Is There Such a Thing as a Debtor’s Prison?

prison

In this modern world that we live in, consumers are protected and have certain rights when it comes to debt collection. The practices of debt collection agencies have to abide by rules through the Fair Debt Collection Practices Act (FDCPA) as enforced by the Federal Trade Commission (FTC). According to the FTC, consumers are to be safeguarded from abusive, harassing or unfair debt collection practices. But, the question is, “Does this act protect consumers from being arrested for the failure to pay back their debts and sent to a debtor’s prison?” The short answer is yes, but there are some instances related to debt in which people have been sent to jail.

Debtor’s Prisons were abolished in the US in 1833, and thankfully so. Before the abolishment, being arrested for outstanding debt was a catch-22 situation. Since there were no work-release programs in place at that time, there was no opportunity for the debtors to make good on their outstanding debt. To make matters worse and put more debt strain on the debtor, they would be responsible for paying prison fees as well. So, without the financial help of friends or family, there would literally be no way to escape their sentence.

Consumers’ debt rights have come a long way, but why are people still being arrested if the debtor’s prison was abolished so long ago? Here are some answers that can shed some light.

What Could Put You at Risk for Arrest

While arrests can be made in a debt situation, it’s not the debt itself that will get you arrested; it’s the violation of the court order that can land you in jail. Depending on the court and jurisdiction, it may be required of the debtor to appear in court. If you are summoned to appear and ignore that summons, a warrant may be issued for your arrest for failure to appear in court. It’s very important to ensure that you don’t ignore any correspondence from the courts and are compliant in regards to being sued for debt and the appearances you are expected to make.

If you don’t know what to do, don’t procrastinate and push it aside. Ignoring a summons to appear in court will not go away. You have the option to represent yourself. However, you may want to consult an attorney that understands the laws on what debt collectors can and cannot do by law as well as your legal rights as a debtor. Depending on your state, there are some other specific restrictions on what creditors and debt collectors can and cannot do when trying to collect a debt.

Many types of debt collection practices are prohibited.

Should you have any debt that is in the process of collection, it’s important to educate yourself on the types of debt collection practices that are prohibited. In addition to being prohibited from harassment, debt collectors may not:

  • Use any threats of violence or harm
  • Publish a list of consumers who refuse to pay their debts (except to a credit bureau such as Experian, Equifax, and Transunion)
  • Use obscene or profane language when trying to collect on the debt; or
  • Repeatedly use the telephone to annoy and harass a debtor.
  • Take or threaten to take your property unless this can be done legally(meaning the debt is secured and tied to an item that can be repossessed);
  • Threaten to sue, garnish your wages and freeze your bank account if they have no intention of doing so.

Knowing what debt collectors are legally allowed to can be overwhelming. Consider consulting an attorney in your county to help you find out what you need to know to keep yourself protected.

If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated each month.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

 

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How to Deduct Medical Expenses Under New Tax Law

1 day ago ... Nearly 9 million Americans deducted medical expenses in 2015, and nearly three-quarters of those taxpayers were older than 50, according to an analysis by the AARP Public Policy Institute. Of filers who used this deduction, 70 percent had incomes under $75,000, with 49 percent earning less than ...
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How to Avoid Credit Card Theft while Traveling

Identity Theft Travel

Whether you plan to travel now or in a year, you should take steps to protect yourself from identity theft and credit card fraud while you’re on vacation. Tourists are often victims of theft, including passport and credit card theft—both of which can compromise personal information. Thieves can gain data by physically taking belongings the old-fashioned way or by hacking into your phone or computer.

By following these six tips before and after you travel, you could save yourself years or even a lifetime of credit and financial nightmares.

1.Notify Your Creditors of Your Travel Plans

Before you travel anywhere, call your credit card companies and your banks to let them know where you will be and when you plan to travel. Many banks and credit card companies keep track of your spending habits, so any purchases out of the norm may prompt them to lock down your account—this could be especially frustrating if you are out of the country and have no way of reaching your bank or credit card company.

If you do end up going overseas, find out the best way to get in touch with your creditors should your credit card or bank card get lost or stolen while you are away. Keep this information and all creditor phone numbers in a safe place that is separate from your cards—then you’ll have it on hand no matter what happens to your wallet or purse.

2. Set Up Email or Text Alerts

As you prepare to travel, subscribe to mobile email or text alerts. By doing so, you will be notified of all activity on your accounts. Receiving email or text alerts on your phone can stop credit card fraud in its tracks, since transaction information is sent to you almost instantaneously. This timely warning can help you resolve unauthorized purchases on the spot.

3.Make Copies

Whenever you travel, make photocopies of both the front and back of your credit cards. Give the copies to a trusted family member or friend at home. In the unfortunate event that your credit card is lost or stolen, you can quickly obtain all the information you need to cancel your credit card.

If you prefer to store copies digitally, you can scan and upload your copies to a secure cloud storage site, such as Google Docs or Dropbox. Should you access your documents while traveling, make sure you are connected to a secure network and not to an open Wi-Fi connection where hackers can steal your passwords and get into your accounts.

Whatever you do, do not keep copies in your luggage. Should your luggage get lost or stolen, you are putting yourself at risk for credit card fraud as your credit card numbers can be used to make fraudulent purchases.

4.Check Your Credit Card and Bank Accounts Often

If you haven’t done so already, sign up for online access to your bank accounts and credit card statements. Consider downloading the mobile apps for your bank and credit cards for easy and convenient access to your accounts. With these apps, you can not only view your bank balances and credit limits but also see all current transactions.

As soon as you see anything suspicious, immediately contact your bank or credit card company to report the questionable charge. Once you’re home, review the transactions from your trip to ensure you didn’t miss any unusual activity that should be reported.

5.Update Your Account Passwords and PINs

If you can’t remember the last time you updated your password or account PIN, it’s probably a good idea to do so now. Create passwords that are long and unique to each credit card and bank account. Updating your passwords and PINs may be a cumbersome task, but the time you take to do so will be well worth the extra protection and security.

6.Stay Alert at All Times

With the recent Equifax data breach, many are on high alert and constantly looking out for suspicious activity. But with time, people may grow lax and check their accounts less often—and this is when a credit card thief’s strike will hurt the most.

Some thieves may sit on your information in hopes of catching you unaware. So it’s important to continually monitor your credit and keep your files and important documents in safe and secure locations where thieves may not think to look.

If you’re thinking of taking a trip, use these tips to avoid credit card theft and protect your financial standing. Credit card fraud can be damaging if not handled properly, so don’t be afraid to check your accounts frequently or err on the side of caution. You can never be too careful.

 

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Report: IRS Debt Collection Program Cost Taxpayers Millions

tax debt collection by the irs
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In its first year in operation, a new IRS program that was meant to outsource federal tax debt collection efforts ultimately cost U.S. taxpayers three times more than it actually recovered.

The findings were published in a Jan. 10 report by the National Taxpayer Advocate (NTA), an independent consumer advocacy arm of the IRS.

In 2015, federal lawmakers enacted legislation that required the IRS to outsource its tax debt collection efforts to private collection agencies. The agency hired four agencies to do the job and spent a total of $20 million to cover program operations. The agencies were charged with collecting $920 million in unpaid debt but, ultimately, they managed to recoup a mere fraction of that amount — $6.7 million in recovered tax debts, according to the report.

Read more: Tax Reform 2018 Explained

After its first year, the current attempt has resulted in a net loss of $13.3 million with less than 1 percent of unpaid tax debt collected.

Consumer advocacy groups like the National Consumer Law Center (NCLC) were quick to cry foul, saying the report’s findings show that the program needlessly wasted money and abused taxpayer rights.

“The IRS private debt collector program is the epitome of waste and abuse in government programs,” said Chi Chi Wu, a staff attorney at the NCLC in a statement.

It’s not the first time the U.S. government has outsourced debt collection efforts to private firms. The NCLC notes that an effort in the mid-1990s lost $17 million and was cut after a year. Another attempt to outsource debt collection in 2006 lasted three years and lost $4.5 million.

Among the taxpayers who were most impacted by this latest private collection program are families hovering just above the poverty line, those beneath it, and retirees who are on Social Security or receive disability benefits.

