Getting your first credit card can be an exciting milestone. You start to picture all the responsible things you’ll do with it, like putting your bills on autopay, getting extended warranties on vital electronics like laptops and cellphones, and collecting and cashing in all those sweet, sweet rewards points.
But sometimes, your credit history doesn’t meet the requirements for approval. Fortunately, there are options available to help you secure a credit card and start building your credit.
Two common approaches are having a co-signer or becoming an authorized user on someone else’s account. However, these credit relationships are more complex than they appear at first glance. It’s essential to explore the differences between co-signers and authorized users before you even ask someone.
Co-Signer vs. Authorized User: What’s the Difference?
Co-signing involves you having your own credit card, whereas an authorized user is something you become. Both could give you access to a credit card and improve your credit history, but both roles also have credit implications and unique responsibilities.
What Is a Co-Signer?
A co-signer essentially lends their creditworthiness to support your credit application.
If you don’t meet the issuer’s requirements, such as having insufficient income or a problematic credit history, you can find someone who has good enough credit to act as a co-signer. And even if you do qualify, having a co-signer with better credit might get you more favorable terms, such as a lower interest rate.
The credit card company checks both your credit before deciding to issue you a credit card. And by co-signing, they become just as legally obligated for the debt as you are.
So expect your co-signer to want to stay informed about the account’s activity and take measures to ensure timely payments. They have a personal stake in your financial responsibility. That’s why co-signers are typically trusted family members or close friends.
Co-signing a credit card can have a significant credit score impact, both on you and your co-signer. The account activity, including payment history and credit utilization, shows up on both parties’ credit reports.
Any late or skipped payments, high balances, or defaults can negatively affect the credit scores of both individuals. That’s because co-signed debt appears on the co-signer’s credit report just like any other financial obligation, potentially impacting their ability to take on new credit or loans of their own.
And if you don’t pay up, the co-signer has to pay the entire debt, including any accrued fees or interest. If they don’t, you could both face lawsuits, wage garnishments, and severe credit score damage.
On the plus side, responsible credit management on your part can benefit both parties and help improve both your credit profiles.
Unfortunately, it can sometimes be difficult for them to get removed as a co-signer. Check the card agreement for a co-signer release option. Even if there is one, for them to get released, you must have a good payment history so the lender feels confident relieving them of co-signer responsibilities.
And if things go south, it can strain your relationship and have long-term financial consequences if you aren’t careful.
If you’re not 100% sure you can use the credit card responsibly, it’s probably best to seek out other options. It’s not worth destroying a relationship over.
What Is an Authorized User?
An authorized user is someone the primary borrower adds to their credit card.
An authorized user shares no legal responsibility for the debt, meaning they don’t necessarily make payments. They just have permission to make purchases on the account. But if you’re just trying to build your credit history, it can help to have someone add you to a card that reports on authorized users’ credit too (which is most of them).
When the primary account holder adds you to their account, you receive a card with your own name on it. The primary account holder retains control over the account and can monitor your spending activity. So it’s crucial to discuss upfront whether there are any guidelines they’d like you to follow.
For example, they may ask you to limit purchase totals to a certain amount, use the card only at certain locations or for specific reasons, or only use it if you can pay them back. They can swiftly cancel your card if you violate any of the rules.
It’s most common to become an authorized user on the cards of family members or trusted individuals. They may be willing to grant access to the account for various reasons, such as building credit, convenience, or sharing expenses.
Being an authorized user can have both positive and negative impacts on your credit. The account’s history, including payment behavior and credit utilization, is typically reported on your credit report as well. If both you and the primary account holder demonstrate responsible credit management, such as making timely payments and maintaining low balances, it can have a positive influence on your credit score.
But if the primary account holder has a history of late payments, high balances, or defaults, it can negatively affect your credit profile. You can also negatively impact their credit rating by charging too much or failing to pay them as agreed so they can afford the monthly payment.
As an authorized user, you don’t have the same level of control or decision-making power as the primary account holder. That means they can cancel the account, revoke your access, or make unexpectedly bad decisions that negatively affect your credit.
You’re not legally responsible for the debt incurred on the account, but you are ethically responsible if you agreed to pay. And there’s nothing to stop them from suing you if you don’t hold up your end of the agreement.
Additionally, pretty much everyone else involved is going to act like the account holder is doing you a favor — probably because they are. So you’re unable to access certain account features or make changes to the account.
It’s essential to establish clear communication with the primary account holder to understand any restrictions or guidelines associated with your authorized user status. And if your primary goal is improving your credit score, it’s critical that you become an authorized user with someone who has good or excellent credit on a card that reports on the authorized user’s credit.
Key Differences Between Co-Signers & Authorized Users
Co-signers and authorized users are pretty much opposite in terms of their rights and responsibilities. The only thing they have in common is how it affects their credit score.
Co-Signer
Authorized User
Definition
Personally guarantees repayment
Granted permission to use someone else’s credit card
Role
Repays debt if you don’t
Authorized to make purchases
Credit Check
Yes
No
Credit Impact
Activity affects credit reports of both parties
Activity may or may not impact the credit report of authorized user
Financial Risk
Obligated to repay the debt if the borrower defaults
No legal obligation for the debt
Control
Has access to account information and decision-making
Account control remains with the primary cardholder
Relationship
Typically trusted family members or close friends
Often family members or individuals with shared needs
Easy to Remove
Only once you meet co-signer release threshold
Yes
Should You Use a Co-Signer or Become an Authorized User?
You may find a credit card co-signer is the best option if you have credit or income issues. But you should only do it if you have no other option for getting credit. And consider whether you can just wait a bit and improve your income or credit score enough to qualify alone.
And you need someone willing to take on the risk as your co-signer. They should know you well enough to trust that you’ll pay your card on time, and you should also feel confident you can. The co-signer also needs to have good enough credit to qualify.
Using a co-signer can cause awkward situations and disagreements, so if you want to maintain a good relationship, think twice. After all, the person puts their finances and credit on the line for you. Running up charges or missing a payment can easily cause issues.
When deciding whether to add an authorized user, consider whether you trust the person to spend responsibly and pay you back as agreed. Even when they use the card, you’re the one stuck with the debt. So, you can easily end up with financial strains and a dinged credit score.
While you might intend to help a loved one build their credit as an authorized user, don’t disregard how it could affect your relationship. Arguments can happen if the person runs up your balance or doesn’t pay you back. This makes a usage agreement with the person crucial.
If you have any doubts about letting the person access your credit card, it’s safer to just not agree to make them an authorized user. Instead, you could help them create a budget and find other ways to build a credit history. That way, they can eventually get credit on their own.
How to Add a Co-Signer or Authorized User to Your Account
If you want to add a co-signer to a credit card application, first ensure your prospective creditor allows it. Unfortunately, most major banks no longer allow the practice. However, you may have better luck going through a smaller bank or credit union.
Depending on the creditor, you may have options to apply online, by phone, by mail, or even in person. In all cases, you must supply personal and financial information for yourself and the co-signer. Exactly how that works depends on how you apply.
Online: You both digitally sign and submit the application.
Phone: The creditor may need to speak with the co-signer in addition to the borrower.
Mail: You must both fill out and sign the application, then mail it to the listed address.
In Person: You must both fill out and sign the application, then you must both go to a branch in person.
The creditor runs both your credit files. Then depending on how you applied, you may find out instantly whether you’re approved or have to wait for an email or even a letter.
If you want to add an authorized user, you’ll have better luck since most card companies allow it. You can either do it when you fill out your application or after you’ve opened the account. Either way, the process is straightforward, and you can do it online, by phone, by mail or in person
When applying, there’s a step to add authorized users. If it’s an existing account, you can log into your online portal, contact customer service, or if it’s at your bank, just walk in.
The creditor won’t run a credit check, but they do need some information about the user. Common information requested includes the authorized user’s full name, birth date, Social Security number, address, and relationship to you. The user should receive their card upon approval.
Final Word
Becoming or adding a co-signer or authorized user is not a decision you should take lightly. Both parties must feel comfortable with the responsibility and trust they’ll act in each other’s best interest. Otherwise, you risk a messy situation in which both parties’ finances and relationships are at risk.
