How Do They Decide What My Credit Card Limit Should Be?

First you cross your fingers hoping you’ll get approved for the credit card you want. Then you cross them again hoping the credit limit will be generous enough to get you what you want. Maybe you need it to pay for some expensive dental work you have to get done. Or perhaps you are applying for a 0% balance-transfer offer so you can transfer debt from other, higher-interest cards. Either way, the credit limit they give you is a few hundred, or a few thousand dollars short of what you need — and you have no idea why. How did they even come up with that number?

Credit card issuers will tell you what factors they consider when they assign a credit limit, but exactly how they calculate it remains proprietary. In fact, it’s so complex, credit card issuers might not be able to explain it if they wanted to, says credit scoring expert Barry Paperno. Not a single card issuer we reached out to for this story could (or would) give us specific information about how they determine credit limits.

In every case, your credit score will have a great deal to do with whether you are approved, and for how much. If you’ve had credit before and handled it well, a card issuer is more likely to approve your application. But that is not the whole story. Your income comes into play, and so do your current financial obligations, such as rent and a car loan, and the amount of credit available to you through other cards. Part of the equation is behavioral: What do they think you are likely to do if you have more credit extended?

Why Your Credit Limit Matters So Much

While it feels great to get approved for a new account, pay attention to the credit limit. Balances higher than 20% to 25% of your available credit can hurt your credit scores. (Though in the case of a balance transfer you’ll have to weigh that against the interest you’ll save by getting out from under a high interest rate. And in the case of essential bills, like dental or medical bills, you may have to accept a temporary hit to your credit in order to pay the bill and avoid having an account turned over to collections.)

If you believe the credit limit you were assigned is too low, you can call the issuer and ask for a higher one. It can help help if you can justify your request with some information the issuer did not have when you applied (“I just mailed in my last car payment” or “My spouse has returned to work, and now our household income is higher than the number on the application”). It’s smart to consider that your credit limit can also be lowered if you give your lender reason to believe you may not be able to handle your current limit.

Sometimes, however, you can get them to change their mind simply by sweetening the pot and letting them know you’ll bring over a balance from another card or charge a significant purchase. Issuers want cardholders who pay interest on balances; after all, that’s how they make money.

Sometimes your credit card issuer may raise your limit without your requesting it, too. That can happen after a period of paying on time and keeping balances low. Some people worry that perhaps there is a downside to this, and wonder if they should ask that the lower limit be reinstated. Generally the answer is no. Assuming your credit card usage stays the same, you’ll be using a smaller percentage of your available credit, and that can only help your score. (It’s a good idea to keep your credit utilization to less than 20% to 25% of your credit limit; less than 10% is ideal.)

So, sadly, it’s generally not possible to know exactly what your credit limit will be ahead of time. In the meantime, you can control some factors that may affect the issuer’s decision. It’s important to maintain (or work toward) good credit. You can check your progress with a free credit report summary, updated every 30 days, on Credit.com, or you may find free scores on your monthly credit card statement. You should be sure you are comparing the same score from month to month, because many scoring models are used, and you want to be sure you look at the same one so that changes are meaningful. The other thing you can do is to check your free annual credit reports to make sure the information there is accurate (and to dispute any that is not). Because your scores are calculated from information in your credit reports, you want to make sure it’s correct and that your information has not been mixed in with anyone else’s.

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This article originally appeared on Credit.com.

This article by Gerri Detweiler was distributed by the Personal Finance Syndication Network.


I’m Unemployed … Should I Pay Off My Debt?

Q. I was out of work so I haven’t been saving for retirement this year. I do have $3,500 in a regular bank account and I’m thinking of using it to fund an IRA. I’m also getting a $5,000 tax refund and I was going to use that to pay off debt and start an emergency fund. What do you think?

A. Your unemployed status should be your priority.

While retirement savings are important, cash, right now, should be your priority.

“Given that the fact that you are temporarily out of work, I would suggest that you set aside at least six months of living expenses in cash in case it takes you some time to find a new job,” said Marnie Aznar, a certified financial planner with Aznar Financial Advisors in Morris Plains.

You didn’t mention whether you had health insurance, Aznar said. If you had coverage through work, perhaps you were able to continue the coverage through COBRA. If not, Aznar said, this is something you should look into as soon as possible.