The report found:

  • 4,905 taxpayers were assigned to private collection firms, and of those, 4,141 filed recent returns by Sept. 28, 2017.
  • 44 percent of those taxpayers had incomes below 250 percent of the federal poverty line ($24,600 for a family of four).
  • 28 percent had an annual income of less than $20,000
  • 19 percent had a median annual income of $6,386
  • 5 percent received Social Security or disability and had a median income of $14,365
report finds IRS private tax debt collection cost more than recouped
Source: Taxpayer Advocate Service

When you owe a tax debt to the IRS, the IRS typically calculates payment plans so that a family can keep up necessary living expenses like housing, transportation, utilities, food, and out-of-pocket health care after making their tax debt payment. However, NTA states that the data shows that these taxpayers were still pressured by the private collection firms hired by the IRS to enter into payment plans they couldn’t afford.

“Forcing the IRS to use private debt collectors to put the squeeze on vulnerable low-income families simply lines the pockets of these private collectors while jeopardizing the economic well-being of families,” said Wu.

Further insight into the problem is difficult to obtain, the NTA says, because the IRS refuses to let representatives of the organization listen to calls between private debt collectors and taxpayers.

Where do the recovered tax debts go?

Under this program, the IRS would send a 10-day notice to taxpayers letting them know a private debt collector will be assigned to them. Of the $6.7 million collected by PCA’s in 2017, $1.2 million, or 18 percent, was recovered as a result of those letters.

Private firms are not supposed to receive a commission off of collected debts. But the NTA study states that the private debt collectors are receiving commission for work done by the IRS and the agency “has no plans to change its procedures to attempt to identify payments that were clearly not attributable to PCA action.”

The IRS is authorized to keep 25 percent of the amount collected by the private agencies and the agencies themselves receive 20 percent in commission. Of the unpaid taxes collected by PCAs, $3 million is the minimum amount left that goes to the Treasury.

What do I do if debt collectors call?

If you’re called by a debt collector, there are several things to know. First, that you have rights, and second, that you need to know more.

The Consumer Financial Protection Bureau (CFPB) states certain laws related to debt collection are put in place to protect taxpayers’ privacy and security. For example, they can’t call before 8 a.m. or after 9 p.m. and they can’t harass or threaten you. In addition, if you have an attorney,  the debt collector will need to contact them instead of you.

You also should check with your state attorney general’s office to see if it offers any additional protection or help for dealing with debt collectors.

Keeping track of your documents is also important. Any communication between you and the debt collector, including letters you may have sent, should be kept in a file that starts when the collector calls, the CFPB suggests.

Identifying the debt collector can save you from taking on a debt that isn’t yours or entering into a less-than ideal payment plan. The CFPB suggests that you don’t give any information, personal or financial, until you’ve verified the collector’s name, address, phone number, and all information about the debt, such as whether it’s yours or not, any dates associated with it, and the total amount including any fees.

What happens if I owe a tax debt?

If you owe a tax debt, you should act sooner rather than later. Unpaid tax debts can not only result in extensive penalties and fees but it could result in:

Reduced Social Security benefits

  • Garnished wages
  • Seized property
  • Passport revocation

Interest is compounded daily on past due taxes (the rate fluctuates, but is 3% more than the federal short-term rate) and late payment penalties are charged separately and can go as high as 25% of the owed amount.

If you owe a tax debt, you still have to file your taxes on time.

If you can’t pay, the worst thing to do is ignore the bill. Contact the IRS and ask them to set up some kind of payment plan that you can afford.

The post Report: IRS Debt Collection Program Cost Taxpayers Millions appeared first on MagnifyMoney.

Top 10 Financially Stable Cities in America

san-francisco-(2)

The global economic outlook is strong, according to recent information from Goldman Sachs. The firm predicts that global growth will reach 4 percent in the next year. The U.S. economy as we head into the new year is showing strong momentum and the unemployment rate is already below what the Federal Reserve deems as sustainable. Overall, the current economic environment is about “as good as it gets,” according to Jan Hatzius, Goldman Sachs’ chief economist.

Of course there are U.S. cities that are more financially stable than others. Here, we’ll take a look at 10 that are expected to top the list in 2018 based on growth, employment, and business opportunities. This list can help you gauge where you’ll have the best shot at getting your credit and finances in shape, and ideally, getting ahead with your personal finances.

  1. Provo, Utah

    This city was recently ranked as the best-performing city by the Miliken Institute, thanks to its robust high-tech sector and broad-based job and wage growth. The Provo/Orem region added 5,500 high-tech jobs between 2011 and 2016. San Jose, California-based Adobe has a major presence there and the region’s flagship college, Brigham Young University also accounts for a considerable amount of employment opportunities.

  1. Raleigh, North Carolina 

    Thanks to its low business costs and thriving research and development-driven industries, this city presents those looking for a new place to call home with big opportunities. Job growth over the next 10 years is predicted to be 42.66 percent. Raleigh’s competitive business climate continues to attract employers looking to relocate operations away from rising rents in major metro cities.

  1. Fort Collins, Colorado 

    This northern Colorado city is home to Colorado State University and it’s growing fast with many job opportunities in the tech sector. The average annual salary for one of the city’s major tech companies, Agilent Technologies, is $81,050. In fact, the whole of northern Colorado is growing right along with the rest of the state, with expectations of growing its population an additional 30,000 residents by 2040.

  1. Dallas, Texas 

    There are many Texas cities that could also make the list of financially stable cities, including Austin and San Antonio. But the Dallas/Plano/Irving region ranks in the top 10 thanks to its significant employment gains and overall strong economy. The region added 50,000 jobs in the high-skill professional, scientific, and technical service industries between 2011 and 2016. Dallas also has a stronghold in the housing market and is expected to lead in home sales in 2018. The median home price in the region is $339,950.

  1. San Francisco, California 

    The Golden City ranks high thanks to its steady increase in wages over the past seven years. Not surprisingly, the region’s tech growth continues to far outpace the rest of the country at 60 percent higher than the national average. Despite higher-than-average median salaries, extremely high housing prices make this city out of reach when it comes to a place to call home. In 2016, the median sales price for a single-family home was over $1 million.

  1. Bradenton/Sarasota, Florida 

    If you’re looking exclusively for string job growth, the Brandenton/Sarasota/North Port area is the place to be. It tops the chart in 12-month job growth. Last year the state of Florida’s unemployment fell to 3.7 percent, its lowest level in more than a decade. The current median salary is $40,592 and the median home price is $279,000.

  1. Nashville, Tennessee 

    Music City continues to outpace many other major metros in job and wage growth, with wages growing 36 percent from 2010 to 2015. Some 8,000 jobs were added across the professional, scientific, technical services, administration and support services industries in 2015 and 2016. Home to Vanderbilt University, Nashville also produces a large pool of employment talent and itself employs some 60,000 people. The salary average is $50,913.

  1. Charlotte, North Carolina 

    Like its eastern counterpart Raleigh, low business costs continue to attract employers to the Charlotte region. The professional, scientific, and technical services industries grew about 9 percent from 2015 to 2016, adding some 5,800 jobs. Median housing prices in the region — which was so hard hit in the housing crisis a decade ago — rebounded to $245,000 in 2016.

  1. Atlanta, Georgia 

    Known as the Empire City of the South, Atlanta grew its job economy by 45,000 people in 2016, spanning industries including dining, health, construction, and film and television. While salaries in the region aren’t exceptionally high (averaging $58,899), that is balanced by a lower median home price of $218,350 as compared to booming housing markets like those in Denver, Seattle and San Francisco.

  2. Seattle, Washington 

    While the city has always been a popular tourist destination, it has recently gained attention for a consistently strong job market over the past decade. With both Amazon and Microsoft headquartered in the city, software developers continue to flock there where they can earn an average salary of $132,000. For those looking for tech and software opportunities, Seattle presents a much more affordable option than San Francisco. The median sales price for existing single-family homes at the end of 2016 was $468,785, compared to $1,056,561 in the San Francisco Bay area.

If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated each month.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Image: zhudifeng 

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Virtual Credit Card – What You Need to Know

credit card rewards

Virtual credit cards have been around in one form or another for years now, but their use has yet to truly take off among consumers.

A crop of new start-ups however, such as Pay With Privacy and Token Payments, are poised to change that.

These two companies may not be household names but perhaps they should be. Both are joining the effort to help consumers beat credit card fraudsters at their game at a time when the list of blockbuster data breaches seems to be growing longer by the day.

For those not familiar with virtual credit cards, they come in various forms but are typically temporary, randomly generated, credit or debit card numbers. Often the numbers link to a real payment account, such as a credit card, debit card or checking account.