Communication and financial planning is key. If you use a co-signer, budget for your monthly payment and don’t carry a high balance that can harm you both. And if you add an authorized user, set limits with them and don’t hesitate to revoke their access if needed.
If your finances or relationships are too big a risk, other options exist for those who struggle to qualify for regular credit cards. Backed by a security deposit, a secured credit card involves a much easier approval process and can help with building credit for easier borrowing experiences later.
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Heather Barnett has been an editor and writer for over 20 years, with over a decade committed to the financial services industry. She joined the Money Crashers team in 2020, covering banking and credit content for banking- and credit-weary readers. In her off time, she enjoys baking, binge-watching crime dramas, and doting on her beloved pets.
Webull is an online brokerage that offers commission-free trading on stocks, options, and ETFs. Key features of the platform include real-time market data, advanced charting tools, and a customizable newsfeed.
With most investing apps now offering commission-free trading, online brokers must find more creative ways to stand out. Robinhood, for example, is now offering a 1% match on IRA contributions. Webull, on the other hand, tries to place the focus on the customer by offering free stocks, fractional share investing, a user-friendly trading platform, extended hours trading, and 24/7 support.
But is Webull a suitable platform for beginner investors? In this Webull Review, I cover Webull’s trading platform, key features, pros and cons, and more.
About Webull
Launched in 2017, New York City-based Webull is a self-directed investment platform that offers commission-free trading. You can buy and sell stocks, options, exchange-traded funds (ETFs), and even cryptocurrencies. And unlike many newer online brokers, you can trade over-the-counter (OTC) stocks with Webull.
Webull describes itself as “a financial company with the customer at heart, the Internet as our foundation, and technology as our lifeblood.” The company delivers on this description by providing a user-friendly investment platform, free real-time quotes, multiplatform accessibility, full extended hours trading, and 27/7 online support.
Key Features
Zero Commissions
No deposit minimums
Hold crypto alongside stocks, ETFs, etc.
Taxable or IRA accounts available
Supports margin trading
Paper trading option
Access to initial public offerings (IPOs).
Webull Community allows you to share investment strategies with other investors on the platform.
24/7 online customer support
Free stock bonus, as well as a referral bonus program
Is Webull Legit?
Yes, Webull is 100% legitimate. They are a US-based broker-dealer, and a FINRA, SIPC, NYSE, and NASDAQ member. It’s estimated that Webull has more than 12 million users and over $40 billion in Assets Under Management (AUM).
At the time of this writing, the company has a rating of 4.4 out of five stars from more than 174,000 Android user reviews on Google Play and 4.7 out of five stars among more than 275,000 iOS user reviews on The App Store.
Unfortunately, they rate poorly with other major rating agencies.
Webull has a Better Business Bureau “F,” the lowest rating on a scale of A+ to F. It scores 1.07 out of five stars, though that rating is based on just 54 reviews.
The company doesn’t do much better with Trustpilot, where it rates 1.3 out of five stars, or “Bad”. However, it’s worth noting the Trustpilot rating is based on just 137 reviews.
Webull Account Types
Webull offers two taxable account types: cash and margin. With the cash account, your buying power is limited to the funds you have on deposit. The margin account allows you to use leverage for the purchase of securities in excess of the cash value of your account.
The margin account requires a minimum of $2,000 to be maintained in the account at all times. Since a margin account will involve leverage, you must maintain a minimum account balance of $25,000 for unlimited day trades (see below).
You can also open a Traditional, Rollover, or Roth IRA with Webull. Each user can have one IRA account, but you must have an individual account before you can open an IRA.
Day Trading Rules
According to FINRA rules, you can make no more than 4 day trades in a margin account within five business days; otherwise, you will be flagged as a pattern day trader (PDT). That will trigger the requirement of the $25,000 minimum balance.
Margin accounts are also available for LLCs, C-Corps, and S-Corps with 2X overnight leverage and 4X day trading leverage.
Webull Trading Platform
The platform offers intuitive tools and support for traders and supports extended hours of trading, both before and after the market closes.
You can do the following on the Webull trading platform:
Real-time quotes
Customizable screens
Stock market trading ideas from top traders
Sort stocks between top gainers, top losers, and most active and best-performing industries.
More than 50 technical indicators and 12 charting tools.
Quant Ratings to provide an overall rating for each stock based on objective data.
The ability to analyze your past trading performance to look for areas of improvement.
Real-time stock alerts to notify you of price action and technical conditions.
In addition, you can execute the following orders:
Limit order
Market order
Stop order
Stop-Limit order
Trailing Stop order.
Stop-Loss/Take-Profit orders (Bracket orders)
One-Triggers-the-Other order (OTO)
One-Cancels-the-Other order (OCO)
One-Triggers-a-One-Cancels-the-Other order (OTOCO).
Margin Trading
Webull offers margin trading for both long- and short positions. You must maintain a minimum account balance of $2,000 in your margin account to qualify for margin trading. The account will provide up to 4X buying power per day trades and 2X for overnight trades.
Webull Paper Trading
Webull offers their Paper Trading feature to help you learn how to trade or to become a better trader without risking real money. And unlike some paper trading accounts offered by other brokers, Webull Paper Trading comes with unlimited virtual cash.
You can take advantage of real-time quotes, explore integrated charts with indicators, and set up price alerts, the same as you would with live trading. The feature offers more than 50 technical indicators and 12 charting tools. Paper trading can be used for options trading practice.
Initial Public Offerings (IPOs)
IPOs are when a private corporation offers stock to the public for the first time. The stocks are in registration and awaiting listing on the secondary market. The registration phase allows the issuing company to raise capital from public investors, who will be the first to receive the stock as of the listing date. In theory, it’s an opportunity for investors to get in on a newly listed company as it is going public.
Webull makes IPOs available to investors. You can locate IPOs by going to the Market page, then to the IPO Center for a list of available offerings. You can even subscribe to notifications of upcoming IPOs as they become available.
Cryptocurrency
You can trade cryptocurrency on Webull commission-free. As is the case with most cryptocurrency exchanges, Webull charges a spread of 100 basis points on both the purchase and sale of crypto. You will need a minimum of $1 to begin trading crypto.
Crypto trading requires either a cash or margin account for crypto trading (no IRAs). You can trade 44 cryptos, including Bitcoin, Ethereum, Litecoin, Dogecoin, Stella Lumens, Ethereum Classic, Cardano, Tazos, USD Coin, and many more.
Crypto trading hours are from 5:30 p.m. to 6:30 PM, Eastern time, seven days per week (23 hours per day).
Crypto Wallet. Webull offers a crypto wallet so you can buy, sell, store, and transfer crypto to and from the wallet.
Stock Lending Income Program
This program allows you to earn extra income on fully paid stocks in your account. If you allow Webull to borrow certain stocks, you’ll be paid interest while those stocks are loaned out.
Apex Clearing, Webull’s clearing agency, will identify fully paid stock in your account, which is considered “in demand” based on the market. You will be paid 15% of the interest earned by Apex Clearing on the loaned stock.
For example, if Apex earns 10% per year, you’ll earn 1.5%. Interest earned through the program is credited daily and paid monthly.
Webull Community
Webull adds a social component to its investment platform. You can participate with millions of other Webull investors to discuss market and exchange strategies, and swap ideas with other investors.
How Does Webull Make Money if they Don’t Charge Fees?
Webull charges very few fees, but they do charge some. After all, they can’t stay in business without any revenue. Here is a list of Webull revenue sources:
Payment for Order Flow (PFOF). This is a common practice among commission-free retail brokers. When Webull sends trades to market makers, they receive rebates for the practice. This income flow is part of the reason why brokers can allow commission-free trading.
Securities lending. This is another common practice in the brokerage industry. Webull uses the services of Apex Clearing as their clearing agent. Through the Stock Lending Income Program, Apex can loan out investors’ shares to other investors and institutions, usually for short sales. Those borrowers will pay interest to Apex, a portion of which is rebated to Webull.