If you’re able to cover your living expenses and if you do have health insurance, Aznar said paying off your high-interest credit card debt should be the next priority for your excess cash.

“Once you have done that, the next step would be to ensure that you have a reasonable emergency fund of at least three to six months of living expenses in a liquid account such as a high-yield savings account,” Aznar said.

Howard Hook, a certified financial planner and certified public accountant with EKS Assoc. in Princeton, NJ, said while it may be tempting to fund an IRA and start saving for retirement — especially if there is a tax deduction for the contribution — it is more important to first build an emergency fund after paying off your debt.

“Your recent unemployment is a perfect example of why the emergency fund is so important,” Hook said. “Emergency funds should be readily available and easy to access making a money market or savings account at a bank a good choice.”

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This article originally appeared on Credit.com.

This article by Karin Price Mueller was distributed by the Personal Finance Syndication Network.


A Debt Collector Contacted You — Now What?

Every day, hundreds of thousands of consumers are contacted by debt collectors regarding delinquent debts. As a debt collector myself, I can tell you that getting a debt collection call is not on anyone’s list of favorite things and never will be. In fact, it probably ranks dead last. Unfortunately, avoiding a debt collector isn’t the answer, either.

While there are some horror stories out there about consumers’ bad experiences, also consider this: With an estimated one in three adults with an account in collections, less than one in 250 debt collection calls (less than half of 1% of all debt collection calls) generated a complaint with the Consumer Financial Protection Bureau in 2014, while one in 40 debt collection calls ended with a payment. The reason I reference these numbers is to show that the odds are having a professional and respectful debt collection call are heavily in their favor. But communication is key.

So when a debt collector contacts you, it helps to know your consumer rights, as well as what steps you can take to can help resolve the outstanding debt. It’s also good to know what a debt collector will likely ask you… and why they’re asking it.

Verifying Your Identity

Before a debt collector can provide you with personal and confidential information about your account, they’re required by law to take precautionary steps to protect your privacy. Once a debt collector has verified you by first and last name, most debt collectors will ask you to provide one or more pieces of information to confirm your identity. Generally, the last four digits of the Social Security number or date of birth is requested before discussing the debt further. (Note, however, that debt collectors do not generally request the entire Social Security number.) If the consumer fails to provide this information as requested, it is likely the debt collector will not proceed any further with the phone call. Some consumers may think this is a positive step that gets a debt collector to go away, however it only escalates the collection process as the debt collector and creditor will have to look at potential involuntary methods to recover the outstanding debt.

Obtaining Details About Your Situation

Before a debt collector can determine what options they have available to assist consumers, it is important for them to understand the reason for delinquency and what the current hardship is. The reason for delinquency is needed to update the consumer’s records and communicate back to the creditor what caused the delinquency in the first place. The current hardship also is updated on their record and helps the debt collector gain an understanding of their current situation in order to determine what repayment options are available for them. If a consumer does not provide these critical pieces of information, a debt collector’s options to help them can be limited.

Determining Your Options

Once consumers have provided the debt collector with the reason for delinquency and current hardship, the next step is to determine their options. Depending upon several factors, in addition to their current hardship — the time the account has been delinquent, account balance, employment situation and other information are all used to determine available options. Aside from paying the balance in full, debt collectors may be able to offer settlements to pay less than the full balance or monthly payment arrangements on the full balance. Consumers should ensure they understand all the options available to them and select the repayment option that best suits their situation.

Why It’s Important to Stay In Communication

One of the worst things consumers can do is deliberately avoid communicating with debt collectors. Most consumers tend to communicate with the debt collectors only when they are in a position to start repayment. While that is great, it is also just as important for consumers to communicate with debt collectors when they aren’t in a position for repayment as well. Once a debt collector understands a consumer’s situation and especially when a consumer isn’t in a position to repay presently, it will change how they handle the account. While debt collection calls may continue, they will be much less frequent when the debt collector is aware of what is going on with the consumer. So even if consumers are not in a position to pay, consumers should take the time to speak with the debt collector if for nothing else than to update their records.

