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The New Year brings new opportunities to seek restitution for wrongs committed in previous months and even years. Take a look at this monthâs list of class-action settlements to see if any of these offers will let you add some cha-ching to your pocket as you ring in 2021.
UnityPoint Health: Data Breach
Anyone who was affected by UnityPoint Health data breaches in 2017 and 2018 may be eligible for up to $7,000 plus a year of free credit monitoring and identity theft protection.
Also known as Iowa Health System, the lawsuit claims UnityPoint was hit by a data breach that began in November 2017. The multi-hospital delivery and health care system purportedly found the ongoing breach in February 2018, but failed to notify affected persons until April or even July of 2018.
The lawsuit alleges that more than 1 million names, addresses, phone numbers, billing information and health information were exposed, costing patients and consumers time and money to cancel credit cards and fight identity theft and fraud.
UnityPoint denied wrongdoing, but agreed to a $2.8 million settlement. UnityPoint Health said it contacted all affected consumers whose personal information was exposed during the 2017 and 2018 data breaches.
File your valid claim by March 2, 2021 to receive a year of free credit monitoring and up to $1,000 in âordinaryâ expenses, including a maximum of three hours of time valued at $15 per hour and documented out-of-pocket expenses you incurred due to the data breaches, such as postage fees and internet charges. You also may claim up to $6,000 in âextraordinaryâ expenses related to identity theft or fraud caused by the data breaches, including false tax returns and interest on loans you had to take out because of canceling your credit card accounts.
Kalispell Regional Healthcare: Data Breach
You could be eligible for expense reimbursement, cash payments and free credit monitoring services as the result of a $4.2 million class-action settlement.
In October 2019, Kalispell Regional Healthcare notified patients that hackers were able to access employee email accounts and used those accounts to access the personal data of patients.
In response, a lawsuit alleged Kalispell didnât do enough to protect against hackers. The company did not admit to any wrongdoing, but agreed to settle for $4.2 million.
Cyber thieves reportedly gained access to the following patient data:
- Â Â Names and addresses
- Â Â Medical record numbers
- Â Â Dates of birth
- Â Â Telephone numbers
- Â Â Email addresses
- Â Â Medical history and treatment information
- Â Â Dates of service
- Â Â Treating physicians
- Â Â Medical bill account numbers
- Â Â Health insurance information
- Â Â Social Security numbers
If you were notified by Kalispell Regional Healthcare that your personal information might have been compromised, you could be eligible for reimbursement of up to $15,000 in expenses related to the breach. You also may be eligible for up to five hours of time at the rate of $15 per hour.
In addition to reimbursement, you can choose between five years of Experian credit monitoring services valued at nearly $720 and an alternative cash payment of up to $100. Exact cash payment amounts will vary but will not exceed $100.
Claim forms are due by Feb. 25, 2021.
BMW: Failing Coolant Pump
If you owned or leased specific 2007 through 2019 models of BMW vehicles, you could claim up to $1,000 in reimbursements.
A class-action suit alleged the affected vehicles were equipped with electric coolant pumps that once they failed, caused engines to overheat, resulting in the need for expensive repairs. The lawsuit further alleged BMW knew of the problem but did not fix it or reimburse owners and lessees for resulting repairs.
Car owners and lessees may receive a maximum of $1,000 in out-of-pocket repair costs for parts and labor required to replace one failed electric engine coolant pump and a thermostat, if such replacement was needed within the first seven years or first 84,000 miles the vehicle was in service. In addition, BMWâs New Passenger Vehicle Limited Warranty may be extended to seven years or 84,000 miles.
BMW also will replace an electric coolant pump that fails for one year after the settlement becomes effective, no matter how old the vehicle is or how many miles it has on it.
We have the complete list of models covered and all the details you need to make a claim by the Feb. 18, 2021 deadline.
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Sports Research: Deceptive Supplement Labeling
If you bought Sports Research Corporationâs Premium MCT Oil products or Turmeric Curcumin C3 Complex products, you could be eligible for a portion of a settlement over allegations of deceptive labeling practices.
The premium-priced products that were labeled âpacked with beneficial fatsâ and capable of fostering ânaturalâ energy purportedly were falsely advertised. The MCT Oil merchandise contained 14 grams of saturated fat that did not allow it to be considered âhealthyâ as part of a diet. In addition, the ânaturalâ energy supposedly induced by the use of raw coconut materials allegedly underwent processing.
The MCT Oil products were also promoted as containing antibacterial, anti-microbial and anti-viral properties, while the Turmeric Curcumin C3 products were marketed as anti-inflammatory products that provided antioxidant benefits.
If you bought Sports Researchâs MCT Oil products or Turmeric Curcumin C3 products between Jan. 9, 2016 and Jan. 9, 2020, you could be eligible for either a $7 voucher to be used toward the purchase of any Sports Research product or $3 cash.
File your valid claim by Feb. 23, 2021 to receive your healthy dose of restitution.
Chime Digital Bank Service Disruption
Were you unable to access your Chime deposit account between Oct. 16-19, 2019 because of a service disruption? If so, you could be eligible for a portion of a $1.5 million class-action settlement.
The intermittent outage lasted for several days, according to the lawsuit, which resulted in late bill payments and disrupted purchases. The suit also says Chime failed to warn users of the outage and only communicated via Twitter.
Chime did not admit to any wrongdoing, but agreed to the class action settlement.
Compensation is divided into two tiers. Tier one allows consumers who suffered a loss due to the service disruption to receive a cash payment up to $25 with no proof of such loss. Tier two provides payments up to $750 for those who can provide documentation.
We have all the details and how to file your claim by the Feb. 15, 2021 deadline.
BMW: Defective Timing Chain
Former owners and lessees of certain 2012 to 2015 models of BMW vehicles could be eligible for reimbursement for allegedly defective timing chain components.