Interest on cash balances. Since Webull doesn’t pay interest on uninvested cash held by investors, the company retains any interest earned on those funds from outside sources.
Interest on margin trades. When you use margin to purchase securities, Webull charges interest which represents income to the company.
Deposit and withdrawal fees. Webull charges fees of between $8 and $45 per transfer for both deposits and withdrawals made by wire.
The basis point spread on crypto trades. Webull earns a 100-basis point spread on the purchase and sale of cryptocurrencies.
Other Features
Income Tax Reporting
Webull provides a consolidated Form 1099, which includes reporting information from 1099-B (transactions), 1099-DIV (dividend income), 1099-INT (interest), and 1099-MISC (other income and information). The form can be downloaded from the Webull app.
Account Protection
Webull is a fully regulated broker-dealer, and your account is protected by SIPC insurance for up to $500,000 in cash and securities, including $250,000 in cash. For additional protection, Webull offers two-factor authentication for an added step on accessing your account and to prevent unintended parties from entering your account.
Free Stock Bonus and Referral Bonus
Webull is currently offering a free stock bonus to include free fractional shares in two stocks. The stock will be worth between $3 and $3,000, which could make the bonus as high as $6,000 in total. You must be new to Webull and meet other eligibility requirements.
You can also receive fractional shares in four, eight, or 10 free stocks by depositing any amount into your new account within ten days. Each fractional share will be valued between $3 and $300. That means you can earn up to 12 fractional shares with a total value of as much as $9,000. Stock rewards must be claimed within 30 days, or the offer will expire.
Under the Webull Referral Bonus, refer family and friends to Webull, and you’ll receive three free shares of stock. Refer three friends, and you’ll receive nine shares. Once you’ve received nine shares, each successful referral will provide you with two free stocks. Each share of stock will be worth between $12 and $1,400.
Your referral must use your unique referral link, and the free stock will be issued when the new user opens a brokerage account with an initial deposit of at least $100.
How to Sign Up for a Webull Account
You can sign up for Webull from either the website or the mobile app by clicking “SIGN UP” at the top of the page. You’ll need to enter your phone number and a referral code if you have one.
Webull will require you to supply your name, US residential address, date of birth, taxpayer identification (Social Security number or individual taxpayer ID number), telephone number, and citizenship.
To verify your identity, Webull may ask for copies of your driver’s license, passport, or other information as necessary.
Due to Webull’s review process, it will take a minimum of 24 hours to open your account. More time may be needed if manual verification of information is required. Webull will perform a soft credit check, which will not negatively impact your credit score.
Funding Your Account
You’ll need to connect a bank account to fund your Webull account. Webull will make two micro-deposits to your account to confirm a valid account connection. Once verified, you’ll be able to begin transferring funds to and from Webull.
The easiest way to fund your account is through ACH transfers, which are free to complete. (Note that Webull charges domestic and international wire transfer fees.)
ACH deposits initiated before 4:00 PM Eastern time will give you instant buying power, enabling you to begin trading immediately. However, the instant buying power feature is a provisional credit representing a portion of the deposit. Full ACH deposits are generally available on the fourth or fifth business day after the ACH is initiated.
Alternatively, you can transfer securities from another broker into your Webull account. The transfer securities must match those available through Webull.
Webull Pros and Cons
There’s plenty to like about Webull, but the platform also has limitations. Here’s my list of Webull pros and cons.
Webull Pros:
No minimum initial investment
Commission-free trading
Get free stock when you open an account and make a deposit
Available crypto wallet where you can manage your cryptocurrency holdings
Connect with millions of investors in the Webull Community
24/7 online support
Webull Cons:
No joint taxable accounts, custodial or trust accounts
You can’t invest in mutual funds, penny stocks, or bonds
Must have a taxable account to open an IRA
No dividend reinvesting option
No interest on uninvested cash
Fees for domestic and international wire deposits and withdrawals.
Webull Alternatives
Before signing up with Webull, I recommend checking out these alternatives, which offer many of the same features as Webull.
Robinhood
Robinhood is a popular online brokerage that offers zero-commission trades of stocks, options, ETFs, and cryptocurrency. No minimum deposit requirement exists, but like Webull, Robinhood doesn’t allow bond or mutual fund trades. One very interesting feature: Effective December 2022, Robinhood now offers IRA accounts with a 1% match, the first online brokerage to do so.
According to Robinhood, “the IRA Match is an extra 1% that Robinhood adds to eligible contributions to your IRA. It’s not counted toward your annual contribution limits and is typically available to invest immediately.” For more information, check out our full Robinhood Review.
Public
Public is an easy-to-use trading app that is geared toward new investors. Like Webull and Robinhood, Public doesn’t charge any trading fees. You can also buy fractional shares and connect with other users in the Public social community. That said, intermediate traders will want to steer clear of Public due to their lack of advanced trading options – they don’t offer IRA accounts and have little in the way of market research tools.
Learn more in our Public Review.
Interactive Brokers
Interactive Brokers (IBKR) is a truly global trading platform offering investors access to 150 markets in 33 countries. You can also trade in more than 24 currencies. Like Webull, there are no commission fees on stock and ETF trades. Interactive Brokers is hands down the more powerful platform for sophisticated traders looking for access to global markets, but it may be overwhelming for new and intermediate investors.
Webull FAQs
Is Webull good for beginners?
Webull is a safe trading platform for new investors. Accounts are protected by SIPC insurance for up to $500,000, and the platform uses numerous security features, including two-factor authentication.
We also like that Webull has no minimum initial investment requirement, though you will need to deposit funds to begin trading. And as a beginning investor, you can certainly benefit from the paper trading account with unlimited virtual cash.
However, other investment brokers may be a better choice for new investors. Webull is designed primarily for active traders and those with at least an intermediate level of experience. Larger brokerage firms will be able to provide higher levels of customer service and a greater variety of account tools and educational services.
What is the minimum deposit for Webull?
There is no minimum deposit requirement for a Webull account, but a $2000 minimum balance is required for all margin accounts.
What is the downside to Webull?
The main drawbacks to Webull include the lack of a dividend reinvestment program and the inability to buy fixed-income and mutual fund investments.
Does Webull work in Canada?
Webull is a US-based online broker. Because it’s not registered in Canada, it’s not available to Canadian citizens.
Final Thoughts on Webull
Webull is an intuitive trading app where you can trade more than 40 cryptocurrencies on the same platform where you hold more traditional investments. They offer plenty of investment tools, including margin trading, day trading, and short sales.
And if you’re new to Webull or have friends to refer, you can take advantage of free stock bonuses.
While Webull is geared more toward intermediate and advanced traders, its intuitive trading platform shouldn’t overwhelm new traders. That said, beginner investors may want to give Robinhood and Public a long look before signing up with Webull.
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Many Americans have income that fluctuates from week to week. When incomes are unsteady, any unexpected expense can leave you coming up short. If you don’t have a fully funded emergency fund, you may find yourself looking around for loans to bridge the gap and get you to your next paycheck. Payday loans are out there, but at a high cost to borrowers. Before taking out a payday loan you may want to first make a budget. You can work with a financial advisor who can help you make a long-term financial plan that you can budget your finances to meet.
Payday Loans: Short-Term Loans with a High Price
What are payday loans? Say you’re still 12 days away from your next paycheck but you need $400 for emergency car repairs. Without the $400 your car won’t run, you won’t make it to work, you’ll lose your job and possibly lose your housing too. High stakes.
If you go to a payday lender, they’ll ask you to write a future-dated check for an amount equal to $400 plus a financing fee. In exchange, you’ll get $400. You’ll generally have two weeks or until your next paycheck to pay that money back. Say the financing fee is $40. You’ve paid $40 to borrow $400 for two weeks.
If you pay back the money within the loan term, you’re out $40 but you’re not responsible for paying interest. But the thing is, many people can’t pay back their loans. When that happens, the money they borrowed is subject to double-digit, triple-digit or even quadruple-digit interest rates. It’s easy to see how a payday loan can lead to a debt spiral. That’s why payday loans are illegal in some places and their interest rates are regulated in others.