If you have a debt in collections, you may want to check your credit report periodically for accuracy and any updated information regarding your debts. You may also want to check the status of your debt with the statutes of limitation. You can get your credit reports for free once a year through AnnualCreditReport.com, and you can get a free credit report summary updated monthly on Credit.com.

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This article originally appeared on Credit.com.

This article by Nick Jarman was distributed by the Personal Finance Syndication Network.


Can You Get Chip & PIN Credit Cards in America?

If you have a credit card, chances are you’ve received a replacement card at least once in the past year or so. Perhaps it expired, or maybe your card information was stolen in a data breach and the issuer had to change it. Meanwhile, some credit card users have started to get cards with a shiny piece of metal embedded in the plastic.

This is the start of the credit card revolution you’ve been hearing about. Credit cards with chips, or EMV payment cards, were a hot topic after Target suffered a massive data breach at the end of 2013, with some experts saying consumers would be better protected from such incidents if the U.S. had already adopted EMV, as much of the credit-card-using world has. The Target breach and others like it gave momentum to the chip movement, and the major credit card networks have all announced plans to migrate to EMV technology. (This is an upgrade from the decades-old magnetic stripe technology.)

Visa, MasterCard, American Express and Discover set an Oct. 1, 2015 deadline for issuers and merchants to enact EMV technology or be held liable for any fraudulent activity occurring on their cards or through their payment systems.

Merchants and credit card issuers are starting to prepare for this change, so yes, you can get an EMV card in the U.S., and you may already have one. How that little chip affects you depends on a variety of things.

“There’s two main flavors for EMV — there’s chip-and-PIN and chip-and-signature,” said Barry Mosteller, director of research and development CPI Card Group, a financial technology company. Credit card production is among its services. Both chip cards require you to dip the card into the terminal — sort of like the move you make when using an ATM, rather than the swiping we’re used to — and you confirm the purchase either by entering a PIN or providing a signature. Your card issuer determines if the card is a signature or PIN card, but even then, merchants can program their payment terminals to do a lot of things, too, like not requiring a PIN or a signature if a transaction is less than a certain dollar amount.

“As a merchant, I could still set it up that I would accept chip and signature even if it is chip and PIN,” Mosteller said. “You’re going to run into all of the above [scenarios].”

As for the difference between the cards, MasterCard explained it in an email:

“Chip-and-sig cards protect cardholders from counterfeit fraud. Chip-and-PIN cards protect against counterfeit as well as lost and stolen card fraud,” wrote Beth Kitchener, a business leader for MasterCard U.S. Markets Communications. “Consumers should contact their bank or card issuer to inquire about their chip card plans / which version they are or will offer (e.g., chip and signature or chip and pin).”

In summary: Yes, you can get a card with an EMV chip in the U.S., but call your issuer to inquire about your specific card, and expect to start using the chip later this year.

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This article originally appeared on Credit.com.

This article by Christine DiGangi was distributed by the Personal Finance Syndication Network.


Data Breach at UC Berkeley Exposes SSNs & Bank Info

A data breach at the University of California, Berkeley exposed some Social Security and bank account numbers of current and former students, in addition to some of their family members, according to an April 30 announcement from the school. There have not yet been signs of anyone abusing the data, the announcement said.

The servers storing the sensitive information were accessed by an unauthorized party in December 2014 and again in February 2015, investigators found. University officials learned of the breach March 14 and took the server offline. The server stored family financial information submitted by students.

Compared with other breaches that have been in the news, this affected a relatively small group of people: The university sent letters to those affected, which included about 260 undergraduate and former students, as well as about 290 parents or relatives of the notified students. UC Berkeley, a public research university, has an enrollment of roughly 36,200. Still, the kind of information exposed in this breach makes this a big deal, especially if you’re among that small group of individuals.

A Social Security number can be used to commit all sorts of fraud, which puts the victims’ personal and financial well-being at risk. A thief can open fake credit accounts and trash the victim’s credit, or the thief could commit crimes using the victim’s identity. Perhaps even worse, a thief could commit medical identity theft, which could cause inaccuracies in a person’s medical files or deplete someone’s health care resources. The longer such activity goes undetected, the more damaging it can be.

“The institutions of higher learning are under assault — look at University of Texas, Stanford, Rutgers. That’s because the universities are historically open environments, and open environments create vulnerabilities,” said Adam Levin, privacy expert, and chairman and founder of Credit.com. “They really have their work cut out for them when it comes to securing their data.”

