Credit Karma

Surge Mastercard® review: A surge of interest and fees

What you need to know about the Surge Mastercard®

The Surge Mastercard®, issued by Celtic Bank and serviced by Continental Finance, is designed to help people with bad credit or no credit at all start building their credit. There’s a lot of competition in this space, so let’s see how the Surge Mastercard® measures up.

An unsecured starter card … except when it’s not

The Surge Mastercard® markets itself as a credit-builder card, and in some respects that’s true. Celtic Bank considers individuals with less-than-stellar credit, and it does report payment history to all three main consumer credit bureaus.

But where the Surge Mastercard® really stands out is that it claims to offer a way for you to get your hands on an unsecured credit card with a $500 credit limit (which is really only $375, because Continental Finance assesses the first year’s annual fee before you begin using your card).

When you can’t afford to put down a security deposit, unsecured credit cards can be attractive, even when they offer few additional perks.

Unfortunately, there’s no guarantee that you’ll be approved for the unsecured version of the Surge Mastercard®. Depending on your creditworthiness, you may be offered a secured card instead.

Without the guarantee of an unsecured card, the Surge Mastercard® loses almost all of its appeal — especially considering its exorbitant fees.

Fees, fees, fees

The Surge Mastercard® charges an eye-popping $125 annual fee your first year (after that the annual fee is $96). That’s a bigger annual fee than many rewards cards charge.

Doing the quick math, $125 is 25% of the card’s $500 credit limit, which is a pretty high percentage of your credit limit.

But it gets worse. After your first year, the Surge Mastercard® charges a $10 monthly maintenance fee — a total of $120 per year — once cardholders enter their second year.

The Surge Mastercard® does reduce its annual fee to $96 in the second year, but you’ll still pay $91 more in the combined annual fee and monthly maintenance fees in your second year than in your first year with the card.

What if you to want to add an authorized user on the account? Surprise, there’s a one-time fee for that too — $30 per authorized user.

Sky-high interest rate

The Surge Mastercard® charges a variable 29.99% annual percentage rate on purchases — that’s high even for starter credit cards.

If you do decide to apply for the Surge Mastercard® and you’re approved, we recommend that you don’t carry a balance. The interest charges on even a few dollars carried over from month to month can accumulate quickly at this high rate.

Thankfully, this credit card comes with a 25-day grace period from the close of your last billing cycle to pay off your statement balance without interest charges.

Unclear upgrade path

One of the hallmarks of great secured credit cards is clarity about how long you’ll need to wait to get your security deposit back and graduate to an unsecured card. For example, the Discover it® Secured Credit Card will consider returning your security deposit after eight months.

But the Surge Mastercard® offers no such guidelines for how or when it considers upgrading its secured cards to unsecured status. In the card’s agreement terms, Continental Finance states that your account will be reviewed for a credit limit increase after it’s been open for at least 12 months.

In contrast, cards like the Capital One® Secured Mastercard® pledge to review your account for a credit-limit increase after only five on-time monthly payments.

Who this card is good for

The Surge Mastercard® should be considered only after you’ve reviewed other options on the market. Check out our top picks for easier-approval credit cards or secured credit cards to start. If you’re not sold after researching your other options, the Surge Mastercard® could be an option to consider and could help you build credit in the short term.

If you’re able to build your credit, applying for a more user-friendly card down the road could give you opportunities to earn rewards at a lower interest rate.

Not sure this card is for you? Consider these alternatives.

• Discover it® Secured Credit Card: This card is one of the best choices for people who would like to earn cash back rewards while building their credit. Read our Discover it® Secured Credit Card review to learn more.
• Petal Visa Credit Card: If keeping fees at a minimum is your top priority, this card could be the one for you. For more details, read our review of the Petal Visa Credit Card.
• The Indigo® Platinum Mastercard®: If avoiding a security deposit is important to you, this card could be a good choice. For more info, read our review of the Indigo® Platinum Mastercard®.

What is a car’s out-the-door price?

You may be surprised to learn that the price on a car’s window sticker — the manufacturer’s suggested retail price, or MSRP — likely isn’t the actual price you’ll pay before driving your new car off the lot. That’s because the MSRP doesn’t reflect expenses like sales taxes and registration, title and dealer fees, like the out-the-door price does.

Once these additional costs are included, a car’s out-the-door price might cost thousands of dollars more than its MSRP.

Let’s take a look at the expenses that can contribute to your car’s out-the-door price and how they can affect the price you pay. We’ll also share ways you can help make sure a car’s out-the-door price fits within your budget.

What’s included in the out-the-door price?

A new car’s out-the-door price may include some or all of the following expenses.

• Vehicle title and registration fees
• Destination fees
• Documentation fees
• Sales taxes

Vehicle title and registration fees

Your car must be titled and registered with your state’s department of motor vehicles or transportation agency. The fees associated with this vary from state to state.

In many states, there’s a flat, one-time fee charged for the vehicle title. Title fees can range in cost from $4 (Arizona) to more than $250 (Iowa).

When it comes to vehicle registration, states base their fees on a number of factors. Some states charge a flat fee while others base the fee on the total weight of the vehicle, with the heaviest vehicles costing the most to register. In certain states, registration fees are calculated based on other factors, like the age of the car or its fuel efficiency. Registration fees are usually annual or biennial, and can range from as little as $14 (Mississippi) to more than $200 (Florida).

AAA features a list of registration and title fees by state. Be sure to confirm these rates with your state’s department of motor vehicles.

Destination fees

The destination fee covers the cost of transporting the vehicle from the factory to the dealership. It’s charged by the automaker, not the dealer, and passed on to you.

This fee is listed on the car’s window sticker, but it’s not included in the MSRP. It’s shown afterward, as a separate expense that contributes to the vehicle’s total price. When carmakers advertise the price of a vehicle, the price listed typically doesn’t include destination fees.

These fees vary by automaker and vehicle type, and they generally run from about $1,000 to $1,400 or more.

Documentation fees

The documentation fee, also referred to as the doc fee, is charged by the car dealership to cover the cost of handling the paperwork associated with the sale of the vehicle.

Some states place a cap on the amount a dealer can charge for doc fees, which can range from a cap of $75 to $300. But in states that don’t limit doc fees, the cost might be higher.

Sales taxes

There are two types of sales taxes that you may have to pay when buying a new car: statewide and local. Whereas statewide sales taxes are just that, local sales taxes are sales taxes charged by some cities and counties in 38 states.

Currently, 45 states and the District of Columbia charge statewide sales taxes. Alaska, Delaware, Montana, New Hampshire and Oregon don’t have sales taxes.

Statewide sales taxes can climb as high as 7.25% (California), while local sales tax rates can be as high as 5.14% (Alabama).

MSRP vs. out-the-door price: A real-world example

The difference between a car’s MSRP and out-the-door price can be significant.

Let’s say you live in Louisiana, and you’re purchasing a new 2019 Toyota Corolla. Here’s a breakdown of the costs that add up to the out-the-door price.

In this example, the out-the-door price of the Corolla is approximately $21,780.50. That represents a $3,080.50, or roughly 16.5%, increase over the car’s MSRP.

Protect your budget by planning ahead

It’s important to keep your car’s out-the-door price in mind both prior to and during the negotiation process. This will help you make sure the price you’re paying for your new car fits your budget. Here are some tips.

Estimate out-the-door price by using online tools

If you’re financing your purchase, the difference between a car’s MSRP and out-the-door price could impact your monthly payment. Edmunds offers an auto loan calculator that estimates sales taxes and registration fees. And NADA Guides lists destination fees in its pricing breakdown when you search by make and model. These tools can help give you a sense of what your car’s out-the-door price might look like, long before you close the deal.

Negotiate using out-the-door price, not monthly payment

If you’re financing your car purchase at the car dealership and negotiating based on the monthly payment, the salesperson may be able to play with the numbers in ways that reduce the amount you’ll pay each month while increasing the total cost of your loan.

For example, the salesperson may be able to reduce your monthly payment by extending the loan term. But the longer loan term could mean you pay more in interest over the course of the loan.

The best approach is to focus on the out-the-door price during negotiations. This can help you make sure that you don’t wind up paying more than you can afford.

Apply for preapproval for a car loan

If you apply for and get preapproved for a car loan, the lender tells you the maximum amount you might be able to borrow. Unless you plan to make a down payment, this means you’ll need to keep an eye on the vehicle’s out-the-door price and make sure it doesn’t exceed your preapproved loan amount.

And since getting preapproved by multiple lenders allows you to shop around for the best interest rate, going this route may have the added benefit of reducing the interest you pay on your car loan. But remember: Preapproval isn’t a guarantee. You’ll need to officially apply to pin down the terms you can count on.

Bottom line

A car’s out-the-door price can exceed its MSRP by thousands of dollars. Ask your salesperson outright for the out-the-door price before deciding. If you don’t think in terms of the out-the-door price — versus your monthly payment — when buying a new car, you might end up committing to much more than your budget allows.

When setting your budget, make sure you consider additional expenses that come with owning a car so that you don’t find yourself struggling to make car payments down the road.

Tips for buying a car from a private seller

You might pay less buying from private sellers because they don’t have to meet dealership-set expectations for profit. This can leave more room for negotiation.

But with a private sale, you’ll also have to handle all of the paperwork associated with the sale and transfer of ownership yourself. You also won’t have access to dealer financing and some of the protections that consumers may get when buying a car from a dealership. For example, private car sales may not come with warranties, depending on your agreement with the seller.

And if you live in a state where the Lemon Law applies only to new cars (and you don’t have any kind of similar protections in your agreement with the seller), you could be out of luck if the car becomes undriveable after you buy it.

If you decide to skip the dealership and buy a car from a private seller, here are a few tips that could help protect you during the car-buying process.

Research cars for sale in your area

If you plan to buy a car from a private seller, you can’t just drive up to a lot and choose from hundreds of cars the way you might if you buy from a dealer. But there are plenty of resources available to help you with your used-car search — you can browse local private-sale inventory on websites like Autotrader or Craigslist, or check classified ads in your neighborhood.

When you find a car you’re interested in, compare the seller’s asking price to the Kelley Blue Book or Edmunds private-party value. Understanding the fair market value of different makes and models can help you figure out whether the seller’s asking price seems fair compared to similar vehicles in your area, giving you info that can help in your negotiations with the seller.

Gather information about the car

Getting as much information as you can about a vehicle can help you make an informed decision. Here are a few ways to learn more about a car you may want to buy.

Get a vehicle history report

For a fee that can range from $10 to $40, you can order a vehicle history report that might help alert you to potential problems with the car. This report contains information including accident history, damage the car has sustained, open recalls, title history, lien history and service history.

You can use the car’s vehicle identification number (VIN) or license plate number to get a vehicle history report from websites like Carfax, instaVIN.com and AutoCheck. But keep in mind there may be incidents in the car’s history that don’t show up on these reports. Don’t rely solely on the report for all the information you need.

Request service records

Car manufacturers typically recommend regular maintenance to keep vehicles running well. Ask the seller to show you the car’s maintenance records. Not all sellers will have these, but if they do, the records can provide insight into how well the car has been kept up.

Ask the seller questions

The seller may be able to tell you things that don’t show up on the vehicle history report. Or there may be a discrepancy between what they tell you and what the report shows, which could be a red flag.

Before you agree to buy a car, here are some questions to consider asking the seller.

• Are you the original owner? If not, it may be tough to find out how well the car was maintained before the current seller bought it.
• Are there any liens on the car? A lien is a notice attached to the vehicle by a creditor who claims to be owed money — one example of this situation could be that the owner put the car up as collateral for a loan that has not been paid off. Lien info may show up on the vehicle history report. If not, in some states, you can check the status of a lien online at your state’s Department of Motor Vehicles by entering the VIN. If there’s a lien on the vehicle because the seller still owes money on a car loan, the seller may need to pay off that loan before the title can be assigned to you.
• Has the car been in an accident? The car may have been in an accident that doesn’t show up on the vehicle history report. Compare what the seller tells you with what’s included in the report.
• Have there been any recalls on the car? If the answer is yes, check that all necessary repairs have been completed. You can search for recalls on your vehicle through the National Highway Traffic Safety Administration.
• Have there been any major repairs? Accidents aren’t the only reason a car may undergo major repairs. If it has a new engine, transmission or a tree has fallen on top of it, you’ll want to know.
• Why are you selling it? Maybe the kids have grown up and moved out, so the seller no longer needs that SUV. Or maybe they just want a newer car with special features. If they can’t give you a good reason, the seller may be trying to hide problems they’re having with the car.
• How many miles are on the car? If the mileage is unusually high or low based on the car’s age, find out why. Americans drive an average of 13,476 miles each year, according to the U.S. Department of Transportation.

Take a test drive

Getting behind the wheel gives you a chance to check for signs of obvious damage and get a feel for the car’s steering, suspension and brakes. Listen for odd noises and make sure things like the heat, air conditioning, lights, windows, locks, turn signal and other features work. If anything feels or sounds off, get it checked out by a mechanic.

Get the car inspected

When you buy from a private seller, the car’s condition may be a bit of a wild card. You won’t know for sure the condition of the parts that aren’t visible or how well it’s been maintained unless you get it inspected. An inspection can alert you to potential mechanical issues and whether the car has been in an accident that wasn’t reported.

A pre-purchase inspection typically runs about $100 to $200, but that cost can be worth it to get a better idea of the car’s condition before you decide to buy it. Be sure the mechanic who conducts the inspection is someone you know and trust. 

Shop around for financing

Unless you have enough cash to buy the car outright, you’ll need financing to cover the cost. Some banks and credit unions offer private-party auto loans, which are designed for consumers who are buying a car from a private seller instead of a dealership.

But keep in mind that not all banks and credit unions offer this type of loan. Among those that do, rates can vary from lender to lender, so take some time to shop around to find the best rate and loan term for you.

Negotiate the sale and close the deal

Once you’ve done your homework, you’ll have a better idea if the seller’s asking price is fair. If you feel it isn’t, you can use the information you’ve learned to negotiate a price you think is more reasonable.

After you agree on a price, the seller should sign the vehicle title over to you at the time of sale. If the seller still owes money on the car, you may need to make a check out to the lender in order to get the car’s title. You’ll then need to register the title in your name with your state’s Department of Motor Vehicles.

The documents you need to register the title in your name vary by state, but may include …

• The title showing it’s been signed over to you
• Bill of sale with the purchase price
• Odometer disclosure statement
• Lien information if you borrowed money to buy the car
• Lien release if the current title shows there’s a lien against it from the previous owner

After you file the necessary paperwork and pay any taxes and fees, you’ll receive either a paper or electronic version of the title.

Bottom line

Buying a car from a private seller can require a lot of work on your part. But if you don’t mind taking the time to research the car, you may be able to save yourself some money by skipping the dealership.

To make sure you don’t get taken for a ride by an unscrupulous seller, take the time to research the car you’re interested in buying, ask lots of questions, go for a test drive and get the car inspected by a mechanic before you complete the sale and drive away.

IRS to waive penalties for some taxpayers whose withholdings and payments fell short in 2018

Usually, a big tax bill in April means you didn’t pay enough tax throughout the previous year, and the IRS can penalize filers who owe more than 10% of their total federal tax obligation come Tax Day.

But not this year.

The IRS recently announced it would waive the penalty for any taxpayer who paid at least 80% of their total federal tax obligation during the year. The break would apply whether you paid through payroll withholdings from your wages, estimated tax payments or a combination of the two payment methods.

That means if your withholdings and estimated tax payments for 2018 fell short, you might be able to avoid the penalty this year.

Want to know more?

• What’s the background?
• Why does this matter?
• How could this impact you?
• What’s next?

What’s the background?

Because 2018 was the first year many provisions of the Tax Cuts and Jobs Act of 2017 took effect, many taxpayers might not have had the correct amount of tax withheld from their paychecks or made the right amount of estimated tax payments.

The IRS issued updated federal tax withholding tables (which employers use to calculate how much tax to withhold from employees’ paychecks) in early 2018. But the tables “couldn’t fully factor in other changes, such as the suspension of dependency exemptions and reduced itemized deductions,” the IRS said in a Jan. 16 news release.

As a result, some taxpayers might not have paid enough tax throughout the year. In fact, a report last year by the U.S. Government Accountability Office predicted that about 30 million taxpayers would fail to withhold enough tax from their paychecks for the 2018 tax year.

Why does this matter?

The federal tax system is pay as you go, and usually the IRS expects taxpayers to have paid at least 90% of the total they owe in any tax year by the time they file their federal return — which is due April 15 this year for most filers. Normally, if you end up owing more than 10% of your total bill when you file, the IRS can penalize you for failing to pay your proper estimated tax.

But the IRS has changed that percentage threshold for 2018 taxes in hopes of helping taxpayers whose withholdings or estimated tax payments fell short last year. If you paid at least 80% of your total 2018 federal tax liability during the year, the IRS said it would likely waive the estimated tax penalty.

That penalty is typically based on how late your estimated tax payments are and the interest rate for the period.

How could this impact you?

If you’re among the estimated 30 million wage earners who didn’t have enough withheld from their paychecks or are a business person whose estimated quarterly payments fell short, the IRS says you might not face a penalty this year.

If you paid at least 80% of your total 2018 federal tax obligation, the IRS said it would waive the penalty. However, if you owe more than 20% of your total tax bill when you prepare and file your 2018 federal tax return, the IRS will calculate the penalty as it normally would, using the 90% threshold for its calculations.

What’s next?

If you filed your 2018 federal income tax return before the IRS announced the expanded penalty waiver and you qualify for the expanded relief, you may be able to claim any additional refund you’re owed. You’ll need to complete Form 843, Claim for Refund and Request for Abatement, put “80% waiver of estimated tax penalty” on Line 7 of the form and mail the form. It can’t be submitted electronically.

If still haven’t filed and aren’t sure how much you’ll owe come Tax Day, the surest way to find out is to prepare your tax return. Doing so will help you understand your total tax obligation for 2018, how much of it you’ve already paid and how much you could still owe.

To determine if the amount you owe represents more than 20% of your total federal tax bill, divide the amount you owe by your total tax obligation. Alternatively, a commercial tax preparation software could be able to help you determine if you’ll face a penalty. “The waiver computation … will be integrated into commercially available tax software,” according to the Jan. 16 IRS news release.

If you discover your withholdings fell short in 2018, you can get a head start on adjusting your 2019 withholdings by using the IRS’ online withholding calculator.

Loans for veterans: Know your options

Whether you need financial assistance to pay bills or want to consolidate debt, there are veteran-focused loan options available that could fit your circumstances.

But before you sign on the dotted line, make sure you understand the loan terms and try to explore grants and other affordable options first.

What is a personal loan?

A personal loan is a type of installment loan that’s paid out to the borrower in a lump sum and repaid with interest in monthly installments over the life of the loan. This type of loan can be used in a variety of situations, such as …

• Consolidating your debt
• Moving expenses or home improvements
• Covering emergencies

Unlike federal student loans, which must be used for education expenses, personal loans have more flexibility in how funds can be used. This can be good for veterans looking for financial assistance.

Personal loans for veterans

If you want a loan, make sure you’re getting it from a trustworthy source. The good news is there are a number of reputable lenders that work with veterans.

USAA

USAA is a large financial institution that works exclusively with current military members, veterans, eligible family members and cadets and midshipman. USAA ranked as the most reputable bank in the 2018 Bank RepTrack study. Becoming a USAA member is free and gives you access to a variety of financial products and services, such as banking, investment and insurance services and personal loans.

You can apply online to get a USAA personal loan. USAA offers personal loans from $2,500 to more than $20,000, and there are no loan application fees. If approved, you can get funds as soon as the next business day in some cases.

Navy Federal Credit Union

Navy Federal Credit Union, which was founded in 1933, has a long history of serving current and former military members. The credit union offers various financial products, including checking and savings accounts, credit cards and personal loans.

At Navy Federal Credit Union, you can apply for a personal loan of up to $50,000. Interest rates are tiered based on the loan terms.

Your creditworthiness will determine the interest rate on your loan. If you are approved for a loan, you may be able to get it deposited directly into your checking or savings account. As with USAA, you will need to become a member of Navy Federal Credit Union to use its services.

Other lenders

Although USAA and Navy Federal Credit Union cater specifically to military members, you will also want to check other personal loan lenders — like banks, credit unions and online lenders — to survey rates.

Other types of loans and financial assistance for veterans

If you need flexibility in how you can use loan funds — and if you can get approved — a personal loan may be what you need. But if you need help with something specific, like getting housing or finding a job, there could be other options for you.

Veterans Affairs loans

The U.S. Department of Veteran Affairs offers several loan programs for eligible veterans if you own, or are hoping to purchase, a home.

• Purchase loan: This could be a good option if you want help with buying a home. These VA home loans often don’t require down payments and may come with better terms and interest rates than traditional lenders offer. Plus, you won’t need private mortgage insurance.
• Native American Direct Loan Program: This loan option is for veterans who are Native Americans or have a spouse who is Native American and are looking to build, buy or improve a home on Federal Trust Land.
• Interest Rate Reduction Refinance Loan: If you have an existing VA-backed home loan, you may be eligible for this type of product, which can help lower your monthly mortgage payments by getting you a lower interest rate or by moving you from a variable-rate loan to a fixed-rate loan.
• Cash-out Refinance Loan: If you’re looking to use home equity to pay for schooling, pay off debt or refinance a non-VA-backed loan to a VA loan, this could be a good option for you.

Nonprofit programs

Another option is the National Veterans Foundation, which serves U.S. veterans and their families by providing various services. It can help you …

• Request assistance
• Learn about veteran benefits and resources
• Apply for a job

The Veterans of Foreign Wars has an Unmet Needs program that offers up to $1,500 in grants for families facing financial difficulties. Because it is a grant and not a loan, you don’t have to pay anything back.

If you’re dealing with an emergency or having trouble paying a bill and need some financial assistance, you may be able to get help by applying for a Homecoming Heroes grant with Modest Needs. Modest Needs is a nonprofit organization that works with newly returned veterans who may be facing financial difficulty.

Balance transfer cards

If you’re not sold on a loan, you might consider applying for a balance transfer credit card that has a low APR or a 0% intro APR for new purchases and balance transfers. While not designed for veterans, a balance transfer card could help you consolidate credit card debt or make a big purchase. With this option, you can transfer your existing credit card balances to potentially save money on interest. Just keep in mind that if you go with a card with the 0% intro APR, it will expire after a time. If you don’t pay off the balance in full and by the time the promotion expires, you’ll have to pay interest.