A lawsuit that alleged certain BMWs equipped with N20 and N26 engines were prone to experiencing damage and needing costly repairs because of defective timing chains.
BMW owners and lessees may qualify for either a reimbursement program or a prospective repair program.
The reimbursement program provides between 40% and 100% reimbursement for vehicle repairs depending on the mileage at the time of service. No cap exists for repair reimbursement if the repairs were completed at a BMW center. However, repairs done at an independent service center are capped at $3,000 for timing chain modules and oil pump drive chain modules and at $7,500 for engines.
A separate program provides reimbursement for future repairs. Some of these claims will be covered under vehiclesâ existing warranties while others will be reimbursed for between 40% and 75% of the total repair costs. Vehicles must be taken to a BMW center.
Expenses are only eligible for reimbursement if the damage was caused by failure of the timing chain or oil pump drive chain modules. Vehicles that have over 100,000 miles or have been in service for over eight years are not eligible.
Check out the details, the list of covered vehicles, and the claim form that must be submitted by the estimated deadline of March 18, 2021.
Navy Federal Credit Union: Unfair NSF Fees
Navy Federal Credit Union has agreed to a $16 million settlement over allegations it charged unfair non-sufficient funds (NSF) fees to its customers.
Navy Federal customers who were charged two or three NSF fees on one transaction between Jan. 28, 2014 and Oct. 27, 2020 may be eligible for cash payments or account credits.
Multiple fees purportedly were incurred when a merchant presented a transaction for payment several times after an initial rejection. With each attempt, Navy Federal allegedly tried to process the payments again, which resulted in an additional NSF fee. This practice of charging the additional NSF fees violated Navy Federalâs own terms of its agreements, according to the suit.
Exact awards will depend upon the number of NSF fees charged and the number of customers who agree to participate in the settlement.
No claim form is required because cash payments or account credits automatically will be distributed, but you have until Feb. 24, 2021 to object to the settlement or to ask to be excluded from it.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
If you want to whip your finances into shape, hereâs a good New Yearâs resolution: improving your credit score.
A lot of New Yearâs resolutions fail because theyâre so extreme. Think of all the bonkers weight-loss and money-saving goals that surface at the start of every year.
This resolution is different. No extreme measures are required. But there arenât any shortcuts. Building good credit is a goal you need to commit to 12 months a year.
How to Build Good Credit in 10 Steps
Ready to make 2021 the year you finally prove your creditworthiness? Or are you looking to recover from a 2020 setback? Hereâs how to build good credit in 10 steps.
1. Stay on Top of Your Credit Reports
Itâs essential to monitor your credit reports, especially if you received a hardship agreement from a lender due to COVID-19. Under the CARES Act rules, lenders are supposed to report your account as paid in full while the agreement is in effect, as long as you werenât already delinquent. But mistakes happen. Even in normal times, about 1 in 5 credit reports contained inaccurate information.
Through April 2021, you can get one free credit report per week from each bureau. (Typically, youâre only entitled to one free credit report per year from each bureau.) Make sure you access your reports at AnnualCreditReport.com, rather than one of the many websites that offer âfreeâ credit scores but will make you put down your credit card number to sign up for a trial. File a dispute with the bureaus if you find anything you think is inaccurate or any accounts you donât recognize.
Your credit reports wonât show you your credit score, but you can use a free credit-monitoring service to check your score. (No, checking your own credit doesnât hurt your score.) Many banks and credit card companies also give you your credit scores for free.
If the bureaus agree to remove information from your credit reports, expect to wait about 30 days until your reports are updated.
2. Pay Your Bills. On Time. Every Single Month
Yeah, you knew we were going to say this: Paying your bills on time is the No. 1 thing you can do to build good credit. Your payment history determines 35% of your score, more than any other credit factor.
Set whatever bills you can to autopay for at least the minimums to avoid missing payments. You can always pay extra if you can afford it.
A strong payment history takes time to build. If youâve made late payments, theyâll stay on your credit reports for seven years. The good news is, they do the most damage to your score in the first two years. After that, the impact starts to fade.
3. Establish Credit, Even if Youâve Made Mistakes
You typically need a credit card or loan to build a credit history. (Sorry, but all those on-time rent and utility payments are rarely reported to the credit bureaus, so they wonât help your score.)
But if you have bad credit or youâre a credit newbie, getting approved for a credit card or loan is tough. Look for cards that are specifically marketed to help people start or rebuild credit. Store credit cards, which only let you make purchases at a specific retailer, can also be a good option.
4. Open a Secured Card if You Donât Qualify for a Regular Card
Opening a secured credit card is one of our favorite ways to build a positive history when you canât get approved for a regular credit card or loan. You put down a refundable deposit, and that becomes your line of credit.
After about a year of making your payments on time, youâll typically qualify for an unsecured line of credit. Just make sure the card issuer you choose reports your payments to the credit bureaus. Look for a card with an annual fee of no more than $35. Some secured card options we like (and no, weâre not getting paid to say this):
- Discover it Secured
- OpenSky Secured Visa Card
- Secured Mastercard from Capital One
5. Ask for a Limit Increase. Pretend You Never Got It
Increasing your credit limits helps your score because it decreases your credit utilization ratio. Thatâs credit score speak for the percentage of credit youâre using. The standard recommendation is to keep this number below 30%, but really, the closer to zero the better.
If you have open credit, ask your current creditors for an increase, rather than applying for new credit. That way, youâll avoid lowering your length of credit, which could ding your score.
The downside of a higher credit limit: Youâll have more money to spend that isnât really yours. To get the biggest credit score boost from a limit increase and avoid paying more in interest, make sure you donât add to your balance.
Donât believe the myth that carrying a small credit card balance helps your credit score. Paying off your balance in full each month is best for your score, plus it saves you money on interest.