People affected by the UC Berkeley breach will receive a year of free credit monitoring, as well as general information about how to get their free annual credit reports and how to contact the major credit reporting agencies in the event of fraud, said Janet Gilmore, UC Berkeley’s director of strategic communications. As of May 1, the university had no knowledge of fraud related to the breach, Gilmore told Credit.com.

All consumers should keep a close eye on their finances and credit, but it’s especially important to do it if your personal information has been compromised. Credit scores are a great fraud-detection resource, because any unexpected major changes to your score can tip you off to a potential problem, and should prompt you to check your credit reports and financial statements for fraudulent purchases or accounts. You can see two of your credit scores every month for free on Credit.com.

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This article originally appeared on Credit.com.

This article by Christine DiGangi was distributed by the Personal Finance Syndication Network.


Nonprofit Credit Counselors Charged With Laundering Drug Money Get Prison

In 2013 the U.S. Government brought charges against individuals associated with a credit counseling operation.

At that time the U.S. District Attorney of Kansas said, “Two people have been charged with laundering cash from marijuana trafficking through a non-profit credit counseling agency in Kansas City, U.S. Attorney Barry Grissom said today.

Mendy Read-Forbes, 37, Platte City, Mo., and Laura Shoop, 46, Platte City, Mo., are charged in a superseding indictment with one count of conspiracy to commit money laundering, one count of conspiracy to possess with intent to distribute marijuana and one count of possession with intent to distribute marijuana. In addition, Read-Forbes is charged with 16 counts of money laundering and Shoop is charged with eight counts of money laundering.

The indictment alleges that Forbes and Newhard Credit Solutions was registered as a nonprofit organization that provided credit counseling services to people who were in bankruptcy proceedings. Forbes held herself out as the owner and operator of the agency. Shoop was an acquaintance of Forbes who worked at various times for the agency.

In March and April 2012, Forbes was introduced to an undercover officer posing as a marijuana dealer. Forbes offered to devise a scheme to launder the dealer’s drug proceeds. As part of the scheme, Forbes offered to deposit money given to her by the drug dealer into the bank accounts of Forbes and Newhard Credit Solutions or related companies and then to return the money to the dealer via checks, money orders or wire transfers. The bank accounts were in Kansas.

To make the transactions appear legitimate, Forbes gave the drug dealer a contract titled “Purchase and Sale of Business Agreement.” The contract, bearing the signature of the drug dealer and another person known to the grand jury, made it appear that the marijuana dealer was purchasing assets of FCP, Inc., a corporation controlled by Forbes and another person.

To make it appear that the drug dealer was engaged in business as a certified credit counselor with Forbes and Newhard Credit Solutions, Forbes gave the drug dealer a certificate saying he had completed training as a bankruptcy specialist.

In addition, Forbes created a company called Maximum Lawn Care, LLC, and opened bank accounts where cash from the drug dealer was deposited.

Forbes agreed not to charge a fee for laundering the drug dealer’s money until she had laundered $170,000 so that the dealer could use the funds to purchase more marijuana. Forbes also agreed to let the drug dealer store 40 pounds of marijuana at her house.” – Source

Last week Mendy Read-Forbes was sentenced to 20 years in federal prison and agrees to be responsible for restitution in an amount more than $370,000 and agrees not to contest any forfeiture proceeding concerning $40,000 currently in possession of the Kansas Bureau of Investigation. – Source

Shoop awaits sentencing.

This article by Steve Rhode first appeared on Get Out of Debt and was distributed by the Personal Finance Syndication Network.


Trust Basics for Retirees

As you begin exploring ideas for savedincome, retirement, and estate planning, you may be wondering about trusts as an option. But what exactly is a trust? And how does it work with family members, retirement income, etc.? If you’ve been pondering questions like these, we interviewed Renee Linares Chin, Esq., an Estate Planning Lawyer who is keen on finances too. She gave us some great information on trust basics for retirees looking for options in their own estate planning. Here’s her thoughts:

Q: Why would a retiree want to set up a trust?

Renee: Most retirees would benefit from having a trust set up which funds their medical expenses, provides retirement income, and funds funeral expenses in the future. In this instance, the retiree would be considered the beneficiary of a living trust as discussed below.

