to enjoy the convenience of ATMs located near you without having to pay out-of-network fees.
    • Online banking can be “a great alternative to going to a branch if the majority of your transactions can be done online or you use services like direct deposit,” Steiner says. Think of the time you’ll save by banking from your computer or mobile device rather than traveling to a branch location.
    • Mobile check deposits can be an important feature when learning how to choose a checking account if you are remote, travel often or need to make a lot of deposits. In many cases, you can use your bank’s app on your mobile phone or tablet to snap a picture of a check you want to deposit and upload the image.
    • Branch access could be important to you if you get paid in cash—for example, if you work in childcare or are a gig worker or freelancer—because you may need to visit the physical branch location in order to deposit the cash. In this case, a checking account at a traditional bank could be convenient.

    There’s also a variety of other features to consider when picking a new checking account. “You just have to define your needs and decide from there,” Steiner says.

    Defining what you're looking for from your bank makes it easier to know how to select a checking account.

    For additional help thinking through what features are most important to you, let your lifestyle and financial goals guide you. What comes next are some tips on how to do just that.

    Tailor your checking account—and its perks—to your lifestyle

    Maybe you like certain benefits that you’ve learned about in your research for picking a new checking account. “But you need to decide what’s most important to you for your banking needs,” Farrington says. “And those goals may be very different from your neighbor’s based on your banking habits.” If you’ve moved or changed jobs and your branch and ATM locations are no longer convenient, for example, that could be a good reason for seeking a new checking account.

    On the other hand, Crediful’s Steiner says, “If you realize you don’t go to a branch and simply need ATM access, an online checking account may be a great fit. It’s easy to open, convenient and most have all the services that a traditional bank offers—usually at a lower price or fee structure.”

    Inevitable things (read: life events) should also be considered when thinking about how to select a checking account. These include getting married (think: combined lives, joint checking account) and having kids (think: convenience, cash in a pinch).

    The reasons you first opened your checking account could also be different from why you need one now. Perhaps you used it to pay down a number of credit card bills in the past and regularly held a high balance. Fast forward, and now the cards are paid off and you’re no longer storing as much cash in the account, making you fall below your bank’s minimum balance requirement and causing you to get hit with fees. In that case, picking a new checking account that doesn’t have a minimum balance requirement may be a great choice.

    Finding a bank that offers perks that complement your current lifestyle is important to consider when determining how to select a checking account, as it could help you make a final decision. Two benefits to consider:

    Say hello to
    cash back on debit
    card purchases.

    No monthly fees.
    No balance requirements.
    No, really.

    See Details

    Discover Bank, Member FDIC

    • Cash back rewards: If you find yourself frequently using your debit card, be sure to maximize that spending by earning rewards. On the money you spend, Discover offers 1% cash back on up to $3,000 in debit card purchases each month.To assess the potential value of this benefit, look at your monthly debit card spending and calculate how much you can earn in cash back. If you spend $3,000 every month, that’s an extra $360 a year. What could that extra cash be used for? Chances are, a lot of things—from a wedding gift to starting an emergency fund. Cha-ching!
    • Interest: â€œSome checking accounts will offer interest,” Steiner says. This allows your money to grow while being held in the account. Consider this if you keep high balances in your checking account.

    Once you’ve considered how to choose a checking account and know what checking account you’re going with, the rest is relatively straightforward. It’s just a matter of following the right steps.

    “If you realize you don’t go to a branch and simply need ATM access, an online checking account may be a great fit.”

    – Chane Steiner, CEO of Crediful

    How to make the switch to a new account

    If you’ve decided upgrading is right for you, the next step (after you’ve mastered how to choose a checking account) is to actually make the switch. The good news is that the process is much simpler than the thinking that goes into picking one out.

    Here are some quick tips for your new checking life:

    • Open the new account—either by completing your application online, in the case of an online checking account, or filling out an application at a branch.
    • Transfer your funds from your old account to your new one.
    • Change any direct deposits from the old account to the new account.
    • Set up automatic bill payments from your new account (and cancel them from your old account).
    • Close your old account. “It’s suggested you keep your old account open for a month or so to make sure you don’t miss any last transactions that may post,” Farrington says.

    Enjoy your new checking outlook

    It’s an easy process to switch checking accounts, and Steiner believes the relief you’ll feel once you’ve mastered how to select a checking account will be worth it.

    Doing your research can help you master how to choose a checking account and find the account that's right for you.