When your loan term ends, you can ask your payday loan lender to cash the check you wrote when you agreed to the loan. Or, you can roll that debt into a new debt, paying a new set of financing fees in the process. Rolling over debt is what leads to a debt spiral, but it’s often people’s only choice if they don’t have enough money in their account to cover the check they wrote.
Are Payday Loans a Good Idea?
Not all debt is created equal. An affordable mortgage on a home that’s rising in value is different from a private student loan with a high-interest rate that you’re struggling to pay off. With payday loans, you pay a lot of money for the privilege of taking out a small short-term loan. Payday loans can easily get out of control, leading borrowers deeper and deeper into debt.
And with their high-interest rates, payday loans put borrowers in the position of making interest-only payments, never able to chip away at the principal they borrowed or get out of debt for good.
Payday Loans and Your Credit
Payday loans don’t require a credit check. If you pay back your payday loan on time, that loan generally won’t show up on your credit reports with any of the three credit reporting agencies (Experian, TransUnion and Equifax). Paying back a payday loan within your loan term won’t boost your credit score or help you build credit.
But what about if you’re unable to repay your payday loan? Will that payday loan hurt your credit? It could. If your payday lender sells your debt to a collection agency, that debt collector could report your unpaid loan to the credit reporting agencies. It would then appear as a negative entry on your credit report and lower your credit score. Remember that it takes seven years for negative entries to cycle off your credit report.
Having a debt that goes to collections is not just a blow to your credit score. It can put you on the radar of some unsavory characters. In some cases, debt collectors may threaten to press charges. Because borrowers write a check when they take out a payday loan, debt collectors may try to press charges using laws designed to punish those who commit fraud by writing checks for accounts with non-sufficient funds (these are known as NSF checks).
However, future-dated checks written to payday lenders are generally exempt from these laws. Debt collectors may threaten to bring charges as a way to get people to pay up, even though judges generally would dismiss any such charges.
Alternatives to Payday Loans
If you’re having a liquidity crisis but you want to avoid payday lenders, there are alternatives to consider. You could borrow from friends or family. You could seek a small personal loan from a bank, credit union or online peer-to-peer lending site.
Many sites now offer instant or same-day loans that rival the speed of payday lenders, but with lower fees and lower interest rates. You could also ask for an extension from your creditors, or for an advance from your employers.
Even forms of lending we don’t generally love, like credit card cash advances, tend to have lower interest rates than payday loans do. In short, it’s usually a good idea to avoid payday loans if you can. Instead, consider working on a budget that can help you get to your next paycheck with some breathing room, and make sure you have a rainy day fund.
The Bottom Line
When considering a short-term loan, it’s important to not just look for low-interest rates. Between fees and insurance policies, lenders sometimes find ways to bump effective interest rates to triple-digit levels even if they cap their APRs. The risks of taking a payday loan bring home the importance of working hard to build up an emergency fund that you can draw on.
Tips for Retirement Planning
If you’re not already preparing for retirement then it’s a good idea to create a retirement plan and make sure you’re contributing to it regularly. If you’re overwhelmed or don’t know where to begin, a financial advisor can help you map it all out. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Not sure how much you need to save for retirement? Consider using our free retirement calculator to get the number you need so that you can start making the right progress.
Amelia Josephson
Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia’s work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.
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If you’ve applied for credit recently – maybe for a store card over the holidays – you may have come across the term “inquiry.” Even if you’re not familiar with credit inquiries, it’s critical to understand what they are, how different ones work, and what they mean. Fortunately, we have answers to your credit-inquiry questions here.
What’s a credit inquiry?
A credit inquiry is a credit check. It’s a request to view your credit by lenders — retailers, financial institutions and others who are legally allowed to see your credit report.
Types of inquiries: hard and soft.
A hard inquiry happens when a potential lender looks at your credit report and uses that information to decide whether to offer you credit and what the terms of the offer might be. Think of hard inquiries as the types of credit checks that happen when you apply for credit, whether it be a credit card, mortgage, car loan or other type of financing. Hard inquiries must be made with your permission and in connection with specific transactions.
A soft inquiry, on the other hand, is more of a routine credit check that doesn’t need to be done with your permission. Importantly, soft inquiries won’t show up on the credit reports potential lenders request to evaluate your creditworthiness. Soft inquiries can happen for a variety of reasons. One example is when potential lenders check your credit report to determine whether to make you eligible for any pre-approved offers. Another happens when one of your existing creditors checks your credit to make sure you’re still creditworthy. A soft inquiry is also triggered every time you check your credit.
One other thing to note: if you would like to see credit reports listing all your inquiries, soft and hard, check your free annual credit reports at AnnualCreditReport.com.
Why inquiries matter.
The first thing you should know is the kinds of credit reports potential lenders see will only list hard inquiries, not soft ones. In that sense, hard inquiries are the ones that “count.” That’s because credit scoring models usually factor in the number of hard inquiries you have when they’re calculating your credit score. Generally, credit scoring models tend to associate a high number of hard inquiries, especially if they’re made within a relatively short period of time, with a high credit risk. It’s important to watch the number of hard inquiries you make because too many of them may affect your ability to get credit at the lowest-available rates.
Do inquiries remain on your credit report forever?
In short, no. They are automatically removed 2 years from the date they first show up on your credit report. As with other aspects of credit, the more time that passes, the less effect hard inquiries may have.
Loan shopping and inquiries.
Let’s say you’re shopping for a mortgage or car loan and want to find one with a good rate and other terms that work best for you. After all, especially with big purchases, you want to make sure you get the best financing you can. But every time you apply for credit, a hard inquiry happens. Does that mean you shouldn’t shop around for a loan?
Fortunately, no. Credit scoring models tend to account for this kind of activity. Generally, credit scoring will count several inquiries made over a relatively short period of time, like 45 days, as one single inquiry. That way, you won’t necessarily get penalized for causing several hard inquiries while shopping for one loan.
Bottom line.
Inquiries are a key, and often misunderstood, part of credit. But they aren’t everything. While you want to pay attention to how frequently you apply for credit, credit health encompasses much more than just hard inquiries. Keep an eye on your hard inquiries, but don’t lose sleep over them, especially if you’re paying your bills on time, not using too much of your available credit, and otherwise practicing healthy credit habits. In other words, keeping your hard inquiries in check should be just part of a healthy-credit new year’s resolution!
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Whether you want to learn how to get $20 in 5 minutes or if you have a little more time such as a day or even a week or so, there are many ways to learn how to make $20 fast so that you can make extra income and real money.
Earning an extra $20 through PayPal may seem like a daunting task at first when you are in real need of making money fast, but it is doable.
In this article, I’ll introduce a few simple ways to get $20 in your PayPal account, allowing you to use the extra cash for whatever you need.
Whether you have a last minute bill that you need to pay, or if you are looking to put a little extra money into your savings (for example, maybe you’re just looking to put an extra $20 a week towards a vacation fund), there are many ways to make $20 right now.
You may decide to find a part-time gig answering questions online, freelance writing, dog sitting, or more. These are just a couple of the many ways to earn $20 with PayPal.
Some of the ways mentioned today may allow you to work from home, such as from your cell phone or your laptop.
Related content:
How To Get $20 PayPal Right Now
Quick Online Methods to Get $20 PayPal Now
There are many sites that may allow you to make $20 fast, and all from home. Some quick online methods that you can do starting today include the below.
Swagbucks
Swagbucks is one of my favorite websites to make easy money online, as it offers a variety of tasks like watching videos, taking surveys, playing games online, and searching the web.
I usually earn points and redeem them for PayPal cash or free Amazon gift cards (I’ve actually earned over 110 gift cards from Swagbucks!), and with a good number of things you can do to earn points available, getting $20 is doable in a short amount of time.
You can join Swagbucks by clicking here and get a free $10 sign up bonus.
Survey Junkie
By taking surveys on Survey Junkie, you earn points that can be converted into PayPal cash, helping you to quickly reach your $20 goal. The surveys are easy to complete and allow you to share my opinions on different topics.
You can sign up for Survey Junkie by clicking here.