Bottom line

If you’re a military service member in need of money, you may want to consider loans for veterans. Make sure to look at loan options specifically for veterans and also from other lenders to compare rates.

If there are grants or other types of financial assistance available, you may want to take advantage of those first before applying for a loan. Beware of scams that target veterans as you compare your options. The key to avoiding scams is to do your research and find a competitive rate with a reputable lender.

Is a short-term car lease ever a good idea?

Short-term car leasing is exactly what it sounds like — a lease agreement for a relatively short period of time.

Short-term leases can offer some advantages, like being able to drive a brand-new car with less of a commitment — but there are a few big drawbacks, too. Let’s take a look at what a short-term lease is, and the potential pros and cons.

What is a short-term car lease?

When you lease a vehicle, you agree to use the car for a specific number of months and miles. After the lease ends, you must return the car to the dealership or, if the option is available, buy it.

There’s no official guideline for what length of car lease is “short” term — some auto industry experts consider any lease 24 months or less short term. Others define it as less than 36 months. Leasing terms at dealerships typically range from 24 to 60 months.

Drawbacks of short-term car leases

Before you jump into a short-term car lease, consider these potential negatives.

Depreciation

If you lease a brand new car, depreciation can take a big bite out of your wallet. Here’s why: The car’s estimated depreciation is built into your lease payments. And cars lose the most value — usually around 20% — during the first year on the road. If you’re leasing during that period, you’re picking up the bill for that depreciation — and with a short-term lease you’re spreading it across a smaller number of payments.

Taxes and fees

Many states charge sales taxes, which you may need to pay on a car lease. In addition, you might need to pay title, registration and inspection fees, along with potential county or municipal sales taxes. Depending on the state and area you live in, these taxes and fees could add thousands of dollars to the cost of a short-term lease. Be sure to do some research and understand all of the potential costs before you sign a lease contract.

Mileage limits

If you get a shorter-term lease through a dealership, you can generally get 10,000 to 15,000 miles per year. But if you take over someone else’s lease, you might have fewer miles to use.

As with longer leases, if you exceed the agreed-on mileage, you could end up owing more. Standard mileage penalties range from 15 to 25 cents a mile.

Possible advantages of short-term car leases

A short-term car lease can be an attractive option if …

You want to drive the latest and greatest

Addicted to that new-car smell? A shorter-term new car lease means your lease will be up not long after that smell wears off, freeing you up to lease another new car.

You need temporary wheels

If you only need a car for a little while, a short-term lease might be a good option. Maybe you’re relocating for your job for a year and your new commute would benefit from a more fuel-efficient vehicle. A short-term lease could work if you need a car that fits your situation for a couple years or so — or less.

Where can you get a short-term car lease?

You have two main options for getting a short-term lease.

Head to a car dealership

If you’re looking for a term of 24 months, many car dealerships offer this option. Just be aware that this might be the shortest term available, and you might not be able to get such a short term at all dealerships.  Lease programs at dealerships vary by location but generally range from 24 to 60 months.

Take over someone else’s car lease

Sites like SwapALease.com or LeaseTrader.com can put you in touch with drivers who want to exit their lease contracts early. If you’re looking for a term shorter than 24 months, you might find some options this way. It’s important to note that both of these sites require a credit check to be eligible to take over a lease, and so applying may generate a hard inquiry and lower your credit score.

As you research your lease takeover options for each car, be sure to note the monthly payment the original lessee had, because you’ll be inheriting it. Pay attention to all the terms, including the remaining miles on the lease, too — you may be left with fewer miles than you need. When you take over someone else’s car lease, you are responsible for all of the obligations included in the lease, so review everything carefully before jumping in.

Bottom line

Short-term car leasing can be an option if you don’t want to commit to one car for a long time — and if you don’t mind paying for that flexibility.

If you aren’t sure whether a short-term lease is right for you, compare the costs associated with those of other options such as a short-term rental or even purchasing a new or used vehicle. Doing all your homework to understand the potential benefits and drawbacks of a short-term car lease will help you decide which route may be right for you.

Can I get a personal loan if I’m unemployed?

Loans for the unemployed are possible, but you’ll likely have to prove that you have an alternative source of income — and the lender may take a closer look at your creditworthiness.

Here are some things to know about applying for a loan if you’re unemployed, along with some info and alternatives to consider before you apply.

Factors lenders may use to evaluate your loan application

Lenders look at multiple factors when evaluating a new loan application. Ultimately, they’re trying to figure out how likely you are to repay your loan.

Income

Income is usually a big consideration in the world of lending, which is why being unemployed can make getting a personal loan more challenging. But if you have income sources outside of a traditional job, you still might have a chance to qualify. Here are some common examples of alternative income.

• Spouse’s income: If you’re married and the lender allows it, you may be able to include your spouse’s income on your loan application. This may be allowed if you can use that income to help repay the loan. You may need to include your spouse as a co-applicant if you choose to include their income as a source of income.
• Investments: Capital gains or money from investments like real estate could help indicate your ability to repay your loan. One-time capital gains might not be considered, but recurring income from dividends or rental properties may be allowed if the lender approves.
• Retirement benefits: Social Security benefits or regular 401(k) withdrawals may qualify if you’re retired.
• Other payments: Unemployment, alimony and child support may be accepted as other predictable sources of income.

But heads up: The Equal Credit Opportunity Act prevents lenders from requiring you to disclose certain types of income, including types of public assistance, alimony and child support.

Debt-to-income ratio

Another factor that lenders may consider in determining whether you have the ability to repay a loan is your debt-to-income ratio. This is calculated by dividing your total monthly debt payments by your gross monthly income. Your gross income is generally your income before payroll deductions like taxes and insurance.

If your debt-to-income ratio is too high, a lender may use this as an indication that you may not have enough income to pay both your debts and day-to-day expenses.

Credit history

Your credit is also key for lenders in evaluating whether to give you an unsecured personal loan. Lenders will almost surely take a look at your credit scores and could also consider payment history and other information on your credit reports, like past bankruptcies or accounts in collection.

The federal Fair Credit Reporting Act requires consumer reporting agencies maintain fair and accurate information in your file that lenders may consider. While strong credit may not make up entirely for a lack of income, it can weigh on the positive side when you’re trying to get a loan.

Risks of borrowing while unemployed

Taking out a loan comes with risks for both the borrower and the lender if you default.

Let’s look at some of those risks before you borrow while unemployed:

• Missed payments: One of the obvious worst-case scenarios when you take out a loan without a job is not being able to pay for the loan. Failing to pay back a loan can damage your credit, lead to collections and make an already challenging financial situation even tougher.
• Higher interest rates: If your income is low, you could still get a loan — but it’s more likely to come with a higher interest rate. Higher interest rates mean higher overall loan costs.
• Shorter repayment term: If a lender determines that you’re a riskier borrower, you may be limited to loans with shorter repayment periods. That’s because a lender is less likely to believe your financial circumstances will change in the short term.

These risks together are a great reason to consider some alternatives to taking out a loan when you’re out of work.

Alternatives to personal loans

• Credit cards: You may already have a personal loan alternative sitting in your wallet. Some credit cards offer a cash advance as a way to tap into your credit line outside of regular purchases. Just be careful: Credit cards can come with high interest rates depending on your credit history — and cash advances tend to come with their own high rates, too — so it’s best to pay off your balance on time and in full if you use them for short-term needs.
• Line of credit: A personal line of credit works similarly to a credit card in that you can add to your balance and pay it off multiple times over the life of the account. You make a monthly minimum payment, paying interest on your outstanding balance and possibly a fee for using the credit line. If you can qualify, this may be a reasonable alternative.
• Secured loan: You could consider using a home or other asset as collateral for a secured loan. Collateral is an asset you pledge to a lender in the event you stop paying for your loan. Interest rates can vary from relatively low to sky-high, so it’s not always an ideal option. And remember, there are also fees associated with these types of loans. The annual percentage rate takes into account the interest rate as well as a range of fees that may be associated with the loan. Also, don’t forget that you risk losing your home, car or other collateral as well as any equity you may have built up in them if you can’t come up with the cash to make timely payments on the loan.
• Home equity line of credit, or HELOC: This is a line of credit attached to the value of your home. It’s a form of secured credit, meaning your home serves as collateral and you risk losing it if you default on your repayment obligation. Again, remember to look at the APR, which should take into account the interest as well as any mortgage broker fees and other fees. Be sure to confirm whether there are any prepayment penalties, whether the interest rate increases in the case of default and whether there is a balloon payment — a very large payment required at the end of the loan term.

Bottom line

Getting a personal loan while unemployed is often more difficult than getting a loan while you have steady income from a job — but it might still be possible.

With any personal loan, it’s important to be mindful of the costs — and to think through all your options and possible alternatives. Signing up for a loan you can’t afford could make your financial situation even more challenging than it is today.

Should I buy a new or used car?

For some people, picking out a car and deciding whether you want to buy new or used can be an easy decision. Some prospective buyers may be focused on saving as much money as possible and would never consider buying a new car. Others may want to pick out the exact vehicle of their dreams and like knowing that they’re the first and only owner.

There are also many people who might be up for either option but want to know the pros and cons of buying a new versus a used car. If you’re one of them, read on.

Benefits of a new car

A shiny new car can offer the latest bells and could even come with a warranty and roadside assistance — giving you peace of mind that you may be covered should you be met with certain car troubles. Let’s take a look at a few other major pros of going with a new car. 

Capitalizing on financing offers

Dealerships may offer new car buyers special financial incentives, like cash back or 0% financing during a promotional period. These offers could help lower the upfront cost, making the car more affordable.

If you’re considering a used car, you still might be able to benefit from offers and incentives. For example, some manufacturers offer special promotions on certified pre-owned vehicles if you finance through the dealership.

But if you have low credit scores, you might not be eligible for special offers on new or certified pre-owned cars.

Customizing your car and getting the latest technology

One great perk of buying a new car is customization. If you want a specific color, interior or features, you may be able to tailor a vehicle to your liking and then order it through a dealership.

Buying a new car might also be the only way to get the latest tech features. Think lane-change warnings, adaptive cruise control or even built-in software that can alert you when someone (like your teenager) is speeding or driving without a seatbelt.

Getting comprehensive warranty coverage

New vehicles often come with a bumper-to-bumper and powertrain warranty, along with roadside assistance. These warranties can help assure buyers that qualified repairs may be covered.

If you’re considering a used car, a warranty isn’t necessarily out of the question. Cars that are only a few years old with low mileage may still be covered by a type of manufacturer’s warranty — if it can be transferred to a new owner. Certified pre-owned cars purchased through a new car dealership may also come with an extended factory warranty.

Paying less for repairs and maintenance

A new car’s warranties may cover many types of common repairs. In contrast, if you buy a used car, you might want to start a repair fund. Even cars known for their reliability can break down at times, and if you’re lucky enough to have a warranty that covers certain issues, it still probably won’t cover everything.

For example, normal wear and tear will have you buying new tires or brake pads, which may not be covered by a warranty. Depending on the mileage, a used car could require costly maintenance or repairs.

Consumer Reports found that the owners of certain 2007 and 2014 car makes and models — and only for car brands that were part of the survey data — paid on average anywhere from $10 to $390 in repairs and maintenance over a 12-month period. But in a car’s 10th year, they paid on average anywhere from $315 to $1,125.

Doing less legwork

The initial steps in buying a used or new car are similar. You set a budget, identify potential makes and models within your price range and do some pricing research. If you’re buying a new car, the next step would likely be to head to some dealerships.

But if you’re buying used, you might need to shop around a bit more and explore the used-car inventory in your area. If you want something specific, like a certain color or features, it might take a while to find the right car. Once you do, you’ll want to get a copy of the vehicle history report and set up an inspection — both of which can cost you money. If you’re buying from a private seller, you’ll also need to look into the car’s title. 

Benefits of a used car

Buying a used car could save you money. Here are a few benefits of buying a used car.

Slower depreciation

A new car depreciates, or loses value, as soon as it leaves the dealer’s lot. In fact, it could lose 20% or more of its value within the first year, depending on the make and model. This might not matter to you if you plan to own the car for a long time. But if you finance your car and plan to sell it in the next couple of years, you may find that you aren’t able to sell it for enough to cover what you owe on your car loan.

Used vehicles generally don’t depreciate as quickly as new vehicles do. After the first year, depreciation of used cars can slow to around 9% to 12% each year for some models.

Lower cost

Here’s the big one: If a brand-new car is worth about 20% less after the first year, why not buy a car that’s almost brand new and potentially save some money? While many people don’t immediately sell a car after buying it, you can often find vehicles that are just 1 to 2 years old. If you go this route, you might pay less for the car — and might save on auto insurance, too. Lower-priced cars are typically less expensive to insure.

If there isn’t a big difference in cost between a new model and the 1-year-old-version of the same model, you may find that financing the used car is more expensive. While the older model will likely cost less, interest rates on used car loans are typically higher than loans for new cars. The Experian State of the Automotive Finance Market report shows that in the fourth quarter of 2018 the average interest rate for new car loans was 6.13% compared with 9.59% for all used car loans. 

The benefits of a large down payment

Depending on your financial situation, you might have a better chance of getting approved for a lower-cost used car loan, especially if you’re able to put down a large down payment. Without a hefty down payment, getting approved for a loan that covers the generally higher cost of a new car can be difficult, especially if you have lower credit scores.

Bottom line

There are pros and cons to buying both new and used cars, and what you decide on may come down to your personal preferences and financial situation. Just be sure to compare your options, negotiate the sale price and shop around for your auto loan if you’re not paying cash. Getting preapproved for loans from a few lenders can also help you get a few estimates and compare your options, too.

Loans for people with bad credit: Your options

Lenders use your credit as a way to determine how likely you are to pay back a loan. Some lenders may not want to loan you money if your credit reflects some financial bumps in the road — or if you haven’t had time to build a credit history.

The good news is that there are different types of loans for people with bad credit. The bad news? There are also lenders that prey on people with bad credit, offering financing with very unfavorable terms that could trap applicants in a cycle of debt.

The key is to do your research and read the fine print to avoid predatory lenders. Instead, you should aim to find lenders that are affordable — and that may even help you build your credit. Let’s review what kinds of loans for people with bad credit may make the most financial sense for you.

What exactly is ‘bad credit?’

First things first: It’s important to understand what “bad credit” really means.

Bad credit typically refers to low credit scores. Things like late payments or maxed-out credit cards can bring your scores down. A few things that could help you improve your credit scores include developing a history of on-time payments and keeping your credit utilization low.

Different credit-scoring models, like VantageScore and FICO, use different formulas for determining your scores, typically on a scale of 300 to 850, and may identify a specific range as “bad credit.” FICO, for example, considers scores between 300 and 579 as “poor.” Each lender can also define bad credit differently.

If you want more loan options with better terms, you’ll want to work on improving your credit.

Loans for people with bad credit

Here are the pros and cons of some of your loan options if your credit falls within the bad credit zone.

Payday loans

Payday lenders typically don’t look at your credit when deciding if you’re eligible for a loan.

Payday loans are for short terms and often for $500 or less. This type of loan is typically due by your next payday and often carries extremely high fees. In fact, the Consumer Financial Protection Bureau has found that the fees for a typical two-week payday loan can equate to an APR of almost 400%. Payday loans are banned in some states, while other states set limits on payday loan sizes and fees.

Car title loans

Car title loans are also short-term loans that may be an option for people with bad credit. Lenders may be more willing to offer these loans because a borrower uses their vehicle’s title as collateral to secure the loan.

Car title loans typically have to be repaid within 30 days or less, and are often for an amount that is 25% to 50% of the value of the vehicle you’re borrowing against. In fact, the Federal Trade Commission warns that most car title loans have APRs in the triple digits.

Finally, these loans can be especially risky because if you can’t pay back the title loan, the lender could repossess your vehicle, so that’s important to keep in mind if you’re thinking of going this route.

Personal loans

Personal loans are installment loans issued by banks, credit unions and online lenders. This type of loan can be secured or unsecured. An unsecured loan doesn’t require collateral, while a secured loan requires you provide property, like a certificate of deposit or vehicle, which the lender can take if you can’t repay the loan.

Secured loans could be easier to qualify for, depending on a number of factors. But some secured loans — and many unsecured ones — are available only to borrowers with good or excellent credit.

There are loans for people with bad credit, though. While these loans usually have higher interest rates than personal loans for people with good credit, they can be cheaper than payday or car title loans.

Personal loans can often be made for larger amounts than payday or car title loans, and they usually have longer repayment periods. It’s not uncommon for borrowers to repay personal loans over 12 to 84 months.

Peer-to-peer lending

Peer-to-peer lending — also known as marketplace or P2P lending — is a system where individual investors fund loans to would-be borrowers. Requirements for these loans vary, but your credit might not be scrutinized as closely by P2P lenders as by traditional financial institutions like banks.

Like other personal loans, those issued using peer-to-peer lending networks often have lower interest rates than payday or car title loans and can offer both longer repayment terms and larger loan amounts.

Payday alternative loans

Payday alternative loans are short-term loans available at some federal credit unions. They typically have much lower fees and annual percentage rates than the typical payday loan.

Several rules apply to payday alternative loans, including …

• Interest rates can’t exceed 28%, though interest rates may change during the life of the loan.
• Loan amounts must be between $200 and $1,000.
• Loans must be repaid within one to six months.
• Application fees can’t be more than $20.

Getting a loan could help improve your credit

If you qualify for a loan with bad credit, you may be able to use it to help build your credit. You can start doing this by paying your loan payments on time. This will help you develop a record of a positive payment history, which is an important component of your credit scores.

But in order for your loan payments to boost your credit, make sure your lender is reporting your record of on-time payments to the three major consumer credit bureaus. Payday lenders often do not report to the credit bureaus, so taking out these loans may not help you improve your credit. That’s yet another reason to consider alternatives to payday loans.

Bottom line

If your credit history contains negative marks and you need to borrow money, there are some options out there — but they’re not all good.

Look closely at the terms of each type of loan, choose carefully and have a plan for paying it back. Some loans might even help you build — or rebuild — a positive credit history.

How to lease a car

Leasing is fundamentally different from buying a new car.

Unlike financing to own a car, leasing a car allows you to drive a new vehicle for a period of time — often two to four years — and for a monthly payment that’s typically less than a finance payment.

Once your car lease is up, you may have different options depending on your lease agreement. The only option may be to return the car — but some lease terms include a purchase option.

There are a number of steps you’ll need to take before leasing a car, and a number of financial and legal terms you’ll want to understand. Follow this guide to learn how to lease a car.

• Step 1: Do your research and learn the car-leasing terminology
• Step 2: Set a budget
• Step 3: Narrow your car search and visit a dealer
• Step 4: Negotiate your lease terms
• Step 5: Take care of your car
• Step 6: Understand your options for turning in your car or keeping it

Step 1: Do your research and learn the car-leasing terminology

Car leases can be considered a low-commitment alternative to vehicle ownership. But car leases do come with many terms and conditions.

Most leases limit the number of miles you can drive and will charge you for overages or any notable damage when you return the vehicle. And returning your leased car early can be costly, too.

While you’re determining if leasing is right for you, you’ll also want to check your credit since you may need healthy credit to lease a vehicle. According to Experian, leasing companies typically look for FICO^® scores of 700 or better (on a scale with a range between 300 and 850), which FICO^® regards as a good credit score.

If you know that leasing could be right for you after researching the requirements that come with leasing a car, make sure to arm yourself with common leasing terminology you’ll likely encounter during your search.

• Lessor/lessee: The lessor is the company that grants you the lease, usually the vehicle manufacturer or auto dealer. The lessee is you — the person who is leasing the vehicle.
• Residual value: When your lease begins, your lessor will determine a future value for the vehicle, which is also known as the residual value. This will help determine your monthly payment. A higher residual value means the lessor expects lower depreciation during your lease — often indicating the vehicle will retain its value better.
• Rent charge: This is the main cost of leasing a car, and is paid each month in addition to vehicle depreciation. This is similar to interest. Some other components of your monthly payment may include amortization, sales or use tax and any miscellaneous fees.
• Disposition fee: If you return the vehicle at the end of your lease, you may have to pay this fee, which helps the lessor prepare to sell the vehicle and can cover costs like vehicle cleaning, storage fees, administrative costs and more.
• Purchase-option opportunity: This refers to your option to buy the vehicle after your lease is complete. Typically, the lease will either state the purchase price from the outset in your contract or in a specified used-car handbook.

Step 2: Set a budget

Next, you’ll want to calculate how much car you can afford to determine how much you can spend on a monthly lease payment.

It’s also important to figure out how much money you have available for any down payment and any extra fees you might be responsible for at the time you lease a car.

Here are some fees and insurance options to consider.

Wear-and-tear coverage

If you’re a frequent driver who anticipates putting a lot of wear and tear on a car, opting into wear-and-tear coverage might be a good investment for you. You can easily pay for this coverage upfront, and then you won’t be charged for certain wear-and-tear damages at the end of your lease — within limits. Check with your leasing company to see what this protection would include on your lease — some companies cover up to $5,000 worth of end-of-lease charges. If this option sounds appealing, make sure to factor this into your pricing and budget.

Comprehensive and collision insurance

When you lease a car, you might have to buy additional, specific types of car insurance coverage if you don’t already have it. Comprehensive insurance may cover the cost of repairing or replacing your vehicle in the event of an incident, including theft, fire or other acts of nature.

Collision coverage is similar to comprehensive coverage, but it’s aimed at covering costs for repairing or replacing your car if it’s damaged in an accident with another vehicle or object.

Gap insurance

Many lessors will also require you to have gap insurance. This may be included as a cost in your lease agreement or you may have to pay for it separately — it will vary based on your lessor.

This is insurance coverage that fills the gap when the early termination payoff (excluding past-due amounts) exceeds the insured value of a totaled or stolen car.

Step 3: Narrow your car search and visit a dealer

With this information in hand, you can visit a car dealership and see what options fall within your price range.

You should shop for a car to lease as if you were buying it. Many of the same rules apply — take it for a test drive, consider the pros and cons, and find a vehicle you’re willing to commit to for the next few years.

You might find that not every car is available for leasing. Since leased cars are usually sold again, dealerships generally put their most popular makes and models up for lease. If you want a specific model or certain features, you might not be able to get it by leasing.