    “Spending a few hours to make the right choice is time well-spent and will save you plenty of headaches in the future,” Steiner adds.

    You might even enjoy calculating how much you’re saving by comparing your old statements with your new ones and adding up the fees you’re no longer paying. Oh yeah, about being the only person on Earth with a checking account that’s not cutting it? Now that you’ve done the research on how to choose a checking account that will work for your financial goals, it’s pretty simple to finally be more in control of your cash. And it only took the amount of time to read this article to learn.

    1 Outgoing wire transfers are subject to a service charge. You may be charged a fee by a non-Discover ATM if it is not part of the 60,000+ ATMs in our no-fee network.

    2 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® 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.

    The post What You Need to Know to Pick a New Checking Account appeared first on Discover Bank - Banking Topics Blog.


    Source: discover.com

    How to Avoid the Financial Blunders People Make in Their 20s

    by Phillip Warren
    Some of the links in this post are from our sponsors. We provide you with accurate, reliable information. Learn more about how we make money and select our advertising partners.
    It takes two minutes to see if you qualify for up to ,000 online. You do need to give AmOne a real phone number in order to qualify, but don’t worry — they won’t spam you with phone calls. The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month. Rates start at just a month. The peace of mind knowing your family is taken care of is priceless.

    Blunder No. 1: Not Getting Free Gift Cards When You Shop

    Plus, when you use the link above, Stash will give you a sign-up bonus once you deposit into your account.* But if you work for a living and don’t happen to have millions of dollars lying around, that can sound totally out of reach. But maybe you’re just looking for a place to safely stash it away — but still earn money. Under your mattress or in a safe will get you nothing. And a typical savings account won’t do you much better. (Ahem, 0.05% is nothing these days.) When you download the app, use the code PENNY to automatically earn 2,000 points when you scan your first receipt. Then start snapping photos of your recent receipts to see how many points you can earn without a single trip to the store! That’s right — you can invest in pieces of well-known companies, such as Amazon, Google, Apple and more for as little as . The best part? If these companies profit, so can you. Some companies even send you a check every quarter for your share of the profits, called dividends.1

    Blunder No. 2: Not Earning Anything On Your Savings

    But a debit card called Aspiration lets you earn up to 5% cash back and up to 20 times the average interest on the money in your account. But a free app called Fetch Rewards will turn them into gift cards. It partners with tons of brands to give you points for every grocery receipt you share. Then you can exchange them for gift cards to places like Amazon, Walmart, Chipotle and dozens of other retailers. A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options. For Securities priced over ,000, purchase of fractional shares starts at If you owe your credit card companies ,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

    Blunder No. 3: Paying Too Much Interest To Credit Card Companies

    It takes two minutes to sign up, and it’s totally secure. With Stash, all your investments are protected by the Securities Investor Protection Corporation (SIPC) — that’s industry talk for, “Your money’s safe.”2 Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for “this is totally safe.” But with an app called Stash, it doesn’t have to be. It lets you be a part of something that’s normally exclusive to the richest of the rich — on Stash you can buy pieces of other companies for as little as . So when you start to think you’re worse off than your parents, or your nephew, or your friends, remember that all 20-somethings have made mistakes that can cost them big time. AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau. 2To note, SIPC coverage does not insure against the potential loss of market value.

    Blunder No. 4: Paying Too Much For Car Insurance

    The Penny Hoarder is a Paid Affiliate/partner of Stash.  You’re probably thinking: I don’t have the time or money for that. But your application can take minutes — and you could leave your family up to million with a company called Bestow. You should shop your options every six months or so — it could save you some serious money. Let’s be real, though. It’s probably not the first thing you think about when you wake up. But it doesn’t have to be. This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017. Nobody is perfect when it comes to their finances — even millionaires slip up sometimes.

    Blunder No. 5: Thinking You Don’t Have Enough Money To Invest

    Take a look at the Forbes Richest People list, and you’ll notice almost all the billionaires have one thing in common — they own another company. 1Not all stocks pay out dividends, and there is no guarantee that dividends will be paid each year. What do you usually do with your receipts? You check out, they hand you a mile-long piece of paper, and you frantically stuff it to the bottom of a grocery bag. Pretty worthless. If you have credit card debt, you know. The anxiety, the interest rates, the fear you’re never going to escape… Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.  But if you’re guilty of making some of these blunders, don’t fret. You can still redeem yourself! Here are some of the worst blunders you can make, and tips to help dig you out of the hole.