In many cases, the cards are designed for a single use. They’re known as “burners” meaning they expire immediately after use (though some can be scheduled to last for up to one year). There are also virtual cards that can be created and locked for use with only a single merchant and virtual cards that allow for setting a maximum charge amount.

The beauty of such cards is that if a hacker gets hold of the information, it doesn’t matter, because the damage that can be done is minimal.

Originally developed to make online credit card purchases more secure, the cards are now also being used with increasing frequency in brick and mortar stores thanks to the rise of mobile wallets such Apple Pay, Google’s Android Pay and more.

Here are the pros and cons that experts say you should keep in mind with this payment technology.

Refunds and Disputes Can Be a Hassle

Most refunds for purchases made with a credit card are made directly to the account that was used for the original purchase, notes Chargebacks911 co-founder and COO Monica Eaton-Cardone.

However, with disposable credit cards that “account” will no longer exist if the purchase was made with a virtual card and the number has already expired.

“That can create headaches for users,” says Eaton-Cardone.

The solution to this issue can range from the merchant in question providing a cash refund to you being required to accept a store credit.

Another issue to keep in mind, said John Buzzard, an industry fraud specialist at CO-OP Financial Services, is that virtual cards offer little consumer protection in the case of a dispute for services not rendered or received. 

Associated Fees

Read the fine print when using virtual credit cards, and understand how they operate including the various fees charged.

For instance, some companies allow you to load money onto the card, explains Eaton-Cardone. But you may be charged a monthly fee if the balance dips below $25.

“There’s a bunch of things they do because they want to make sure you are incentivized to keep money on the card,” explained Eaton-Cardone

Some of the cards have expiration dates, (also noted in the fine print), which can lead to inadvertently allowing the card to expire while there’s still money on it.

Other disposable cards include foreign transaction fees or fees for paper copies of documents that have already been provided.

Verification May Be a Problem – Particularly for Travel Related Transactions

Virtual credit card numbers can certainly be used to book such things as car rentals and hotel rooms online through sites such as Expedia, Orbitz and more. But when you show up to pick up that rental vehicle, you’ll be required to have an actual credit card to swipe.

“With disposable credit cards, the account numbers won’t match,” says Eaton-Cardone.

When booking hotel rooms online with a disposable card, you may be able to request that the property in question charge the cost of the room to the card you used to make the reservation. However, you will still need to present an actual credit card to be swiped upon check-in to cover incidentals. 

Virtual Credit Cards and Mobile Wallet Technology

One of the growth spaces for virtual credit cards is in conjunction with mobile wallet technology such as Apple Pay, Android Pay and more.

A virtual card can be issued instantly, even while standing in line at a brick and mortar store, and some can be delivered to your Apple Pay account, explained Jason Gardner, CEO of Marqeta, a fintech firm that enables companies to issue and manage virtual cards.

The card can be preconfigured with a spending limit instantly, funded, unloaded, suspended or cancelled, all in real time, granting the cardholder complete control.

“These cards create a lot of choice for consumers, different products that fit different constituencies,” said Gardner. “You are seeing a significant decline in private label cards. The growth of these virtual credit card companies is undeniable.”

For the digital obsessed Millennial demographic in particular, it’s an option that is very appealing. If you look at Millennials and the top 50 brands they focus on, there’s not a single bank, or credit card company among the list. Companies like Facebook, Amazon, and Twitter are all taking over, making digital and virtual products more mainstream.

In such a world, virtual credit cards are a natural fit.

“Most millennials are not carrying credit cards now,” said Gardner. “But they all have mobile phones. And the ability to instantly make a credit decision and pay with the mobile phone is beautiful consumer experience and it also generates choice.”

One last downside however, is that mobile wallet payments are still not widely accepted by merchants. But that too may be changing in 2018 and beyond.

If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated each month.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

 

Image: iStock

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Citizens Bank Review: CDs, Checking, Savings, Money Market, and IRA Accounts

Citizens Bank
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Although Citizens Bank is one of the largest banks in the nation, it only got its start relatively recently, in 2005. Since then, it has become the largest bank in Rhode Island (where it’s headquartered) and opened over 1,200 local branches along the East Coast and in the Midwest.

We wanted to know: How do the deposit accounts at Citizens Bank stack up with the competition? What are the hidden “gotchas” and what do you need to know before opening an account?

The interest rates that Citizens Bank offers on its deposit accounts vary according to where you live. So, to make things simple, we’ll compare their rates across accounts in the 02903 zip code (Providence, R.I.) where its headquarters is located. To find out the rates in your area, click on the link “Specify Your Location” on their homepage.

All rates are current as of Jan. 2, 2018.

Citizens Bank CD Rates

Citizens Bank offers limited options for CDs and very low rates unless you also have an existing premium account with them.

 

12-Month Breakable CD

14-Month CD

48-Month CD

Standard APY

0.05%

0.10%

0.10%

APY with Platinum Checking

0.10%

1.15%

1.55%

APY with Platinum Plus Checking

0.20%

1.40%

1.70%

  • Minimum opening deposit: $1,000 for the 14 and 48 month CDs and $10,000 for the 12 month CD
  • How interest is compounded: Interest is calculated based off of your daily balance, then tallied up and deposited into your account monthly.
  • Early withdrawal penalties: $50 plus whichever of the following two options is less:
        1. 180 days’ worth of interest on the withdrawn amount
        2. Half of the remaining interest you would have earned
  • Grace period: Your CD will automatically roll over to another CD with the same term. However, you have a 10-day grace period to withdraw or add funds without paying an early withdrawal penalty.

12-Month Breakable CD

The bar for opening this CD is set very high: You’ll need to come to the table with at least $10,000. In return, you will earn interest, but at very low rates even if you qualify for a higher rate by also holding a platinum-level checking account.

One of the benefits of this account is that you’re allowed to make one full or partial withdrawal of your cash during its 12-month term without paying an early-withdrawal penalty. If you think you might need to withdraw the cash before the term ends, this may be a wise choice.

14-Month CD

This CD is much more accessible for people with smaller amounts of cash because it only requires one tenth of the money as the 12-month breakable CD. The rate for this CD is also a lot better — but only if you have an existing Platinum or Platinum Plus Checking Account.

48-Month CD

This CD is interesting. It’s also fairly accessible for people with smaller opening deposits. However, unless you have one of the Platinum checking accounts, there’s no real incentive to open a 48-month CD over a 14-month CD because the rates are exactly the same.

In fact, if these two CDs pay the same interest rate for non-Platinum checking account members, it’s probably better to stick with the 14-month CD because you’ll earn exactly the same interest rate and you’ll get more frequent access to your money if you need it.

How Citizens Bank CD rates compare

Citizens Bank clearly wants you to be a Platinum Checking Account member, and these CDs only make sense if you are one. The rates offered for Platinum Checking Account holders on their 14-month and 48-month CDs are actually slightly better than national averages.

Otherwise, if you’re just walking into this bank off the street (or logging in), pass this one up. You can earn much better CD rates elsewhere without the checking account requirements.

How to get a Citizens Bank CD

If you decide a Citizens Bank CD is right for you, good news: It only takes about 10 minutes to apply for an account, and you can apply online or in a local branch. All you’ll need is basic personal information (including your social security number), a government-issued photo ID, and some way to fund your account.

You can fund it with a check, or a credit or debit card, but heads up: If you go the card route, you can only make the minimum opening deposit of $1,000 — you can’t deposit anything more than that.

Citizens Bank Checking Account Options

The checking accounts at Citizens Bank offer few benefits in exchange for high fees and requirements — however, they may be useful if earning higher rates on another product is your endgame.

One Deposit Checking from Citizens Bank®

  • Minimum opening deposit: Any amount.
  • Interest rate: None.
  • Monthly maintenance fee: $9.99
  • How to waive monthly maintenance fee: Citizens Bank will waive the fee if you’re a minor, or if you have at least one deposit into your account each statement period.
  • ATM fees: None for Citizens Bank ATMs. $3 for using non-Citizens Bank ATMs, plus whatever surcharge fees the ATM’s owner charges.
  • ATM fee refunds? None.
  • Overdraft fee: $35 per item (up to seven per day).

Even though this is Citizens Bank’s most basic-level checking account, it isn’t one you can walk away from and leave on autopilot. You’ll need to make at least one deposit into the account each statement period in order to avoid the exorbitant $9.99 monthly fee.

Not only that, but it will cost you to use this account anyway — at least indirectly. Checks do not come free with this account. You’ll need to pay at least $9.99 for an order of checks if you want to, you know, write checks from your checking account.