6. Prioritize Credit Card Debt Over Loans
Tackling credit card debt helps your credit score a lot more than paying down other debts, like a student loan or mortgage. The reason? Your credit utilization ratio is determined exclusively by your lines of credit.
Bonus: Paying off credit card debt first will typically save you money, because credit cards tend to have higher interest rates than other types of debt.
7. Keep Your Old Accounts Active
Provided you arenât paying ridiculous fees, keep your credit card accounts open once youâve paid off the balance. Credit scoring methods reward you for having a long credit history.
Make a purchase at least once every three months on the account, as credit card companies often close inactive accounts. Then pay it off in full.
8. Apply for New Credit Selectively
When you apply for credit, it results in a hard inquiry, which usually drops your score by a few points. So avoid applying frequently for new credit cards, as this can signal financial distress.
But if youâre in the market for a mortgage or loan, donât worry about multiple inquiries. As long as you limit your shopping to a 45-day window, credit bureaus will treat it as a single inquiry, so the impact on your score will be minimal.
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9. Still Overwhelmed? A Debt Consolidation Loan Could Help
If youâre struggling with credit card debt, consolidating your credit card debt with a loan could be a good option. In a nutshell, you take out a loan to wipe out your credit card balances.
Youâll get the simplicity of a single payment, plus youâll typically pay less interest since loan interest rates tend to be lower. (If you canât get a loan that lowers your interest rate, this probably isnât a good option.)
By using a loan to pay off your credit cards, youâll also free up credit and lower your credit utilization ratio.
Many debt consolidation loans require a credit score of about 620. If your score falls below this threshold, work on improving your score for a few months before you apply for one.
10. Keep Your Credit Score in Perspective
All the credit-monitoring tools out there make it easy to obsess about your credit score. While itâs important to build good credit, look at the bigger picture. A few final thoughts:
- Your credit score isnât a report card on the state of your finances. It simply measures how risky of a borrower you are. Having an emergency fund, saving for retirement and earning a decent living are all important to your finances â but these are all things that donât affect your credit score.
- Lenders look at more than your credit score. Having a low debt-to-income ratio, decent down payment and steady paycheck all increase your odds of approval when youâre making a big purchase, even if your credit score is lackluster.
- Donât focus on your score if you canât pay for necessities. If youâre struggling and you have to choose between paying your credit card vs. paying your rent, keeping food on the table or getting medical care, paying your credit card is always the lower priority. Of course, talk to your creditors if you canât afford to pay them, as they may have options.
Focus on your overall financial picture, and youâll probably see your credit score improve, too. Remember, though, that while credit scores matter, you matter more.
Now go crush those goals in 2021 and beyond.
Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to DearPenny@thepennyhoarder.com.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
You’ve tried debt payoff strategies, balance transfers, consolidation, and evenÂ debt management; you’ve begged your creditors, liquidated your assets, and pestered your friends and families for any money they can afford, but after all of that, you still have more debt than you can handle.
Once you reach the end of your rope, the options that remain are not as forgiving asÂ debt managementÂ and they’ll do much more damage to yourÂ credit scoreÂ than debt payoff strategies. However, if you’ve tried other forms ofÂ debt reliefÂ and nothing seems to work, all that remains is to consider debt settlement and bankruptcy.
Debt settlement is a very good way to clear your debt. It’s one of the cheapest and most complete ways to eradicateÂ credit cardÂ debtÂ and can help with most other forms ofÂ unsecured debtÂ as well. Bankruptcy, on the other hand, is aÂ last resortÂ option for debtors who can’t meet thoseÂ monthly paymentsÂ and have exhausted all other possibilities.
But which option is right for you, should you be looking for aÂ debt settlement companyÂ or aÂ bankruptcy attorney?
Similarities Between Bankruptcy and Debt Settlement
Firstly, let’s look at the similarities between bankruptcy and debt settlement, which are actually few and far between. In fact, beyond the fact that they are bothÂ debt reliefÂ options that can clear your debt, there are very few similarities, with the main one being that they both impact yourÂ credit scoreÂ quite heavily.
A bankruptcy can stay on yourÂ credit reportÂ for up to 10 years and do a lot of damage when it is applied. It may take several years before you can successfully apply for loans and high credit lines again, and it will continue to impact your score for years to come.
Debt settlement is not quite as destructive, but it can reduce yourÂ credit scoreÂ in a similar way and last for up to 7 years. Accounts do not disappear in the same way as when you pay them in full, so future creditors will know that the accounts were settled for less than the balance and this may scare them away.
In both cases, you could lose a couple hundred points off yourÂ credit score, but it all depends on how high your score is to begin with, as well as how many accounts you have on yourÂ credit reportÂ and how extensive the settlement/bankruptcy process is.
Differences Between Bankruptcy and Debt Settlement
The main two types of bankruptcy are Chapter 7 and Chapter 13. The former liquidates assets and uses the funds generated from this liquidation to pay creditors. The latter creates aÂ repayment planÂ with a goal of repaying all debts within a fixed period of time using an installment plan that suits the filer.
Debt settlement, on the other hand, is more of a personal process, the goal of which is to offer a reduced settlement sum to creditors andÂ debt collectors, clearing the debts with aÂ lump sum paymentÂ that is significantly less than the balance.
Chapter 7 BankruptcyÂ andÂ Chapter 13 Bankruptcy
When people think of bankruptcy, it’s often a Chapter 7 that they have in mind. With aÂ Chapter 7 bankruptcy, all non-exempt assets will be sold, and the money then used to pay lenders. There are filing costs and it’s advised that you hire aÂ bankruptcy attorneyÂ to ensure the process runs smoothly.
Chapter 7 bankruptcyÂ is quick and complete, typically finishing in 6 months and clearing mostÂ unsecured debtsÂ in this time. There is noÂ repayment planÂ to follow and no lawsuits or wage garnishment to worry about.