Sometimes automakers offer leasing specials, so it may help to shop around for lease deals online or visit your local dealership to see what’s available while you’re in the market.

Step 4: Negotiate your lease terms

You may think you can only negotiate when you’re buying a vehicle, but that’s simply not true. When lease shopping, terms like the mileage, the cost of the vehicle and the interest rate on the lease are all negotiable.

This could help you get a lease contract that better works for your needs and budget.

Once you’ve selected your preferred vehicle and come to an agreement on the terms of your lease, it’s time to fill out the paperwork. If you’re approved, you’ll receive a contract that formalizes the agreement between you and the leasing company, and it will outline your use of the vehicle and your obligations. This is your lease agreement.

As you review your lease agreement, you’ll want to note your monthly payment, the amount due at signing, what maintenance you’ll be responsible for (and who pays for it) and fees due, like disposition fee and the acquisition fee and mileage limits.

You should also confirm if your lease is a closed-end lease or an open-end lease. With a closed-end lease, when you return the car, you’re done — you generally don’t pay any additional amount unless there is excessive mileage or wear on the car, and you can just walk away.

With an open-end lease, you and the lessor agree at the start of the lease what you think the car will be worth at the end of the lease (its residual value). Then, when the lease ends, you have to pay any difference between its residual value and its “realized,” or market, value.

Always read the fine print of your lease agreement to ensure you don’t miss any important details.

Step 5: Take care of your car

Once you’ve signed your lease and driven off the lot, you should take good care of your car. Remember, you could be responsible for any and all damages during your lease term.

Getting extra covering and protection for the floors and seats of your newly leased car may not be a bad idea. You’ll want to keep your leased vehicle looking its best to avoid additional fees.

You’ll also have to keep up with routine maintenance. Neglecting to do this could cost you at the end of your lease. While that oil change might be inconvenient, you’ll want to take care of the vehicle.

The good news? Some car leasing agreements include maintenance, so you won’t have to pay extra for it yourself.

If at all possible, keep your vehicle for the whole term of your lease. If you terminate your car lease early, you may have to pay an early termination charge, which is typically the difference between the lease payoff amount and the value of the vehicle. That charge can be several thousand dollars.

Step 6: Understand your options for turning in your car or keeping it 

Once the end of your lease term approaches, you’ll want to understand what your options may be: returning your vehicle, buying your leased car (if allowed in your contract), getting another leased vehicle or buying a different car altogether.

Follow this timeline to help guide your decision.

Two to three months before your lease ends

Depending on the terms of your lease, you may have several options when it ends, including buying it outright to keep the car or getting a new vehicle. You may also have the option of extending your lease.

Now is a great time to reevaluate your budget and take a look at what’s on the market and what kind of deals may be available to you.

If you’re considering buying the car after your lease ends, you’ll need to know the purchase-option price of the vehicle. This is typically either stated as a fixed dollar amount in your lease agreement or will be determined by the vehicle’s fair market value in a used-car guidebook.

You’ll also need to schedule a lease-end inspection. There may be some variation in this process, depending on the lessor, but this will typically be 60 to 90 days before your lease’s end and will determine if you need to make any repairs to your vehicle before returning it.

You should also take care of any repairs or maintenance you may need, like windshield repair or new tires. It’s also worth checking to ensure that you’ve got everything that came with the car, including both sets of keys, all floor mats, a spare tire or charging equipment.

Many manufacturers have online leasing checklists that detail your return timeline and what’s involved in the vehicle inspection, including what is considered normal versus excessive wear and tear.

If you’re thinking about buying out your lease, two to three months before your lease’s end is a good time to talk to your lessor about that process.

One month before your lease ends

Now’s the time to schedule your inspection, if it hasn’t taken place already, and find a time and date to return your leased vehicle.

If you want to buy out your lease, this is the time to start shopping for auto loans. That way you can aim to get your financing in order, and you can make your car-buying experience a smooth transition.

The day before your lease ends

It may sound obvious, but don’t forget your important personal items in the car. Things like garage door openers, toll transmitters and parking permits are easily forgotten.

It also won’t hurt to give your car a good wash and vacuum, wipe down the interior and spot treat any small stains. Go into the final inspection with your car looking its best.

Day of your lease return

This is when you’ll drop off your car for good if that’s the decision you’ve made. Don’t forget to take along your spare key as you part ways with the vehicle.

Verify with your lessor that everything is settled. You may have to sign documents like an odometer disclosure statement. Make sure all the terms of your lease agreement have been satisfied.

If you’re leasing a new vehicle, you’ll start this process all over again with the same lender or a different lender.

Bottom line

Learning how to lease a car is a multilayered process that comes with a lot of responsibilities. Becoming informed and understanding your lease agreement is the first step to walking away from your lease satisfied.

While every car lessor is different in how it handles leases, returns and charges, there are common elements that can help you to understand how to successfully and efficiently lease a car.

Some credit card issuers are offering new perks. What’s the deal?

Credit Karma’s editors and writers want to help you stay on top of credit card news. The information below is accurate to the best of our knowledge when posted. Heads up: Credit card terms are subject to change, and the terms outlined below may not be current after the date of publication.

Some major credit card issuers are offering new perks that are different from the kinds of benefits that many have come to expect from rewards credit cards.

In the past few weeks, American Express made a move to expand its airport lounge access for cardholders, Visa announced exclusive benefits for cardholders at a New York attraction and Chase partnered with a hospitality brand to start offering Sapphire cardmembers extra benefits.

So what’s the deal? It’s not just that credit card issuers are competing harder for your business, some industry experts say — it’s a move to offer rewards that are easier on their balance sheets than things like cash-back bonuses and airline miles.

Want to know more?

• What new perks are being offered?
• Why all the new perks?
• Will this trend continue?

What new perks are being offered?  

Three major card issuers recently took action to bring new perks to cardholders.

• American Express announced plans to acquire the travel lounge company LoungeBuddy, which might enable American Express cardholders to have greater access to airport lounges worldwide.
• Visa partnered with the new Hudson Yards development in New York City to provide Visa cardholders exclusive perks when they use their cards to pay Hudson Yards merchants. Perks range from free admission to The Vessel installation to a secret menu item at a Hudson Yards restaurant.
• Chase partnered with sbe, a global hospitality company, to provide Chase Sapphire Reserve® cardholders with perks at select sbe properties like SLS, Delano, Mondrian and Hyde hotels. Perks at these properties could include getting a fourth night free after four consecutive nights booked, room upgrades, or food and drink credits. Chase Sapphire Preferred® and Chase Sapphire Reserve® cardholders could also see perks like access to exclusive sbe events.

Why all the new perks?

Rewards credit cards — think cards that come with sign-up bonuses, cash back offerings and airline miles — have been popular with consumers, but they haven’t necessarily benefitted card issuers over the long term.

According to a report in The Wall Street Journal, credit card issuers have noticed that consumers often open new rewards cards for the sign-up bonus but stop using the cards after that. Other cardholders may continue to use the cards but regularly pay off their balances on time and in full to earn rewards but avoid interest. This aspect of credit card rewards has gotten costly for many card issuers.

It stands to reason that card issuers could be aiming to entice more credit card use by offering new and different kinds of perks that could be much less costly — helping the card companies’ bottom lines, sources told the Journal.

Will this trend continue?

We think so.

The race among card issuers to attract new cardholders and encourage more credit card use is unlikely to cool off any time soon. There’s still a big market to tap — U.S. credit card debt hit a record $870 billion at the end of 2018, a signal of just how popular credit cards continue to be with many Americans. And tech companies like Uber and Apple are bringing even more competition to the landscape with card products geared toward digital-first consumers.

Tweaking their perks is one way for credit card issuers to generate consumer interest in a way that could better protect their profit margins.

What is the best place to buy a used car?

There are many different kinds of sellers, including new-car or independent dealerships, used-car retailers and private or online sellers. The buying experience, car costs and financing options can vary across these different types of sellers, too.

Let’s take a look at the pros and cons of buying a used car from each type of place.

Types of used car sellers

Whether you have a specific car in mind or not, it’s always a good idea to shop around for the best deal you can get.

New-car dealerships

New-car dealerships are typically affiliated with one car manufacturer for new cars, but new-car dealerships may also sell used cars from other manufacturers on their lots. In some cases, these used vehicles are sold as “certified pre-owned” — meaning the dealer or manufacturer is vouching that the car meets certain standards. Certified pre-owned cars may also come with a warranty (terms of certified pre-owned programs can vary by manufacturer and dealer).

Another plus with new-car dealerships is that they typically offer several financing options — with lenders competing for your business — because they have relationships with a variety of finance companies. If your credit isn’t in great shape, having access to more lenders could mean a better chance of approval.

But your interest rate may be higher than if you get a loan elsewhere. With dealership-arranged financing, your approved interest rate can be marked up by the dealer and lender to generate more profit for themselves.

New-car dealerships also tend to have high overhead costs due to internal business expenses such as staffing and maintaining inventory of new models. That means you might end up paying more at a dealership than you would buying from a private seller — even if you manage to negotiate on the price.

Independent dealerships

Independent dealerships tend to be smaller than new-car dealerships, which can mean lower overhead costs and potentially lower sticker prices.

On the flip side, some independent dealerships may offer only in-house financing, giving you fewer lender options. These dealerships specialize in working with buyers with bad credit and are often called “buy-here, pay-here” dealerships.

You’ll want to think twice before working with a buy-here, pay-here dealership. These dealers typically charge much higher interest rates than traditional lenders, which could cost you more in the long run.

Used-car retailers

Large used-car retailers like CarMax and DriveTime function like independent dealerships, but they’re different for a number of reasons. For example, CarMax calls for inspections of all of its cars for sale, and each comes with a free vehicle history report and safety recall report. DriveTime’s program is similar.

Just keep in mind that CarMax and DriveTime sticker prices aren’t negotiable — part of the haggle-free experience they offer.

Another positive: Salespeople are paid a flat-rate commission, so there’s little financial motivation for them to push you to finance in a certain way.

Private sellers

If you have a specific car model in mind, you might be considering buying from a private seller. You can easily find cars from private sellers online.

It’s widely understood that dealerships have certain profit expectations that may drive their prices up. Private sellers, on the other hand, negotiate according to their own wishes and needs — possibly making it more likely to buy for a lower price than a dealership might offer.

But you’ll need to do a significant amount of research to help make sure you’re getting a car that’s in good condition, and for a fair price. Also, private sellers don’t partner with lenders, so you’ll likely need to find your own financing through a private party auto loan, or pay with cash or debit. Just keep in mind that lenders may typically charge higher interest rates on private party loans than they do for used cars purchased from a dealership.

Online sellers

Online sellers and auction sites allow you to compare several car listings without leaving the comfort of your home or office.

Though that may sound appealing, it’s not easy to know exactly what you’re getting just by looking at pictures. Some online sellers may offer a seven-day test drive to give you time to take the car to a mechanic and decide if you like it. But cycling through multiple test drives can be time-consuming. Also, not every online seller offers that opportunity.

Depending on the website, you may be able to finance directly with the online seller — or you might need to find your own financing. Some online sellers work with borrowers with low credit scores.

What’s the best place to buy a used car?

There are many places where you can get a used car, and no single source is objectively better than the rest — it depends on your situation.

New car dealerships and used car retailers that have access to several lenders can do the legwork for you and potentially provide competing offers — although these offers may have higher interest rates than you’d find with other lenders.

On the flip side, if you’re considering a seller that doesn’t provide financing, you’ll need to do your own auto loan shopping. This process can be time-consuming, but shopping around and getting preapproved could help you find the best offer for you.

Bottom line

Shopping for a used car can take time, especially if you’re considering your options from different types of sellers. But doing your research beforehand can help you find the right car for your needs at the right price.

If you have good or excellent credit, you might have an easier time getting approved for an auto loan with a low interest rate, regardless of which seller you buy from. But if your credit scores need some work, you may benefit more from a seller that specializes in working with people with less-than-stellar credit, or that has access to several financing options.

The hidden risks of subprime auto loans

But your lower scores might not stop you from buying a car. That’s because some lenders offer auto loans to what’s known as “subprime” borrowers — people whose credit scores are within a certain range (defined as 580 to 619 by the Consumer Financial Protection Bureau).

To get you up to speed on subprime auto loans, we’ll cover some basics.

• What is a subprime auto loan?
• How does a subprime auto loan work?
• What are the hidden risks of a subprime auto loan?

What is a subprime auto loan?

A subprime auto loan is aimed at borrowers who have credit scores within a certain range, which can vary depending on the source. While the Consumer Financial Protection Bureau considers a subprime score to be between 580 and 619, credit bureau Experian considers subprime to be between 501 and 600.

The CFPB defines five levels of credit scores for people who take out an auto loan.

• Deep subprime (credit scores below 580)
• Subprime (credit scores of 580 to 619)
• Near prime (credit scores of 620 to 659)
• Prime (credit scores of 660 to 719)
• Super prime (credit scores of 720 or higher)

Subprime auto loans are sometimes even extended to people who have no credit scores at all.

The Federal Reserve Bank of Kansas City emphasizes that there’s actually no universal definition of a “subprime loan.” More often than not, the borrower’s credit scores define whether a loan is subprime. But even the loan’s interest rate or the specific lender can be used to identify a subprime loan.

How does a subprime auto loan work?

Someone taking out a subprime auto loan usually has lower credit scores or no credit scores at all, so a lender typically charges higher interest rates and fees. Why? Because these loans often have higher delinquency rates than loans made to car buyers with higher credit scores.

Keep in mind that because of the nature of subprime auto loans, you might be required to provide additional information to a lender when applying. This could include income or employment verification beyond what’s normally required, like supplying your pay stubs or tax returns.

What are the hidden risks of a subprime auto loan?

Before you sign a loan agreement, consider the potential costs of subprime lending.

High interest rates

First and foremost, a subprime auto loan typically comes with a higher APR than a conventional auto loan does. The APR, or annual percentage rate, is the interest rate of your loan expressed as a yearly rate.

The APR for an auto loan can include fees, like a fee for originating the loan. The APR gives you a sense of how much it’ll actually cost you to borrow money for a car.

For example, a borrower with a FICO® score of 720 to 850 might qualify for a fixed APR of 4.55% on a 60-month loan for a $20,000 new car. Meanwhile, someone with a FICO score of 590 to 619 might qualify for an APR of about 16% for the same loan.

That can make a big difference in the total amount of interest paid during the life of the loan, amounting to $6,794 more paid for the subprime borrower in this example.

Interest rates on subprime auto loans can be upward of 29%, according the Columbia Business Law Review. People with shaky employment situations, and whose employment is dependent on access to a car, are often vulnerable because of it and might not have as much power to negotiate on the loan’s interest rate and terms.

Extra fees

Aside from a higher APR, higher fees might also be attached to a subprime auto loan.

For example, potential car buyers may be hit with several fees, like the following:

• A processing, or origination, fee for taking out the loan
• A prepayment penalty for paying off the loan early
• A service contract for repairs or maintenance service

Risk of default and repossession

Subprime auto loans are often at a higher risk for default and repossession than prime or near-prime loans, according to data from the 2018 Urban Institute analysis of American Community Survey.

If a borrower secures a subprime auto loan with a hard-to-manage repayment plan, it’s likely the borrower will default on the loan and the car will be repossessed, according to a 2016 analysis published by the University of New Mexico law school.

A default can happen when a borrower fails to make on-time payments. And a default on an auto loan could lead to repossession of your car, which provides subprime auto lenders with a way to potentially recoup their funds — by reselling your repossessed car.

In fact, some less-than-responsible dealerships will “churn” the same repossessed cars as many times as they can, according to the Center for Responsible Lending.

The harm of default and repossession extends beyond just the loss of the car. A study by Cornell and Rice universities showed that people are much more likely to declare bankruptcy following a repossession, and they face more difficulty in successfully applying for credit in the future than consumers who were behind on car payments but didn’t experience a repossession.

Bottom line

While subprime auto loans come with some hidden risks, there are steps you can take to help reduce those risks.

• Figure out how much car you can afford. See what kind of monthly payment you can fit into your budget before applying for a loan.
• Check your credit scores. These scores carry a lot of weight in determining your lending options, so knowing where your scores stand generally can give you an idea of what your options might be.
• Consider more than the monthly payment. Weigh the total cost of financing a car. Keep in mind that if you lengthen the term of your loan from, say, 48 months to 60 months, you’ll pay more interest.
• Look at all of the expenses of car ownership. This includes state taxes, title fees, insurance, maintenance and repairs.

Finally, keep in mind that the scores you see on Credit Karma may be different from what the lender will use when evaluating your application. You can always ask your lender what information they use while reviewing your application.

Quick loans: Your guide to personal loan options

A quick personal loan option could give you fast access to funds directly deposited into your bank account. If you have good credit, you may be able to find a loan with favorable terms. But some loans charge exorbitant interest rates and high fees.

What is a quick loan?

Quick loans are personal loans that may be funded in a short amount of time. You can find personal loans offered at credit unions, online lenders and traditional banks, and some other nontraditional lenders.

Personal loans are usually unsecured, which means the funds are not secured by an asset or property as collateral, like a vehicle or home.

There are other personal loan options that are offer funding quickly that are often less favorable to borrowers. For example, payday loans, auto title loans, and other high-interest, short-term debt can be incredibly expensive. You should try to avoid these types of loans whenever possible.

Personal loans and credit lines from credit unions and banks

Many banks and credit unions offer personal loans, often unsecured, that can be funded in a short amount of time — if you’re approved. These types of loans are installment loans that you pay back with regular monthly payments over a fixed period of time.

A personal line of credit works more like a credit card. It’s a revolving line of credit that allows you to take out money, up to a certain credit limit, and then pay it off over time with interest.

Personal loans from online lenders

The borrowing process can be quick and easy for a personal loan with an online lender. Just like personal loans and credit lines from credit unions and banks, after submitting your loan application the lender will perform a hard credit inquiry to determine how much money you can borrow and at what interest rate.

If you’re approved, the lender can typically send the funds right into your bank account, often within only a few business days.

You would then pay back the loan amount as scheduled until it’s fully repaid.

These loans can make sense — if you qualify for a competitive interest rate.

Payday loans and payday advances

A payday loan is another type of quick personal loan. They’re typically for $500 or less and due on your next payday.

Lenders that offer these types of loans often charge exorbitant fees, which can equate to interest rates of around 400% in some cases. To put things into perspective, a $500 loan with a $50 lending fee equates to an APR of more than 260%.

This type of loan can often be rolled over or renewed for only the cost of the lending fee, which increases the total cost for the borrower, and moves the loan out to the next payday.

This cycle of applying for and then renewing payday loans can quickly put a consumer in a cycle of debt, and so applying for this type of loan to get funds quickly should be avoided whenever possible.

A potentially cheaper option is a payday alternative loan, which is a small-dollar loan offered by certain federal credit unions. The interest rates on these short-term loans can’t exceed 28%, and loan amounts are between $200 and $1,000.

Car title loans

A car title loan is another expensive short-term loan.

This is a type of secured loan, where your vehicle is used as collateral. This means your car’s title or registration is left with the lender until you pay back the loan in full — and can be repossessed should you fail to make your payments as agreed. You must repay the loan with interest and fees, with loan terms typically between 15 and 30 days.

These loans are expensive, often offered by predatory lenders and should be avoided if possible. A report from the Consumer Financial Protection Bureau found that one in five auto title loan borrowers had their vehicle seized by a lender for being unable to repay the loan.

Pawnshop loans

With a pawn shop loan, you can use an item of value to secure the loan. A pawn shop will assess the value of the item and keep it on hand as collateral to back the loan.

Examples of items you can use as collateral for a pawnshop loan are jewelry, musical instruments, electronics and other high-value items. Terms for pawn shop loans vary and often include high interest rates.

You’ll typically be required to pay back the full amount of the pawn loan to reclaim your pawned item, though the amount of time you have to repay the loan can vary from state to state.

Peer-to-peer lending

Peer-to-peer lending, also known as marketplace or P2P lending, gives you an option to borrow directly from individual investors and removes financial institutions from the equation. A third-party platform where borrowers can search for and apply for these loans acts as an intermediary.

Instead of a bank making money on interest, the investors can earn money from interest payments. But peer-to-peer lending can come with fees, along with potentially high interest rates, for some.

What to watch out for with quick loans

For many, being strapped for cash is a common situation.

According to a 2017 study by CareerBuilder, 78% of U.S. workers live paycheck-to-paycheck. Of those who earn $100,000 and up every year, almost one in 10 workers lives paycheck-to-paycheck, the survey found.

If you have bad credit, you may be limited to high-interest loan options like online and payday loans, which can be expensive, so make sure to carefully plan how much you will need to borrow and what it will cost you in the long run. In some states, the fees for payday loans can add up to the triple digits — in Idaho, for example, the average payday loan fee is equal to an APR of 521%. And with a car title loan, your vehicle is at risk for repossession if you don’t pay back the loan as agreed.

Alternatives to high-interest debt

If you’re worried about covering your bills, low-interest personal loans might be an option for you to consider.

Just be aware that even if a lower interest rate is advertised by a lender, it’s not guaranteed for all applicants, and so borrowing could still result in a loan with a higher interest rate. Your eligibility and interest rates are based on your credit history and credit scores, among other factors, so it’s a good idea to get an idea where your credit is at before applying.

Here are some options you can consider if you have trouble qualifying for a personal loan.

• Get a co-signer. If you have difficulty qualifying for a loan on your own, a co-signer with good credit, like a parent or spouse, may be another alternative to avoid high-cost debt.
• Ask for an extension. If you’ve recently become unemployed or experienced a crisis, you also can reach out directly to creditors to see if they’ll grant you a bill extension.
• Try an online alternative. Several companies have emerged as alternatives to payday options. PayActiv works with certain employers to provide access to earned (but unpaid) wages for a membership fee of $5, which is charged each time they use the service. Earnin is another payday loan alternative that asks for tips, instead of fees or interest, on loans.

Bottom line

Many people have a quick loan alternative in their wallet that offers an interest rate below what you might pay at a quick-cash lender: your credit card. Just be sure to pay it off in full before the due date each month and you won’t have to pay any interest.

But if you don’t have a credit card and find yourself in the market for a quick loan, you should do your best to avoid predatory lenders, high fees and interest rates. If you’re able to work with only high-quality, reputable lenders, you should have a better overall borrowing experience. But it’s best to avoid feeling strapped for cash from the start.