Q: What is the difference between a revocable and an irrevocable trust?

Renee: A revocable trust is also called a revocable living trust, a living trust or an inter vivos trust. A revocable trust is a type of trust that can be changed anytime during the trustor’s lifetime. (A person who creates the trust is called a “trustor.”)

An irrevocable trust is also called a testamentary trust, a type of trust that can’t be changed after the agreement is signed, or becomes irrevocable after the trustor dies or after a specific time as stated in the trust.

The largest difference between a revocable trust and an irrevocable trust is the flexibility to modify the terms. You can change a revocable trust as much as you’d like during your lifetime. However, an irrevocable trust cannot be modified except under specific circumstances.

Another difference between a revocable trust and an irrevocable trust is that the irrevocable trust functions to protect the trustor’s property from creditors. In an irrevocable trust, the property no longer belongs to the trustor; it now belongs to the trust. Therefore, if the trustor incurs personal liability and is subject to creditor claims and judgments, the funds in the trust are protected as they are not his or her personal property. In contrast, all the property included in a revocable trust is considered the personal property of the trustor. Since the trustor’s assets are still considered personal property, they are subject to creditor claims and lawsuits.

You will have to pay estate taxes on revocable trusts because no taxes are paid when the property is transferred into the trust. In contrast, you do not need to pay estate taxes for irrevocable trusts because income taxes are paid when the property is transferred into the trust.

Both revocable and irrevocable function differently to avoid probate court. Probate is a legal proceeding where the court determines the validity of a will and administers the estate of the deceased person. It’s advisable to have a trust for the purpose of avoiding probate as the process is expensive, lengthy, and will diminish estate assets. If a person transfers all of their assets into a revocable trust, they own no assets at the time of death and there is no need for probate.

Q: What are some examples of some different kinds of trusts and their purposes?

Renee: An Inter Vivos Guardianship Trust is created by parents for the purpose of providing financially for their children, in the event that both parents die. This trust typically contains provisions stating that the use of trust funds are to be used for housing, health, welfare, and education of the children.

An Inter Vivos Conservatorship Trust is created for the purpose of providing care for a person that becomes incapacitated. This trust typically has a third party trustee. A trustee is a third party who is responsible for managing assets, expenditures, insurance, and government aid (if applicable).

An Inter Vivos Spendthrift Trust is created for the purpose of preventing a beneficiary who is not responsible with money from spending all of the estate assets. This gives an independent third party trustee the authority to make decisions on how to spend the trust funds. The Trustee’s authority is limited by guidelines for spending trust assets, which are outlined in the trust document.

An Inter Vivos Charitable Trust is created with the purpose of supporting a charity over a specified period of time. There are no estate taxes to be paid. This type of trust is commonly used to provide income to schools, churches, and non-profit organizations.

A Testamentary Trust is created by a will after the trustor dies. A Testamentary Trust can be created for a variety of purposes. The most common purposes of these are to avoid probate,provide income to the surviving spouse, and protect estate assets for children.

An Irrevocable Life Insurance Trust is funded with alife insurance policy, which should be taken out three years prior to the deathof the trustor. The purpose is to reduce estate taxes for wealthy individuals who would be subject to higher estate taxes.

Q: Are there any tax consequences regarding putting money in a trust or receiving money as a beneficiary?

Renee: Yes. You will have to pay income taxes on money earned by assets placed in the trust and on money received as a beneficiary. Depending on the type of trust you have elected, estate taxes may be reduced. The tax liability varies greatlydepending on the amount of assets and the type of trust.

Q: What are some basic things a retiree might plan for if they are considering setting up a trust?

Renee: If you are considering setting up a trust, you need to get a comprehensive list of your assets and liabilitiesalong with listing people who have access to your assets. Knowing yourportfolio of assets should help you put together an estate plan regardless if atrust is part of that plan. Any attorney or financial advisor will be betterable to assist you if you have comprehensive records of the following: trust deeds to all real property owned along with ownership records for cars, boatsand planes; list of valuable personal property items such as furs, jewelry,sports equipment and electronics; list of all bank accounts, CDs, 401K, RothIRA, retirement savings accounts and safe deposit boxes where valuables are stored and the names of individuals who have access to these assets. Additionally, if you have minor children, you and your partner should have a list of guardians for your children in the event of your incapacity.