Citizens Bank Platinum Checking™

  • Minimum opening deposit: Any amount.
  • Interest rate: 0.02% APY for any amount in your account.
  • Monthly maintenance fee: $25
  • How to waive monthly maintenance fee: Keep at least $25,000 across all of your Citizens Bank investment and deposit accounts.
  • ATM fees: None for Citizens Bank ATMs. $3 for using non-Citizens Bank ATMs, plus whatever surcharge fees the ATM’s owner charges.
  • ATM fee refunds? Your first four non-Citizens Bank ATM charges will be waived each statement period (but not the ATM surcharge).
  • Overdraft fee: No fee for overdraft transfers or overdraft lines of credit.

This is Citizens Bank’s lowest premium-level checking account. If you have this account, you can qualify for higher rates on CDs, savings accounts, and money market accounts, a 0.125% discount on a mortgage, and waived fees for things like paper statements or stop check orders. Plus, you’ll get free checks. You can also earn interest with this account, albeit at a very low level.

In return, Citizens Bank wants you to keep a fairly high amount of cash with them in deposit and investment accounts. Make sure you can commit to this so you don’t have to face the high $25 monthly fee.

Citizens Bank Platinum Plus Checking™

Amount

$0-$24,999

$25,000-$249,999

$250,000+

APY

0.03%

0.05%

0.07%

  • Minimum opening deposit: Any amount.
  • Monthly maintenance fee: $25
  • How to waive monthly maintenance fee: You’ll need to keep at least $25,000 in linked deposit or investment accounts, plus one of the following two requirements: either deposit at least $5,000 per month into your account, or keep at least $10,000 in your account.
  • ATM fees: None for Citizens Bank ATMs. $3 for using non-Citizens Bank ATMs, plus whatever surcharge fees the ATM’s owner charges.
  • ATM fee refunds? Your first four non-Citizens Bank ATM charges will be waived each statement period (but not the ATM surcharge).
  • Overdraft fee: No fee for overdraft transfers or overdraft lines of credit.

This is basically the same account as the lower-level Citizens Bank Platinum Checking account with one extra bonus: a slightly higher, but still overall lackluster, interest rate.

In return for this higher interest rate you’ll need to jump through a few extra hoops (in addition to having at least $25,000 in linked deposit or investment accounts): keep an average of at least $10,000 in your checking account, or deposit at least $5,000 into your checking account each statement period.

How Citizens Bank checking accounts compare

Most checking accounts at large national banks set the bar fairly high to waive their outrageous monthly fees in return for low interest rates. Citizens Bank is no exception. Rather than using this account for its low interest rate, however, think outside the box: You actually can earn some decent rates on CDs if you hold one of the Platinum checking accounts.

If you can meet the requirements on these Platinum checking accounts, want to earn higher rates on CDs, and if Citizens Bank is convenient for you to work with, then this bank might make sense for you.

However, it’s still possible to find higher interest rates with fewer pesky requirements by opening a checking account with one of these online banks.

How to get a Citizens Bank checking account

If you decide a Citizens Bank Checking Account is right for you, good news: it only takes about 10 minutes to apply for an account, and you can apply online or in a local branch. All you’ll need is basic personal information (including your social security number), a government-issued photo ID, and some way to fund your account.

You can fund it with a check or a credit or debit card, but again, if you go the card route, you can only make the minimum opening deposit of $1,000 — you can’t deposit anything more than that.

Citizens Bank Savings Account Options

Citizens Bank does offer savings accounts with some neat features, but they’re still plagued with low interest rates and potentially high fees.

GoalTrack Savings®

GoalTrack Savings is a savings reward program that you can enroll in with any savings account, except for the CollegeSaver and Citizens Bank HomeBuyer Savings accounts. If you enroll in this program, you have to make a pledge: I will save X dollars each month for X months.

If you reach your goal, Citizens Bank will reward you with a gift card to certain merchants such as Best Buy, Lowe’s, Hyatt, or Pizza Hut. The amount of the gift card may be as follows:

Months

$25-$49

$50-$99

$100-$199

$200-$399

$400+

8-11

Discount at a merchant

$5

$5

$10

$20

12-17

$5

$5

$10

$20

$40

18-23

$5

$10

$20

$40

$75

24-35

$10

$20

$40

$75

$100

36+

$20

$40

$75

$100

$250

Green Savings®

  • Minimum opening deposit: Any amount.
  • Interest rate: 0.01% APY for any amount in your account.
  • Monthly maintenance fee: $4.99
  • How to waive the monthly maintenance fee: Fee is waived for the first four months of account opening. After that, the fee is waived if you keep an average of at least $200 in your account every day.
  • ATM fees: None for Citizens Bank ATMs. $3 for using non-Citizens Bank ATMs, plus whatever surcharge fees the ATM’s owner charges.
  • ATM fee refunds? None.
  • Excessive transaction fee: You’re allowed six certain transactions per month as per Federal Regulation D. After that, you’ll be charged $15 per transaction.

Citizens Bank’s Green Savings account is their most basic savings account. It’s also their only savings account to charge a fee, which you can avoid as long as you keep a small amount of cash ($200) in this account.

That means that this account isn’t meant to ever be drained completely lest you face the pesky monthly fee. Make sure you take that into account — i.e., if you’re saving for a specific goal, you’ll need to bump up your savings target by $200 to leave enough in this account after you withdraw the cash.

Citizens Bank Platinum Savings™

  • Minimum opening deposit: Any amount.
  • Interest rate: 0.02% for any amount in your account.
  • Monthly maintenance fee: None.
  • ATM fees: None for Citizens Bank ATMs. $3 for using non-Citizens Bank ATMs, plus whatever surcharge fees the ATM’s owner charges.
  • ATM fee refunds? None.
  • Excessive transaction fee: You’re allowed six certain transactions per month as per Federal Regulation D. After that, you’ll be charged $15 per transaction.

This account comes standard with Citizens Bank’s Platinum Checking account. Although this account doesn’t have a monthly maintenance fee, the checking account does: $25, unless you qualify to have the fee waived.

The benefits of this savings account aren’t much greater than Green Savings, which you can open without a demanding checking account. Thus, we only recommend this account if you’re interested in the Platinum Checking account anyway.

Citizens Bank Platinum Plus Savings

Amount

$0-$24,999

$25,000-$249,000

$250,000+

APY

0.03%

0.05%

0.07%

  • Minimum opening deposit: Any amount.
  • Monthly maintenance fee: None.
  • ATM fees: None for Citizens Bank ATMs. $3 for using non-Citizens Bank ATMs, plus whatever surcharge fees the ATM’s owner charges.
  • ATM fee refunds? None.
  • Excessive transaction fee: You’re allowed six certain transactions per month as per Federal Regulation D. After that, you’ll be charged $15 per transaction.

This is Citizens Bank’s most premium-level savings account. It also comes standard with a Platinum Checking account, meaning that you’ll have to pay a $25 monthly fee for that account as well unless you qualify to have the fee waived.

In return, you get slightly higher savings account rates, as well as higher rates on things like CDs and money market accounts.

CollegeSaver®

  • Minimum opening deposit: $25 if your child is under 6 years old. $500 if your child is 6-12 years old.
  • Interest rate: 0.05% for any amount in your account.
  • Monthly maintenance fee: None.
  • Minimum monthly deposit: If your child is under 6 years old, you’ll need to deposit $25 per month until his or her 18th birthday. If your child is between 6 to 12 years old, you’ll need to deposit $50 per month until his or her 18th birthday.
  • Excessive transaction fee: You’re allowed six certain transactions per month as per Federal Regulation D. After that, you’ll be charged $15 per transaction.

If you’re looking to save up some extra cash for your kid’s college bill, the CollegeSaver account might be able to help. Be warned, though: it does have some steep requirements. You’ll have to commit to depositing at least $25 into the account ($50 if your child is between ages 6-12) every single month until their 18th birthday. If you can do this, you’ll get a nice bonus: When your child turns 18, Citizens Bank will throw an extra $1,000 into your savings account.

This is a nice idea, but unfortunately this account still doesn’t earn much interest — just 0.05% APY. If saving for your kid’s college is a priority, you may be better off investing that money in a tax-advantaged savings account such as a 529 plan or a Coverdell account.

Citizens Bank HomeBuyer Savings®

  • Minimum opening deposit: $100
  • Interest rate: 0.05% for any amount in your account.
  • Monthly maintenance fee: None.
  • Minimum monthly deposit: $100
  • Excessive transaction fee: You’re allowed six certain transactions per month as per Federal Regulation D. After that, you’ll be charged $15 per transaction.