Working for yourself? What to know about IRS Schedule C

Part of that extra time might be spent completing IRS Schedule C – Profit or Loss From Business (Sole Proprietorship). If you’re a sole proprietor (and you likely are if you run the business yourself and it isn’t incorporated or a partnership) you’ll need to report how much money you made or lost in your business on Schedule C, which you’ll file with your federal income tax Form 1040.

The IRS estimates it takes Schedule C filers approximately 22 hours to fulfill their tax compliance obligations. But don’t panic just yet. That time includes 12 hours of recordkeeping.

If you’ve diligently tracked your income and expenses throughout the year, you could be more than halfway to fulfilling your tax-filing obligation. Here’s an overview to help you through the process of filling out IRS Schedule C.

Who must file IRS Schedule C?

IRS Schedule C is required for anyone who owns and operates an unincorporated business as a sole proprietorship or a single-member limited liability company (LLC) — provided you don’t treat the LLC as a corporation — and owe federal income tax. You don’t have to take any formal action to set up a sole proprietorship — it’s your default status as long as you’re the only owner of the business. For example, if you’re a freelance writer or independent contractor and you haven’t incorporated your business, you’re likely a sole proprietor.

Single-member LLCs that choose not to be treated as a corporation also use Schedule C because they’re considered “disregarded entities” by the IRS. The name sounds unpleasant, but it’s not — it just means you’re not taxed like a corporation or partnership. Instead, your business income and expenses are reported on Schedule C attached to your Form 1040 individual tax return.

How to complete IRS Schedule C

Schedule C has six parts: An initial section for providing general information about your business and five numbered sections labeled Part I through Part V. Let’s look at each of these sections in detail.

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Schedule C: General information

Much of the information needed to complete Lines A through J on Schedule C should be easy. Enter your name and Social Security number and the name, address and tax identification number for your business (if you have a separate business name, address and EIN).

Line A asks for your principal business or profession. Your principal business or profession is a description of how you earn income. For example, if you made money as a driver for Lyft or Uber, you could enter “rideshare driver” on Line A.

Line B asks for a six-digit code. You’ll find a list of codes on pages C-17 through C-18 in the Instructions for Schedule C. Just read through the list and find the code that best describes your business.

On Line F, you’ll state your accounting method, which would usually be cash or accrual.

Line G asks whether you materially participate in the operation of the business during the tax year. Many sole proprietors will answer “yes” to this question. But if your business involves renting property or a working interest in an oil or gas well, look at the Instructions for Schedule C to see if your business activities are considered passive.

If your business is new or newly acquired this tax year, or you reopened or restarted it after a temporary closure (and didn’t file Schedule C or Schedule C-EZ for the prior year), you’ll answer “yes” on Line H.

Lines I through J have to do with filing Form 1099. Certain types of payments you make in a year as a sole proprietor might require you to file a 1099. If you’re unsure whether you need to file one or more 1099, check out the IRS rules on 1099 and other information returns.

Schedule C: Parts I and III

Now we move on to the meat of Schedule C. Part I asks for information on your business’s gross receipts and other income. Generally, gross receipts are your total earnings and you can get this from your Profit and Loss Statement (which is generated by your business) or add up income reported on the 1099-MISCs you received.

Cost of goods sold typically applies only if you sell a product. It includes all the costs of creating the products you sell. You’ll calculate your cost of goods sold in Part III, and then enter the total amount on Line 4.

If you’re a statutory employee — such as a full-time life insurance agent or traveling salesperson — and received a W-2 that notes you’re a statutory employee (box 13 of Form W-2), you’ll also report your income and expenses related to that income on Schedule C (or Schedule C-EZ). If you were both a statutory employee and had self-employment income, you’ll have to file two Schedule Cs — one for each income source.

Schedule C: Parts II, IV and V

Part II is where you’ll enter all the business-related expenses you incurred throughout the year. Schedule C lists some common expense categories, including advertising, insurance, interest, legal and professional fees, office expenses, rent, repairs and more. Enter the amount you spent for each category on Lines 8 through 26. If any of your expenses don’t fit into the categories shown, you’ll list them separately in Part V and enter the total amount on Line 27a.

If you take a deduction for car and truck expenses on Line 9 and aren’t required to file Form 4562 for your business, you’ll need to complete Part IV of Schedule C. This section provides details about your vehicle and the number of miles you drove for business, commuting and personal use during the tax year.

On Lines 28 through 32, you’ll calculate your net profit or loss from the business by adding up your expenses and subtracting the total amount from your income reported in Part I. If you used your home for business, you’ll include your home office deduction on Line 30, either by calculating the deduction using the Simplified Method Worksheet or attach Form 8829.

With that, your Schedule C is nearly complete. If your result is a positive number, you’ll take the net profit from Line 31 and enter it on Line 12 of Schedule 1 attached to your Form 1040. If the result is more than $400 or more, you’ll also need to complete Schedule SE to calculate your self-employment tax.

But if your business had a net loss for the year, you might need to do a little more work. Review the IRS Schedule C instructions for information and rules on how to report your losses.

Who can file Schedule C-EZ?

When filing your taxes, you might want to see if you can use the simpler Schedule C-EZ instead of Schedule C. Schedule C-EZ is a pared-down version of Schedule C, but to use it, you must meet all the following criteria:

• Your total business expenses were $5,000 or less
• You use the cash method of accounting
• Your business had no inventory at any time during the year
• Your business didn’t have a net loss
• You had only one business as a sole proprietor, qualified joint venture, or statutory employee
• No employees worked for you during the year
• You didn’t deduct expenses for business use of your home
• You have no unallowed prior-year passive activity losses from your business
• You’re not required to file Form 4562 to claim depreciation and amortization expenses for this business

Bottom line

Even seasoned entrepreneurs may find the IRS Schedule C daunting, and new business owners might be unsure which form they can use – Schedule C or the simpler Schedule C-EZ. Fortunately, the IRS instructions for Schedule C have in-depth definitions and explanations to help you make sense of anything you don’t understand.

If you do your taxes with an online tax preparation and filing service like Credit Karma Tax®, completing Schedule C can be even simpler. Credit Karma Tax, which is always free, can help you complete and file your Schedule C along with your federal income tax return.

Of course, the really time-consuming part of completing Schedule C happens way before tax season: tracking your income and expenses. When you stay on top of your small business accounting throughout the year, filling out forms can be as easy as transferring numbers from your Profit and Loss Statement into the right boxes.

Who can take a casualty-loss tax deduction?

Insurance companies pay out billions of dollars every year to cover such expenses — known as casualty losses. In fact, insured losses due to natural disasters in the U.S. totaled $78 billion in 2017, according to the Insurance Information Institute. That number increased to $91 billion in 2018, the National Oceanic and Atmospheric Administration reports.

But sometimes the insurance you have doesn’t cover an entire loss. Or worse, you may not have insurance coverage at all. If either is the case, you might be able to take a casualty-loss deduction on your federal income tax return, provided you meet some specific criteria.

What is a casualty loss?

It’s important to understand what constitutes a casualty loss and what doesn’t.

Normal wear and tear or progressive deterioration over time doesn’t add up to a casualty loss. To qualify as a casualty loss, the damage, destruction or loss of property must arise from a sudden, unexpected and unusual event, like a flood, hurricane, tornado, fire, earthquake or volcanic eruption.

For example, if your home’s roof needs to be replaced because it’s 30 years old and your insurance doesn’t cover the replacement, that wouldn’t be considered a casualty loss. But if the roof is damaged in a storm, that could be a casualty loss.

Causes of casualty losses can include (but aren’t limited to, and there are exceptions) …

• Earthquakes
• Fires
• Floods
• Demolition or relocation of a home, at the government’s order, because a disaster has rendered the home unsafe
• Sonic booms
• Storms, including hurricanes and tornadoes
• Vandalism
• Volcanic eruptions

What is the casualty-loss deduction?

When your home or personal property is damaged in a disaster, you might be eligible to take a casualty-loss tax deduction — but there are specific rules for who can take this deduction.

Prior to tax reform, any taxpayer who experienced a casualty loss, and who qualified for a casualty-loss tax deduction, could take the deduction by itemizing on Schedule A. To deduct casualty losses for property for personal or family use, you had to reduce each casualty loss by $100 and the total had to be more than 10% of your adjusted gross income.

Taxpayers could also deduct casualty losses due to theft. The theft must have been considered illegal in the state where it occurred and done with criminal intent. You may only deduct the theft in the year that your property was stolen.

If you met the criteria for the casualty-loss tax deduction, you could take the deduction regardless of where the loss occurred. But the Tax Cuts and Jobs Act of 2017 changed the criteria for the deduction, and now where your loss occurs helps determine if it’s deductible or not.

Changes due to tax reform

Tax reform drastically limited who can claim the casualty-loss tax deduction for personal losses.

Now, only taxpayers whose personal losses occur in a federally declared disaster area may be eligible to claim a casualty-loss tax deduction. So the president must declare the region a disaster area in order for losses in that area to be deductible.

This provision effectively excludes many events that previously could have been the cause of deductible losses.

For example, if you had property damage due to a severe summer storm, prior to tax reform you might have been able to take a casualty-loss deduction for that damage (provided you met all the other criteria for taking the deduction). But not every summer storm will warrant a federal declaration of a disaster — and unless that occurs, storm victims in the area won’t be able to claim a casualty-loss tax deduction.

And theft losses are only deductible if they can be attributed to a federally declared disaster as well.

But if you do live in a federally declared disaster area, there’s good news from tax reform. If you’re eligible for the casualty-loss tax deduction, you can claim it without having to itemize your deductions. The amount of your loss no longer needs to exceed 10% of your AGI, but the $100 per-casualty limit has now increased to $500 per casualty.

These changes are temporary, though: The tax reform bill applied the changes only to tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026. It’s also important to note that the limitations only apply to personal casualty losses, not casualty losses experienced by a business.

Federally declared disaster areas

How do you know if your area is considered a federally declared disaster area? The Federal Emergency Management Agency, or FEMA, maintains a list of disasters that’s searchable by incident type, declaration type and date of incident.

Here’s a partial list of federally declared disaster areas from events that occurred in 2018.

• Alaska earthquake
• California wildfires
• Alabama, Georgia and Florida (Hurricane Michael)
• Virginia (Hurricane Florence)
• Hawaii (Tropical Storm Olivia)
• North Carolina and South Carolina (Hurricane Florence)
• Hawaii (Hurricane Lane)

FEMA oversees the process for declaring a federal disaster area. It starts with an affected state or tribal government asking FEMA to conduct a preliminary damage assessment. Certain tribal governments can also request a declaration directly from the president.

There are two types of declarations.

• Emergency declarations — The president may issue an emergency declaration when he or she determines the affected region requires federal assistance.
• Major disaster declarations — For an emergency to be declared a major disaster, the president must determine the event has caused damage so severe that the state or local governments wouldn’t be able to respond.

How to claim the casualty-loss tax deduction

Calculating a casualty-loss deduction isn’t as straightforward as submitting receipts or repair estimates and asking for reimbursement. It takes a bit of work — beginning with determining your actual loss.

Calculating actual loss

For personal-use property like a home or car, or for other property that is only partially destroyed (the roof is gone but the walls are still standing), your casualty loss is either the adjusted basis of the property or the decrease in fair market value of the property as a result of the damage, whichever is less.

For business or income-producing property that is completely destroyed, your casualty loss is the adjusted basis of the property, and for theft, the casualty loss is typically the adjusted basis of the property.

Figuring in insurance reimbursement

Once you know the amount of your loss, you must deduct any insurance or other reimbursement you received for the damaged property to arrive at your loss after reimbursement. From that amount, you would subtract $500 (the per-casualty limit). The final product of your calculations should be your casualty-loss tax deduction.

Let’s look at an example. Joe’s personal car gets caught in flooding in a federally declared disaster area and is totaled as a result. His adjusted basis for the vehicle is $12,000 (he uses adjusted basis because it’s less than the decrease in the fair market value of his vehicle). Insurance pays him $7,000 for his loss.

Here’s the calculation for Joe’s casualty loss tax deduction.

$12,000 (Joe’s loss) – $7,000 (insurance payout) = $5,000

$5,000 – $500 (per-casualty limit) = $4,500 (Joe’s casualty-loss deduction)

When to report

Generally, you must deduct a disaster loss on your tax return for the same year the disaster occurred. But if your loss occurs from a federally declared disaster, you may be able to apply your casualty-loss tax deduction to your tax return for the year before the disaster happened.

IRS Publication 547 has detailed information on casualty losses.

Casualty loss gains

If you experience a casualty loss and receive insurance reimbursement for more than the adjusted basis of the damaged, destroyed or stolen property, you may have a casualty gain that you’ll have to report as income.

The adjusted basis of property is generally how much you paid to buy the property, plus anything you did to improve the property and increase its value, and minus anything that happened to decrease its value.

You may not have to report the gain as income if it came about because your main home was destroyed. If you meet the qualifications, you may be able to exclude up to $250,000 of your gain ($500,000 if married filing jointly) from your income.

There are detailed rules for how to report gains from different kinds of casualty losses. Again, check out IRS Publication 547 to learn more.

Bottom line

Insurance to cover valuable property can be expensive, but going without it can be even more costly if disaster strikes — especially since you can’t deduct casualty losses that occur outside a federally declared disaster area.

If you do suffer losses as a result of a federally declared disaster, it’s important to understand how the casualty-loss tax deduction works and when you can take the deduction. You’ll need to reduce your loss amount by any reimbursement you receive for the loss, plus the $500 limit. But with the suspension of the 10% AGI requirement, you may be able to recoup more of your uninsured, unreimbursed losses.

When does a dependent have to file a tax return?

In most cases, the answer is “no.”

Generally, you can’t include your dependent’s income with yours on your tax return, although there are exceptions. If your income-earning dependents are required to file (or want to file in order to claim a tax refund or credit), they’ll have to file their own tax return, separate from yours. And if your dependents aren’t capable of filing their own return (think: young children), then it’s your responsibility to file on their behalf and ensure any tax they owe gets paid.

Whether a dependent must file a return is based on multiple factors, including the amount and type of their income.

Let’s look at what to do about dependent income at tax time.

Who qualifies as a dependent?

You may think it’s pretty obvious as to who counts as a dependent and who doesn’t for the purposes of your federal tax return, but there are subtleties in the tax code.

For someone to qualify as your dependent, they must meet these basic criteria.

• They must be a U.S. citizen, U.S. national or U.S. resident alien, or a resident of Canada or Mexico.
• They must not be claimed as a dependent on anyone else’s return.
• They must not file a joint tax return or only file a joint return in order to claim a refund of tax they paid.
• They must not claim anyone else as a dependent on their own return.
• They must have received more than half their total support from you during the tax year.

There are additional criteria for qualifying children.

For example, you might assume a child who lives with you only counts as a dependent child if they’re your child, either biological or adopted. But foster children, your siblings or step-siblings, half-siblings, grandchildren, nieces and nephews might qualify as your dependents if they meet the basic criteria and additional qualifications, including the following:

• The child must be younger than 19 at the end of the tax year and younger than you (or your spouse if you file jointly).
• If a student, then they’re younger than 24 at the end of the tax year and younger than you (or your spouse).
• They can be any age if permanently and totally disabled.
• The child lived with you for more than half the year (there are exceptions).

Adults may be qualifying dependents too, regardless of their age. The IRS may consider them a qualifying relative if they …

• Are related to you, or if they’re not related to you, lived with you all year (although there are exceptions)
• Made less than a specific amount of income during the tax year
• Aren’t a qualifying child or relative of another taxpayer

Those criteria apply regardless of whether the adult is actually related to you. And in some cases, you may be able to claim a qualifying relative as a dependent even if they didn’t live with you for the required time.

Claiming a dependent on your tax return might make you eligible for certain tax deductions or tax credits that could help lower your tax bill, so it’s worth navigating the rules to see who qualifies. You can use an IRS tool to help determine who might qualify as your dependent.

How income affects the dependent tax return

There are two basic types of taxable income: earned and unearned.

Earned income is all of the taxable income and wages you received from working (or from certain disability payments). You can get earned income by working for someone else or for yourself.

Unearned income is exactly what it sounds like — income you received but didn’t earn through work. Some examples of unearned income include …

• Interest and dividends
• Retirement income
• Social Security
• Unemployment pay
• Alimony
• Child support
• Pay received for work while an inmate in a penitentiary

The type and amount of income a dependent has will influence whether or not they’ll be required to file a tax return. And other criteria apply as well.

When is a dependent required to file a return?

In addition to the type and amount of a dependent’s income, a dependent’s age and disability can also play a role.

Generally, single dependents must file a federal return if any of the following applies to their income:

• They have more than $1,050 of unearned income ($2,650 if 65 or older or blind, or $4,250 if 65 or older and blind)
• They have earned income of more than $12,000 ($13,600 if 65 or older or blind, or $15,200 if 65 or older and blind)
• Their gross income exceeded a certain threshold (they’ll need to do some math)

For married dependents, the threshold amounts are …

• Unearned income of more than $1,050 ($2,350 if 65 or older or blind, or $3,650 if 65 or older and blind)
• Earned income of more than $12,000 ($13,300 if 65 or older or blind, or $14,600 if 65 or older and blind)
• Your gross income was at least $5 and your spouse files a separate return and itemizes deductions

If a dependent has both earned and unearned income, they’ll need to do some calculations to determine if they’re required to file. Additionally, there are other situations in which a dependent may be required to file, like if they had net earnings from self-employment of at least $400 or earned $108.28 or more working for a church or qualified church-controlled organization that’s exempt from employer Social Security and Medicare taxes.

A small but key part of filling out a tax return as a dependent: Check the box that says “Someone can claim you as a dependent.” From there, your income and other factors will influence your tax bracket, standard deduction (if you choose to take it) and a number of other items on your tax return. If you’re a parent filling out the return on behalf of a child, be sure to sign it “By (your signature), parent for minor child.”

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When you can include a dependent’s income on your tax return

Though it might seem more convenient to report your dependent’s income on your own return, the IRS has strict rules about this.

“As far as the parent claiming the dependent’s earned income, that’s a big no-no,” says Michael Sacco, certified public accountant and owner of tax firm Sacco & Associates LLC. “If a child is working and gets a W-2, chances are that child is basically starting to pay into Social Security. The parent can, however, claim a child’s investment income.”

If the child is younger than 19 (younger than 24 if a full-time student) and has only interest and dividend income of less than $10,500, then the child’s unearned income may be included in the parent’s income on the parent’s return.

The so-called kiddie tax is the government’s way of staying “one step ahead,” Sacco says.

And he goes on to suggest the IRS motivation behind the kiddie tax.

“They always feel that maybe families — parents and grandparents — try to shift their assets into their child’s name so their child won’t be paying the same rate as they would.”

When a dependent may want to file — even if they don’t have to

Even if the dependent isn’t required to file a tax return, they may choose to file because it’s the only way to get a refund they’re owed.

For example, say your 15-year-old son earns $3,000 working a summer job and has taxes withheld. If he’s due a refund of any of the tax withheld, filing a return is the way to get that refund.

“A lot of times, the dependent’s income is not a lot,” says Sacco.

But it could still be worth filing.

“We would file a tax return for them just to get the withholdings back into their pocket,” he says.

In addition to filing for the purpose of claiming a refund, a dependent might opt to file to claim credits like the earned income credit.

Bottom line

Generally, if your dependent has any type of income, it’s a good idea to check if they may need or want to file a tax return. If the dependent has unearned income to report, you may be able to claim it on your federal return under certain circumstances — but if it’s earned income, you can’t. If you’re still not sure if your dependent should file, check out the IRS Interactive Tax Assistant: Do I Need to File a Tax Return?

Should you get a medical loan?

The medical billing system is complex. It’s not always easy to figure out how much you’ll need to pay to get the care you need. When you need medical treatment for a serious illness or injury, paying for an expensive procedure can be an extra burden.

Taking out a personal loan for medical expenses may seem like a tempting option.

Before you decide how to pay for your medical care, examine all of your options to determine what’s best for your situation.

What is a medical loan?

A medical loan is a personal loan that’s used to pay for medical expenses.

Personal loans can be used for a wide range of medical treatments, including elective procedures, fertility treatments, prescriptions, surgeries and more. A number of lenders, including certain banks, credit unions and online lenders, offer personal loans that can be used for medical treatment.

Medical loans may be unsecured personal loans, meaning they don’t require any collateral. Since lenders are trying to judge your ability to repay the loan, applications for these types of personal loans will primarily focus on factors such as your credit history and income.

You can also apply for a secured personal loan to help pay for medical expenses. Secured personal loans require you to put up collateral to secure the loan, but you may be able to get more competitive rates.

The amount you’re approved to borrow and the terms of the loan will depend on a variety of factors, including your credit history.

Pros of medical loans

There are a few benefits of using a personal loan to pay for medical expenses. You may be able to get access to funds quickly — and if you’ve had a medical emergency, this may be the most important factor for you. If you apply and are approved, some lenders will give you the funds within a few business days.

Personal loans may also be cheaper than using a traditional credit card to pay for your medical debt. If you have excellent credit, it’s possible to find personal loans with APRs as low as 6% or less. Since the average APR on credit cards is in the double digits, you may end up paying less interest with a medical loan.

Cons of medical loans

Medical loans can be an expensive financing option. While some borrowers can qualify for low-interest personal loans, applicants with less-than-perfect credit histories will probably see much higher interest rates. Depending on the terms you qualify for, you could end up paying a lot in interest over a number of years.

A medical loan doesn’t decrease the total cost of what you’re paying. If you’re struggling to pay medical bills, explore options that could actually reduce the amount you’re required to pay.

Alternatives to medical loans

Taking out a personal loan to pay for your medical bills isn’t always the best option. Instead, examine medical financing alternatives before you borrow money.

Explore financial assistance

If you’re struggling to make ends meet, you may qualify for free or reduced-cost care.

Hospitals often have financial-assistance programs to help you pay for the care that you need. The criteria for financial assistance vary, but these programs might consider your income, assets and whether the care you receive is a medical necessity.

You may also be able to work out a payment plan with the hospital if you need extra time to pay the debt.

Look for information about your hospital’s financial-assistance program on its website or through its customer service department.

Ask for discounts

Some hospitals are willing to provide discounts if you’re uninsured, even if you don’t qualify for free or reduced-cost care.