Branded Surveys
Branded Surveys is another survey platform that can help you earn extra money. After earning Branded Surveys points, you can cash out via PayPal. There are over 3,000,000 users who take surveys on this website, so it is very popular!
You can sign up for Branded Surveys by clicking here.
American Consumer Opinion
As a member of American Consumer Opinion, you get the chance to participate in product testing, surveys, and even earn cash for referring friends.
You can typically earn anywhere from $1 to $5 for a survey, which mainly depends on the length of the survey. Longer surveys typically pay more than shorter ones.
You can sign up for American Consumer Opinion by clicking here.
Ibotta
Ibotta is a cash back website that gives you a $10 sign up bonus for signing up once you spend $30. You can get cash back for shopping at stores such as The Home Depot, Best Buy, Chewy, Walmart, Old Navy, and more.
You can sign up for Ibotta by clicking here.
MyPoints
As an online reward platform, MyPoints can be a useful tool for you to make extra money through surveys, online shopping, and even watching videos.
By completing various tasks and earning points, you’re able to cash out your earnings to PayPal and make $20 in a short amount of time. They have given out over $236,000,000 in rewards over the years.
You can sign up for MyPoints by clicking here.
User Interviews
User Interviews can help you to make extra money by participating in online research studies and interviews. With a variety of interesting topics and user-friendly platform, making $20 and getting paid through PayPal is an achievable goal, as there are many focus groups on this website that pay over $100 per hour.
They launch over 2,000 studies each month and are always looking for new participants.
You can sign up for User Interviews by clicking here.
You can learn more about the highest-paying survey sites and how to test new products at 18 Best Paid Survey Sites To Make $100+ Per Month.
Freelance Opportunities for $20 PayPal
Another option is to take on some freelancing jobs. By freelancing online, you may be able to earn $20 by the end of the week (and usually much more money!).
See what skills you have to offer, and then list your services online.
Fiverr
Fiverr is a platform to offer your services and quickly make $20 with PayPal as a payment method.
There are many different categories to choose from, such as graphic design, voice over, illustration, writing, translation, online tutoring, and marketing. You can click here to see the many different types of job categories that they have listed on their website
You can set your own prices and gig extras to maximize your earning potential. When you complete your tasks, and the clients approve them, the payment gets transferred to your PayPal account.
Freelance Writing
A freelance writer can easily earn $20 fast. A freelance writer may write for many different types of clients, such as a website, magazine, marketing department, book publishers, and more.
You may be writing articles, blog posts for SEO, marketing content, newsletters, press releases, and so much more.
You can learn more in my article 14 Places To Find Freelance Writing Jobs – (Start With No Experience!)
Proofreading
As a proofreader, you are looking for misspelled words and punctuation mistakes in written content such as articles, blog posts, advertisements, resumes, and newsletters.
You can learn how to find jobs at 20 Best Online Proofreading Jobs For Beginners To Earn $40,000+ Each Year.
Alternative Ways to Earn $20 PayPal Fast
If you want to learn how to make $20 fast, there are many other ways to make this possible.
Below, I will be talking about how you can sell your stuff online, micro-investing, getting cash back when shopping online, renting out a spare room, pet sitting, and even getting a personal loan.
Sell Your Stuff Online
One method for earning $20 on PayPal is by selling your used and unused items online. You may be able to sell an old cell phone that is sitting around (such as from maybe when you upgraded your last phone, or if you even have an old phone that has a cracked screen), clothing, jewelry, appliances, and more.
Many platforms, such as eBay, Poshmark, Facebook Marketplace, Craigslist, and Decluttr, allow you to create listings and accept payments through PayPal.
This not only helps you to declutter your space but also turns your belongings into some extra cash. Plus, you can get $20 instantly by doing this as there are probably many items in your home that you can sell right at this very moment.
Acorns Micro-Investing
Acorns allows you to link and round up transactions from both debit and credit cards and essentially invest their spare change. Acorns also does 2x, 3x, and 10x multipliers on round-ups so you can maximize your investments and have a more diverse portfolio.
For example: If you use a linked card to buy a $4.22 latte, Acorns will round it up to $5 and invest the $0.78 difference. Turning on round-ups will increase your investment to $1.56, $2.34, or $7.80.
You can click here to sign up for Acorns.
Shopping Online with Rakuten
Rakuten is a cashback website. You can earn cashback for simply shopping online.
By signing up for Rakuten today, you can also get $30 as a welcome bonus after you spend $30.
Plus, this is for shopping online at many of the stores that you probably already shop at, such as Walmart, Target, Best Buy, Old Navy, Chewy, and more.
You can learn more and sign up here.
Rent out a spare room
If you have a spare room in your home, you may want to consider renting it out on platforms such as Airbnb or finding a long-term roommate to make extra money.
This will, of course, earn you much more than $20, but I wanted to mention this here because it can be a way to make consistent money each month if you are looking for more ways.
To learn more about renting out your spare room, please read A Complete Guide To Renting A Room To Make Extra Money.
Babysitting and Dog Walking
Another way to make quick money is by babysitting kids or providing dog walking services in your local area.
Websites such as Care and Rover make it easy to connect with families in need of a babysitter or a pet owner looking for a dog walker or pet sitting.
You may be watching the children or pets in your own home or their customer’s home – it simply depends on what type of service you want to offer. Sometimes people like to be in their own home, whereas other times maybe you would rather go over to the client’s home for the services.
The gig economy has been a fantastic option for earning extra money, and these platforms make it easy to get paid through PayPal, direct deposit, or cash.
Albert – quick personal loan
If you need cash now and the above options will not work for you, a company called Albert may be able to give you a small advance of up to $250.
There are no late fees, interest, or credit check. If you want to avoid personal loan lenders who have high interest rates, and only need a small cash advance, then Albert may be a place to start with. Albert is available in the App Store and Google Play. How this works is that they send you $250 from your next paycheck. You simply repay them when you receive your next paycheck.
You can learn more about Albert here.
What app can I get $20 from?
There are many apps that can help you learn how to make $20 right now.
These may include:
This may be available on your laptop, tablet, or cell phone (Android or Apple).
How can I get $20 right now?
If you want to learn how to get $20 right now, then I hope you enjoyed today’s article and are able to try a few of the options listed above.
There are many other ways to get $20 in PayPal right now, from taking up side hustles to searching for free money in your spare time.
From earning sign up bonuses from a simple online purchase to selling your used items on Facebook Marketplace to taking online surveys to taking on odd jobs, there are many ways to earn $20 fast.
Whether you are looking for $20 in PayPal cash, a direct deposit of $20, or visa gift cards, there are many ways to earn $20 and more quickly.
Do you want to learn how to get $20 PayPal now? What tips do you have to share?
The Walmart MoneyCard is a reloadable prepaid debit card designed to provide a versatile financial solution for a range of consumers. This includes those who do not have access to conventional bank accounts or people seeking a tighter rein over their spending.
The MoneyCard is not tied to a traditional checking account, which eliminates the risk of overdrafting, offering a critical advantage over conventional banking.
Issued by the Green Dot Bank, the Walmart MoneyCard doesn’t necessitate a credit check or a specific credit score, thus making it easily accessible. This feature can be particularly useful for those wanting to avoid the credit scrutiny that comes with most credit card companies or people working on rebuilding their credit scores.
Getting Started with Walmart MoneyCard
The process to get started with a Walmart MoneyCard is straightforward. Customers can apply for the card online or buy a starter kit from any Walmart stores.
Once the card is registered and activated, you can load money onto it through various means. These include direct deposit, using Walmart Rapid Reload, or transferring money from a different bank account.
You can use the Walmart MoneyCard immediately for in-store and online purchases at any location that accepts Visa or Mastercard debit cards.
Walmart MoneyCard: Key Features
Cash Back Rewards
One of the Walmart MoneyCard’s standout features is its cash back rewards system. The card offers up to 3% cash back on purchases made at Walmart.com, 2% at Walmart fuel stations, and 1% cash back on purchases made in Walmart stores.
