January 7, 2014 By

Tuesday’s need-to-know money news

Today’s top story: Making sense of your credit report. Also in the news: Protecting your credit cards from data theft, four bills you may be able to eliminate in 2014, and the benefits of joining a credit union.The hacker

The 5 Most Confusing Things on Your Credit Report
Unlocking the mysteries of your credit report.

How to Protect Your Credit Card from a Data Breach
Don’t let your credit become a target.

You May Be Able to Eliminate these 4 Bills
Not everything needs to be insured.

The Benefits of Joining a Credit Union
Lower fees and higher interest rates.

How To Profit From Gift Cards, Pay It Forward With Frequent Flier Miles
Don’t let unwanted gift cards collect dust.

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August 21, 2013 By

Wednesday’s need-to-know money news

Zemanta Related Posts ThumbnailGetting your finances together in the name of love, how to save on homeowners insurance, and how Twitter could save you a bundle on back-to-school shopping.

Study: Pinching Pennies Is Good for Your Dating Life
Tired of spending your nights alone? Getting your financial act together could be the key to romance.

An Easy Way to Save on Homeowners Insurance
How increasing your deductible could reduce your premiums.

5 Credit Union Freebies Worth Scooping Up
Credit unions can provide a wide range of perks.

The Best Back-to-School Deals? Check Twitter
Saving money on back-to-school shopping in 140 characters or less.

Best Places For Affordable Homes
The cities and towns that give you the best bang for your buck.

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November 19, 2012 By

Low car loan rate could have been lower

Dear Liz: I recently bought a new car, and the dealer, after running a credit check, told me my Experian score was 783. I have had only credit cards and no loans. This is my first auto loan. They gave me a 3.5% interest rate and I took it reluctantly. I do not like the rate and the need to pay huge interest over time, and am considering paying off the loan as soon as possible as there are no pre-payment penalties. If I am able to pay off my loan in a couple of months (instead of the original five-year loan term), will this improve or adversely affect my credit score? How will this look in the eyes of future lenders?

Answer: Paying off debt is a good thing, both for your credit scores and your wallet. The leading FICO credit scoring formula likes to see a big gap between your available credit and the amount you’re using. This is particularly true with revolving accounts, such as credit cards, but your scores also get a boost from paying down installment debt, such as auto loans and mortgages.

By the way, a 3.5% rate isn’t bad and wouldn’t cause you to pay “huge” interest. But you probably would have gotten a better rate had you arranged your financing in advance, say with a local credit union. If the dealership then offered you a better deal, you could cancel your application with the credit union. As it was, you left yourself at the mercy of the dealer — not a good idea.

Once you get this loan paid off, consider making the same-sized payments to a savings account so you can pay cash for your next car. If you do decide to finance again, try to keep your loan term to three or four years. That will help ensure you don’t buy more car than you can afford and could prevent you from being “upside down” (owing more than the car is worth) for much of the loan term, as is often the case with longer loans.

Filed Under: Credit & Debt, Q&A Tagged With: , , , , , , ,
September 27, 2012 By

How to set up savings “buckets”

Dear Liz: You’ve written about how helpful it can be to have “savings buckets” or separate savings accounts earmarked for different goals such as vacations, property tax payments and so on. I have been trying to do this myself, but every bank I find charges so much in fees that it would cost more money than I would save. Either that, or they tie the savings accounts to a “free” checking account that has a high minimum balance. Can you please pass along any information about free savings accounts that have no minimum balance? I cannot use Internet banks because I cannot deposit cash when I have $5 or $10 in my pocket that I would take to the bank.

Answer: Actually, you can. Internet banks can be linked to your checking account at a brick-and-mortar bank. You can take your money to the bank, then transfer it to one of your savings accounts at the Internet bank. Unlike traditional banks, Internet banks such as ING Direct, Ally and FNBO don’t have balance minimums or monthly fees. You can set up several savings accounts without paying extra fees.

You still need a low-cost checking account, of course. You should be able to find one at a local credit union.

Filed Under: Q&A, Saving Money Tagged With: , , ,
July 2, 2012 By

There’s more than one way out of credit card debt

Dear Liz: In your book “Your Credit Score,” you note that one of the best ways to improve your credit score and lighten your credit card load is to get a personal loan with a credit union and pay it off in installments.

I have two high-interest credit card balances that are hovering right near my credit limits (a little over $15,000 total) that comprise the vast majority of my debt. I’d love to get an installment loan to pay them off, but I’ve applied several times and several places for personal loans — including my credit union — and have either been denied or not given a sufficient loan to cover the total amount. I also don’t have $15,000 in cash sitting around in a savings account to secure a loan of that size.

In this situation, what would you recommend? The minimum payments on these two cards are roughly $190 and $160 each, and I’d love to be able to combine them and maybe even save a few bucks too.

Answer: What you seem to be talking about is a secured personal loan, rather than one that’s unsecured. Secured personal loans typically require that you have an equivalent amount in a bank account or certificate of deposit as collateral for the loan. If you have the cash, though, you wouldn’t need the loan — you could use the money to pay off your debt.

Unsecured personal loans don’t have collateral. The bank or credit union is relying on your word that you’ll repay the loan. Not surprisingly, lenders can be pretty picky about whose word they will trust. Few will take a risk on borrowers with poor credit scores — and those maxed-out cards, accompanied by all those loan applications, aren’t helping yours.

For now, give up the idea of getting a loan. Instead, take whatever cash you have to pay down the cards as far as you can. Retain $500 or so as an emergency fund, but put the rest to use in eliminating this high-rate debt.

Next, start cutting expenses so you can free up more money to repay your debt. Do you eat out? Cut back. Pay for TV? Ditch the cable. Take vacations? Stay home for a while. None of these sacrifices has to be more than temporary, as long as you’re willing to stop adding to your debt.

Paying credit card debt is a lot like losing weight. If you don’t make much effort, you won’t get much result. But sending in big payments each month will help you see progress pretty quickly, which can inspire you to keep going.

Once you’ve got the debt paid off, don’t charge more on the cards than you can afford to pay off each month.

Filed Under: Credit & Debt, Q&A Tagged With: , , , , , , , ,
April 4, 2012 By

Find cheaper checking and ditch your bank

If you’re sick of rising bank fees, check out a new feature at NerdWallet that allows you to compare the costs of more than 120 different checking accounts across a spectrum of banks and credit unions.

You’ll answer a few questions about how you use your account, including the minimum balance you can maintain and how much you’ll deposit each month. The feature serves up the best matches based on your answers. If you have enough cash on hand to qualify for an interest-bearing checking account, the feature can help you find some good options.

You also might want to read a couple of my previous posts on this topic: “How to shop for a new bank” and “7 steps to say ‘buh-bye’ to your bank.”

Changing banks isn’t hassle-free, but you can save some decent money switching to an institution that actually wants your business, rather than punishing you for it.

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