Chapter 13, on the other hand, focuses on aÂ repayment planÂ that typically spans up to 5 years. The debts are not wiped clear but are instead restructured in a way that the debtor can handle. This method of bankruptcy is typically more expensive, but only worthwhile for debtors who can afford to repay their debts.
Filing for bankruptcy is not easy and there is no guarantee you will be successful. There are strictÂ bankruptcy lawsÂ to follow and theÂ bankruptcy courtÂ must determine that you have exhausted all other options and have no choice but to file.
Bankruptcy will require you to see aÂ credit counselor, which helps to ensure that you don’t make the same mistakes in the future. This can feel like a pointless and demeaning requirement, as many debtors understand the rights and wrongs and got into a mess because of uncontrollable circumstances and not reckless spending, but sessions are short, cheap, and shouldn’t cause much stress.
HowÂ Debt Settlement Works
The goal of debt settlement is to get creditors to agree to aÂ settlement offer. This can be performed by the debtor directly, but it’s often done with help from aÂ debt settlement company.
The debt specialist may request that you stop making payments on your debts every month. This has two big benefits:
1. More Money
You will have more money in your account every month, which means you’ll have more funds to go towards debtÂ settlement offers.Â
The idea of making largeÂ lump sum paymentsÂ can seem alien to someone who has a lot of debt. After all, if you’re struggling to make $400 debt payments every month on over $20,000 worth of debt, how can you ever hope to get the $5,000 to $15,000 you need to clear those debts in full?
But if you stop making all payments and instead move that money to a secured account, you’ll have $4,800 extra at the end of the year, which should be enough to start making those offers and getting those debts cleared.
2. Creditor Panic
Another aspect of the debt settlement process that confuses debtors is the idea that creditors would be willing to accept reduced offers. If you have a debt worth $20,000 and are paying large amounts of interest every month, why would they accept a lump sum and potentially take a loss overall?
The truth is, if you keep makingÂ monthly payments, creditors will be reluctant to accept aÂ settled debtÂ offer. But as soon as you start missing those payments, the risk increases, and the creditor faces the very real possibility that they will need to sell that debt to aÂ collection agency. If you have a debt of $20,000, it may be sold for as little as $20 to $200, so if you come in with an offer of $10,000 before it reaches that point, they’ll snap your hand off!
Types of Debt
AÂ debt settlement programÂ works best when dealing withÂ credit cardÂ debt, but it can also help to clear loan debt,Â medical bills, and more. Providing it’s not government debt or secured debt, it will work.Â
With government debt, you need specific tax relief services, and, in most cases, there is no way to avoid it. With secured debt, the lender will simply take your asset as soon as you default.
Debt settlement companiesÂ may place some demanding restrictions on you, and in the short term, this will increase yourÂ total debtÂ and worsen yourÂ financial situation. In addition to requesting that you stop makingÂ monthly payments, they may ask that you place yourself on a budget, stop spending money on luxuries, stop acquiring new debt, and start putting every penny you have towards the settlement.
It can have aÂ negative impactÂ on your life, but the end goal is usually worth it, as you’ll beÂ debt-freeÂ within 5 years.
Pros andÂ Cons of Debt SettlementÂ and Bankruptcy
Neither of these processes are free or easy. With bankruptcy, you may pay up to $2,000 for Chapter 7 and $4,000 for Chapter 13 (including filing fees and legal fees) while debt settlement is charged as a fixed percentage of the debt or the money saved.Â
As mentioned already, both methods can also damage yourÂ credit score. But ultimately, they will clear your debts and the responsibilities that go with them. If you’ve been losing sleep because of your debt, this can feel like a godsendâa massive weight lifted off your shoulders.
It’s also worth noting thatÂ scamsÂ exist for both options, so whether you’reÂ filing bankruptcyÂ or choosing a debtÂ settlement plan, make sure you’re dealing with a reputable company/lawyer and are not being asked to pay unreasonable upfront fees. ReputableÂ debt settlement companiesÂ will provide you with aÂ free consultationÂ in the first instance, and you can use the NACBA directory to find a suitable lawyer.
Bankruptcy and Debt Settlement: The End Goal
For all the ways that these two options differ, there is one important similarity: They give you a chance to make aÂ fresh start. You can never underestimate the benefits of this, even if it comes with a reducedÂ credit scoreÂ and a derogatory mark that will remain on yourÂ credit reportÂ for years to come.
If you’re heavily in debt, it can feel like your money isn’t your own, your life isn’t secure, and your future is not certain. With bankruptcy and debt settlement, yourÂ credit scoreÂ and finances may suffer temporarily, but it gives you a chance to wipe the slate clean and start again.
What’s more, this process may take several years to complete and in the case of bankruptcy, it comes withÂ credit counseling. Once you make it through all of this, you’ll be more knowledgeable about debt, you’ll have a better grip on your finances, and your impulse control.Â
And even if you don’t, you’ll be forced to adopt a little restraint after the process ends as yourÂ credit scoreÂ will be too low for you to apply for newÂ personalÂ loansÂ and high limitÂ cards.
Other Options for Last DitchÂ Debt Relief
Many debtors preparing for debt settlement or bankruptcy may actually have more options than they think. For instance, bankruptcy is often seen as a get-out-of-jail-free card, an easy escape that you can use to your advantage whenever you have debts you don’t want to pay.
But that’s simply not the case and unless you have tried all other options and can prove that none of them have worked, your case may be thrown out. If that happens, you’ll waste money on legal and filing fees and will be sent back to the drawing board.