If you’re saving for a house, you might want to consider the Citizens Bank HomeBuyer program. If you can commit to saving $100 per month for 36 months straight, you can get a $1,000 credit toward the closing costs on a Citizens Bank mortgage (assuming you qualify). You also get a free pass to skip one monthly deposit per year without losing eligibility for the $1,000 credit.

If you do earn the credit, be prepared to use it fairly soon: You have another 36 months after you earn the credit to complete the purchase of a home, or lose it.

This sounds like a good plan (and it very well may be), but remember: Just because you get a $1,000 credit at the start of your mortgage doesn’t mean it’ll be cheaper in the long run.

Who knows what mortgage interest rates Citizens Bank will be charging three years from now and whether they’ll be competitive or not. You might end up saving $1,000 now only to shell out thousands more later.

How Citizens Bank savings accounts compare

While we do like some of the unique savings accounts that Citizens Bank offers (specifically the savings accounts for college and home down payments), we think that the interest rates offered are still very low.

Furthermore, their savings accounts either come with unnecessarily high fees, or are linked to checking accounts that do have high fees.

Unless there’s something really tying you to Citizens Bank, we think that you can earn a lot more and pay a lot less with other online savings accounts.

How to get a Citizens Bank Savings account

If you decide a Citizens Bank savings account is right for you, good news: It only takes about 10 minutes to apply for an account, and you can apply online or in a local branch. All you’ll need is basic personal information (including your social security number), a government-issued photo ID, and some way to fund your account.

You can fund it with a check or a credit or debit card, but once again, if you go the card route, you can only make the minimum opening deposit of $1,000 — you can’t deposit anything more than that.

Citizens Bank Money Market Account Options

The rates you can earn on these money market accounts are generally rock-bottom, unless you can qualify for the promotional rates offered on the premium-level accounts.

Personal Money Market

  • Minimum opening deposit: Any amount.
  • Interest rate: 0.01% APY for any amount in your account.
  • Monthly maintenance fee: $10
  • How to waive the monthly maintenance fee: Keep a minimum of $2,500 in your account.
  • ATM fees: None for Citizens Bank ATMs. $3 for using non-Citizens Bank ATMs, plus whatever surcharge fees the ATM’s owner charges.
  • ATM fee refunds? None.
  • Excessive transaction fee: You’re allowed six certain transactions per month as per Federal Regulation D. After that, you’ll be charged $15 per transaction.

This account also comes with checks, however watch out: You can only use the checks up to three times per month without incurring an excessive transaction fee. Like savings accounts, you’ll also be limited to just six transactions per month according to Federal Regulation D rules. If you go over, you’ll have to pay a $15 transaction fee.

If you end up paying this fee more than three times in a year (or “significantly exceed these transaction limits in any one statement cycle,” as stated in Citizens Bank’s Fees and Features Guide), your account may be automatically downgraded into a non-interest-bearing checking account.

Citizens Bank Platinum Money Market™

Promotional offer: If you deposit at least $25,000 of new-to-Citizens-Bank money in a new Citizens Bank Platinum Money Market account, you’ll earn the following interest rates until November 30, 2018:

Amount

$0-$24,999

$25,000-$2,999,999

$3,000,000+

APY

0.03%

1.10%

0.03%

  • Minimum opening deposit: Any amount.
  • Interest rate: 0.03% APY for any amount in your account (unless you qualify for the promotional rates above).
  • Monthly maintenance fee: None.
  • How to waive the monthly maintenance fee: Keep a minimum of $2,500 in your account.
  • ATM fees: None for Citizens Bank ATMs. $3 for using non-Citizens Bank ATMs, plus whatever surcharge fees the ATM’s owner charges.
  • ATM fee refunds? Your first four non-Citizens Bank ATM charges will be waived each statement period (but not the ATM surcharge, however).
  • Excessive transaction fee: You’re allowed six certain transactions per month (including three checks) as per Federal Regulation D. After that, you’ll be charged $15 per transaction or check.

You are eligible to open this account if you have a Platinum Checking account. Like the other premium-level savings accounts, this account has no monthly maintenance fee of its own, but its linked Platinum Checking account does.

Citizens Bank Platinum Plus Money Market™

Promotional offer: If you deposit at least $25,000 of new-to-Citizens-Bank money in a new Citizens Bank Platinum Plus Money Market account, you’ll earn the following interest rates until November 30, 2018:

Amount

$0-$24,999

$25,000-$2,999,999

$3,000,000+

APY

0.05%

1.35%

0.25%

  • Minimum opening deposit: Any amount.
  • Interest rate: 0.10% APY for any amount in your account (unless you qualify for the promotional rates above).
  • Monthly maintenance fee: None.
  • ATM fees: None for Citizens Bank ATMs. $3 for using non-Citizens Bank ATMs, plus whatever surcharge fees the ATM’s owner charges.
  • ATM fee refunds? Your first four non-Citizens Bank ATM charges will be waived each statement period (but not the ATM surcharge, however).
  • Excessive transaction fee: You’re allowed six certain transactions per month (including three checks) as per Federal Regulation D. After that, you’ll be charged $15 per transaction or check.

If you have a Citizens Bank Platinum Plus checking account, you’re eligible to open this corresponding money market account as well. Normally, the rates are very low (0.10% APY), however, if you have enough cash to take advantage of the promotional offer (meaning you have $25,000 stashed somewhere outside of Citizens Bank that you bring in to open a new account), you can earn much more interest.

How Citizens Bank’s Money Market accounts compare

If you can qualify for the promotional rates offered on the Platinum or Platinum Plus Money Market accounts, you can actually earn pretty decent rates. Unfortunately, most people may have a difficult time earning them because you need to deposit at least $25,000 from another non-Citizens Bank account, and the rates only last until November 30th.

If you’re looking to maximize the interest rates you receive on a money market account, you can find better rates with money market accounts from other institutions.

How to get a Citizens Bank Money Market account

If you decide a Citizens Bank money market account is right for you, good news: It only takes about 10 minutes to apply for an account, and you can apply online or in a local branch. All you’ll need is basic personal information (including your social security number), a government-issued photo ID, and some way to fund your account.

You can fund it with a check or a credit or debit card, but if you go the card route, you can only make the minimum opening deposit of $1,000 — you can’t deposit anything more than that.

Citizens Bank IRA Options

These retirement savings vessels are light on information—make sure you do your research before choosing to open an account.

IRA CDs

Citizens Bank offers some less-touted IRA CD options, including terms ranging from one to 120 months. You can get started with one of their IRA CDs with a deposit as small as $250. There is no monthly account maintenance fee.

The interest rates on these IRA CDs are not advertised on their website, however, so you’ll need to contact the bank directly if you’d like to open an IRA CD.

How to get a Citizens Bank IRA CD

If you’re interested in getting a Citizens Bank IRA CD, make sure you do your homework first by calling the bank or visiting them in person to verify the rates and term options for their different CDs.

If you’re looking for a good benchmark to compare the rates, check out other IRA CD options.

IRA Savings

Citizens Bank also offers an IRA Savings account, however they offer just about as much information on it as with their IRA CDs (that is to say, very little).

You can open an IRA Savings account with any amount you wish. Your first four months with this account are free, but after that you’ll need to pay a $4.99 monthly maintenance fee if you don’t keep at least $200 in your account.

How to get a Citizens Bank IRA savings account

Again, if you’re interested in this account you’ll need to either call Citizens Bank or visit a branch to get the information you need to make an informed decision. Specifically, you’ll need to inquire about the interest rate being offered and whether there are any fees associated with the account.

Overall review of Citizens Bank

Citizens Bank does offer some niceties with their accounts. In particular, we like the monetary bonuses they throw in for the CollegeSaver and HomeBuyer Savings accounts, in addition to their GoalTrack gift card bonuses. These rewards may provide just enough incentive if you’re looking to stick to your savings goals.

However, we are not excited about the rates that they offer and the amount of fee baggage that these accounts come with. In this day and age, it’s very easy to find a bank that doesn’t hang you high and dry with fees.

The only reason we can see recommending Citizens Bank is if you want to use an in-person branch exclusively and if Citizens Bank is the closest bank to you. Otherwise, we’d skip past this one in favor of something better.

The post Citizens Bank Review: CDs, Checking, Savings, Money Market, and IRA Accounts appeared first on MagnifyMoney.