    Blunder No. 6: Assuming Life Insurance Is Expensive And Time Consuming

    Not too shabby! If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow. And the truth is, your credit card company doesn’t really care. It’s just getting rich by ripping you off with high interest rates. But a website called AmOne wants to help. Not so bad for a useless receipt, right? Yup. That could be 0 back in your pocket just for taking a few minutes to look at your options. Have you thought about how your family would manage without your income after you’re gone? How they’ll pay the bills? Send the kids through school? Now’s a good time to start planning for the future by looking into a term life insurance policy. And it’s perfect for those of us who don’t want to put a ton of work into this. All you have to do is send Fetch a photo of your receipt, and it does everything for you. No scanning barcodes or searching for offers — and you can use it with any grocery receipt. Using Insure.com, people have saved an average of 0 a year. *Offer is subject to Promotion Terms and Conditions. To be eligible to participate in this Promotion and receive the bonus, you must successfully open an individual brokerage account in good standing, link a funding account to your Invest account AND deposit .00 into your Invest account. You’ve probably heard the best way to grow your money is to stick it in a savings account and leave it there for, well, ever. That’s bad advice. Source: thepennyhoarder.com
    When’s the last time you checked car insurance prices?

    Can you send money with a credit card?

    by Phillip Warren

    Sending cash to friends and family? Before you reach for that credit card, grab a calculator. It’s 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 you’re 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 it’s different story when you’re sending money through peer-to-peer platforms. Many of them (like Google Pay, Popmoney and Zelle), don’t 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 – 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. That’s 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 that’s often $10 or 5% of the transaction – 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 you’d planned.

    No chargeback rights with credit cards

    The real kicker: Unlike other venues, you don’t 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, there’s a merchant involved – and the law provides chargeback rights for your protection in case you don’t get what you were promised in the deal. But in a peer-to-peer money transfer, there’s no merchant, so currently the laws don’t give consumers any chargeback rights, says Christina Tetreault, manager of financial policy for Consumer Reports.

    “The chargeback right requires a merchant,” says Tetreault. “One of the hoops a consumer has to jump through is to try and work it out with the merchant.”

    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 that’s often the same whether you use a credit card, debit card, bank account or funded account on the platform.

    “Be doubly sure when you’re sending the money that you’re putting in the correct information,” says John Breyault, vice president of public policy, telecommunications and fraud for the National Consumers League. “It’s still a buyer beware world when it comes to peer-to-peer.”

    The solution

    If you’re 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 – 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 there’s an extra charge to use a credit card, says Tetreault. With Venmo, for example, you’ll 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 doesn’t 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 you’ve chosen treated as a cash advance? If they are, what’s the interest rate, and what’s the cash advance fee?

    “What I would suggest is to ask that question, via email, of your financial institution,” says Tetreault. “It may be in their FAQs. And you want to save that email. If you have it in writing, if there’s an issue later, you’re better positioned to contest that fee.”

    But “the hard truth is you may not be able to find out ahead of time,” she says.

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

    “With credit unions, the APR is usually the same” 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 – with no cash advance fees or cash advance APRs, says Rick Rothacker, spokesperson for the bank.

    See related: How do credit card APRs work?

    What’s your reason for using a credit card?

    Take a good look at the reason you’re using a credit card, too. If you want chargeback rights, that’s not an option. If you’re 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 you’re using a card because you don’t have the cash, that might be a good reason to rethink the idea of sending money in the first place.

    That’s a huge red flag, says Bruce McClary, vice president of public relations at the National Foundation for Credit Counseling.

    “The need to convert credit into cash is what really gets my attention – because that hints at a lack of savings,” he said. “It’s a reality a lot of people are facing, especially now.”

    Cash advances aren’t 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 that’s a sign of financial stress, says McClary. “It means that, in some situations, they have run out of savings.”

    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 customer’s 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 “buy a gift card for someone,” says Bratsakis.

    Retailer-specific gift cards and gift cards issued through local and regional retail associations and malls often come with no fees – 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, that’s not the same as “no interest,” says Bratsakis. Also, if you don’t pay the loan in full, will you owe the full interest retroactively?

    “That’s where consumers have to be careful,” he says. With a convenience check or even a cash advance, “that’s usually where consumers can get themselves into trouble if they can’t pay it off and get hit with deferred interest.”

    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.

    “The safest way to use these services is to send money person-to-person and be diligent about getting all the details correct so it doesn’t go to the wrong person,” says Tetreault.

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


    Source: creditcards.com