So, regardless of theÂ amount of debtÂ you have, make sure you’ve looked into the followingÂ debt reliefÂ options before you focus on debt settlement or bankruptcy.Â
AÂ debt consolidationÂ loanÂ is provided by a specialized lender. They pay off all your existing debts and give you a single large loan in return, one that has a lowerÂ interest rateÂ and a lowerÂ monthly payment.Â
Your debt-to-income ratio will improve, and you’ll have more money in your pocket at the end of the month. However, in exchange, you’ll be given a much longer-term, which means you’ll pay more interest over the life of the loan.
AÂ Debt ManagementÂ Plan
Debt managementÂ combinesÂ counseling servicesÂ withÂ debt consolidation. AÂ debt managementÂ planÂ requires you to continue making yourÂ monthly payment, only this will go to theÂ debt managementÂ company and not directly to the creditors. They will then distribute the money to your creditors.
You’ll be given aÂ monthly paymentÂ that you can manage, along with the budgeting advice you need to keep meeting those payments. In exchange, however, you’ll be asked to close all but oneÂ credit cardÂ (which can hurt yourÂ credit score) and if you miss a payment then your creditors may back out of the agreement.
Balance Transfer Card
If all your debts are tied intoÂ credit cards, you can use a balance transferÂ credit cardÂ to make everything more manageable. With a balance transferÂ credit card, you move one or more debts onto a new card, one that offers a 0% APR for a fixed period.Â
The idea is that you continue making yourÂ monthly payment, only because there is no interest, all the money goes towards the principal.
Home Equity Loans
If you have built substantial equity in your home then you can look into home equity loans and lines of credit. These are secured loans, which means there is a risk ofÂ repossessionÂ if you fail to keep up your payments, but for this, you’ll get a greatly reducedÂ interest rateÂ and a sum large enough to clear your debts.
Bottom Line: The Best Option
Debt settlement and bankruptcy are both considered to beÂ last resortÂ debt-reliefÂ options, but they couldn’t be more different from one another. Generally speaking, we would always recommend debt settlement first, especially if you have a lot of money tied up inÂ credit cardÂ debt.
If not, and you can’t bear the idea of spending several months ignoring your creditors, missing payments, and accumulatingÂ late fees, it might be time to consider bankruptcy. In any case, make sure you exhaust all other possibilities first.
Debt Settlement vs Bankruptcy: Which is Best? is a post from Pocket Your Dollars.
Credit cards exceptional financial instruments. They allow you to buy without any cash and earn rewards while at it. Another interesting feature is the option of adding another person as an authorized user to your card. However, credit card usage does have a huge impact on your creditworthiness. So, does removing your name from a […]
The post How Removing Your Name from a Shared Credit Card Affects Your Credit Score appeared first on Credit Absolute.
Credit card issuersÂ have consumers right where they want them, lending money at high-interest ratesÂ and earning money from many different fees. Even reward cards benefit the issuers, because all the additionalÂ perksÂ and rewards they provide are covered by the increased merchant fees, which essentially means theÂ credit card companyÂ offers you extra money to incentivize you to spend, and then demands this money from the retailers.
It’s a good gig, but some consumers believe they can beat the credit card companiesÂ and one of the ways they do this is via something known asÂ credit card churning.
What isÂ Credit Card Churning?
Many reward cards offerÂ sign-up bonusesÂ to entice consumers to apply. Not only can you get regularÂ cash back, statement credit, and air miles, but you’ll often get a reward just for signing up. For instance, manyÂ rewards credit cardsÂ offer a lump sum payment to all consumers who spend a specific sum of money during the first three months.
Credit card churningÂ is about taking advantage of these bonuses, and getting maximum benefits with as little cost as possible.
“Churners” will sign up for multiple different reward cards in a short space of time, collect as many of these bonuses as they can, clear the card balance, and then reap the rewards.
DoesÂ Credit Card ChurningÂ Work?
Credit card churningÂ does work, to an extent. Reward credit cards typically don’t require you to spend that much money to receive the sign up bonus, with most bonuses activated for a spend of just $500 to $1,000 over those first three months. This is easily achievable for most credit card users, as the average spend for reward cards is over $800 a month.
If you haveÂ good credit, it’s possible to sign up to multiple credit cards, collectÂ bonus offersÂ without increasing your usual spend, and get everything from hotel stays to free flights,Â cash back,Â gift cards, statement credit, and more.
However, it’s something that manyÂ credit card companiesÂ are trying to stop, as they don’t benefit from users who collectÂ sign-up bonuses, don’t accumulate debt, and then pay off their balance in full. As a result, you may face restrictions with regards to how many bonuses you can collect within a specified timeframe.Â
What’s more, there are several things that can go wrong when you’re playing with multipleÂ new accountsÂ like this, as all information is sent to theÂ credit bureausÂ and could leave a significant mark on yourÂ credit report.
Dangers of Churning
Even if theÂ credit card companiesÂ don’t prevent you from acquiring multipleÂ new credit cards, there are several issues you could face, ones that will offset any benefits achieved from those generousÂ sign-up bonuses, including:
1. You Could be Hit with Hefty Fees
Many reward credit cards haveÂ annual fees, and these average around $95 each, with some premiumÂ rewardsÂ cardsÂ going as high as $250 and even $500. At best, these fees will reduce theÂ amount of moneyÂ you receive, at worst they will completely offset all the benefits and leave you with a negative balance.
Annual feesÂ aren’t the only fees that will reduce your profits. You may also be charged fees every time you withdraw cash, gamble, make a foreign transaction or miss a payment,
2. YourÂ Credit ScoreÂ Will Drop
Every time you apply for aÂ new credit card, you will receive aÂ hard inquiry, which will show on yourÂ credit reportÂ and reduce yourÂ FICOÂ scoreÂ by anywhere from 2 to 5 points. Rate shopping, which bundles multiple inquiries into one, doesn’t apply toÂ credit card applications, soÂ credit cardÂ churnersÂ tend to receive manyÂ hard inquiries.