This feature can provide significant value, particularly for regular Walmart shoppers. Keep in mind that the total rewards are capped at $75 per year.
Free Cash Reloads
The Walmart MoneyCard makes it simple to add money to your card with free cash reloads in Walmart stores. This is a practical and convenient feature, especially for those who routinely shop at Walmart. It allows customers to top up their card balances during their regular shopping trips, making the process seamless and straightforward.
Walmart MoneyCard App
The cardholder gains access to a robust mobile banking platform via the mobile app. The app lets you deposit checks using the mobile check deposit feature, pay bills, transfer money to others, check your account balance, and set account alerts. Having all these capabilities in the palm of your hand simplifies managing your finances.
ASAP Direct Deposit
ASAP Direct Deposit is another noteworthy feature of the Walmart MoneyCard. With this feature, you can receive your paycheck or government benefits up to two days early, depending on your employer or benefits provider’s deposit schedule. This can offer considerable assistance, especially when budgeting around bill payments or other financial commitments.
Understanding the Fee Structure
Despite the various benefits the Walmart MoneyCard offers, it does come with a monthly fee of $5.94. This fee, along with potential charges for ATM withdrawals or balance inquiries, is vital to understand before getting the card. However, the monthly fee can be waived in any month where you have loaded $1,000 or more to your card in the previous monthly period.
Furthermore, it’s important to note that while Walmart Rapid Reload is free, using this service at non-Walmart locations may involve a fee. Similarly, while withdrawals at in-network ATMs are free, out-of-network ATM withdrawals come with a $2.50 fee.
Walmart MoneyCard: Main Benefits
No Overdraft Fees
One of the significant advantages of the Walmart MoneyCard is the absence of overdraft fees. With this prepaid card, you’re spending your own money that you’ve loaded onto the card, which means there’s no chance of incurring an overdraft fee or the risk of a bounced check.
This feature could provide peace of mind, especially for those who are worried about maintaining a positive balance in a traditional checking account.
MoneyCard Vault
The Walmart MoneyCard comes with a unique feature called the MoneyCard Vault. This tool acts as a savings account, allowing you to set aside money while earning interest. With the MoneyCard Vault, you can earn a 2% annual interest rate (APY) on your savings up to a $1,000 balance. This feature incentivizes saving by providing an opportunity to grow your money.
Cash Prizes
Not only does the MoneyCard Vault help you save, but it also offers an exciting chance to win cash prizes. For every dollar saved in the MoneyCard Vault, you earn an entry into a monthly drawing where 999 winners are chosen.
These winners could receive a cash prize of up to $1,000. This feature makes saving money even more enticing, offering a chance at a potential monetary bonus simply for practicing good saving habits.
Family Accounts
Finally, the Walmart MoneyCard offers a beneficial feature for families. The cardholder can create up to four additional MoneyCards for family members who are 13 years and older. This could be an excellent tool for teaching teens about financial responsibility or for managing a family budget effectively.
Potential Drawbacks and Limitations
While the Walmart MoneyCard offers several benefits, it does have potential drawbacks that must be considered. One such drawback is the monthly fee of $5.94. This fee can be waived if you load at least $1,000 onto the card in the previous monthly period, but for users who don’t frequently load large amounts onto their card, this cost might be a deterrent.
Although there’s the benefit of earning rewards, there are limitations. The cash back rewards are capped at $75 each year. Depending on your spending habits, this may be less generous than some rewards credit cards offered by traditional financial institutions or credit card companies.
It’s also important to note that while the card offers the ability to withdraw cash, out-of-network ATM withdrawals come with a $2.50 fee. Additional third-party fees might be charged at out-of-network ATMs and are not controlled by Green Dot Bank.
Security Features
Walmart MoneyCard provides several measures to ensure the safety of your funds. Firstly, your funds are held with Green Dot Bank, a member of FDIC, meaning your MoneyCard deposits are insured up to the standard deposit insurance limit.
The card also includes an EMV chip that provides enhanced security and is globally accepted. Additionally, customers can set up account alerts through the app to receive instant notification of any transactions or suspicious activity.
Another valuable security feature is the ability to instantly lock your card if it’s ever lost or stolen, directly from the MoneyCard App or website. This can prevent unauthorized use and provide peace of mind.
Customer Service and Support
Walmart offers various customer service channels for MoneyCard users. These include a phone number to call for live support and an online Help Center with answers to common questions. You can also receive assistance via the Walmart app or website, where you can report lost or stolen cards, check your balance, view transactions, and find the nearest Walmart store or ATM.
Remember that it’s always beneficial to research user reviews and feedback to get a sense of the overall customer service experience. While Walmart offers several avenues for support, it’s essential to ensure that the support meets your expectations and needs.
Comparing Walmart MoneyCard with Other Prepaid Cards
When compared to other prepaid cards on the market, the Walmart MoneyCard stands strong. Its cash back rewards program, free cash reloads at Walmart stores, and early access to direct deposits via the ASAP Direct Deposit feature set it apart from many competitors.
However, it’s crucial to remember that no single financial product will be the perfect fit for everyone. Other prepaid cards might have lower monthly fees or offer different benefits, like rewards on other types of purchases, no fees for ATM withdrawals at certain ATMs, or better customer service.
It’s essential to compare the Walmart MoneyCard with other prepaid debit cards and carefully consider your financial needs, habits, and preferences before making a decision.
Is the Walmart MoneyCard right for you?
The Walmart MoneyCard could be a good fit for those who shop frequently at Walmart, as they can earn cash back at Walmart.com, Walmart stores, and Walmart fuel stations. For those without a traditional bank account, or for those who wish to avoid overdraft fees and credit checks, the Walmart MoneyCard provides a flexible and accessible option.
Additionally, if you’re seeking a tool to help with budgeting or teaching family members about financial responsibility, the Walmart MoneyCard can be a valuable resource due to its reloadable nature and the option to create additional MoneyCards for family members.
However, if you’re not a frequent Walmart shopper, or if you plan to make regular ATM withdrawals, it’s important to consider the associated fees. The $2.50 out-of-network ATM fee and the monthly fee (unless waived) could outweigh the benefits for some users. Similarly, those who do not anticipate depositing $1,000 or more monthly might find the fee to be a deterrent.
As always, your individual financial habits, needs, and goals are key factors in determining whether a particular financial product, such as the Walmart MoneyCard, is a good fit for you.
Bottom Line
The Walmart MoneyCard offers a unique blend of features, such as the rewards program, no overdraft fees, and the MoneyCard Vault savings feature, that make it stand out among prepaid debit cards. Its ease of use, accessibility, and range of services offer an appealing package for many individuals.
However, potential users should be mindful of the associated fees and limitations. The potential for out-of-network ATM fees and the monthly charge (unless waived) should be weighed against the benefits that the card provides. Also, the card may not be the best fit for individuals who don’t frequently shop at Walmart or deposit less than $1,000 monthly.
As with any financial product, it’s critical to understand its fee structure, limitations, and potential downsides before deciding if it’s the right fit for your financial needs.
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Taking out a home equity loan could make sense if you need cash for home improvements, repairs or other expenses. You might be wondering if you can refinance home equity loan debt to get a lower interest rate or change your payment terms. The short answer is yes, refinancing a home equity loan is possible, though there are some requirements you’ll need to meet to qualify.
Talking to your financial advisor can help you decide if home equity loan refinancing makes sense.
Understanding Home Equity Loan Refinancing
Home equity loans allow you to tap into your equity value for cash. A home equity loan is a type of second mortgage that you repay with interest, in addition to your primary mortgage loan. Home equity loans typically have fixed interest rates and repayment terms can extend up to 30 years.
Refinancing a home equity loan means taking out a new loan to pay off the old one. You’d then make payments to the new loan at the terms set by the lender. And you’d still be responsible for making payments to your primary mortgage as well.
Reasons for Refinancing Home Equity Loan
There are several scenarios when refinancing a home equity loan or any type of mortgage could make sense:
Changing your rate. First, you might refinance if it would allow you to get a lower interest rate. Reducing your interest rate could save you money on the loan and it may result in a lower monthly payment as well.