Every hospital has its own policy, but if you’re uninsured, don’t have coverage for the medical procedure you need, or need to pay out of pocket for another reason, ask about getting a discount.

If you ask, you may end up getting a substantial discount — some hospitals will cover up to 50% of your bill for medically necessary services if you’re paying for your own care.

Negotiate a lower payment

If you don’t qualify for financial assistance but still need to lower your bill, consider negotiating with your doctor or hospital. You may be able to negotiate an out-of-network bill down to a more-manageable cost.

Use a medical credit card

You may be able to get a medical credit card through your healthcare provider to pay for eligible medical bills. Unlike regular credit cards, a medical credit card can only be used to pay for healthcare — and only with providers that accept the credit card.

Some medical credit cards come with a period of deferred interest — if you’re able to pay off the balance before the deferment period is up and follow the terms of the offer, you won’t need to pay the interest. But if you can’t pay it off within the deferment period, you might have to pay the interest that’s been accruing since the date you first used the credit card.

Once you’ve used a medical credit card to pay for your care, you’ll make payments to the credit card company, not the doctor.

A word of caution on medical credit cards: Once you pay for your bill on a medical credit card — or any credit card — you may not be eligible for financial assistance.

Use a credit card

Instead of paying for your treatment with a medical credit card, you might also consider using a regular credit card.

If you’re able to qualify for a credit card with an intro low-APR offer, and you can pay off the debt within the introductory timeframe, this could be a smart financial move. Remember though, if you don’t pay your balance by the time the intro period ends, you’ll be stuck paying interest.

But if you’re not be able to pay off the debt before the intro rate ends or you can’t keep up with the monthly payments, using a credit card could end up costing you.

Dispute billing inaccuracies

Before you pay your medical bill, take some time to double check your invoice to make sure everything is correct.

If you find any incorrect information, call your healthcare provider or insurer to dispute the errors.

Bottom line

If you’re struggling to pay your medical bills, getting a medical loan — which is a personal loan — isn’t your only option. Consider alternative ways to pay for your expenses — including applying for financial assistance or getting a medical credit card — before applying for a personal loan.

American Express® Green Card review

What you need to know

Charge card vs. credit card

The first thing you should know about the American Express® Green Card is that it’s a charge card rather than a credit card. That means it won’t have revolving credit the way a credit card would, but also unlike a credit card, you typically can’t carry a balance, instead having to pay your bill in full each month. There is an exception though: The American Express® Green Card offers you some flexibility to carry over certain balances through its Pay Over Time program (which comes with a variable purchase APR of 20.49%).

Rewards

The rewards you earn for using this card are … moderate.

The American Express® Green Card earns you just one Membership Rewards point per $1 on everyday purchases, but you’ll get two points per $1 when you book flights, hotels, cruises, rental cars and other eligible travel through American Express Travel at amextravel.com.

Redeem your Membership Rewards points through American Express travel, and you’ll also get access to certain discounts. Deals might include discounted rates on flights, last-minute hotel bookings and a variety of other amenities.

Other American Express cards offer bigger points multipliers, like the Platinum Card® from American Express, which gets you five points per $1 on flights booked with airlines or through American Express Travel and on hotels booked on American Express Travel.

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Foreign transaction fee

It probably goes without saying that you’d expect to use a travel rewards card to make purchases while abroad. But with a 2.7% foreign transaction fee, you’ll want to leave this card in your wallet and use a travel card with no foreign transaction fee instead.

What else you need to know

Here are some other things to know about the American Express® Green Card.

• There’s no annual fee the first year. But you’ll pay $95 every year after that, so make sure you’re getting enough value out of the card to justify the annual cost.
• This card comes with a lot of the usual perks of a rewards card, like rental car insurance and purchase protection.

Understanding your points and redemption

2 points per $1

Eager to cash in on the 2x multiplier? In order to get two points per $1 on eligible travel purchases, you must first enroll your card in the Membership Rewards program, which you can do online.

Redemption value

The value of your Membership Rewards points varies depending on what you redeem them for. If you’re looking for gift cards, 10,000 points can get you a gift card worth up to $100 with dozens of travel and retail companies (coming in at a potential 1 cent per point). Here are a few from the long list of gift cards or vouchers you can choose from.

• Amtrak
• Avis
• Barnes & Noble
• Benihana
• Carnival
• Chili’s
• Coach
• Crate and Barrel
• Enterprise Rent-a-Car
• Fairmont Hotels & Resorts
• The Home Depot

Points can also be transferred to partnering hotel and airline programs, including Delta SkyMiles, Virgin Atlantic Flying Club and Marriott Rewards. Many partners redeem Amex member points for their own points at a 1:1 value.

Who this card is good for

If you’re looking for a low-ish annual fee and are willing to accept the conservative travel benefits that come along with it, the American Express® Green Card could be the American Express card for you. At a lower price than some other Amex travel cards, this card can be just right for the occasional traveler looking to rack up travel rewards for the first time.

The American Express® Green Card can also be great for someone who has never used a charge card before and wants to try one on for size. Paying off the full balance on your card each month might be a difficult, but worthwhile, habit to build.

Other than that, this card probably isn’t a great deal. If you’re open to other cards, there could be a better option out there for you.

Not sure this is the card for you? Consider these alternatives.

• Chase Sapphire Preferred® Card: If you want a rewards credit card that you can take abroad with no foreign transaction fees, this card may be for you. Read our review of the Chase Sapphire Preferred® Card.
• Capital One® VentureOne® Rewards Credit Card: This card may be a good option if you want a travel rewards card with no annual fee. Read our review of the Capital One® VentureOne® Rewards Credit Card.
• American Express® Gold Card: If you’re still hankering for a charge card but want better rewards, this could be the card for you. Read cardholder reviews of the American Express® Gold Card.

What is credit insurance?

Depending on the specific type of credit insurance offered, it may offer protection from missed payments in case of unemployment, disability, death or destruction of the property you financed with your loan. Policies can be available on many types of loans, including home mortgages, personal loans, credit cards, auto loans, and loans for furniture or appliances.

Credit insurance may be more expensive than a life or disability insurance policy, both of which may provide broader protection for the events those policies would typically cover — so think carefully before buying credit insurance.

Let’s take a look at how credit insurance works, what it costs and what you need to know if you’re considering this type of coverage.

How does credit insurance work?

Credit insurance is coverage for your making your loan payments if you become unable to make those payments yourself, for the reasons covered by the specific policy. A credit insurance policy can possibly be purchased directly from your lender when you get your loan. While you generally can’t be required to buy credit insurance, this type of protection may be marketed to you when you borrow or may be included in your loan paperwork. But your lender must make clear what’s being offered to you when it comes to credit insurance, and the FTC says it’s actually illegal for a lender to deceptively include credit insurance in your loan without your permission or knowledge.

To be guaranteed approval, there may be eligibility requirements with some credit insurance policies but not with others.

Types of credit insurance

There are four main types of credit insurance.

1. Credit disability insurance: Makes payments to your lender if you become injured or sick and can’t work. It’s also called “accident and health insurance.”

2. Involuntary unemployment insurance: Makes payments to your lender if you’re laid off or otherwise lose your job through no fault of your own. It’s also called involuntary loss of income insurance.

3. Credit property insurance: Provides coverage for personal property that was acting as collateral for the loan if it’s destroyed by an accident, theft or natural disaster.

4. Credit life insurance: May pay off some or all of your remaining loan balance to your lender if you pass away.

How much does credit insurance cost?

Credit insurance can be more expensive than other types of insurance. According to the State of Wisconsin Department of Financial Institutions, the annual cost for credit life insurance for a 30 year old in good health is approximately $370 for $50,000 of coverage, compared to $78 for term life insurance.

Credit insurance premium costs vary widely, because they may be determined by a number of different factors, such as …

• The type of loan or credit you’re getting
• The amount of debt that will be protected
• The type of credit insurance policy you choose

Your insurance costs and the way you’re charged for coverage may also depend on whether your debt is open- or closed-end.

Open- vs. closed-end credit

Open-end credit (also known as revolving credit) allows you to borrow more at any time, up to your credit limit, often with a credit card. There’s no fixed repayment schedule to pay back the balance in full, although there is usually a monthly minimum payment amount.

With open-end credit, the cost of credit insurance may be charged via the monthly premium method. This means that the credit insurance premium each month is calculated on a monthly basis — either by the average daily balance or the balance at the end of the month. Your policy will specify which calculation method is used.

The monthly insurance cost will be part of your minimum monthly payment. This charge should be displayed separately on your loan or credit card statement.

Closed-end loans are repaid over a fixed timeline, in which you are required to have paid off your entire balance. Installment loans, like most auto and personal loans, that are repaid on a monthly basis are common examples of closed-end loans.

With closed-end loans, the cost of your credit insurance may be included as a monthly premium or single premium option.

With a single premium, the insurance cost is set at the beginning of the loan and added to the amount you originally borrow, increasing both the amount borrowed and the amount of interest you’ll pay. If calculated as a monthly premium, then the outstanding balance in the account on the monthly billing date is multiplied by the premium rate.

Things to consider before buying credit insurance

If you’re considering credit insurance, here are a few things to know.

Credit insurance is optional

Lenders sometimes include credit insurance automatically in their loan paperwork, but you aren’t obligated to buy it. In fact, according to the FTC, it’s against the law for a lender to deceptively add credit insurance coverage to your loan without your knowledge. Be sure to ask your lender if the loan includes any credit insurance charges.

If a lender pressures you to buy credit insurance or denies you a loan if you refuse to buy it, the Federal Trade Commission recommends you report the lender to your state insurance commissioner, state attorney general or directly to the FTC.

You may not need it

Depending on the types of insurance you might already have, you may not even need credit insurance. For example, if you already have disability or life insurance, these policies may be enough.

If you don’t already have other insurance that covers debt, compare the cost of credit insurance to that of other types of insurance. It may be less expensive to get another type of insurance that may pay you or your family, versus your lender, if something were to happen.

Some policies have restrictions

Before you sign on the dotted line, make sure you understand all the details of the credit insurance policy being offered. Some policies have waiting periods or exclusions. For example, with certain credit disability insurance policies, if you file a claim within the first six months of the policy because of a health condition you were treated for up to six months before you got the credit insurance, your claim could be denied.

The FTC also suggests asking other questions.

• Whether you can cancel the insurance and, if so, whether you would receive a refund
• If you’ll have coverage for the full loan amount until it’s paid off
• Whether a co-signer is covered and if there is an additional cost for their coverage, if you have a co-signer

Bottom line

While credit insurance may seem like a smart purchase at first, it can add significant costs to your loan. If you decide to buy it, make sure you fully understand the policy terms and any limitations.

If you have reservations about credit insurance, you may want to consider setting aside the money you’d pay for coverage instead. This way, you’d have a fund you could pull from if you come up short for one or more months.

Here’s your rundown of the new Apple Card

Credit Karma’s editors and writers want to help you stay on top of credit card news. The information below is accurate to the best of our knowledge when posted. Heads up: Credit card terms are subject to change, and the terms outlined below may not be current after the date of publication.

Apple’s new credit card is aimed at revolutionizing people’s wallets the same way the iPhone and the Mac revolutionized smartphones and personal computers.

The Apple Card, announced Monday and coming out this summer, has a handful of consumer-friendly features like no annual fee. You’ll also earn 3% Daily Cash (Apple’s term for cash back) on Apple purchases, 2% back on purchases made through Apple Pay and 1% back on all purchases made with the physical card. Apple did not say whether the new card will offer a sign-up bonus.

You’ll only be able to apply for the card if you have an iPhone — and your phone will have to meet certain specs for you to apply through the iPhone Wallet app.

Want to know more?

• An ‘iPhone-first’ credit card
• Fewer fees and other consumer-friendly features
• How does it compare?

An ‘iPhone-first’ credit card

If you apply for the Apple Card and get approved, the card will be loaded into your Apple Wallet — so you can begin making payments from your phone within minutes of being approved at eligible retailers that accept Apple Pay.

There is a physical Apple Card, made of titanium. But the integration of the card with your iPhone is designed to create a super-smooth purchasing experience, encouraging you to use and manage the card primarily through your phone and use Apple Pay more often.

This integration also allows you to use any cash back the same day you earn it. Daily Cash can be redeemed for new purchases you make with Apple Pay, or used toward your credit card balance. And if you ever need help with your card, you can text customer service from your iPhone instead of calling.

Fewer fees and other consumer-friendly features

The Apple Card charges few fees. There’s no annual fee. No late fee. No over-the-limit fee. No foreign transaction fee.

Unlike many other credit cards, the Apple Card includes features that encourage cardholders to stay on top of their balances. For example, the card offers the ability to make more frequent payments and suggests paying more each month to help cardholders pay less in interest. If you do carry a balance, the Apple Card charges variable APRs between 13.24% and 24.24% (as of March 2019), depending on the cardholder’s creditworthiness.

Apple also claims the Apple Card will be secure because it uses Touch ID and Face ID to authenticate every purchase you make.

How does it compare?

From a rewards perspective, the Apple Card falls short compared to other co-branded rewards cards.

At first glance, Apple’s second-generation credit card issued by Goldman Sachs looks similar to the version from Barclays, which offers three points for every $1 you spend on Apple purchases, two points for every $1 spent at restaurants and one point for every $1 spent on all other purchases.

But when you look beyond the surface, you’ll find the new Apple Card’s cash back offers more flexible redemption options compared to the Barclaycard Visa® with Apple Rewards, which only allows you to redeem for Apple Store or App Store and iTunes gift cards.

What is loan-to-value ratio?

When you apply for a loan, lenders will typically review your credit history and other financial factors like your debt-to-income ratio and credit scores. They’ll also probably consider your loan-to-value ratio to determine how risky your loan may be.

A lower loan-to-value ratio indicates to the lender that you may be less likely to go “upside-down.” In the case of a car loan, this is when you owe more on the car loan than it’s worth on the market. A bigger down payment can help lower your loan-to-value ratio.

How to calculate your loan-to-value ratio

Your loan-to-value ratio, or LTV, is usually expressed as a percent. To calculate your LTV ratio, divide the amount of your loan by the appraised value of the asset securing the loan.

For example, say you want to purchase a home for $200,000, which is also its appraised value. If you have $40,000 for a down payment, you would need a $160,000 loan.

The LTV would be the loan amount of $160,000 divided by the appraised value of $200,000, which is 0.80, or 80%. Your LTV is 80% of the property’s value.

Your LTV ratio can be one indicator of whether you can afford the home or vehicle you want.

Why your LTV ratio matters

The higher your LTV ratio, the riskier your loan may appear to lenders. Also, when you make a smaller down payment, you have less equity — or ownership — in your property.

That can be problematic for the lender because if you default on a loan, the lender might not be able to recoup its loss by selling your property.

As a borrower, there are several ways a higher LTV ratio could affect you.

• Higher interest rate: A high LTV ratio may mean that you have to pay a higher interest rate on your loan. Over time, that can make a significant difference in the total amount you pay for your loan.
• Private mortgage insurance: If you decide to refinance your mortgage, some lenders may require you to get private mortgage insurance, or PMI, if your loan-to-value ratio is too high. If you’re just taking out your first mortgage, lenders usually require PMI if your down payment is less than 20% of the home’s value. Adding PMI to your loan could increase your monthly mortgage payment.
• Higher monthly payments: If your loan-to-value ratio is too high it can impact your loan terms, like your interest rate. If that’s the case, it can lead to a higher monthly payment that can strain your budget and make your loan much more costly over the long term.
• Refinancing: If you want to refinance your mortgage or auto loan, a lower LTV ratio may help you qualify for better interest rates.
• Building equity in your asset: A higher loan-to-value ratio indicates that you have less equity in the asset. Putting down a larger down payment or getting a less expensive car or home to get a lower loan-to-value ratio can put you on track to build more equity in the asset. For example, if you decide you want to take out a home equity loan or line of credit, having more equity in your home can really pay off.

What your loan-to-value ratio should be

LTV ratio requirements will vary by loan. But having a lower LTV ratio is one factor that could help you get more favorable loan terms.

If you’re considering a conventional loan to purchase a home, the going wisdom is to aim for an LTV ratio of no more than 80%. Anything above that may come with additional costs, one of them likely being for private mortgage insurance. This could add hundreds or even thousands of dollars to your payments.

Mortgage loans backed by the Federal Housing Authority accept lower loan-to-value ratios. The borrower must make a down payment of at least 3.5% of the appraised value of the home, leaving an acceptable LTV ratio of 96.5%. But remember: With a down payment that small, you’ll have to pay mortgage insurance, which protects the government and lenders in case of default. So you’ll need to pay both an upfront and annual premium for this insurance coverage.

Certain USDA loans and VA loans don’t require down payments, therefore allowing a 100% LTV ratio. In order to qualify for these loans, you’ll need to meet specific requirements for loan approval.

Tips to lower your LTV ratio

There are ways to lower your loan-to-value ratio, which may ultimately help you build more equity in your property.

• Increase your down payment: If your loan-to-value ratio is relatively high, it may be a good idea to increase your down payment before you take out a loan. If you don’t have enough money to do that, consider waiting until you can save more.
• Lower your purchase price: If you don’t have a big enough down payment and can’t wait to save more, you can decrease your LTV by selecting a car or home that costs less. Compromising a bit on things like square footage (for a home) or mileage (for a car) could make you financially stronger in the long run.
• Get your home reappraised: Ideally, your home will appreciate over time — it’s possible for the value to go up significantly within a few years of buying it. If you want to refinance your home or take out a home equity loan or line of credit, a reappraisal can help you get a better idea of your home’s value and your equity in your home. It could also give you an idea of whether your LTV has decreased enough to request to have your PMI removed.

Bottom line

When you apply for a loan it’s important to understand the financial implications of a high loan-to-value ratio. Lowering your LTV ratio may put you in a better financial position to receive a better interest rate and help you save money over the life of your loan.

Capital One® SavorOne℠ Cash Rewards Credit Card review

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What you should know about the Capital One® SavorOne℠ Cash Rewards Credit Card

Here are some features you should pay special attention to.

No annual fee

The $0 annual fee is one of the major distinctions between this card and the Capital One® Savor® Cash Rewards Credit Card, which charges an annual fee of $0 intro, $95 after first year.

No annual fee means you don’t have to worry about making sure you spend enough in certain rewards categories to offset that yearly cost.

Boosted rewards for both dining and groceries

The Capital One® SavorOne℠ Cash Rewards Credit Card does sacrifice a bit in terms of rewards for that $0 annual fee, compared with cash back cards that do charge an annual fee. But its unlimited rewards in solid, everyday bonus categories means it stands on its own as a contender.

You’ll get an unlimited 3% cash back on dining and entertainment purchases, 2% at grocery stores and 1% on everything else.

If you spend your weekends out at restaurants, concerts and movies, you could earn more on purchases in these categories than you would with an average, flat-rate cash back card. And if you balance your weekends out and about with cooking at home, the 2% cash back at grocery stores is also a plus.

These are two uncomplicated everyday-spending categories that many people can benefit from. But if a chunk of your regular spending falls outside these categories, you may find more value from another cash back card that suits your spending better.

0% introductory APR for 15 months 

The Capital One® SavorOne℠ Cash Rewards Credit Card includes a 15-month 0% intro APR for both purchases and balance transfers. This gives you a healthy window to pay down your balance, whether on a big purchase or a balance transfer. But after that, you’ll be left with a variable APR of 16.24% - 26.24% on both purchases and balance transfers.

There’s also a balance transfer fee of 3% for the first 15 months your account is open (you won’t be charged one if you transfer a balance after that). This is a decent offer if you’re looking to transfer a balance, though you should check out other balance transfer offers to see if you can find one that’s a better fit for you.

Automatic redemption

You can redeem your rewards for a statement credit or a check, and you can set an automatic redemption trigger when you hit a specific dollar threshold.

$150 sign-up bonus

You’ll earn a $150 sign-up bonus after spending $500 on purchases within the first 3 months of opening your account. This is a decent offer but not a standout: You’ll see similar offers with other no-annual-fee cash back cards like Chase Freedom®, which also offers a $150 bonus after you spend $500 on purchases in the first 3 months from your account opening. 

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Who this card is good for

The Capital One® SavorOne℠ Cash Rewards Credit Card comes loaded with perks and incentives. On its own, this card offers generous rewards for a wide range of expenses. If you appreciate a card with no annual fee along with your cash back and spend your money on dining out, entertainment and groceries, this card is hard to beat.

But if a big chunk of your spending falls in other spending categories, or you’re not interested in juggling categories at all, another card might be a better fit.

Not sure this is the card for you? Consider these alternatives.

If you like your dining and entertainment rewards to come with no annual fee, the Capital One® SavorOne℠ Cash Rewards Credit Card could be a good fit for you. But it’s not the only card in town that delivers high rewards. Here are some other credit card offers you should take a look at when you’re shopping around.

• Capital One® Quicksilver® Cash Rewards Credit Card: This card is a contender if you don’t want to worry about cash back categories. Our review of the Capital One® Quicksilver® Cash Rewards Credit Card takes a closer look.
• Chase Freedom®: If you don’t mind juggling revolving categories, this card offers great earning potential. Read more in our review of the Chase Freedom®.
• Uber Visa Card: Frequent travelers will appreciate this card’s earning potential. Check out our Uber Visa Card review.

Should I consider a moving loan?

Moving isn’t cheap: The national average relocation cost is $962, and it’s typical to spend $520 to $1,430 on moving, according to HomeAdvisor.

If you’re moving around the corner, some good friends and a rented moving van might get you by. But if you’re going far, costs could run into the thousands. Taking out a personal loan for moving could help you make ends meet as you move to your new home.

To help you make a sound decision, let’s take a look at the potential costs and some alternatives to a personal loan for moving.

What is a moving loan?

Also known as a relocation loan, a moving loan is a personal loan used to cover relocation or moving expenses. A moving loan can be an unsecured personal loan, which means that it doesn’t require collateral. Instead, lenders decide whether to offer the loan based on several factors, including your credit.

You might consider using money from a moving loan to rent a moving truck, hire professional movers, buy packaging supplies, stay in hotels and get moving insurance. You could even use it to pay for move-in costs like your security deposit and first- and last-month’s rent.

The amount you can borrow can depend on the lender, as well as your credit, the state you live in and other factors.