The Ultimate Layoff Survival Guide

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Paul Catala, a 53-year-old entertainment reporter in Lakeland, Fla., knows firsthand about the struggles of unemployment. He was the victim of massive layoffs at a Tampa-area newspaper in December 2012. The result? A severance package of about $1,500.

“I was pretty much financially panicked,” Catala told MagnifyMoney, who also lost his health insurance. “All I had was my severance and nothing more than a couple thousand dollars in savings.”

As a single guy, he didn’t have a spouse’s salary to fall back on, but he made it work. During the year and a half that followed, he patched together a steady income by picking up a string of odd jobs and side gigs (more on this in a bit) before eventually securing a full-time job.

In 2017 alone, at least 255,000 planned job cuts have been announced, according to a report put out by the firm Challenger, Gray & Christmas. (The bright spot, however, is that the report also found that job cuts are on the decline.)

If you’re newly unemployed and not sure how to move forward, this ultimate layoff survival kit is for you. Here’s everything you need to know about weathering the storm.

What to do when you lose your job

Step one: Don’t freak out

If the financial implications and the stress of having to find a new job have your head spinning, you’re not alone. The longer you’re unemployed, the more likely it is to take a toll on your psychological well-being. According to a 2013 Gallup survey, roughly 20 percent of Americans who’ve been unemployed for a year or more have been affected by depression.

But while it’s certainly wise to make a plan, don’t take such a long view that you’re overwhelmed by the enormity of unemployment. As the old saying goes: “Inch by inch, life’s a cinch. Yard by yard, life’s hard.”

Do one thing at a time to avoid “analysis paralysis” (aka feeling so overwhelmed that you take no action at all).

Step two: Exit your current job with grace

Getting laid off hurts, but think twice before storming out in a blaze of glory.

“Anything you can do to leave on a good note is a good idea,” career coach Angela Copeland tells MagnifyMoney. “Thank-you notes and goodbye lunches all help to give positive closure.”

The last thing you want to do is burn bridges on your way out. When applying for new jobs, Copeland says you’ll be asked for references the hiring manager can call, which will likely include your previous employer. It’s in your best interest to keep these relationships positive.
Negotiating your severance package before hitting the road may also be on your to-do list.

“Some people have been able to negotiate an extra month of severance because they’ve been there longer and can quantify what they’ve brought to the job,” said Shannah Compton Game, certified financial planner and host of the “Millennial Money” podcast.

“Try and correlate it to something positive, like revenue or growth you’ve been able to do for the company,” she said. “Keep good records of the successes you’ve had because you just never know when you’ll be able to use that.”

On a similar note, you might be able to use rumors of impending layoffs to your advantage. Game says that it’s usually the people in the early rounds of layoffs who get the better severance packages. If you’re likely to be on the chopping block, volunteering to be let go sooner rather than later could be used as a bargaining chip to secure a better severance package.

Step three: Get your finances in order

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Before you panic, sit down and do a thorough audit of your financial situation. List all your monthly expenses, from fixed costs like rent and utilities to discretionary spending like entertainment costs. Then factor in any income you still have, like unemployment benefits (we’ll dive into how to apply in a minute), a severance package, and any cash you have coming from side gigs or passive income streams.

Now for the obvious question: What does your savings account look like?

“The goal marker is to have three to six months’ worth of fixed expenses saved in your emergency fund,” said Game.

To help curb temptation, she recommends parking it in an interest-bearing savings account that’s separate from your regular bank. (We’ve rounded up the best online savings accounts here.) If you’ve got an emergency fund, getting laid off is as good a time as any to dip into it — that’s what it’s there for. Of course, the idea is to make your savings last as long as possible. This is why Game suggests retooling your budget right out the gate.

“Is there anything in there you can cut, or at least make better?” she asked. “Can you negotiate a better cellphone or internet plan? Are you overpaying in some areas? When you’re unemployed, every dollar helps.”

Another thing to think about is your 401(k). Getting laid off makes you ineligible to take out a 401(k) loan, according to Game, but you can withdraw from it — for a hefty price.

“If you pull out of your 401(k) and you’re under 59½, you’ll have a 10-percent penalty, plus whatever you take out is added to your taxable income, so it could shock people if they took out a sizeable amount,” warned Game, who also recognizes that sometimes you don’t have any other choice.

Tapping your nest egg should be an absolute last resort. If it comes to that, Roth IRAs are a little more appealing because you can pull out your contributions at any time without tax or penalty (It’s just the appreciation you can’t touch until you’re over 59½). If you’re financially stuck between a rock and a hard place, a Roth IRA could serve as an extra backup emergency fund.

As for a 401(k) from your old job, Game says you have a couple of options. Some companies will let you do a direct rollover, which is a hands-off option that’s way easier than rolling it over yourself. This way, you won’t get a check for that cash.

“If you do, you have to have it deposited into your new account in a short time period so you don’t get taxed on that amount, which is why it’s better to do these things electronically whenever possible,” said Game.

No emergency fund or Roth IRA to tap into? You’re not out of options. Read on for more ways to access cash during unemployment.

Step four: Rev up your job hunting efforts

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“One of the biggest mistakes I see from people who’ve been recently laid off is that the experience is so stressful that they want to take a break,” said Copeland. “They think, ‘I need a few months to take some time for myself.’ What they don’t understand is that the longer you wait, the harder it becomes.”

Begin by dusting off your resume and updating it with any relevant new skills, accomplishments, and/or trainings you’ve completed. Do the same for your LinkedIn profile, which includes adding keywords that potential employers may be searching for (To get an idea of what these are, Copeland suggests browsing job postings you’re interested in). You’ll also want to follow companies on LinkedIn and connect with influencers within those organizations.

When it comes to references, Copeland adds that asking folks to leave you a written, public recommendation on LinkedIn can do wonders. Future employers are going to be looking at your profile. Seeing that people you’ve worked with have positive things to say is going to make them much less suspicious that something negative happened at your old job.

One other thing: Fine tune your elevator pitch so you’re ready to comfortably, and confidently, talk about yourself at a moment’s notice. After that, step away from your computer and get yourself out there (literally).

“A lot of people are told to apply online — ‘If you’re a good fit, we’ll call you ‘— but very rarely is that true,” said Copeland.

“It’s one-on-one personal connections that are going to help you find a job, and those people will be most helpful and empathetic very soon after you’ve been laid off.”

Let your network know you’re actively looking for work, attend industry events, and reach out to people for informational interviews. In some cases, this might mean cold emailing a colleague of a colleague and asking to pick their brain over coffee. They could always say no, or even ignore you, but Copeland says that when up against unemployment, this isn’t the worst thing in the world.

Step five: Protect yourself against the worst-case scenario

If your job hunt stretches past the one-month mark, you could end up draining your emergency fund faster than anticipated. According to the U.S. Department of Labor, the number of long-term unemployed workers (i.e. people who’ve been out of work for at least 27 weeks) held steady at 1.5 million as of December 2017. This makes up 22.9 percent of the unemployed.
If you find yourself in this boat, you’ll need to go beyond cutting cable and scaling back your entertainment budget to make ends meet.

“Can you call your student loan servicer and defer your loans for a few months?” suggested Game. “Remember, you’ll still be accruing interest when you do this, but it might help you out for a few months.”

Looking for other high-impact ways to free up cash? Game also suggests considering:

  • Taking on a roommate or renting out a room on Airbnb.
  • Getting a part-time job.
  • Taking out a short-term loan from a family member.
  • Using balance transfer offers to lower your credit card interest rates by moving debt to a 0% APR card.
  • Researching a personal loan. Going into debt is never advised, but if your situation’s getting dire, it may be your best worst option (It’s sure better than getting evicted or defaulting on your car payment).

This is precisely why Game says it’s so important to get your financial house in order while your career is going well. Flash forward to being laid off: Having a solid credit score is what’s going to enable you to get the best rate on a personal loan. The same goes for locking down a low-interest credit card, if it comes to that.

4 tips to help stretch your finances when you’re unemployed

How to apply for unemployment

Taking advantage of unemployment insurance can help stretch your savings and soften the financial blow of a layoff. Whether you qualify depends on a number of factors, one of the top ones being where you live; every state is different.

As long as you’re looking for work — and meet the qualifying criteria below — most states allow participants to collect benefits for up to 26 weeks (about six months). Just keep in mind that a severance package could impact how much you qualify for, depending on the state you live in.