Q: What are common misconceptions many people have regarding trusts?

Renee: The largest misconception is that if you have a trust, you will have to pay nothing in taxes. This is untrue. A trust can assist you to reduce estate taxes. However, merely having a trust is not sufficient to make your tax liability disappear.

If you’ve been wondering about different options regarding trusts in your estate plan, hopefully these tips from Renee Linares Chin, Esq. can give you some ideas. If you have additional questions, definitely consult with your own attorney or financial advisor.

Renee Linares Chin Esq. is an attorney who regularly blogs about personal finances and estate planning topics. Visit her at @renelinareschin and her website ReneeLinaresChin.com.

Paige Estigarribia is a writer for The Dollar Stretcher who enjoys writing about food, frugal living, and money-saving tips. Visit The Dollar Stretcher today for what you need to know when choosing a trustee.

This article by Paige Estigarribia first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.


Understanding Millennials and Their Money

I’m standing on the last leg of my 20s and have yet to make any of the following major milestone purchases – a car, a home, a baby (not the baby itself obviously, but the significant investment that goes into having and raising it). The media might label my reluctance to adapt these traditional life stage expenses prior to thirty as some kind of “perma-childhood” characterized by the helplessness, selfishness, and entitlement that have largely (however limitedly) come to define my generation – millennials.

understanding millennials and their money

For my part, I find the idea of an “appropriate” schedule for life events ludicrous, but perhaps more importantly, a perfect illustration of the pervasive misunderstanding of millennial reality. To understand millennial behavior is to appreciate the context in which millennial choices are made- or deferred.

Understanding Millennials: Unemployment and Underemployment

In 2014, six years after the recession and several years into the would be working lives of many millennials, the percentage of unemployed young adults was approximately twice the national average. In addition to the high numbers of young people out of work, a 2012 report from the Federal Reserve Bank of New York found that about 44 percent of young, working college grads were underemployed. I still remember how relieved I was to find that I wasn’t the only 2008 grad working a babysitting gig that could’ve just easily been done by a high school junior.

It turns out graduating into a weak labor market has implications that last for years. I’ve certainly seen the effects of long-term financial insecurity manifest among my peers and a 2009 study out of Yale showed that my anecdotal experiences and observations were not singular. Researchers found that students who graduate during a recession earn up to 10 percent less after a decade of work than they might have otherwise.

While the economy may be improving in time to save younger millennials from that same fate, my experience and those of my older millennial contemporaries have largely reflected those findings. Even those who pursued more “traditional” and marketable career prospects are just starting to find their financial footing and get a grasp on their lives. Not necessarily because of entitlement (though I won’t dismiss it entirely), but because they’ve had to channel far more of their resources to achieve some semblance of stable and sufficient income, let alone success.

Understanding Millennials: Retirement 

An often-overlooked implication of the millennial unemployment and underemployment debacle is the effect on retirement planning. Prior to full time employment and without access to employer sponsored retirement plans and an HR department to walk individuals through the steps of enrollment, the onus of retirement planning rests largely on the individual. That means in between job interviews, unpaid internships, and part-time shifts at Starbucks, millennials need to set up their own retirement accounts or do without- an option many seem to have favored, if only for the sake of simplicity.

By the time many young professionals are able to secure employment that comes with retirement benefits (if they ever do), they’ve already missed out on valuable years of investment growth as well as foundational financial literacy that comes through the practice of implementing a long term financial strategy.

The millennial reluctance to invest towards retirement (or anything for that matter) has its own contextual causes. Having experienced extreme job volatility as a result of the floundering economy and seen the effects of poor market conditions on their parents’ employment, portfolios, and retirement prospects, a fiscally conservative, depression era mindset has taken hold among gen Y workers.

According to a study by the Brookings Institution, more than half of people between the ages of 21 and 36 have their savings parked in cash. Instead of growing their money through aggressive investments like stocks, millennials favor traditional bank savings accounts and CDs. While these latter accounts carry minimal risk, they also pay little to no interest- which can actually leave millennials more vulnerable, with the value of their savings eroding due to inflation.