Getting different loan terms. For example, say that your original home equity loan has a 20-year term, but you’d like to extend it. You could refinance it into a 30-year loan instead. You can also do the reverse and refinance a longer loan for a shorter term, though that can mean a higher monthly payment.
Switching loan types. If you have a variable rate home equity loan you might refinance to a fixed rate. Doing so could give you some predictability where your payments are concerned since you don’t have to worry about interest rate fluctuations affecting what you pay.
Taking out more equity. If your equity has increased since you took out a home equity loan, you might refinance it to draw out more cash. Just keep in mind that doing so means you’ll have a larger mortgage debt to repay.
Advantages of Home Equity Loan Refinancing
Refinancing a home equity loan can offer some benefits to homeowners. Here are the main pros to know about home equity loan refinancing.
Refinancing a home equity loan could save you money if you’re able to get a lower interest rate.
You might be able to lower your monthly payment, either by reducing the interest rate or changing the loan terms.
Choosing a shorter repayment term could help you pay off a home equity loan faster, freeing up money for other financial goals.
It’s helpful to understand what you hope to get out of refinancing home equity loan debt before making a move. That can also help you decide what kind of loan terms make the most sense.
Disadvantages of Home Equity Loan Refinancing
While there are some good reasons to refinance home equity loan balances, there are a few cons to know.
Refinancing may save you money on interest but you’re essentially just shuffling debt around.
Your lender may expect you to pay closing costs on the refinance loan and there may be a prepayment penalty if you decide to pay it off early.
Qualifying for home equity loan refinancing might be difficult if you don’t have sufficient equity or meet the lender’s minimum credit score and income requirements.
It’s important to note that refinancing into a longer loan term may not save much money, even if you’re getting a lower interest rate. The longer you pay on the loan, the more you’re paying in interest overall.
Using an online mortgage refinancing calculator can help you estimate your savings with different loan terms.
How to Refinance a Home Equity Loan
If you’d like to refinance your home equity loan, a good first step is calculating how much equity you have in the property to determine how much you might be able to borrow. Lenders will look at your loan-to-value (LTV) ratio, which is the loan amount divided by the property value. Generally speaking, a good LTV for mortgage refinancing is 80% or less.
Once you’ve done that, you can move on to the next phase which includes:
Shopping around to find the right lender to work with.
Applying for a refinance loan and submitting the required documentation
Completing the appraisal if the lender requires one.
Reviewing the loan disclosures to make sure you understand them.
Closing on the loan and paying any costs due.
When comparing lenders, it’s helpful to look at the minimum requirements to qualify for a home equity loan refinance, including LTV and credit score requirements. It’s also a good idea to check the costs. For example, will you need to pay closing costs out of pocket or are they rolled into the loan? Will you be charged a prepayment penalty if you pay the refinance loan off early?
In terms of documentation, the lender may ask for the same things that were required to get your first mortgage loan. The list can include tax returns, W-2s, bank statements and investment account statements. The more documentation you have to demonstrate your ability to pay, the better.
If the lender gives you the option to roll closing costs into the refinance loan, consider the pros and cons before agreeing. On the one hand, you won’t have to pay any money out of pocket to complete the refinance process. However, you’re still going to pay those closing costs over time and with interest since they’re included in the loan.
The Bottom Line
Refinancing a home equity loan is something you might consider if you’re ready to make changes to your existing loan or want to draw more equity out of your home. Estimating the costs and the potential long-term savings is a good starting point. And of course, keep in mind that your new payments need to fit your budget, so you don’t run the risk of falling behind.
Mortgage Tips
When you’re not sure whether refinancing a home equity loan is ideal, talking to your financial advisor can help. Your advisor can help you evaluate the pros and cons of refinancing and what kind of terms might work best. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Your bank might offer home equity loan refinancing options, but you may consider working with an online lender instead. An online lender may be able to offer lower interest rates for a home equity loan refinance, charge fewer fees or close on the loan in a shorter time frame. You may also be able to get pre-approved for a home equity refinance loan online, without affecting your credit scores. Keep in mind, however, that a hard credit check might be required if you decide to go ahead with submitting a full loan application.
Rebecca Lake, CEPF®
Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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If someone leaves you money in their will but you don’t want to wait until probate ends to claim it, you might consider getting an inheritance advance. An advance against an inheritance allows you to collect money that’s set to come to you in exchange for a fee. How much does an inheritance advance cost? The amount you’ll pay to access an inheritance early can depend on which advance company you’re working with.
Talking to your financial advisor can help you decide if taking an advance against your inheritance makes sense.
Understanding Inheritance Advances
An inheritance advance is an advance against money that you stand to inherit from someone else. When someone passes away, they can leave money or other assets to you in a will. That will is then subject to probate, which is a legal process in which assets are inventoried, outstanding debts are paid, and inheritances are distributed to heirs.
All of that is handled by the executor of the will and depending on the size of the estate, probate can take months or even years to complete. Should someone decide to contest the terms of the deceased person’s will, that can drag the probate out even longer. An inheritance advance allows you to bypass all of that and get your inheritance sooner.
How Does an Inheritance Advance Work?
Inheritance advances work by allowing you to get some of the money that’s been earmarked for you in a will before probate ends. The exact process can vary from company to company but generally, it works like this.
You tell the advance company how much you stand to inherit.
The advance company verifies the amount and offers you a percentage of the inheritance up front, in exchange for a fee.
If you agree to the amount, cash is paid out to you.
When probate is finalized, the advance company collects its fee and any remaining inheritance funds are turned over to you.
An inheritance advance is not the same as a probate loan. With a probate loan, you’re borrowing money against a future inheritance, which you must pay back to a lender with interest. There’s usually a credit check involved, and you may need to make payments while probate is ongoing.
With an inheritance advance, the advance company pays money to you and gets a cut of the inheritance for their services. There are no credit checks required and funding can be delivered in a matter of days once you’re approved. When probate ends, any money that’s left after the advance company gets paid to you and there’s nothing you have to pay back.
How Much Does an Inheritance Advance Cost?
The cost of an inheritance advance will depend on the company that you’re working with. A typical fee structure involves paying a percentage of the inheritance to the advance company which can range from 10% to 50%. Again, this money comes directly out of the inheritance itself, rather than from your pocket.
Here’s an example of how an inheritance advance might work and what it can cost. Say that you’re going to inherit $100,000 from a distant relative and it’s going to take six months for probate to wrap up. You need $30,000 right now to fund a major home renovation project.
You approach an inheritance advance company that agrees to give you 30% of your inheritance, or $30,000, in cash. Meanwhile, the advance company wants 40% of the inheritance. You agree and get the cash.
Six months later when probate ends, the advance company is able to collect $40,000, its share of the inheritance. You, meanwhile, get the remaining $30,000 for a total inheritance of $60,000.
Is an Inheritance Advance Worth It?
Getting an advance against an inheritance could be worth it if you need money fast and you don’t want to take out a loan. Again, there are no credit check requirements for inheritance advances and nothing to pay back since you’re not actually borrowing anything. You’re just getting a portion of the money you’ll inherit a little early.
Of course, you’re making a trade-off since you’re not getting the full inheritance at the end of the day. The advance company will want its cut, which again, may be anywhere from 10% to 50% of what you’ll inherit.
What you have to decide is how much the convenience of getting an inheritance advance is worth to you. If you need money for something critical, like a life-saving operation or medical treatment that insurance won’t cover, for instance, then forgoing some of your inheritance money to get cash right now could be a no-brainer.
On the other hand, missing out on a chunk of your inheritance may be the best move if your need for cash is less urgent. For example, if you need money to pay for home renovations then you might get a home equity loan instead. Once the inheritance comes through, you can take part of it to pay back the loan and you’re not stuck paying a high fee to an advance company.
How to Get an Inheritance Advance
If you’re interested in getting an advance against an inheritance, the first step is finding a company to work with. That’s fairly easy to do since you can search for inheritance advance companies online. Keep in mind that you typically won’t find inheritance advances offered by traditional banks or credit unions.