  • Losing your job was out of your control: Being laid off generally ticks this box, but if you were fired or quit voluntarily, you’ll be ineligible.
  • You worked long enough and earned enough wages to qualify in your state: Every state’s threshold is different, but applicants must meet requirements for wages earned or time worked during an established time period in order to collect unemployment. You can research your state’s rules here.
  • You were laid off from a W2 job: In other words, you weren’t a freelancer or independent contractor. Since employers don’t pay unemployment taxes for these folks, benefits are typically off the table.

That said, there isn’t a one-size-fits-all answer when it comes to how much money you’ll actually get. What you were earning, where you live, and whether or not you received a severance package may all come into play. Your best bet is to contact your state unemployment office to start untangling the details.

How to apply for food stamps

Applying for the Supplemental Nutrition Assistance Program (SNAP), aka food stamps, is also a state-specific process. In order to qualify, you must meet resource and income requirements (SNAP provides this handy pre-screening eligibility tool to help clarify whether or not you qualify). Eligibility varies from state to state but is largely determined by your:

  • Resources: Things like bank accounts and vehicles fall into this camp. Some resources are generally off limits, like retirement plans and your home.
  • Income: You have to meet the income requirements outlined here. Some exceptions — like having an elderly or disabled person in your household, for example — may make it easier to qualify. Just keep in mind that any unemployment benefits you’re collecting will be factored in here.
  • Employment status: If you’ve been recently laid off, this one’s a biggie since SNAP eligibility is hinged, in part, on meeting work requirements. They include:
    • Registering for work
    • Not voluntarily quitting a job or reducing your hours
    • Taking a job if one is offered
    • Participating in your state’s employment training programs
    • If you’re an able-bodied adult without kids, you’ll also be required to either work or participate in a work program for a minimum of 20 hours per week to receive SNAP benefits for longer than three months in a 36-month period.

Ready to apply? Find your state here to get the ball rolling.

How to get help with a job search

There are a number of federal government programs in place to help see you through a stint of unemployment. CareerOneStop (backed by the U.S. Department of Labor) is packed with free job search assistance and training resources. Here you’ll find everything from job openings and resume guides to salary data and interview and negotiation tips.

COBRA might also make sense for newly unemployed folks. The program allows you to keep your employer-sponsored health plan after getting laid off. Before pulling the trigger on enrolling in a new health plan, be sure to check if COBRA makes sense for your health care needs and budget.

Pick up part-time work

Another way to unlock cash is to think of out-of-the-box ways to make money. Before Catala secured a new full-time job, he picked up a ton of side hustles to fill in the missing income. This included everything from tutoring at a local community college to cutting lawns to booking music gigs (He happens to be a pianist.). The takeaway? Look beyond your 9-to-5 skill set to pay your bills.

“At one point, I was doing like five different things and just making money,” said Catala, who earned too much from the gigs to collect unemployment.

“If you’re creative and willing to hustle, you’ll be fine. Even if it’s just $50 a week, that’s better than nothing.”

The post The Ultimate Layoff Survival Guide appeared first on MagnifyMoney.

10 Ways to Invest Outside of Your 401(k) in 2018

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So you’ve got plans to max out your 401(k) and your emergency fund is cash-flush. What next?

You have plenty of options, many of which we’ve listed below. Wherever you put your money, remember that each type of investment comes with drawbacks. You should understand your risk tolerance and be comfortable with the potential pitfalls involved before getting started with a new investment. Asset diversification is a way to offset the potential risks — do not put all your eggs in one basket. If you are looking to diversify your assets, here are 10 ways to invest outside a 401(k). We’ve put them in order (roughly) of how complicated it is to get started with these investment strategies.

Upgrade your savings

Stashing your extra money in a certificate of deposit (CD), high-yield savings account, or money market account might be the least risky investment you can make in 2018.

The Federal Reserve has gradually raised its benchmark funds rate in 2017. The latest hike was in December, when the Fed raised the funds rate target range by 25 basis points. When the Fed rates increase, banks often raise savings rates as well. So it may be the time to upgrade your ho-hum deposit accounts.

Most accounts are insured by the Federal Deposit Insurance Corporation, a government agency, for up to $250,000. The risk with these accounts is you might not earn enough interest on your deposits to outpace inflation. If you choose a CD, you usually can’t access your money until the term ends without paying a hefty fee, so it’s probably not a good idea to lock all your savings into a five-year CD account.

You can read our reviews on CDs, online-bank savings accounts, and money market accounts with the highest yields and best perks.

Best for: Conservative investors who are not comfortable with investing in the market and those who need a place to save their emergency fund.

Get an automated micro-investing app

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Small savings add up quickly.

A wave of micro-investing apps have allowed users to invest spare money in small amounts in selected exchange traded funds (ETFs), which are securities that track a basket of stocks, bonds, commodities, or indexes — like the S&P 500 index, for instance. You can often select a ready-made portfolio depending your risk tolerance and invest as little as $5 each day.

Take Acorns as an example: It automatically invests a small amount of your money daily, weekly, or monthly. One of Acorns’ interesting features is rounding up your purchases to the nearest full dollar amount and makes the change available for you to invest.

Let’s say you used a credit card to buy a cup of coffee for $2.75. You can choose to invest the 25 cents on the app, or Acorns will invest the change for you if you elect automatic-roundup investments. It’s free to open an Acorns account. The app charges $1 per month if your balance is under $5,000, or 0.25 percent per year if your balance is $5,000 or more.

We’ve reviewed four micro-investing apps. Read more about their features here.

One thing to note: These apps target investors saving small amounts of cash, so you want to make sure the fees don’t eat into your returns. As a reference, the average ETF fee is 0.24%, and the average for target-date funds is 0.71%, according to Morningstar. So, it really doesn’t make much sense for you to pay $12 a year if you only invest $200 a year through Acorns — the fee would be a sky-high 6%.

Best for: People with cash sitting idle in their checking account. And those who have the best intention to save but struggle to get over the emotional barrier. The automated apps help you save spare money and potentially grow it through investing.

Open a Roth IRA

Consider opening a Roth IRA if you have maxed out your 401(k) or you are simply not happy with the investment choices in your plan.

It’s a more flexible retirement investment vehicle, especially for early-career professionals, than a 401(k), according to financial planners. With a Roth, you save after-tax dollars. Money invested in a Roth grows tax-free, and you can withdraw your original contributions — but not the earnings — before retirement without tax consequences or penalty. Many parents also make it a piece of their college savings plan, thanks to its tax efficiency.

The total allowable amount contributed to a Roth is $5,500 for 2018 ($6,500 if you’re age 50 or older). The IRS does have income limitations for who is eligible for a Roth IRA. Check if you qualify for a Roth here.

Best for: Young professionals who expect their incomes to rise as their careers advance, or their tax bracket to stay the same in retirement as it is now. Parents saving for their children’s education.

Health savings account (HSA)

Experts say an HSA is one of the most tax-favored, yet underused, investment vehicles.

People with a high-deductible health plan (HDHP) are eligible for a tax-advantaged Health Savings Account. Pros highly recommend that those who have an HSA use it not just as a medical fund for unexpected emergencies, but also as a long-term retirement savings account.

HSA has a triple-tax benefit: The money you put into an HSA is tax-deductible; the balance grows tax-free and rolls over each year; and withdrawals from your HSA for qualified medical expenses are not taxed. There are a variety of HSA investment options, from regular savings accounts to mutual funds.

The annual maximum HSA contribution in 2018 is $3,450 for an individual and $6,900 for a family. If you are at least 55 years old, you can contribute an additional $1,000 annually. Experts suggest you max it out if you can, given its triple-tax benefits. While you must have a high-deductible health plan to contribute to an HSA, you get to keep and use the funds even after you’ve changed insurance coverage.

You can search for HSAs on DepositAccounts.com, which, like MagnifyMoney, is a subsidiary of LendingTree. This may help you navigate the hundreds of plan providers out there.

Best for: People who have a high-deductible health plan.

529 plans

A 529 savings plan is a tax-advantaged savings account designed to encourage saving for qualified future education costs, such as tuition, fees, and room and board. Much like a 401(k) or IRA, a 529 savings plan allows you to invest in mutual funds or similar investments.

It used to only be eligible for college expenses, but under the new tax law, you can now use 529 savings for private K-12 schooling. Tax benefits are now extended to eligible education expenses for an elementary or secondary public, private, or religious school.

The new rules allow you to withdraw up to $10,000 a year per student (child) for education costs.