Pros of a moving loan

• Low interest rates: Personal loans often have better interest rates than credit cards, particularly if you have good credit history.
• No collateral: Unsecured personal loans don’t require collateral to qualify. That means you won’t have to guarantee the loan with property, like your car or home.
• Easier to budget: Personal loans are typically installment loans with a fixed monthly payment schedule. This makes your repayment costs more predictable, which simplifies budgeting to pay it off.
• Varying loan terms: Personal loans come with repayment terms that usually range from 12 to 84 months. You may be able to choose a repayment term that makes sense for you.
• Speedy application process: If you need money fast, some lenders can approve and fund a personal loan within about a week — or less — and deposit it directly into your bank account. Just remember to take the time to read the fine print — even if the loan process is quick.

Cons of a moving loan

• Potentially high fees: Some lenders that offer personal loans might charge an origination fee, which covers the costs of processing your application and distributing the funds. This fee is typically a percentage of your total loan amount, ranging from about 1% to 8% or more. Another potential fee is a prepayment penalty, which is a fee if you’re charged if you pay off your loan early. Because paying off your loan early can save you in interest paid, you’ll want to steer clear of loans with prepayment penalty fees if you can.
• More debt: If you already have substantial debt and you’re having trouble making monthly payments, it’s probably not the best idea to take on more.
• High interest rates: If you opt for an unsecured personal loan, which doesn’t require collateral, know that they often come with a higher interest rate than secured loans do. A less-than-stellar credit history could also increase the rate you get.
• Financial consequences if you miss payments: If you don’t pay back your loan as agreed upon, your credit could be negatively impacted by each payment you miss, and your loan could be referred to a debt collection agency.

Alternatives to a moving loan

If you’re on the fence or have decided a moving loan isn’t right for you, consider the following ideas.

Credit cards

The average American has two to three credit cards. If that applies to you, it may make sense to pay for relocation expenses with a form of credit that’s already open, as long as your credit limit can comfortably support some or part of those moving expenses.

But even if that’s not a deciding factor for you, you also could consider applying for a credit card with an introductory 0% APR. As long as you pay off the charges according to the terms of the introductory offer and before the intro period is over, you shouldn’t have to pay interest on the amount you charge.

On the flip side, if your credit is a little rough, you might have trouble qualifying for a credit card with a low-APR intro offer.

Employer relocation package

If you’re moving for a new job, ask your new employer if they’re willing to help with the costs of relocating. You may need to negotiate for relocation assistance to be part of your compensation package.

Some relocation packages cover one part of moving, like the moving truck. Others might include costs to help you sell your current home. You might be given a lump sum upfront or be reimbursed after the move. Heads-up though: Depending on your new employer and location, you may be on the hook to pay back any moving costs your company reimbursed you if you stop working for the company within a certain period of time.

Budgeting

If you don’t have to move right away, you could wait a little longer to save up money.

First, add up all your estimated moving expenses. Next, divide that total by the number of weeks or months until your ideal move date. For instance, if you plan on moving in six months, and anticipate needing $5,000 for your move, that’s $834 a month, or $208 a week.

Then go over your spending habits in detail, and look for any ways to cut back. You can also use a budget worksheet, like the one from the Consumer Financial Protection Bureau, to track your income and how much you spend each month.

To save even more, consider moving on a weekday, dining out less while you save or selling unwanted belongings before you relocate. You could even start a side hustle job to earn more money.

Peer-to-peer lenders

Peer-to-peer lending can help you to borrow directly from individual lenders who fund small loans, bypassing traditional financial institutions.

The investor can choose to fund part of a loan or multiple loans. A borrower can receive funds from multiple individual investors.

P2P loans can come with fees and possibly high interest rates if your credit isn’t strong — which may make them more expensive than traditional forms of lending.

Bottom line

Moving can be stressful — even more so if you’re struggling with costs of relocation.

If there’s no way to pay for your move out of pocket and you think you need a moving loan, consider all of your financing options, including smaller personal loans, credit cards or updating your budget in anticipation of the move. Look closely at the interest rates, fees and other terms, and do the math for each scenario. Once you do, you can better decide on the best solution for your situation and budget.

Credit One Bank® Platinum Visa® with Cash Back Rewards review: Rewards undermined by expensive fees

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What you should know about the Credit One Bank® Platinum Visa® with Cash Back Rewards

The Credit One Bank® Platinum Visa® with Cash Back Rewards can earn you cash back while you work on building your credit. But keep an eye on the expensive fees and high variable purchase APR of 20.24% - 26.24% — these can quickly eat into anything you might earn.

1% cash back rewards

If you’re working on your credit, you may not see as many cards out there that come with rewards. How much you can earn with the Credit One Bank® Platinum Visa® with Cash Back Rewards depends on your creditworthiness, but the cash back rewards are a nice draw.

You’ll receive the rewards as automatic statement credits, which can help you pay down your account balance. Based on your credit, you’ll be assigned one of the following rewards categories:

• 1% cash back on eligible gas, groceries, mobile phone services, internet service, and cable and satellite TV services
• 1% cash back on all of the above and on eligible dining purchases
• 1% cash back on eligible dining purchases and 1% cash back on other eligible purchases
• 1% cash back rewards on eligible purchases

Prequalification check

When shopping for cards, you might be tempted to apply for as many as possible in hopes you’ll be approved for one. But the lender will check your credit when you submit an application, which will result in a hard inquiry — and a hard inquiry can impact your credit scores.

With the Credit One Bank® Platinum Visa® with Cash Back Rewards, you can find out if you’re prequalified for this card before actually applying. A prequalification is when the lender does a soft pull on your credit, meaning the credit inquiry may appear on your reports but will only be visible to you, and it won’t ding your credit scores. Based on your prequalification, you can then decide whether to submit a formal application (remember that prequalification doesn’t guarantee approval).

Expensive fees and APR

This card can charge a lot of fees, starting with an annual fee that initially reduces your available credit limit and ranges from $0 to $75 for the first year, and $0 to $99 after that. You won’t know upfront if you’ll be charged an annual fee or not.

You may also be charged a fee if your credit line increases, a fee up to $39 when you make a late payment, $19 to add an authorized user and up to $39 for returned payments.

There are also cash advance and foreign transaction fees — and the card offers no intro APR for purchases. Based on your creditworthiness, your variable APR on purchases will range from 20.24% - 26.24%.

Low credit limit to start

If your application is approved, the minimum credit line on this card is $300, which is on the low side. Credit One says it may increase your limit “based on your overall credit performance,” but it’s not clear what that means specifically — and Credit One doesn’t make any promises.

Generally, paying your bill on time every month (in full if you can), along with using only 30% or less of your available credit, can help you start building credit.

Even if you don’t get a higher credit limit with this card, you’ll still be building a positive payment history and contributing to a healthy credit profile overall if you stick with these habits.

Access to your Experian credit score

An additional feature from the Credit One Bank® Platinum Visa® with Cash Back Rewards that you might find helpful is the access you get to a free monthly Experian Scorex credit score. Scorex is just one of many credit scores that exist in the world of credit reporting, and it’s just that — a score, not a full credit report. But it can’t hurt to have it as one indicator or measure of your credit health.

Who this card is good for

Getting any kind of credit line can be expensive when you’re still working on your credit. If you don’t have the cash for the security deposit needed on a secured card, then the Credit One Bank® Platinum Visa® with Cash Back Rewards could be a cheaper option.

It won’t be cheaper though, if you get hit with all the fees the Credit One Bank® Platinum Visa® with Cash Back Rewards can come with. An annual fee along with other possible fees for things like credit increases, late payments and cash advances could quickly wipe out any gains from the cash back rewards.

Once your credit improves, you can consider moving on to a cash back credit card that offers a higher limit and no annual fee. And if you’re still building your credit, you can look for a secured card with better terms and a refundable deposit.

Not sure this is the card for you? Consider these alternatives.

The Credit One Bank® Platinum Visa® with Cash Back Rewards isn’t the only way to help you build your credit with a credit card. If you go with a secured card instead, it may require an upfront deposit — but some secured cards don’t charge an annual fee, and some even come with rewards. 

• Discover it® Secured Credit Card: This card could be a good fit if you’re still looking to earn rewards while you build your credit. You can read our review of the Discover it® Secured Credit Card to help you decide.
• Capital One® Secured Mastercard®: This is a great option if you’re looking for an inexpensive way to help you build credit. Our Capital One® Secured Mastercard® review explains how.

The best way to use a credit card

Credit cards can be a useful tool to help you manage your finances and build your credit history. And depending on the credit card you can get, it may offer fraud and purchase protection, and unlike cash, if your card is lost or stolen, it can easily be replaced.

So, what’s the best way to use a credit card? We’ll explore four ways you can use your card: Build credit, earn rewards, pay down debt and finance a purchase. We’ll also give you some tips for using your card so that you can help avoid racking up unnecessary debt or negatively impacting your credit.

1. Using a credit card to build credit

If you’re new to using credit or want to improve a less-than-stellar credit history, getting a credit card may be a good first step for you. There are two types of cards you can apply for: Secured and unsecured.

Secured cards require a deposit, which is often refundable, that’s usually equal to your credit limit and will be used as collateral. Unsecured cards don’t require collateral and are granted based on your creditworthiness. Secured credit cards often have less-stringent application requirements than unsecured cards.

Payment history for both types of cards is typically reported to the three major consumer credit bureaus. Making your payments on time and in full can help you establish a pattern of responsible borrowing and can help you boost your credit, whereas late payments can negatively impact your credit.

2. Earn rewards

Credit cards can be a great way to earn rewards or cash back on purchases you’d be making anyway. There are a variety of rewards cards to choose from, including travel, hotel, airline and cash back cards, to name a few. The type of card that’s right for you will depend on the kind of rewards you want to earn, your lifestyle and your spending habits.

A word of caution if you opt for a rewards or cash back credit card: Several studies — like the ones in the Journal of Research Marketing and the Journal of Experimental Psychology — show that people who pay for their purchases with a credit card often spend more than those who pay with cash. So if you’re going to use a credit card to earn rewards, you should try to only use your card to pay for items you’d normally buy anyway and that you know you can pay off.

Also, many rewards cards have an annual fee. If you won’t earn enough rewards to offset the fee, it probably makes sense to opt for a different type of card. 

3. Pay down debt

Using a credit card for purchases may seem counterintuitive since it’s one of the ways people can accumulate debt. But when used strategically — like to take advantage of an introductory 0% APR for balance transfer offers — a credit card can actually help you pay off debt.

Many credit cards offer balance transfers with low or no interest for an introductory period. If you transfer high-interest debt and pay it off before the promotional period ends, you could save yourself a bundle on interest charges.

If you use a credit card to reduce debt, we don’t recommend making any additional purchases with that card until you pay off the balance in full. Also, watch out for fees. Some credit card issuers charge a balance transfer fee when you transfer your balance from a different card. If possible, try to find a card that offers an intro balance transfer fee.

4. Finance a purchase

For the most part, a credit card isn’t your best bet for financing a purchase, since interest rates are typically high. But a card with an introductory 0% purchase APR can give you an opportunity to pay off a big purchase interest-free. If you’re confident you can pay off the balance in full and before the intro rate ends, using a credit card to finance a purchase may be a good option for you.

Just be sure to carefully read the fine print of any credit card you use. Some credit cards offer deferred interest promotions, which means if you don’t pay your balance in full before the offer ends, you could be on the hook for all of the interest that accrued during the promotional period. Other cards may only charge interest on the remaining balance, but it could still add up quickly.

Using credit cards strategically

While a credit card can provide numerous benefits when used strategically, it can also lead to high interest charges, increasing debt and a negative impact on your credit if you’re not careful with how you use it. Here are a few best practices to help you keep your budget and financial health on track.

• Make your payments on time. Your payment history is one of the major factors that influences your credit. If you make your monthly payments late, it can negatively affect your credit scores, and you’ll likely be charged a late fee.
• Pay your credit card bill in full and on time each month. Paying off your balance in full and on time can help you avoid incurring high interest charges. If you can’t pay the entire statement balance, pay as much as you can and be sure to make at least the minimum payment on time.
• Buy only what you can afford to pay for with cash. This can help you avoid overspending and help you stick to your budget each month.
• Stay well below your credit limit. Your credit utilization ratio — the ratio between the total balance you owe and your total credit limits on all your credit cards — is one of the criteria used to calculate your credit scores. Typically, a low ratio has a favorable impact on credit scores, while a high ratio has a negative impact. Aim to keep your credit utilization ratio below 30%.

Bottom line

There are many benefits to keeping a credit card in your wallet, but there are some risks, too. When used strategically, credit cards can help you establish a solid credit history, earn rewards on everyday purchases, pay off high-interest debt or obtain interest-free financing. The trick to using these benefits while maintaining healthy credit card use is to use them to pay for items you’d buy anyway, pay your bill in full and on time every month, and keep your credit utilization rate low.

Avant personal loan review: Multiple repayment options and no prepayment penalty

What you need to know about an Avant personal loan

Avant offers unsecured personal loans ranging from $2,000 to $35,000. The typical Avant borrower has a credit score in the 600 to 700 range, according to the company, so you don’t have to have squeaky-clean credit to get approved.

Although credit can be an important factor in a lender’s decision-making process, lenders generally consider a host of factors, such as your debt-to-income ratio.

Avant offers loans to borrowers who live in every state except for the few states the lender doesn’t service (Iowa, Colorado, Vermont and West Virginia).

Fees and penalties

Avant may charge an administration fee of up to 4.75%, which it will automatically deduct from your loan proceeds if your loan is approved and funded. Disclosed as part of your loan offer, the administration fee is nonrefundable once your loan is issued.

Avant may also charge a late fee may if you miss a scheduled payment. And you may face a dishonored-payment fee if one of your scheduled payments is rejected and not paid.

Some other lenders don’t charge these types of fees, so you may want to look elsewhere if you want to avoid paying just to apply or you’re worried about making all of your payments on time.

Fast funding

Avant says it tries to disburse loan proceeds directly into your bank account as quickly as possible — often by the next business day after you’re approved. But this depends on each situation and the bank where the funds are being deposited.

This can be a big benefit if you need access to the money quickly, especially if other lenders would take days or more than a week to deposit the funds.

Higher APRs

Avant’s interest rates may be higher than those offered by other lenders. If you have good credit, you may be better off securing a personal loan from another lender since some lenders offer lower APRs.

Multiple repayment options

Avant loan lengths range from two to five years and can be repaid early without a prepayment penalty. Speaking of repayment, Avant offers a good deal of flexibility when it comes to paying off your loan. You may enroll in automatic monthly payments or you can pay via another method such as a credit card, debit card, paper check, cashier’s check or money order.

Avant personal loan details

Avant is a Chicago-based lender that was founded in 2012. Its mission is to “lower the barriers and costs of borrowing.” Here are some other important details to know.

• Avant personal loans are originated by WebBank, which is a member of the Federal Deposit Insurance Corporation, or FDIC.
• Once a loan is issued, the amount and terms are fixed until the borrower has repaid the loan. But there may be an opportunity to refinance the loan to receive additional funds and/or a lower annual percentage rate, or APR.
• You can use a personal loan for a variety of purposes, including debt consolidation, home improvement and certain sudden expenses.

Who is an Avant personal loan good for?

According to Avant, most of their customers who receive loans have credit scores of 600 to 700. If you’re in that range and meet other important lender criteria, you may be a good candidate for an Avant personal loan. And if you need money for an emergency expense, a personal loan through Avant may make sense, since you may receive the funds within one business day if your loan has been approved.

An Avant personal loan also may be a good option if you’re searching for repayment options. Since Avant allows you to make payments via credit or debit card, personal check, a cashier’s check or money order, you don’t have to pay by automatic withdrawal if you don’t want to.

How to apply with Avant

If Avant services your state, you can visit Avant’s website to apply for a personal loan. You’ll begin by providing some basic information to view your loan options. Once you select your loan of choice, you’ll go through the official application process, which should take a few minutes if you’ve got all your information available.

The loan application will ask you for information such as your …

• Full name and address
• Date of birth
• Email address and phone number
• Housing costs
• Social Security number
• Desired loan amount
• Intended use of the loan

Not sure Avant is right for you? Consider these alternatives.

If you’re not sure Avant is for you or don’t live in an eligible state, here are a couple of alternatives you might want to consider.

• Marcus by Goldman Sachs personal loan: A Marcus personal loan could be right for someone who hopes to get rewarded for making their payments on time.
• Citizens Bank personal loan: Citizens Bank personal loans can be a good option for those looking for a loan with fewer fees. Read our review of Citizens Bank.

How to buy a new car

A new car can come with a hefty price tag. The average purchase price for a vehicle in the U.S. was $35,742 in September 2018, according to Kelley Blue Book.

Doing your research and comparing options can help you determine a fair price for the car you want and identify loan offers — which together could save you hundreds or even thousands of dollars.

Follow this guide to learn steps on buying a new car.

1. Set a budget
2. Do your research
3. Calculate a fair price
4. Schedule a test drive
5. Compare dealer quotes
6. Sell or trade in your existing vehicle
7. Close the deal

1. Set a budget

The first step in buying a new car is figuring out how much you can afford.

You have two options for buying your car: paying in cash or getting a loan. If you have enough money saved, paying in cash is generally the more cost effective option because you won’t pay any loan interest. If you get a car loan, you may need to make a down payment. After that, you’ll make monthly payments determined by the amount you borrowed, your annual percentage rate and the length of your loan.

Whether you plan to pay in cash or get a loan, remember to set money aside for additional expenses, including vehicle registration, car insurance, gas, sales tax and ongoing maintenance.

If you plan to finance your car, take a look at your monthly income and expenses to determine how much you can comfortably afford for a car payment. On the income side, consider your take-home pay after taxes, not your gross pay. When it comes to expenses, add up food, rent or mortgage, student loans and other debt as well as entertainment and other costs. Subtract your expenses from your income, then consider how much of what’s left that you want to put toward a monthly car payment.

Getting preapproval on a car loan from a bank, credit union or other lender could help you set your budget. When you’re preapproved, the lender lets you know the loan interest rate, maximum loan amount and length of the loan that you would likely be approved for. Being preapproved is no guarantee you’ll be offered a loan (you’ll still need to provide more information before you can be approved and receive an official loan offer), but it can help give you an idea of the price range you need to stay within.

You may want to get preapprovals from a few lenders, so you can compare offers and identify the one that works best for you. Just be sure to get them within the same time period. Preapprovals typically result in a hard credit inquiry. But multiple inquiries within a span of 14 days to 45 days are typically counted as a single inquiry, depending on the credit scoring model used.

2. Do your research

Begin by identifying your top priorities. For example, if you’re single and on a tight budget, you might find a fuel-efficient subcompact hatchback ideal. But if you’re a parent with children, a larger vehicle like a minivan or midsize crossover with strong safety ratings may be the most appealing option.

Some websites to help you research include …

• Fueleconomy.gov — Look up a car’s fuel economy.
• National Highway Traffic Safety Administration — Find vehicle safety ratings.
• Edmunds.com and Kelley Blue Book — Get information about some of the strengths and weaknesses of the cars you want. These sites also offer tools that provide estimates of a model’s cost of ownership, including expenses related to depreciation, maintenance, fuel and repairs. You can even find lists that rank models with the lowest cost of ownership.
• J.D. Power — The company’s annual U.S. Vehicle Dependability Study ranks the dependability of car brands.

3. Calculate a fair price

Get a sense of pricing for the cars that caught your eye, so you can weed out any that fall outside your budget.

Kelley Blue Book and Edmunds.com offer pricing tools that let you know what others are paying for certain models, based on data from thousands of transactions in your area.

Once you’re at the dealership, you’ll see a “sticker price” in each car window. This price is the manufacturer’s suggested retail price, or MSRP. Each vehicle comes with an MSRP, which is set by the auto manufacturer.

In addition to the MSRP, you’ll see the destination charge, which is the cost to transport the car to the dealership, and added costs for any special features beyond the standard equipment.

Dealers can adjust the sticker price up or down. One factor that can influence pricing is availability. If the model isn’t in high demand, a car dealer may be willing to offer the vehicle at a price that’s lower than the MSRP.

Your final price will also depend on whether you purchase any additional options, such as window tinting, chrome-plate wheels or splash guards. For example, Kelley Blue Book’s pricing tool shows that if you buy a 2019 Honda Accord Sport in Charlotte, N.C., the fair purchase price range is between $24,375 and $26,196. But if you add on a trunk tray, all-weather floor mats and a heated steering wheel, the fair purchase price would be between $25,371 and $26,870.

4. Schedule a test drive

Once you’ve narrowed your car choices, it’s time to do some test drives. Though a vehicle may look good on paper, your opinion may change after you get behind the wheel. You may find its seats uncomfortable or that it doesn’t handle hills or turns well. Maybe the engine is too loud. Doing a test drive will help you to identify any potential issues that you can’t live with.

You may be able to schedule a test drive at a local dealership. In some cases, you may even be able to schedule a test drive at your home or office.

Another option is to rent the vehicles you’re considering for a day or two. Though this will cost you money, it allows you to spend more time in the car, with no salesperson in the mix.

After you’ve test-driven your candidates, you should have a clear idea of which vehicle is at the top of your list.

5. Compare dealer quotes

With an idea of what you can afford and your top choices of cars in mind, it’s time to gather dealer quotes.

Compare each dealer’s asking price with the estimates provided by the pricing tools you’ve used, then negotiate based on your research. Dealers often make a profit of 10% to 20% and may be willing to bring the price down.

If you are open to dealer financing and you’ve been preapproved for a loan, let the dealer know.

Give the dealer a chance to beat the best rate you’ve been offered.

6. Sell or trade in your existing vehicle

If you currently have a vehicle, selling or trading it in could give you some cash to use toward your new car’s down payment. You can sell it to a private party or a company like CarMax. Or you can trade in your old car at the dealership where you plan to buy your new vehicle.

Your goal here is to get the most for your used car. The pricing offered by Edmunds and Kelley Blue Book can serve as a guide for this step by showing your car’s current market value. Pricing will depend on factors like the car’s overall condition and the number of miles on its odometer.

Generally speaking, you’re likely to get a higher trade-in offer from a private party than you would from a car dealership. But trading in the vehicle at the dealer can be easier and less time-consuming, since it doesn’t require you to spend time and energy listing the vehicle for sale and meeting with prospective buyers.