Understanding Millennials: Debt

Let’s not forget the debt! The average student loan debt for graduates of public universities doubled between 1996 and 2006. Those who took out student loans as eager 18 years olds did so anticipating finding a job upon graduation that would help them pay off; instead, they found themselves in the worst economy since the Great Depression, struggling to find any employment.

With opportunities minimal and wages stagnant, just keeping up with five and six figure student loan payments is enough to create serious financial strain – forget retirement planning or buying a home.

Understanding Millennials: Opportunity

While it’s important to understand how these contextual factors shape millennial behavior, I don’t advocate using them as a way to justify or play victim.

Yes, millennials face real financial and economic challenges that have been largely misunderstood and underappreciated, but they also have unprecedented access to information, resources, and low cost opportunity.

You can set up your own retirement portfolio with as little as $100 month.

You can start your own business with minimal investment or risk.

You can answer just about any question in the ten seconds it takes to type it into Google search.

Hardship is the birthplace of innovation, but only for those who are willing to carve their own way and try new approaches.

The old formula for success and all its’ “accepted” timelines is outdated. So go ahead, delay traditional “adulthood”, but not out of helplessness, do it consciously as you propel yourself forward, finding new, innovative ways to create your own powerful future- financial and otherwise.

This article by Stefanie OConnell first appeared on thebrokeandbeatifullife.com and was distributed by the Personal Finance Syndication Network.


Can I Get a Credit Card If I Don’t Have a Job?

While the overall job market has improved over the past few years since the Great Recession, not everyone has been able to return to the workforce. At the same time, others are without employment because they are in school, transitioning to a new career, are stay-at-home parents, or have simply retired. In these situations, is it still possible to be approved for a credit card?

It Depends

First of all, a job is not required to be approved for a credit card, but applicants should be able to show some form of income. For several years, the Credit CARD Act of 2009 was interpreted to allow card issuers to consider only the applicant’s individual ability to repay a loan. This had the effect of shutting out many applicants, especially stay-at-home spouses. Fortunately, the Consumer Financial Protection Bureau revised its rules in 2013 to allow card issuers to consider the household income of applicants 21 years of age or older, so long as they had a reasonable expectation of access to the income they reported.

For example, an at-home parent could include his or her spouse or domestic partner’s income when their household finances were managed jointly. The same could also be true of extended family living together, or perhaps even roommates. However, the Credit CARD Act still requires applicants under 21 to show their own independent income, rather than rely on their parent’s income. In addition, credit card issuers can consider other forms of income other than employment including investments, child support and alimony payments.

How to Get a Credit Card Without a Job

Once they have included household income, as well as other forms of income that are not related to employment, most applicants with good credit should be able to qualify for at least a minimal line of credit. But in some situations, it’s possible that many card issuers may still be unwilling to grant a line of credit to some applicants. In these cases, it may help to apply for a secured credit card.

Secured credit cards require applicants to submit a refundable deposit first, before being granted a line of credit that is equal to the amount of the deposit. But at the same time, secured credit cards can be used much like any other credit card. Cardholders can use them to easily rent cars or reserve hotel rooms, which can be very difficult to do without a credit card. In addition, many secured credit cards even offer auto rental insurance, which can be expensive if purchased from the rental car agency.

Like all other credit card users, secured card holders must make monthly minimum payments, and will incur charges unless they pay their statement balances in full and on time. Most secured card issuers will report cardholders’ payments to the three major consumer credit bureaus, so these cards can help people to rebuild their damaged credit as well. In addition, secured credit cardholders are protected by the Fair Credit Billing Act, the same law that applies to standard credit cards. Unfortunately, secured cards will generally have higher annual fees and interest rates than a similar non-secured card. As you work to build your credit, it’s a good idea to keep an eye on your credit scores to track your progress. You can get your credit scores for free from several sources, including Credit.com.

Alternatives to Credit Cards

Prepaid debit cards are rapidly becoming popular among those who are not able to qualify for a credit card, as well as those who want to avoid the possibility of incurring debt. Prepaid cards differ from credit cards in that funds must first be added before the card can be used, so they are not a line of credit and have no significant qualifications for approval. On the other hand, prepaid debit cards typically have more fees (check carefully — a few have minimal fees) and less robust legal protections than standard credit cards.