AÂ new accountÂ can also reduce yourÂ credit score. 15% of your score is based on the length of your accounts while 10% is based on how manyÂ new accountsÂ you have. As soon as thatÂ credit card accountÂ opens, your average age will drop, you’ll have anotherÂ new account, and yourÂ credit scoreÂ will suffer as a result.
The damage done by aÂ new credit cardÂ isn’t as severe as you might think, but if you keep applying and adding thoseÂ new accounts, the score reduction will be noticeable. You could go fromÂ Excellent CreditÂ toÂ Good Credit, or from Good to Fair, and that makes a massive difference if you have a home loan or auto loan application on the horizon.
Your credit utilization ratio also plays a role here. This ratio is calculated by comparing your total debt to yourÂ available credit. If you have a debt of $3,000 spread across three credit cards with a totalÂ credit limitÂ of $6,000, your credit utilization ratio is 50%. The higher this score is, the more of an impact it will have on yourÂ credit score, and this is key, as credit utilization accounts for a whopping 30% of your score.
Your credit utilization ratio is actually one of the reasons yourÂ credit scoreÂ doesn’t take that big of a hit when you openÂ new cards, because you’re adding a newÂ credit limitÂ that has yet to accumulate debt, which means this ratio grows. However, if you max that card out, this ratio will take a hit, and if you then clear the debt and close it, all those initial benefits will disappear.
You can keep the card active, of course, but this is not recommended if you’re churning.
3. You’re at Risk of AccumulatingÂ Credit Card Debt
EveryÂ new cardÂ you open and every time yourÂ credit limitÂ grows, you run the risk of falling into a cycle of persistent debt. This is especially true whereÂ credit card rewardsÂ are concerned, as consumers spend much more on these cards than they do on non-reward credit cards.
Very few consumers accumulateÂ credit card debtÂ out of choice. It’s not like a loanâitâs not something they acquire because they want to make a big purchase they can’t afford. In most cases, the debt creeps up steadily. They pay it off in full every month, only to hit a rough patch. Once that happens, they miss a month and promise themselves they’ll cover everything the next month, only for it to grow bigger and bigger.
Before they realize it, they have a mass ofÂ credit card debtÂ and are stuck paying little more than the minimum every month.Â
If you start using a credit card just to accumulate rewards and you have several on the go, it’s very easy to get stuck in this cycle, at which point you’ll start paying interest and it will likely cost you more than the rewards earn you.
4. It’s Hard to Keep Track
Opening one credit card after another isn’t too difficult, providing you clear the balances in full and then close the card. However, if you’re opening several cards at once then you may lose track, in which case you could forget about balances, fees, and interest charges, and miss your chance to collectÂ airline milesÂ cash back, and other rewards.
How to Credit Churn Effectively
To credit churn effectively, look for theÂ best rewardsÂ and most generousÂ credit card offers, making sure they:
- Suit Your Needs:Â A travelÂ rewards cardÂ is useless if you don’t travel; a store card is no good if you don’t shop at that store. Look forÂ rewards programsÂ that benefit you personally, as opposed to simply focusing on the ones with the highest rates of return.
- AvoidÂ Annual Fees:Â AnÂ annual feeÂ can undo all your hard work and should, therefore, be avoided. Many cards have a $0Â annual fee, others charge $95 but waive the fee for theÂ first year. Both of these are good options forÂ credit card churning.
- Don’t Accumulate Fees:Â Understand how and why you might be charged cash advance fees and foreign transaction fees and avoid them at all costs. The fees are not as straightforward as you might think and are charged for multiple purchases.
- Plan Ahead:Â Make a note of theÂ bonus offerÂ and terms, plan ahead, and make sure you meet these terms by theÂ due datesÂ and that you cover the balance in full before interest has a chance to accumulate.
- Don’t Spend for the Sake of It:Â Finally, and most importantly, don’t spend money just to accumulate more rewards. As soon as you start increasing your spending just to earn a few extra bucks, you’ve lost. If you spend an average of $500 a month, don’t sign up for a card that requires you to spend $3,000 in the first three months, as it will encourage bad habits.Â
What Should You do if it Goes Wrong?
There are many ways thatÂ credit card churningÂ could go wrong, some more serious than others. Fortunately, there are solutions to all these problems, even forÂ cardholdersÂ who are completely new to this technique:
Spending RequirementsÂ Aren’t MetÂ
If you fail to meet the requirements of the bonus, all is not lost. Your score has taken a minor hit, but providing you followed the guidelines above, you shouldn’t have lost any money.
You now have two options: You can either clear the balance as normal and move onto your next card, taking what you have learned and trying again, or you can keep the card as a back-up or a long-term option.Â
Credit card churningÂ requires you to cycle through multiple issuers andÂ rewards programs, never sticking with a single card for more than a few months. But you need some stability as well, so if you don’t already have a credit card to use as a backup, and if that card doesn’t charge high fees or rates, keep it and use it for emergency purchases or general use.
Creditor Refuses the Application
Creditors can refuse an application for a number of reasons. If this isn’t your first experience of churning, there’s a chance they know what you’re doing and are concerned about how the card will be used. However, this is rare, and in most cases, youâll be refused because yourÂ credit scoreÂ is too low.
Many reward credit cards have a minimumÂ FICOÂ scoreÂ requirement of 670, others, including premiumÂ American ExpressÂ cards, require scores above 700. You can find more details aboutÂ credit scoreÂ requirements in theÂ fine printÂ of allÂ credit card offers.
YourÂ Credit ScoreÂ Takes a Hit
As discussed already, credit card churning can reduce yourÂ credit scoreÂ by a handful of points and the higher your score is, the more points you are likely to lose. Fortunately, all of this is reversible.
Firstly, try not to panic and focus on the bigger picture. WhileÂ new accountsÂ and credit length account for 25% of your total score,Â payment historyÂ and credit utilization account for 65%, so if you keep making payments on your accounts and don’t accumulate too muchÂ credit card debt, your score will stabilize.