7. Close the deal

You’re now at the finish line. This step involves applying for a car loan — if you’re getting the vehicle financed — and, if you’re approved, signing the paperwork for your new car.

Contact the lender you’ve decided to do business with, submit a formal loan application and, if you’ve been approved, finalize the loan. If you decide to finance through the dealership and are approved for a loan, you can finalize the loan and car sales paperwork at the same time.

Some dealers may deliver the closing paperwork and car to your home or workplace so that you don’t have to make another trip to the dealership. Or you can visit the dealership to sign the paperwork and collect the vehicle.

Either way, be sure to confirm the following information.

Car condition and options: Be sure to carefully inspect the vehicle to make sure there’s no damage. Confirm that the car includes all of the options you’ve requested.

Contract terms and pricing: When signing the paperwork, ensure that all the terms and prices listed reflect items agreed upon during your previous interactions with the dealer. Make sure the sales price is correctly listed. The sales contract will include such items as state and local taxes. There may also be a registration fee, if the dealer has gotten the vehicle registered on your behalf. You’ll also see a documentation fee, which dealers charge for the work involved in putting together a sales contract.

Loan details: If the vehicle is being financed by the dealer, double-check the interest rate, loan term and any rebates the dealer may have promised in previous discussions.

If you see any discrepancies in the loan documents or fees listed that the dealer didn’t previously discuss with you, ask questions. Don’t be afraid to hold off signing the contract until your concerns have been addressed.

Once you’ve reviewed and signed the documents, it’s time to get behind the wheel and enjoy your new car.

Bottom line

Buying a new car can be a lengthy process, but taking the time to plan your budget and do some research can pay off. If you plan to finance your car, keep in mind that there are a lot of potential lenders out there. Getting preapprovals can help you shop for the best interest rates, which could save you money on your new car.

If you struggle to get loan approvals, consider putting your purchase on hold as you build your credit, or consider a less expensive make and model.

What is MSRP?

MSRP can be a helpful starting point when figuring out how much car you can afford and negotiating with car dealers.

Let’s take a look at what MSRP means and how to use this knowledge to help get you the best deal on the car of your dreams.

What does MSRP mean?

The manufacturer’s suggested retail price is a key figure to know when shopping for a new car. It’s also known as the “sticker price” of a vehicle. By federal law, the MSRP must be somehow displayed on the car window.

The MSRP is the price the auto manufacturer suggests the car dealer charge the consumer for the vehicle. However, the dealer doesn’t have to abide by that price. The MSRP doesn’t include optional features that you can select for the car, and these add-ons (along with a lot of other costs) can raise the price above the MSRP.

It’s important to keep in mind that while the MSRP makes up the bulk of the cost of a new vehicle, it’s not necessarily the selling price — and it doesn’t include every potential cost.

What’s not included in MSRP?

The MSRP can give you an idea of what the dealer would like to charge you for a vehicle. But there are other pricing terms to know as you begin negotiations with a dealership.

• Invoice price is the price the car manufacturer charges the seller for the vehicle. This cost usually includes any destination and delivery charges for the vehicle.
• Destination charge is how much the dealer spent transporting a vehicle from the manufacturer. This is also known as the freight charge.
• Registration fees are what you’ll be charged to own a car in a particular place. This varies from state to state.

Should I pay the MSRP?

The answer to that question may not be a simple yes or no. What is certain is that you should negotiate.

Haggling with salespeople may not be your idea of a pleasant shopping experience. But it’s important to keep in mind that the MSRP is only the manufacturer’s suggested retail price, meaning it’s not set in stone.

Many numbers you see in the cost breakdown of a vehicle are fair game for negotiating with the seller. Dealers may be willing to budge on price in order to lower your cost to a number that could be as much as 10% to 20% below the MSRP, the Federal Trade Commission says.

There may be times when a dealership won’t negotiate at all on MSRP, like when a new vehicle first comes out or is in high demand in your market. But if you don’t ask, you’ll never know what kind of deal might be possible.

Bottom line

Buying a car can be stressful, but by doing some research ahead of time and knowing the key terms and language of pricing, you’ll be better prepared and probably more confident to negotiate the price of your car — whether you pay in cash or take out a loan to finance it.

Filing state taxes for free: Where to go for free filing

In 43 states and the District of Columbia, Americans have to pay some sort of state-level income tax as well as federal income tax. If you live in a state with a state-level income tax, you may dread the idea of paying someone to complete yet another tax return for you.

If so, you’ll be happy to know that it’s possible to file state taxes without paying for it. Here’s what you should know about filing your state taxes for free.

Basics to know about filing state taxes for free

Some states allow taxpayers to e-file state returns for free directly through a state website. Others participate in state-level versions of the Free File Alliance.

The Free File Alliance is a group of tax-preparation and tax-filing software vendors and online filing services that has agreed to make free versions of its paid products available to eligible taxpayers. To use Free File software, taxpayers must have an adjusted gross income of $66,000 or less. Additionally, participating vendors may have lower AGI limits or additional limitations based on age, military status or other factors.

Currently, 23 states participate in the Free File Alliance. Credit Karma Tax® does not participate in the Free File Alliance. It’s always free to prepare and file federal and single-state income tax returns with Credit Karma Tax®, regardless of adjusted gross income. But a free Credit Karma account is necessary in order to use the service.

State-by-state free filing

Click on your state in this table for information that could help you find the best option for filing your state tax return free of charge.

*Provides free e-filing through a state portal.

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Alabama

Taxpayers can e-file online for free through the My Alabama Taxes website. There are no income limits or other qualifications to use the free system; it’s available to anyone who files an Alabama individual income tax return.

Alabamans may also be able to e-file for free through an approved vendor, some of which may offer free versions of their paid products for filers who meet certain qualifications. Taxpayers can also e-file with Credit Karma Tax®, an authorized e-file provider for the state of Alabama.

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Arizona

Arizona does not provide free e-filing of state returns directly through the Arizona Department of Revenue website. But if taxpayers meet certain criteria, they may be able to file their Arizona state tax return through a Free File Alliance partner. Each provider has its own qualifications, which may include age, income or other limits.

Credit Karma Tax® is included among the state’s list of authorized e-file vendors.

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Arkansas

Arkansas taxpayers can’t e-file their state returns through the Arkansas Department of Finance and Administration website. Instead, the state participates in the Free File Alliance. If taxpayers meet varying qualifying criteria, they may be able to prepare and e-file an Alabama state tax return for free with a participating provider.

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California

The California Franchise Tax Board allows taxpayers to e-file for free directly with the state through CalFile. The state says CalFile takes about 15 to 30 minutes to complete and results in the fastest-possible refund if filers also choose to have their refund directly deposited.

The tax board’s website also lists other free online-filing options, including Credit Karma Tax® and Free File.

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Colorado

If taxpayers need to file a Colorado state tax return, they can probably do so for free directly through the Colorado Department of Revenue Taxation Division’s Revenue Online service. The service is available to Colorado taxpayers or people with a valid Colorado state driver’s license or ID.

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Connecticut

The Connecticut Department of Revenue Services allows taxpayers to file their Connecticut state tax returns directly with the state through its taxpayer service center.

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Delaware

Delaware taxpayers can file Delaware state tax returns directly with the state through the Delaware Division of Revenue website. Filers need to create an account in order to file.

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District of Columbia

The District of Columbia Office of Tax and Revenue doesn’t provide direct filing service through its website for D.C. taxpayers. Instead, eligible filers may be able to file for free through a Free File Alliance partner.

Alternatively, D.C. taxpayers may be able to file using Credit Karma Tax®, which is always free and is listed as an authorized e-file tax service on the district’s website.

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Georgia

Georgia does not offer direct e-filing of state returns through the Georgia Department of Revenue website. The state participates in the Free File Alliance. Georgia taxpayers may also be able to file their state taxes with Credit Karma Tax®, which is always free.

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Hawaii

Taxpayers in Hawaii can file state taxes for free through the Hawaii Department of Taxation’s Hawaii Tax Online. The state also provides a list of approved e-file providers, some of which may allow taxpayers to file for free. Credit Karma Tax® is included in the list.

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Idaho

The Idaho State Tax Commission doesn’t offer direct e-filing through its website. Instead, the state participates in the Free File Alliance. Credit Karma Tax® is an authorized e-file provider for the state.

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Illinois

Illinois taxpayers can file state taxes for free directly through the Illinois Department of Revenue website. They’ll need to create a MyTaxIllinois account in order to file.

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Indiana

Indiana has its own version of Free File: INfreefile. As with the federal-level Free File, Hoosiers who want to use a free product from one of the listed vendors will need to meet that vendor’s requirements, which may include limitations on age, adjusted gross income and other factors.

The Indiana Department of Revenue also lists Credit Karma Tax® as a provider of free e-filing services.

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Iowa

The Iowa Department of Revenue does not provide direct e-filing through the state’s website. Instead, Iowa taxpayers may be able to file state taxes for free through one of the providers listed on the site. Income limits and other qualifications apply in order to file for free.

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Kansas

If taxpayers need to file a Kansas state tax return, they may be able to do so through KSWebFile, a free online filing service from the Kansas Department of Revenue. Filers need to sign up for an account, but there is no income limit for using the service.

The state also provides a list of authorized e-file vendors, including Credit Karma Tax®.

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Kentucky

Kentucky taxpayers who want to e-file their state tax return for free can’t do it through the Kentucky Department of Revenue website. Instead, the state participates in Free File, and lists several possible vendors.

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Louisiana

The state of Louisiana provides taxpayers with Louisiana File Online, where they can file their Louisiana state tax returns for free. Filers must create a user account in order to use the free online service from the Louisiana Department of Revenue.

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Maine

Maine FastFile is similar to the federal-level Free File service. Maine taxpayers can choose from a list of participating providers, some of which may allow qualified taxpayers to file for free. Credit Karma Tax® is also included in Maine’s list of participating e-file providers.

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Maryland

Maryland taxpayers who register for an account with the Comptroller of Maryland may be able to file directly with the state for free through Maryland’s iFile portal. Once they’ve created an account, they can log in and begin preparing their Maryland state tax return.

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Massachusetts

The Massachusetts Department of Revenue offers fillable online forms that filers can complete and e-file for free. The forms mimic the state’s paper tax return and provide a calculation mechanism to help with math. The forms can either be e-filed or printed and mailed.

For taxpayers who want to prepare their taxes with an interview-based program, the state offers a list of Massachusetts State Free File providers.

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Michigan

The Michigan Department of Treasury participates in Free File and provides a list of vendors on its website. Credit Karma Tax® is listed as a provider of free filing, and the state website notes that Detroit residents can also use the service to file their city of Detroit individual income tax returns.

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Minnesota

Qualifying Minnesotans may be able to file state taxes for free through one of the software providers listed on the Minnesota Department of Revenue website. However, AGI, age and other limitations may apply in order to do so.

The state also lists Credit Karma Tax® among providers certified to electronically submit Minnesota state tax returns.

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Mississippi

The Mississippi Department of Revenue does not offer direct e-filing through the state website, though taxpayers can view and pay their individual income tax through its Taxpayer Access Point.

Instead, state taxpayers may be able to file for free through a Free File vendor.

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Missouri

Missouri taxpayers who wish to file state taxes for free will have to see if they qualify for Free File through Missouri Department of Revenue participating vendors. To Free File, taxpayers must meet income, age and other qualifications.

Alternatively, they can file through Credit Karma Tax®, which is always free and is included in the state’s list of e-file providers.

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Montana

The Montana Department of Revenue provides a list of Free File Alliance participants for state filers, including information on qualifications for using the free versions.

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Nebraska

Cornhuskers who want to file their Nebraska state income tax return for free can do so through the Nebraska Department of Revenue’s NebFile program. After verifying eligibility, the tool prompts users to create an account in order to complete and e-file their tax returns through the system.

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New Jersey

The New Jersey Department of the Treasury, Division of Taxation, provides NJWebFile, where qualifying taxpayers can e-file their state taxes for free. There are limitations on who can use NJWebFile, so New Jersey taxpayers should check their eligibility.

The Garden State also offers NJ Fill’nFile for taxpayers who know how to complete their tax returns on their own. The fillable form doesn’t prompt users or include instructions on what information to enter on each line. The completed forms can be printed and mailed or e-filed for free.

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New Mexico

The New Mexico Taxation & Revenue Department provides free e-filing through its Taxpayer Access Point. Taxpayers must create an account in order to use TAP.

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New York

The New York State Department of Taxation and Finance partners with the Free File Alliance to provide free filing to taxpayers who meet certain qualifications. Empire State taxpayers may be able to file for free with Credit Karma Tax®, which is among the state’s approved commercial software providers.

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North Carolina

North Carolinians can’t file their state tax returns for free through the North Carolina Department of Revenue website. But they may be able to do so through NCfreefile, provided they meet eligibility requirements.

The state’s revenue department website provides a list of Free File Alliance vendors, as well as other free filing options, including Credit Karma Tax®.

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North Dakota

The North Dakota Office of State Tax Commissioner provides an ND FreeFile tool to help taxpayers determine if they’re eligible to file for free through a participating vendor. The state’s Taxpayer Access Point doesn’t allow users to file for free directly with the state.

But taxpayers can use North Dakota Fillable Forms to e-file (or print and mail) their state tax return for free. The forms provide a calculation mechanism but don’t guide you through the preparation process. Other limitations apply, so taxpayers should verify their eligibility to use the forms.

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Ohio

Eligible Ohio taxpayers can file state taxes for free online through Ohio I-File from the Ohio Department of Taxation.

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Oklahoma

The Oklahoma Tax Commission allows eligible state taxpayers to file for free using OkTAP. The state’s website provides an online quiz to help taxpayers determine if they’re eligible to use the free online filing service.

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Oregon

Oregon taxpayers have a few possible options for filing state taxes for free.

They may be eligible to file for free with a participating vendor if they meet requirements such as income, age and other restrictions. Or they may be able to use the Oregon Department of Revenue’s free fillable forms. The forms help with basic calculations but don’t provide added guidance.

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Pennsylvania

For simple filing needs, the Pennsylvania Department of Revenue offers padirectfile. Eligibility requirements apply and taxpayers with tax situations that are more complex may not be able to use the state’s free e-filing tool.

The state lists Credit Karma Tax® on its website as a provider of free e-filing services.

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Rhode Island

The Rhode Island Division of Taxation participates in the Free File program and provides a list of participating vendors. Income, age and other limitations may affect eligibility to use certain Free File products. Credit Karma Tax® is also an approved e-filing vendor for the state.

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South Carolina

The South Carolina Department of Revenue does not offer direct e-filing through its website. Instead, the state participates in the Free File program.

Taxpayers who don’t meet requirements for a Free File offering may be able to use the state’s free fillable forms. The forms, which can be e-filed or printed and mailed, will do math for you if you want but will offer only limited edits on the information you input.

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Utah

Utah residents may be able to file state taxes for free through the Utah State Tax Commission Taxpayer Access Point.

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Vermont

Taxpayers in Vermont can’t directly e-file their taxes with the Vermont Department of Taxes. Instead, they may be able to file for free through a Free File vendor, provided they meet qualifications like income, age and other limitations.

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Virginia

Virginians can’t e-file directly with the Virginia Department of Taxation through its website. But the commonwealth does offer free fillable forms that help with basic math and offer basic guidance. Filers must be a full-year resident of Virginia and preparing a current-tax-year return to use the fillable forms. And they should be comfortable doing their own taxes with little guidance in order to make good use of the forms.

Taxpayers may also be able to file for free with a Free File participating vendor, provided they meet qualifications. Credit Karma Tax® is also an authorized e-file provider for commonwealth tax returns.

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West Virginia

The West Virginia State Tax Department does not allow taxpayers to e-file directly through the state’s website. Free filing may be available through the Free File program, which the state participates in, if taxpayers meet the qualifications.

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Wisconsin

Taxpayers in Wisconsin may be able to e-file for free through the Wisconsin Department of Revenue e-file system.

Bottom line

Although just a handful of states allow their residents to file state taxes for free directly through the state’s website, taxpayers generally have other options for filing their state taxes free of charge. Many states participate in the Free File program, which allows qualified taxpayers to file state and federal income taxes for free.

And most taxpayers can use Credit Karma Tax®, which is always free, to file their state and federal income tax returns.

Should you get a wedding loan?

If you’re fortunate, you may have enough savings to cover all your wedding expenses, or parents who are willing to foot some or all of the bill. If not, you may find yourself at a crossroads: Do you take on debt to have your dream wedding, or do you cut back with a smaller celebration?

A wedding loan — which is a personal loan — or a credit card could be viable options, but only if you can afford to pay the debt off within a reasonable time. You probably don’t want to start your new marriage stuck in high-interest debt for years to come.

If you do want to finance your wedding, here’s some helpful information to consider about using a credit card or taking out a personal loan — which we’ll refer to as a wedding loan going forward. And if you’re not opposed to scaling back to a smaller wedding to avoid going into debt, we have tips for that, too.

What is a wedding loan?

A wedding loan is a personal loan that you use to pay for your celebration.

Depending on the lender, you may be asked to indicate how you intend to use the money when you apply for a wedding loan.

Pros of a wedding loan

• Fixed repayment terms — One benefit of a personal loan is that it’s typically an installment loan. This type of loan allows you to borrow a set amount of money to pay back over a fixed period of time that is determined by you and the lender at the time you take out the loan. Given making your payments on time, you can get a good idea of when you’d be able to pay off your debt.
• Many lender options — Wedding loans are offered by many different financial institutions in the form of personal loans — including banks, credit unions and online lenders. So you should have a number of options to compare to get the best rate available to you. Make sure to compare interest rates, fees and loan terms at several lenders. Finally, look for a loan with no prepayment penalty, so that you have the option to repay the loan early with no additional fee.
• Select the amount you want to borrow — Another benefit of a wedding loan is that you may have some flexibility in how much money you can borrow when you first apply. While loan amounts vary by lender, offers can range from $1,500 to $100,000. Just keep in mind that the loan amount you qualify for can be based on many factors, including your creditworthiness.
• Potentially lower interest rates — Depending on your credit, you might qualify for a lower interest rate on your loan. That could save you money compared with carrying a balance on a credit card. For instance, in the fourth quarter of 2018, the average interest rate on a 24-month personal loan from a commercial bank was 10.7%, compared to an average rate of about 14.73% interest for credit cards, according to Federal Reserve data.

Cons of a wedding loan

• Extra monthly expense — Before you sign a personal-loan agreement, consider using a loan calculator to determine your potential monthly payment to make sure it’s truly something you can afford.
• Potentially high interest — If you have poor credit health, you might find yourself paying a steeper interest rate, which can significantly increase the cost of borrowing money. For example, if you take out a $10,000 loan at a 20% interest rate for 24 months, you can end up paying about $1,464 more than the same loan with a 7% interest rate.

Should you use a credit card instead?

If you have a credit card or want to apply for one, you and your partner still may not have a credit limit to cover the cost of an average wedding. But if you need to borrow a smaller amount, a credit card could be an option.

Pros of using a credit card

• Low interest through intro APR offers — Some credit cards offer introductory periods of 0% APR on purchases, for a year or longer in some cases. If you’re confident that you could pay off those wedding purchases within that time frame, getting a card with an intro 0% APR on purchases might be something to consider.
• Use existing credit — If you already have an open credit card, using it to pay for your wedding could help you avoid having to take out a loan or other new credit account. And if you already pay a monthly credit card bill, you won’t have to worry about taking on new monthly bills — you may just end up increasing your monthly payment for your existing one. But be aware that there are big drawbacks to this option.
• Travel rewards — If you’re using a travel rewards credit card for your wedding expenses, each dollar you spend may help you earn points or miles that can often be redeemed for flights, hotel stays, rental cars or other travel. In other words, you’ll be earning rewards that could help cover costs for other travel expenses you may incur, including your honeymoon if you take one. But remember, be mindful of the APR and your credit utilization if you’re making wedding purchases on a credit card.

Cons of using a credit card

• Potentially high interest rates — If you qualify for an introductory rate and then can’t pay off your credit card before it expires, you’ll have to be prepared for when the regular purchase interest rate kicks in — and it can be high. Even if you didn’t have an introductory rate, interest rates can be very high to begin with. Also, keep in mind that a high credit utilization can negatively impact your credit. And if you plan to carry a balance month-to-month that interest can really add up. Experts recommend keeping your credit utilization below 30%.
• No end date to paying off debt — It’s wise to only put expenses on your credit card that you know you can pay off. If you put wedding purchases on the card without a plan for paying it off, you could find yourself stuck in debt and even put your credit scores at risk if you miss payments.

Ways to scale back your wedding

We get it: You have a vision for your wedding, and you may not want to compromise on certain things.

“But you should only keep wedding traditions that are personally meaningful to you in order to avoid unnecessary spending,” says Amy Shackelford, founder and CEO of Modern Rebel, an alternative event-planning company that focuses on unique weddings.

If you’re on the fence about taking out debt to pay for your wedding, first see if you can scale back a bit. Shackelford has found that the best way to reduce costs is often to lower headcount.

“People are the biggest determinant of cost, because food and beverage costs are often charged at a per-person rate,” she says.

While many couples might envision a large wedding, Shackelford reminds them that if there are 250 people there, the couple probably won’t have the chance to connect with every person at the event. She suggests lowering the number of guests to cut costs and make it easier to get more quality time with the people you care about.

There are many other ways to scale back. Shackleford suggests saving money by having a midday wedding instead of a nighttime event. And she encourages couples to think outside the box.

If money is tight, rather than immediately taking out financing, it’s a good idea to try to find ways to reimagine your special day.

Bottom line

A wedding loan could be a solution to pay for some or all of your wedding expenses, but it’s important to carefully compare all of your options and consider the risks of each to find the right option for you. Don’t forget that you always have the option to scale back to hold your wedding within a smaller budget. After all, it is your day.

Should you take out a disability loan while waiting for a benefit decision?

A disability loan — which is a personal loan — can get you cash to pay for your mortgage, household bills, groceries and other expenses.

But before you go that route, let’s take closer look at how disability benefits work and the pros and cons of disability loans. We’ll also review some possible alternatives that might help bridge your financial gap until you have income again. Finally, remember that although we use the term disability loan, what we’re referring to is a personal loan.

What is a disability?

According to the Social Security Administration, you may be considered disabled if you meet all of the following requirements.