Although many people do not have jobs, we can all have access to a secure and convenient method of payment. By examining the strengths and weaknesses of standard credit cards, secured cards and prepaid cards, you can choose the product that best meets your needs.

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This article originally appeared on Credit.com.

This article by Jason Steele was distributed by the Personal Finance Syndication Network.


4 Balance Transfer Credit Card Mistakes

Opening a credit card with a 0% financing offer or low fees when you transfer the balance from a different card can help you save money when working to pay down credit card debt, particularly if you have a lot of it. Getting a balance transfer card and using it wisely requires careful thought, and if you don’t exercise discipline, you may end up hurting your finances instead of helping them.

Here are some common mistakes you want to avoid when using a balance transfer credit card:

1. Mixing Balances

You may have received offers from your credit card issuer about transferring a balance from another card to the one you have with them. If you use the card that’s offering the balance transfer, keep in mind that the promotional financing will only apply to the transferred balance — the interest rate on your existing balance still applies.

“Now you have balances at two different interest rates, which can get confusing fast,” said Gerri Detweiler, Credit.com’s director of consumer education, in an email.

If you pay more than the minimum payment, credit card issuers are required to apply the excess payment to the balance with the higher interest rate, meaning you may not be paying off that transferred balance. There’s an exception: If you made a purchase under promotional financing, you can ask the issuer to apply payment to that balance before applying money to a balance with a higher interest rate. Keep in mind that if you don’t pay off the balance with promotional financing — whether it was a transferred balance or a new purchase — within the timeframe of the promotion, you’ll end up paying interest on it.

Like Detweiler said, it can be very confusing.

“It’s best to use a card exclusively for a balance transfer if possible,” she said.

2. Overlooking the Cost

Transferring a balance from one card to another usually carries a 2% to 4% transfer fee, Detweiler said, so you have to do some math before committing to the transfer.

“It may still be a better deal than the interest you were paying, but you have to take it into account,” she said.

Jason Steele, an expert on credit cards and frequent contributor to Credit.com on the topic, said a common mistake people make is transferring a balance they could pay off in the next billing cycle. Part of the problem there is that people aren’t paying close enough attention to the terms of the card, but these cards aren’t always easy to understand.

“There’s not much information that the card issuers give on these subjects,” he said. “They’re just marketed as a 0% balance transfer.” You have to understand exactly what that means and how much it might cost you.

3. Failing to Plan

Steele said another common mistake he sees is people failing to use the card as an instrument for repaying debt. That’s the point of a balance transfer in the first place: Put the balance on a card with a lower interest rate so you can save money while paying it down. Because the interest rate will expire, you have incentive to pay the balance off faster. If you’re not doing that, what was the point of paying a fee to transfer that balance to the card in the first place?

Additionally, Steele said a lot of people think they can just get another balance transfer card if they don’t pay off the first one in time, but that’s not necessarily a reliable (or affordable) strategy. Getting a new credit card requires a credit check, and if you’ve opened a lot of credit cards recently or carry high balances, your credit may not be in good enough shape for another card approval.

Perhaps you’re sensing a theme: It’s really important to pay attention to the details with these products. You also need to watch the transition very closely, because it can get confusing to have been paying one issuer and now have to pay another, and you definitely don’t want to miss a payment during the switch. Late payments can knock a lot of points off your credit score and can hurt your credit for years. (You can see how your credit history affects your credit scores by checking them regularly — which you can do for free through numerous sources, including Credit.com.)

4. Procrastinating

Both Detweiler and Steele stressed the importance of the financing timeline.

“Either [they] don’t keep track of when the transfer period ends or they are overly optimistic that they can pay it back before it does. Then they can’t, and the real interest rate — which is much higher — kicks in,” Detweiler said.

Getting a balance transfer is just the first step of a months-long process of paying down debt and, ultimately, improving your credit. (This calculator can show you how long it will take to pay off your credit card debt.) As long as you don’t continue to rack up charges, are realistic about what you can accomplish and commit to your plan, you could see a drastic improvement in your debt and credit situation after using a balance transfer.

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This article originally appeared on Credit.com.

This article by Christine DiGangi was distributed by the Personal Finance Syndication Network.