You Accumulate Too Much Debt
Credit card debtÂ is really the only lasting and serious issue that can result fromÂ credit card churning. You’ll still earn benefits on a rolling balance, but your interest charges and fees will typically cost you much more than the benefits provide, and this is true even for theÂ best credit cardsÂ and the most generous reward programs.
If this happens, it’s time to putÂ credit card churningÂ on the back-burner and focus on clearing your debts instead. Sign up for aÂ balance transferÂ credit card and move your debt to a card that has a 0% APR for at least 15 months. This will give you time to assess your situation, take control of yourÂ credit history, and start chipping away at that debt.
What is Credit Card Churning? Dangers and Benefits is a post from Pocket Your Dollars.
PNC BusinessOptions Credit Card $750 Sign Up Bonus [AL, DC, DE, FL, GA, IL, IN, KY, MD, MI, MO, NC, NJ, NY, OH, PA, SC, VA, WI and WV]
Update 1/2/20: Extended through June 30, 2021.
Direct link to offer
- The PNC BusinesOptions Credit card is offering a bonus of $750 in the form of statement credit when you spend $25,000 or more in qualifying purchases during the first three billing cycles
The Fine Print/Card Details
- Offer is valid until December 31st, 2019
- Annual fee varies on spend, first annual fee is due in the 13th billing cycle after account opening (e.g itâs waived first year) and as follows with annual spend of:
- $0-$49,999.99: $500 annual fee
- $50,000-$74,999.99: $250
- $75,000-$99,999.99: $125
- Greater than $100,000: $0
- Choose one of three rewards programs:
- Cash back:
- 1.5% when you choose a revolving card (e.g normal credit card)
- 1% when you choose a pay in full card (e.g charge card)
- PNC points: 5x points per $1 spent (points are worthless)
- Travel Rewards: 1x mile per $1 spent:
- 25,000 miles = air ticket worth up to $315, then you must redeem in increments of 5,000 miles = $50
- Cash back:
Sign up bonus was previously $400 for $15,000 in spend. Most people will choose the revolving card that earns 1.5% cash back, if you spend $25,000 total you’d earn $1,125 ($750 from the bonus and $375 from the spend itself) for a total of 4.5% cash back. The opportunity cost when compared to a 2% cash back card is $125. Very appealing deal for people that spend large amounts of money and value cash sign up bonuses. I will be adding this to our list of the best business credit card sign up bonuses.
- Update 7/13/20: Extended through December 31st, 2020
- Update 4/4/20: Deal has been extended until June 30th, 2020.
- Update 1/3/20: Deal has been extended until March 31st 2020
Hat tip to reader Eddie S
Since weâre in the middle of a pandemic, weâre all trying to figure out the new normal. Whether youâre working from home, have a houseful of kids to keep busy or find yourself facing financial uncertainty, everyone has at least a little adjusting to do. While youâre taking stock of your life and what you need to adjust, itâs probably a good idea to take a look at your finances and credit card use, too.
Wondering how you should use your credit card? Weâve got some ideas for you on how you can use your credit card in the middle of a global emergency.
How to Use Your Credit Card During a Pandemic
But before we get started, remember to take a hard look at your personal finances before following any financial information. Everyoneâs situation is differentâso what might work for you might not work for someone else, and vice versa.
1. Keep Online Shopping to a Minimum
If youâre working from home, the temptation to online shop can be all too real. But when youâre in the middle of a pandemic, you might need to put your money towards unexpected expenses.
David Lord, General Manager of Credit.com, has some advice on preventing frivolous spending. âTry browsing, putting things in your cart and leaving them for the day,â Lord suggests. âIf you take a look at your cart the next day, youâll most likely find that 90% of the time you wonât remember the things you placed in your cart in the first place.â
If the temptation to online shop is too strong, Lord suggests buying something thatâll keep you occupied for a while, like a puzzle, a paint set or a yoga mat. That way, youâll be too distracted to buy something else.
2. Try to Keep Your Credit in Good Shape
During a global emergency, it feels like everythingâs up in the air. Because of that, itâs important to stay as on top of things as you can and prepare for the worst-case scenario. Having good credit is important in the best of times, but it can be even more so in the worst.
Letâs say you find yourself with a bill that you canât pay on your hands. If you need to take out a loan, youâd probably want a loan with the best interest rates possible. In order to qualify for those types of loans, youâll need a good credit score.
If youâre in a position to do so, try to keep your credit score healthy. Hereâs some quick things you can do today:
- Keep an eye on your credit score and credit report
- Pay your bills on timeâat least the minimum payment
- Keep your credit utilization ratio at 30%
But if you find yourself in a financial situation where you canât keep up with everything, you can prioritize. For example, going above 30% of your credit utilization ratio wonât impact your score as much as missing a payment. Thatâs because credit utilization makes up 30% of your credit score, while your payment history makes up 35% of your score.
3. Utilize Cashback Rewards
Do you have a greatÂ rewards credit card on your hands? Nowâs a great time to use them. While some credit cards might not be handy right now, like travel rewards cards, there are others that could be useful. If your card offers cashback on categories such as groceries, gas and everyday purchases, take advantage. You could use those rewards to help you cover essential purchases.Â
4. Use Your Balance Transfer Credit Cards
If you already have significant debt or if youâve recently taken on new debt, you might want to consider using a balance transfer credit card. A balance transfer credit card allows you to move your debt from one card to your balance transfer card, which typically has a lower promotional interest rate. These promotional interest rates can last from six to 18 months, and sometimes longer.
These are great options if youâre faced with new debt. If youâre struggling to pay the rent, groceries or medical bills, and your stimulus check canât cover it all, you can use your balance transfer credit card. Just make sure to be careful. You still have to pay off your debt, so make sure to do so before the promotional balance transfer offer ends. If you can, try to make regular payments on your card, so youâre not faced with an overwhelming amount of debt when the promotional offer ends.