Edward Vargo, an Ohio-based financial planner, told MagnifyMoney that 529 plans are “excellent legacy planning tools” for one’s grandchildren or great-grandchildren.

One drawback of a 529 plan is that earnings withdrawn not used for qualified education expenses will be taxed, and an additional 10-percent penalty is applied. So parents should thoroughly evaluate the expenses that might be needed to fund education down the road.

Best for: Parents, grandparents, or couples planning on having children.

Education

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If you want to advance your career, move up the ladder, or increase your earning potential, consider furthering your education.

To be sure, going back to school is a big time and financial commitment. Be prepared for a time period of uncertainty and income drop if you quit a full-time job to pursue a degree, which may require a lifestyle adjustment. But knowledge is invaluable, and there’s potential for an economic return, as well. A 2014 Georgetown University economic analysis of college majors found that obtaining a graduate degree leads to a wage bump.

Biology and life science graduate degree holders make a median of $35,000 more with a graduate degree, for instance. The median salary of those with an advanced degree in humanities and arts is $18,000 higher than their counterparts with a bachelor’s degree.

Investing in your education doesn’t necessarily require dropping everything to go back to school, either. Pursuing an unfinished degree on a part-time basis, attending professional workshops, taking ongoing education courses, or learning a new language could also be worth your time and money, depending on your career.

Best for: Professionals in fields where an advanced degree is highly preferred or those looking to advance their career or switch careers.

Open a brokerage account

If you’ve paid off your credit card debt, established an emergency fund, and exhausted all your tax-advantaged accounts, you can open a regular old brokerage account to squirrel away some more money.

A brokerage account is much like an IRA. It’s more flexible in terms of investment choices and money withdrawal than 401(k)s, but you don’t get any tax breaks. It allows you to buy and sell a wide variety of securities, from stocks and bonds to mutual funds, currency, and futures and options contracts, through a brokerage firm.

You can open a brokerage account with any of the major investment firms like Vanguard,Charles Schwab, or Fidelity. Just like with other financial accounts, you deposit money and work with a broker to buy or sell securities. The broker will recommend investments depending on your personal financial situation and goals. But you have the final say on investment decisions. The brokerage firm takes a commission for executing your trades, and there are fees linked to the transactions, ranging from account maintenance fees and markups/markdowns to wire fees and account closing fees.

Be prepared for a steep learning curve as a market newbie. You will have to study how each financial instrument works and the companies you invest in, such as learning to read their quarterly financial reports. Holding a brokerage account is also a big-time commitment. Although a broker will help you make investment decisions, you will have to stay on top of the daily market movements and news that may impact the market to make sure you are making a profit.

Best for: Aggressive investors with high-risk tolerance and extra savings.

Invest in real estate

The housing market poses a rosy picture in 2018. Nationally, home prices rose more than 6 percent in 2017, according to the S&P CoreLogic Case-Shiller Indices. Across the country, demand for houses is high while supply is tight.

It’s a good place to tap into if you are looking to diversify your portfolio.There are a couple options. If you want to get hands-on, you can buy a home and rent it out, flipp houses, or rent out your existing home. Or if you don’t want to be quite so involved, investing in Real Estate Investment Trusts (REITs) is another option.

If you are buying a property, experts advise you put the down payment funds in a fairly liquid account, so that it’s immediately available when you need to make a purchase.

Whichever way you choose to invest in real estate, you want to keep up with the latest economic trends, especially the real estate market. For example, you may want to read the real estate market outlook PwC published for 2018.

Unlike many other highly liquid investments, properties cannot be bought and sold for profit in a heartbeat. You want to set aside cash for other life expenses before jumping into real estate, because you are likely to hold the property for a long time.

Best for: Investors with a large sum of cash to cover a down payment and those who understand the real estate market.

Invest in a business

You may think it’s a type of venture only the super rich or a venture capitalists can do. Well, not necessarily.

The Securities and Exchange Commission in 2015 approved crowdfunding rules that allow startups or small businesses to seek investors through brokers or online crowdfunding platforms. This basically means, ordinary Joes can now buy into startups now.

A parade of online equity crowdfunding platforms allow non-accredited investors to put money in small businesses and startups. MicroVentures, DreamFunded, SeedInvest, StartEngine, and Wefunder are among those.

But tread carefully. Entrepreneurship gives hope and excitement, but investing in small businesses and startups is risky.

Make sure you do homework before starting a venture. Familiarize yourself with the process and understand the risks. You also want to research the company thoroughly, and understand its management structure and the product or service it offers. Basically, read up on anything you can to find about the company you buy into.

Because of the risks involved, the SEC put a cap on how much you can invest in those businesses through crowdfunding depending on your net worth and annual income. Check the limitations here.

Best for: Adventurous investors who are comfortable with the potential risks, passionate about entrepreneurship, and willing to spend time studying the businesses they invest in.

Wait, but what about Bitcoin?

Investing in the extremely volatile Bitcoin is so risky that it has the chairman of the U.S. Securities and Exchange Commission on guard.

Bitcoin has had a wild ride. Its value skyrocketed from $1,000 to $19,000 in 2017, often moving thousands of dollars a day. And it’s been in the news constantly. But, as with any high-risk financial move, you shouldn’t invest unless you are willing to lose it all. There are no consumer protections on Bitcoin. If Bitcoins are lost or stolen, they are gone forever.

That being said, if you are curious about it and want to learn how it works, you can throw in $20 or $100 to buy through a digital currency exchange or broker. You can read more about the cryptocurrency craze in our ultimate Bitcoin guide.

Best for: Curious investors willing to experiment — and potentially lose.

The post 10 Ways to Invest Outside of Your 401(k) in 2018 appeared first on MagnifyMoney.

3 Ways to Boost Your Credit Score in 2018

PostHolidayCreditImprovement

All the holiday excitement is over and it’s time to face your post-holiday credit card bills. If you stayed within your budget, you shouldn’t have difficulty paying off your bills. However, if you went a little crazy with December cheer, now is the time to take corrective action, prioritize your finances, and boost your credit score.

As you get your finances back in shape, you’re ultimately helping out your credit—and for a multitude of reasons, it’s important to have a good credit score. Good credit grants you better loan approval, lower interest rates, higher spending limits, negotiating power, and more rewards. Your credit score also impacts the ability to obtain necessities like a home, a car, and other lifestyle needs.

So here’s how to start boosting your credit score in 2018.

  1. Pay All Your Bills on Time

If you’re expecting hefty post-holiday bills, the best way to improve your credit score is to simply make timely payments. Making all of your payments on time is crucial to a great credit score and positive credit history. Your payment history has a huge effect on your credit score.

Set calendar reminders or alerts on your phone to make sure you pay your bills and pay them on time. Unpaid bills are a red flag and may indicate to the lender that you’re an unreliable borrower. It’s also important to tackle balances with the highest utilization and interest rates.

  1. Consider a Lifestyle Change

If you find yourself strapped for cash, there are a few things you can do.

  • Pay at least double the minimum on each payment. If you can, and if there’s no prepayment penalty, doubling down on payments each month will help you tackle the balance quicker.
  • Rework your budget. Evaluate your budget and cut out unnecessary expenses that are eating up your income. Then you can start allocating that money toward getting out of debt. For example, forgo your daily specialty drink at your local coffee shop and bring a lunch from home instead of buying lunch at work. Setting a strict budget will allow you to free up cash and focus on paying down your debt.
  • Pick up a side hustle. If you can, apply for a part-time job or do some extra freelance work to build up your funds.
  • Don’t apply for new cards or loans. For now, stay away from new credit card and loan applications, even if you’re planning to use the extra credit to pay off your debts. Also, avoid using any credit cards you’re currently paying off. 
  1. Check Your Credit Report

About once or twice a year, you should check your credit report for mistakes. Maybe you forgot to pay a bill, or maybe you’re a victim of identity theft. If you don’t check your report for these and other problems, chances are you may miss them and they can harm your score tremendously—which in turn would bring you great financial hardship.

According to the Federal Trade Commission, about 5% of consumers have credit errors large enough to increase costs of insurance or some financial products. When you have bad credit with a low credit score, it may take some time to build it back up. Check your history so you can address these problems right away.

When you do check your credit report, make sure you get reports from all three bureaus (Experian, Equifax, and Transunion) to get the clearest picture of your credit, since some creditors only report to one or two. You can check two of your credit scores for free at Credit.com

 

Image: iStock

The post 3 Ways to Boost Your Credit Score in 2018 appeared first on Credit.com.