Once you choose an advance company, you’ll need to give them some information about the inheritance, including:
The estimated amount
The name of the executor who’s handling the estate
A copy of the deceased person’s death certificate
The advance company will verify the amount of the inheritance and make you an offer. That offer should specify how much money you’ll be able to get up front and what percentage of the inheritance will go to the advance company.
If you’re satisfied with the offer, you can sign off on the paperwork and then wait for the advance company to deposit money to your bank account. Depending on the company, you might be able to get the funds as quickly as the next business day.
The Bottom Line
How much does an inheritance advance cost? There’s no simple answer, as it can depend on how much you stand to inherit and which advance company you decide to work with. A better question to ask might be how much you are willing to pay to access your inheritance early. That can help you to decide if an advance is right for you.
Estate Planning Tips
Consider talking to your financial advisor about the pros and cons of an inheritance advance. Your advisor can also offer tips on how to manage a large inheritance and where it might fit in to your overall financial plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
You might consider a probate loan instead of an inheritance advance if you don’t want to sacrifice fees to an advance company. With a probate loan, you’ll have to pay interest on the amount of your inheritance that you borrow but it may be much less than what an advance might cost. Keep in mind that a probate loan may take longer to get approved, so there might be a wait to get the cash. You’ll also need a good credit score to qualify for the lowest interest rates.
Rebecca Lake, CEPF®
Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
College will cost more for students borrowing during the 2023-24 academic year as federal student loan interest rates climb to heights not seen in a decade or longer.
As of July 1, undergraduates who take out new direct federal student loans will see interest rates rise to 5.50%, the Education Department’s Federal Student Aid office said Tuesday — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.
Interest rates on graduate direct loans, available to graduate and professional students, will rise to 7.05% from 6.54% the year prior. PLUS loans, which parents and grad students can use to fill in education funding gaps, will jump to 8.05% from 7.54%. Here are the higher 2023-24 rates for each type of federal student loan, compared with the 2022-23 academic year:
2022-23 interest rate
2023-24 interest rate
Undergraduate direct loans
Graduate direct loans
PLUS loans
Undergraduate direct student loan interest rates haven’t been this high since 2013. Interest rates on direct graduate loans and PLUS loans, introduced with fixed rates in 2006, have never been this high.
Rising rates makes college pricier
Higher interest rates mean paying off loans will cost more. Each year, usually in mid- to late May, the government sets fresh federal student loan interest rates for the academic year ahead by adding the U.S. Treasury’s May 10-year note auction yield with an additional “add-on” percentage, which varies depending on loan type. The final rates apply to new loans doled out starting July 1.
Ultimately, charging more interest will make college more expensive for the millions of college students and their families who take out loans. Today, nearly 44 million people collectively owe roughly $1.6 trillion in outstanding federal student loans — and federal loans account for about 93% of the total student debt burden, according to a NerdWallet analysis of Department of Education and Federal Reserve data.
For example, if you start college this fall and borrow a total of $31,000 in unsubsidized federal direct loans (the maximum loan amount for dependent undergraduates) with a 5.50% interest rate, you’ll wind up paying back almost $50,000 under a standard 10-year repayment plan. If you’d started college in 2020-21 and taken out the same $31,000 federal loan with a record-low 2.75% interest rate, you would’ve had to repay around $39,500 including interest over 10 years.
The higher rates will apply to all students who take out new federal loans for college or graduate school in the 2023-24 academic year. It’s important to note that all federal student loans have fixed interest rates, so they won’t change during the repayment period.
Federal vs. private student loan interest rates
In recent years, federal student loans have offered lower interest rates (and fees) than private alternatives, but that may no longer be true for some borrowers. The average private fixed-rate undergrad student loan charges 5.99% to 13.78% in interest, according to a January 2023 NerdWallet analysis. As a result, private loans may start to look more attractive.
However, private student loans have drawbacks. They usually require a student to have a high credit score — or a co-signer with a high credit score — to qualify for the lowest rates. The co-signer, typically a parent, is equally responsible for the loan. Federal student loans don’t allow co-signers, and only federal PLUS loans require a credit check.
Federal loans also offer benefits like payment plans that cap monthly bills at a certain percentage of your income, temporary payment pauses if you lose your job or experience financial hardship, and loan forgiveness programs. Private loans don’t typically offer these protections.
Though federal interest rates still have room to climb, they could soon hit a ceiling. Under the Higher Education Act, rates may not exceed 8.25% for undergrad loans, 9.5% for grad loans and 10.5% for PLUS loans. Private student loan lenders have much higher maximum interest rates.
Submit the FAFSA to minimize borrowing
Minimize your total college debt — and the amount of interest you’ll pay over time — by maximizing funding sources you won’t have to repay, like scholarships, grants, work-study and other financial aid options.
You’ll need to submit the Free Application for Federal Student Aid, or FAFSA, to qualify for most federal, state and school grants. That includes the federal need-based Pell Grant, which, starting in 2023-24, can give students up to $7,395 per year in free money to pay for college. Scholarships also often require applicants to submit the FAFSA, including some offered by private organizations.
The FAFSA is open until June 30, 2024, for the 2023-24 school year, but don’t delay. Fill it out as soon as possible to increase your chances of getting more money. Some types of aid draw from limited pools and can run out.
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You’ve got someone moving into one of your spare bedrooms. You’re hiring a new housekeeper or nanny. You’re renting out your house. You’re dating someone and you’re curious about his or her debt and credit management skills. Or, maybe your spouse passed away and you need to see what’s on their credit report. There are many reasons why you’d be curious to see what’s on someone else’s credit reports that have nothing to do with lending them money.
Permissible Purpose
There are dozens of websites where you can buy or claim YOUR credit reports but getting someone else’s credit report isn’t quite as easy. The only way you can legally pull someone else’s credit report is if you have what’s referred to as Permissible Purpose. Permissible Purpose is a term straight from the Fair Credit Reporting Act and it defines the conditions under which a credit reporting agency may furnish a credit report. And, as you’ve probably already figured out, getting your girlfriend’s credit report simply because she’s your new girlfriend isn’t on the list.
There is, however, more than one way to skin a cat and if you’re diligent and creative then getting your hands on someone else’s credit report might not be impossible. You can certainly ask that your prospective tenant provide you with a credit report, which they can get at any number of websites. Yu can also buy their credit report from one of the many tenant screening companies but you will need to have their permission and cooperation.
Proxy Ordering
You can also proxy order their credit report from any of the credit bureau’s websites. Proxy ordering is when you are entering the other consumer’s personal information as if you were them. You’re still going to need their permission and cooperation because you’ll have to “authenticate” their identity, which means they’ll have to answer a few questions that only they know the answers to. These questions come directly from their credit report, so it’ll be something along the lines of “Your credit report shows a mortgage loan opened in 2004, who is the lender?” I’ve done this before and it’s very efficient, as long as you’ve got a cooperative consumer.
Deceased Spouse
If you need a credit report of a deceased spouse, then you’re going to have to go directly to the credit bureaus to get it. According to Rod Griffin, Director of Public Education at Experian, “You can request a copy of your deceased spouse’s credit history by mailing a letter stating you are the deceased’s spouse and that you are requesting a copy of his or her credit report.” You will need to provide the following documentation:
For the deceased: – Name (First, Middle, Last, Generation (Jr., Sr.)) – Mailing address at time of death – Social Security number – Date of birth – Previous addresses for the prior two years – Copy of the death certificate
For the living spouse: – Your name (First, Middle, Last, Generation (Jr., Sr.)) – Address the report should be mailed to – Copy of documentation verifying you are the spouse If you are not the spouse but are the executor of the estate you will need to send a copy of legal documentation naming you as the executor (signed and sealed from the court).
Mail your request to: Experian PO Box 2002 Allen, TX 75013
Clearly, this is going to be much less prevalent than requesting a credit report for a living spouse or a roommate, but I did get several questions this past year from consumers wanting to know how to get their deceased spouse’s credit reports. But, it wasn’t nearly as common as people wanting help getting their boyfriend/girlfriend/fiancé’s credit reports. That took the cake… by a long shot.
John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. Follow John on Twitter
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