Be Mindful of Your Situation
Above all else, be mindful of your situation. What urgent bills do you have to pay? Do you have a loved one in the hospital? Have you or your significant other lost their job? Make goals based off of your situation, and use your credit card accordingly.
Go to Guide
If youâre looking for more information on coronavirus and your finances, check out our COVID-19 Financial Resource Guide. We update it frequently, to make the most up-to-date and useful information available to you.
The post Using Credit Cards During COVID-19 appeared first on Credit.com.
Choosing a card with an introductory APR can be a great move for a small business. You can pay off large purchases over time without worrying about accruing interest â allowing you to truly invest in your business.
If you have a large business purchase looming ahead that you want to finance, there are plenty of great small business credit cards that offer 0% interest on new purchases for the first few months of card ownership.
Read on to learn about some of the best business credit cards with an intro APR.
See Related: How does credit card APR work?
Chase Ink Business CashÂ® Credit Card
Best intro APR business card for office supplies: Chase Ink Business CashÂ® Credit Card
The Ink Business Cash Credit Card offers one of the longest introductory periods available on the market â 0% for the first 12 months on purchases (13.24% to 19.24% variable APR thereafter). Plus, the card comes with a competitive earning rate that makes it a particularly good choice for small business owners who need to stock up on office supplies.
|Chase Ink Business CashÂ® Credit Card|
Why should you get this card?
If youâre determined to keep costs to a minimum, the Chase Ink Business Cash Credit Card offers a lot of cash back on your business purchases â including purchases made on employee cards â for no annual fee.
Read full review
|Other things to know:
Beyond a competitive intro APR, the Ink Business Cash card offers plenty of potential value for cardholders with a competitive rate of cash back on internet, cable and phone services, office supplies, gas and dining purchases. If you spend a lot of money on office supplies or you frequently charge client dinners to your business card, you can rack up plenty of rewards with the Ink card.
Best intro APR business card for a flat rate on all purchases: American Express Blue Business Cashâ¢ Card
The American Express Blue Business Cashâ¢ Card offers an intro APR of 0% on new purchases for the first 12 months of card ownership (13.24% to 19.24% variable APR thereafter). Unlike the Ink Business Cash card, the Amex Blue Business Cash offer the same 2% cash back on all purchases, up to $50,000 per calendar year (1% thereafter). If you have a wide variety of purchases to make for your business, this flat rate might equate more rewards.
|American Express Blue Business Cashâ¢ Card|
Why should you get this card?
The American Express Blue Business Cash Card comes with a major selling point: 2% cash back on your first $50,000 of purchases each year for no annual fee.
Read full review
|Other things to know:
Adding to its appeal for small business owners, the Blue Business Cash card comes with access to top-notch business perks from Amex, including expense-tracking tools and the ability to enroll in Working Capital Terms.
Alternate #1: The Blue BusinessÂ® Plus Credit Card from American Express
If points are more your speed than cash back, the Blue BusinessÂ® Plus Credit Card from American ExpressÂ offers the same generous rewards rate as the Blue Business Cash â with one key difference. Rather than cash back, Blue Business Plus cardholders earn 2 Membership Rewards points per dollar on the first $50,000 in spending each year and 1 point per dollar on all purchases thereafter.
value Membership Rewards points at an average of 1.19 cents per point. If you redeem your rewards strategically, you can stretch them a long way.
Plus, the Blue Business Plus card offers the same lengthy introductory interest rate on new purchases â making it a top-notch card for financing large purchases in the first year (after that, it’s 13.24% to 19.24%).
Alternate #2: Chase Ink Business UnlimitedÂ® Credit Card
Another popular Chase small business credit card, the Ink Business UnlimitedÂ® Credit Card offers the same 12 months interest-free for new purchases (13.24% to 19.24% variable APR thereafter) as the Ink Business Cash. But unlike the Ink Business Cash card, the Ink Business Unlimited offers the same flat rate of cash back on all purchases â 1.5%.
Though a slightly lower rate than the Amex Blue Business Cash or Blue Business Plus, this earning rate is still great for cardholders who donât weigh their spending heavily to one particular category. For a card with no annual fee, it is a pretty generous earning scheme. Plus, there are no caps on what you can earn. If you spend significantly more than $50,000 per year on your business, the ongoing flat rate of 1.5% might make more sense for you.
Other intro APR business cards
While a 0% interest rate is a compelling reason to choose a business rewards card, you should also ensure that the rewards rate on the card closely matches your spending habits. This will boost your ability to eke plenty of value out of the cards even after the intro APR ends.
If none of these Chase or American Express cards seem right for your spending, Capital One also offers two cards with introductory APRs. Both the Capital OneÂ® SparkÂ® Cash Select for Business* and the Capital OneÂ® SparkÂ® Miles Select for Business* offer a 0% APR on new purchases for the first nine months (13.99% to 23.99% variable APR thereafter).
Though this introductory period is shorter than those on competing business cards, it might be worth taking a shorter offer if one of these cardâs rewards better suits your spending. With the Spark Cash Select, you can earn 1.5% cash back on every purchase. The Spark Miles Select comes with 5 miles per dollar on hotels and rental cars booked through Capital One Travel, while other purchases earn 1.5 miles per dollar.
Business credit cards are a valuable resource, as they can improve your cash flow while allowing users to rack up rewards on all their business purchases. By choosing a card with an introductory APR, you can pay off large purchases or debt over time without racking up interest â saving yourself money to reinvest in your business.
*The information about Capital One Spark Cash Select for Business and Capital One Spark Miles Select for Business has been collected independently by CreditCards.com. The card details have not been reviewed or approved by the card issuer.