• You are unable to perform work you did previously
• Your medical condition will not allow you to perform other types of work
• Your disability has lasted or is expected to last for at least one year, or will lead to your death

The Social Security Administration, or SSA, uses a five-step process to determine whether you qualify for disability benefits.

1. Employment status. In 2019, if you’re working and earn at least $1,220 a month before taxes, you generally cannot be considered eligible for disability benefits.
2. Severity of condition. If the SSA doesn’t find that your condition significantly restricts you — for at least 12 months — from everyday activities like standing, walking, lifting, sitting and remembering, you will not qualify as disabled. If it’s found your condition is getting in the way of basic work-related activities, the SSA moves to Step 3.
3. Listed conditions. In this step, the SSA checks if your condition is on the list of medical conditions. This list is extensive and detailed. If your condition is not listed, the SSA will decide whether it’s as severe as a listed medical condition. If so, the SSA can still consider you disabled. If not, the process goes to Step 4.
4. Ability to perform your job. While your condition may not be listed or considered as severe as a listed condition, the SSA must determine whether your condition prevents you from doing the same work you did before. If it does, the SSA moves to Step 5.
5. Ability to perform other work. The SSA then determines whether you can do another type of work. In evaluating this, the SSA looks at whether you have any skills, experience or education that you can apply to different jobs, despite your medical condition. If it appears you can do other work, the SSA will deny you disability benefits. If not, you may be considered disabled.

There are two main types of federal disability programs. Social Security Disability Insurance, or SSDI, covers you if you worked a certain amount of time and paid into Social Security. Supplemental Security Income, or SSI, provides payments based on financial need.

What is a disability loan?

If you can’t work because of a disability and are waiting to hear whether you’re eligible for disability benefits, you might need some cash to tide you over. In this case, you may consider a disability loan, which is essentially a personal loan. Just be aware that some are cash-advance and payday-type loans that are marketed to people with disabilities and can come with costly interest rates.

The Social Security Administration may be able to help if you’re in an emergency situation. Based on the severity and type of the condition and the likelihood your claim will be approved, you may qualify for advanced payments for up to six months while you’re awaiting your final decision. These are called presumptive disability or blindness payments — which is a zero-interest advance of your payments — and do not need to be paid back even if you do not ultimately get approved for benefits unless there is an overpayment.

You may be eligible to get an emergency advance payment through the SSA if you’re already due to receive Supplemental Security Income payments but haven’t received them yet. But as part of the application, you must prove that you’re facing a threat to health or safety, such as insufficient money for food, clothing, shelter or medical care.

In addition, the maximum emergency advance payment an applicant can get is the smallest of the SSI Federal benefit rate (plus any federally administered State supplement), the total amount of benefits due, or the amount requested for the financial emergency. You may also be eligible for something called an “immediate payment,” which is subtracted from the first regular payment your due, but cannot be an amount higher than $999.

If you get an emergency advance payment, it will be paid back by subtracting the emergency advance payment amount from payments already due you and you’ll be paid the difference, or by subtracting the emergency advance payment from your current monthly benefits in six monthly installments if you’re not due past payments.

Pros and cons of disability loans

As with all financial products, there are advantages and downsides to disability loans.

Pros of disability loans

Disability loans that offer quick turnaround may help you get cash fast. In some cases, you can fill out a brief application and find out if you’re approved within minutes.

If you’re struggling financially or have a shaky credit history, a disability loan —which is a personal loan — may help until you get a benefits decision, so long as it comes with terms and costs you can manage and you’re confident you can repay it.

Cons of disability loans

There are a number of disadvantages to disability loans, starting with the terms that come with many disability loans.

If you no longer have a stable income and apply for a disability loan, certain lenders may reduce their risk by offering you short repayment terms. While you may receive the cash you need, you might have to pay it back far faster than you would if you took out a disability loan while you were working.

Lenders may offer personal loans with high interest rates to protect themselves when lending money to you while you’re unemployed — and they may charge expensive loan origination fees or other fees. Costly fees paired with high interest rates can make it easy to rack up debt in a hurry — a dangerous scenario when you’re not working.

Disability loan alternatives

Before you take out a disability loan, do your research and consider other options.

• Disability insurance: If your employer offers short- or long-term disability insurance, you may want to enroll as a preventative measure in case you become disabled. Just keep in mind that you may not be able to get coverage for claims related to a pre-existing condition, so be sure to review the terms of the specific policy. You can purchase disability insurance privately as well.
• Government assistance: Government-assistance programs like the Supplemental Nutrition Assistance Program, subsidized or public housing programs, presumptive disability and blindness payments, and Temporary Assistance for Needy Families may help cover your basic necessities.
• Cash advances: A cash advance can allow you to receive cash by taking a loan against your credit card spending limit. But before you get a cash advance, consider all costs and fees associated with it and compare interest rates between your credit card cash advance rate and available disability loans because cash advances can sometimes come with high APRs.
• Short-term loans from family members or friends: If somebody close to you is willing to help you out, you may be able to get a loan from a family member or friend that offers far more favorable terms than a disability loan from a lender.

Bottom line

It can be tough to cover your expenses when you’re out of work and waiting for the Social Security Administration to make a decision on your disability payments. While a disability loan might be a good idea, be sure to weigh the pros and cons and determine whether you’d be better off pursuing an alternative.

HSBC Cash Rewards Mastercard® credit card review: A simple cash back card for your wallet

From our partner

HSBC Cash Rewards Mastercard® credit card

1.7/5

12 reviews ➔

From cardholders in the last year

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What you need to know about the HSBC Cash Rewards Mastercard® credit card

1.5% cash rewards earning rate

The HSBC Cash Rewards Mastercard® credit card offers a decent 1.5% cash rewards earnings rate on all purchases. The cash rewards earnings structure is simple and allows you to earn unlimited cash rewards with no expiration dates and no annual fee, which means you don’t have to worry about juggling things like bonus categories, rotating categories or cash rewards limits. 

10% anniversary bonus on all cash rewards earned

This card offers a 10% anniversary bonus on all cash rewards earned each year. This means you actually earn 1.65% cash rewards on all purchases after your anniversary bonus posts to your rewards program account.

Even so, your total cash rewards rate with the HSBC Cash Rewards Mastercard® credit card can still be beaten by a handful of competing cash back credit cards. This includes the Citi® Double Cash Card, which offers 2% cash back: 1% when you make your purchases, and another 1% when you pay them off.

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Citi® Double Cash Card

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$150 sign-up bonus

The HSBC Cash Rewards Mastercard® credit card offers a $150 cash rewards intro bonus if you spend $2,500 or more in the first 3 months after opening your account.

But while the dollar amount of the bonus is competitive with other cash back credit cards with no annual fee, the HSBC Cash Rewards Mastercard® credit card has a steeper spending requirement than some other cards to earn it. 

Intro 0% APR offers aren’t best in class

Balance transfer intro APR: The HSBC Cash Rewards Mastercard® credit card does come with a balance transfer offer: 0% intro APR on balance transfers for the first 15 months of account opening (then a variable APR of 15.24%, 19.24% or 25.24%). Balance transfers must be posted within the first 60 days of account opening.

This is a decent amount of time to be able to work on paying down your debt, but you’ll have to pay a balance transfer fee of 4% (minimum $10). You can find better intro APR offers out there — our favorite balance transfer cards include several that can earn you cash back on your card purchases (although we don’t recommend making purchases until you’ve paid down your debt). 

No purchase intro APR: The HSBC Cash Rewards Mastercard® credit card doesn’t offer an introductory 0% APR offer for purchases at all.

This means that if you’re planning a big purchase that you can’t pay off immediately and want to earn cash back and reduce the amount of interest you pay on it, there are other cash back cards that could be better for you.

Limited redemption options

HSBC offers several ways to redeem your cash back, but two methods stand out.

Statement credit: One way to redeem your cash rewards is by requesting a statement credit. When we contacted HSBC on Feb. 20, 2019, a company representative told us that statement credit redemptions start at $25, which means you have to have built up enough cash rewards to hit that minimum before you can start redeeming.

Direct deposit: You can also redeem your cash rewards for a direct deposit if you have an HSBC Bank consumer checking or savings account.

These are both relatively straightforward redemption options, but some other cash rewards credit cards allow you to redeem your cash back into a bank account at other institutions or for any dollar amount with no minimums.

Who this card is good for

The HSBC Cash Rewards Mastercard® credit card is a good option if you’re looking to dip your toe into the cash back world with a solid card that can earn you rewards on your everyday spending — particularly if you already have a banking relationship with HSBC Bank.

Keeping all of your accounts, including your credit card, at one bank can make your finances easier to manage.

The HSBC Cash Rewards Mastercard® credit card offers a simple earnings structure, unlimited rewards, no expiration dates and no annual fee — all of which can help make managing these rewards easy.

These features, along with a sign-up bonus and the anniversary bonus, make this card a solid contender for a spot in your wallet, especially for those new to credit card rewards.

But if you don’t already have a relationship with HSBC Bank or you don’t mind exploring options at other banks, other cards can give you an opportunity to earn even more cash rewards.

Not sure this is the card for you? Consider these alternatives.

If you want to earn cash back but want to get a better rate that suits your particular spending patterns, consider these other cards.

• Citi® Double Cash Card: This card is a good option if you’re looking to boost your cash back for your everyday spending. Read our review of the Citi® Double Cash Card to learn more.
• Chase Freedom®: This card could be a good choice if you don’t mind tracking rotating categories. Find out more in our review of the Chase Freedom®.
• Bank of America® Cash Rewards credit card: This card could be a good fit if you spend a significant amount of money in a single bonus category. Learn more in our review of the Bank of America® Cash Rewards credit card.

Family loans: What to know before you borrow or lend within the clan

Should I lend money to a family member? It’s a much-debated question.

In fact, the best place to get a loan may be from your family. Loans from family members can be a great deal, particularly for the borrower — but you may have heard the common warning: Never lend money to a family member.

These loans have potential for both financial and personal downsides, as well as possible tax consequences. Here are a few things to know before making a family loan.

What is a family loan?

A family loan, sometimes called an intra-family loan, is a loan between family members. Family loans are often less formal than personal loans from traditional lenders or in the peer-to-peer (P2P) marketplace, which connects potential investors directly to borrowers.

By contrast, family loans may have no contracts or simple contracts where the borrower or lender tracks the interest due and repayment schedules.

Informal family loans may make sense for family dynamics, but a loan is still a contract, and loans have potential tax consequences for both the borrower and the lender: A lender who charges interest will have to pay taxes on any interest earned from the borrower.

If the lender doesn’t charge interest, things become more complicated. The IRS actually requires the lender to pay taxes on “imputed interest charges.” Imputed interest is the estimated amount of interest that the IRS thinks the lender should have charged.

If keeping track of interest, payments and tax implications sounds like a headache, you may be able to pay a peer-to-peer loan administrator to take care of documentation and collect payments for you.

Pros of family loans

• Rough credit is not an issue: There’s nothing to stop family members from lending to one another, even if the borrower’s credit history is a little banged up.
• Low interest rates: In some cases, family members lend to other family members at a lower interest rate than a bank would lend to them.
• Mutual benefits: The borrower may get a loan with better-than-average loan terms, and any interest is paid to a family member instead of a faceless lender.

Cons of family loans

• Paperwork: When you give a family loan, you may want to create a written contract that includes a promise to repay the loan. This type of contract is called a promissory note. You may also want to track interest owed, payments and more.
• Tax consequences: When dealing with a family loan, the borrower and lender have to follow tax rules. Lenders may have to pay interest on income earned from the loan, as well as income not earned if they offer a below-market rate. Unless an exception applies, borrowers may have to repay the debt as agreed or claim the canceled debt as income.
• Family dynamics: Will it ruin Thanksgiving dinner if your brother still owes you the $10,000 he should have repaid by summer? Broken loan agreements can cause family tension.
• Credit history: Unless they’re reporting your loan payments to the three main credit bureaus, you probably won’t improve your credit history with a loan from a family member.

When should I consider a family loan?

Loans between family members can be risky. Before any money changes hands, think about putting these conditions in place.

• Loan terms: The borrower and lender ideally should agree on a repayment schedule and an interest rate before making a loan. Loan terms should be put into a signed contract.
• Legal remedies: If the borrower defaults on the loan, the lender has to decide whether to sue a family member or to absorb the financial loss. If you can’t afford to lose the money, it may not make sense to lend it.
• Restrictions on use: For example, down payment funds from unsecured loans —including family loans — in some cases aren’t considered valid sources of funding for a mortgage down payment. So if a mortgage down payment is the reason for a family loan, you’ll want to think (and check the details) twice.

Tips to make a family loan legitimate for tax purposes

Although a handshake between family members is an enforceable loan contract, the IRS assumes money transfers between family members are gifts — unless there’s proof that the lender expected to enforce the repayment terms.

Take these steps to help ensure your loan is the real deal in the eyes of the law.

Agree to a repayment schedule

Rules surrounding loans between family members can become complicated if the loan agreement doesn’t include terms of repayment. A best practice for loans between family members is to set a repayment schedule. The borrower could make a payment every month or repay the loan in a few years.

Charge interest

The IRS sets a minimum interest rate called the applicable federal rate. The minimum interest rate varies based on whether a loan is a short term (three years or less), midterm (over three years but not over nine years) or long term (over nine years) loan.

As of February 2019, the annual applicable federal rate for a short-term loan was 2.57%. A lender who doesn’t charge at least the applicable federal rate may have to pay taxes on the unearned interest.

Put it in writing

While a handshake technically is an enforceable loan contract, putting the repayment terms in writing gives you something concrete showing there’s an expectation that the lender will enforce the debt repayment terms.

Keep records

The paperwork doesn’t stop after the loan is issued. The borrower and the lender should record payments and keep track of the balance of the loan. Good recordkeeping will help with taxes and will help keep family members on the same page.

Tax rules around gifts and loans can be complicated. If you’re unsure of the tax implications of making a family loan, it may be worthwhile to consult a tax professional.

Alternatives to family loans

When money and family mix, relationship dynamics can get messy. Here are a few alternatives to consider if you don’t think a family loan is right for you.

Give a gift

If you’ve got the financial means, you may want to consider giving money to family members with no strings attached. For 2019, family members can give up to $15,000 per individual giftee without triggering gift tax laws.

Use a personal loan

If a family member can’t afford to lend to you, you may have better luck finding a personal loan. In some cases, a family member may be willing to co-sign the loan. When a family member co-signs the loan, that person agrees to become responsible for the payments if the borrower defaults.

Remember, both the borrower’s and the co-signer’s credit is on the line if the borrower is late making payments.

Consider a business loan

If you’re trying to start a new business or grow a side business into a full-time occupation, a business loan may make more sense than borrowing from friends or family.

Entrepreneurs can consider a variety of loan options when starting a business. Some popular funding choices for small-business owners include business credit cards, microloans (loans typically under $50,000) backed by the Small Business Administration, an SBA-guaranteed loan from a bank or community development organization, or a traditional business loan from a bank or peer-to-peer lender. 

Make a family member an authorized user

Not willing to co-sign a loan or lend a family member money? You may still be able to help them boost their credit scores by making them an authorized user on your credit card.

When a credit card holder adds someone as an authorized user, the bank may report the primary credit card holder’s information on the authorized user’s credit reports. If the primary cardholder has a great credit history, the new authorized user could see a boost to their credit scores. Better credit scores could help the authorized user become eligible for a loan from a lender. 

Bottom line

A family loan ideally creates a win-win situation for the borrower and the lender. But if the family loan goes sideways, it may hurt your relationships, if not your credit scores.

Before borrowing from or lending to family members, think through all of the possible consequences. If the loan still makes sense for both parties, be sure everyone is on the same page by putting the loan in writing and carefully tracking the repayments.

Alaska Airlines Visa® Business Card review: The right companion for your business?

5 things you need to know about the Alaska Airlines Visa® Business Card

1. Save money when you travel for work

The Alaska Airlines Visa® Business Card offers plenty of rewards for business owners who frequently travel for work. So much so that you could pay for future business trips with the rewards you earn.

You’ll receive five miles for every $1 you spend on purchases at select restaurants in certain cities, three miles per $1 on purchases from Alaska Airlines, and one mile per $1 on all other purchases you make. Those points could add up quickly if you take a lot of business trips and like to treat your clients to dinner.

The current sign-up bonus for the Alaska Airlines Visa® Business Card comes in at 40,000 miles after you spend $2,000 on purchases during the first 90 days after opening the account. With domestic one-way flights starting at 5,000 miles, that could be enough to redeem for up to four round-trip tickets.

Alaska’s Famous Companion Fare, which also comes with the sign-up bonus, can help you save even more money, too. When you purchase your nonrewards ticket, your guest’s airfare will be discounted: The price of your companion’s ticket will start at just $121 ($99 base fare plus taxes and fees, which start at $22). If you’re booking a long flight with the companion fare — say, three hours or longer — you’re potentially getting a steeply reduced price. But you can only use this benefit once a year.

If you earn the sign-up bonus, you’ll be able to redeem Alaska’s Famous Companion Fare during your first year of card membership. After that, you’ll qualify for a companion fare each year on your account anniversary.

For those with a small travel budget, this could be a great way to bring along your business partner or an employee.

You’ll also receive one free checked bag on Alaska flights, and if your business takes you overseas, you won’t have to pay foreign transaction fees.

2. Help your business build credit

If you’re starting a new company, you may need to build business credit. Opening a business credit card like the Alaska Airlines Visa® Business Card could be one way to do just that.

To build credit, it’s important that you make on-time payments and keep your credit card balances low. Keep in mind, if you slip up, it may hurt your personal credit as well as your business credit.

3. Keep tabs on how much your employees spend

The Alaska Airlines Visa® Business Card can help you track employee spending.

Not only can you set individual spending limits for employee cards, but you’ll get extra protection against card misuse by former employees.

4. Your annual fee could vary

The Alaska Airlines Visa® Business Card’s annual fee can be confusing if you don’t look closely.

Each year, you’ll pay $50 for the company account, plus $25 per card. That works out to $75 per year for one cardholder (presumably, the owner of the business), plus an additional $25 for each employee card you issue.

If you want to limit the cost of this credit account for your business, then you might have to consider exactly how many individual cards you really need to make the most of your rewards. Will every cardholder earn $25 worth of rewards with their spending?

Keep in mind that each individual card won’t earn the annual companion fare benefit — it’s only available once for each account.

5. Carrying a balance will cost you

If you’re opening a new business, you might be tempted to carry a balance until sales pick up. Unfortunately, the Alaska Airlines Visa® Business Card doesn’t offer an introductory 0% APR rate on either purchases or balance transfers. Instead, you’ll pay a variable APR between 17.24% and 25.24% on both.

Carrying a balance at those rates could make it difficult for your company to climb out of debt — and it could add up to even more if you’re not careful. That’s why you should aim to pay your balance on time and in full each month.

Understanding your points and redemption options

According to Credit Karma’s point valuations, Alaska Airlines miles are worth an average of 1.09 cents each when you redeem them through the flagship carrier. But you can also transfer your miles across Alaska’s 17 airline partners. This can help you reach more destinations where Alaska may not fly on your next business trip. That’s especially true for international locations.

Alaska doesn’t have blackout dates, so you can redeem your miles for any available flight unless you’re also using Alaska’s Famous Companion Fare.

The companion fare offer is a buy-one-get-one-discounted deal. That means to redeem this offer, you must pay for your own airfare out of pocket. You can’t use miles for your ticket and use the companion fare for your guest’s ticket.

The good news is that both you and your companion can earn miles with Alaska Airlines for this trip, even though your guest won’t have to pay the full price for their ticket.

Who this card is good for

The Alaska Airlines Visa® Business Card is helpful for small-business owners who frequently travel on or to the West Coast, where Alaska does most of its flying. If you’re looking to save money on your next business trip, you’ll appreciate checking your bag for free and bringing along your business partner or employee at a discount with Alaska’s Famous Companion Fare.

But this card probably isn’t best for businesses that do most of their traveling outside of Alaska’s flight area. Additionally, businesses that need to carry a balance may end up falling into debt without an introductory APR offer for purchases or balance transfers.

Not sure this card is right for you? Consider this alternative.

If the Alaska Airlines Visa® Business Card isn’t the right fit, you might want to take a look at our review of the Ink Business Preferred℠ Credit Card. This card offers more flexibility for business travelers who don’t want to commit to one airline.

Fed signals no more rate hikes in 2019. What could this mean for you?

The Federal Reserve this week announced plans to leave interest rates unchanged at a range between 2.25% and 2.5%. Officials also indicated they would be unlikely to raise rates this year.

If you have a credit card or a line of credit, you might benefit from the Fed’s decision because variable APRs tied to certain indexes may stay about the same rather than go up.

Although job gains have remained strong in recent months, the central bank cited slower growth in household spending and business investment in the first quarter as areas of concern.

By continuing a wait-and-see approach that the Fed adopted earlier this year, the central bank has signaled that 2019 may bring growth, but at a slower pace than was seen in 2018. But there may still be plenty for consumers to be upbeat about.

Want to know more?

• How has the Fed typically approached interest rates?
• Why has the Fed changed course?
• What does this change mean for you?

How has the Fed typically approached interest rates?

The Fed uses interest rates as a tool to help control inflation, with policymakers seeking a target inflation rate of about 2%. The thinking traditionally has been that interest rates can be lowered to jumpstart economic growth, or raised to cool an economy that might be growing too fast and causing inflation to rise too rapidly.

Since 2015, the Fed has engaged in a policy of steady rate increases as the economy experienced steady growth after the last recession. However, as the current economic expansion continues, the Fed has an opportunity to pause rate hikes to get a better idea of how the economy will behave. 

Why has the Fed changed course?

The Fed has a mixed bag of data to examine regarding the U.S. economy. There are a number of indications that the U.S. economy is doing well, such as steady job and wage growth. At the same time, recent declines in consumer spending are raising concerns.

Faced with both positive indicators as well as uncertainties influencing the economy, the Fed has decided the best course of action is to continue observing the economy for the time being and leaving interest rates unchanged.

What does this change mean for you?

In the near term, if you have a line of credit, a credit card or certain types of other loans, you may see variable interest rates remain at current levels — which could mean interest payments won’t cost you any more than they do now. This is because variable APRs are tied to an index, and some indexes fluctuate based on changes to the federal funds rate.

If you’d like to keep up with what the Fed’s up to, you can follow its meeting calendar and statement releases here.