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4 Keys to Successful Debt Consolidation

When your personal finances teeter on the brink, your first instinct might be to do something drastic. Freeze your credit cards in a block of ice. Vow to never eat out again. Forgo your Netflix subscription. These tactics may help, but financial experts say paying off debt requires a more comprehensive plan. One common strategy is debt consolidation, rolling multiple debts into a single loan or credit card at a lower interest rate. “Consolidating debt into one spot can be empowering and helpful from a psychological standpoint because it feels manageable,” says Mathew Isaac, associate professor of marketing at Seattle University’s Albers School of Business and Economics. But debt consolidation is not a solution for everyone. Consolidation works best for  high-interest-rate debts such as credit cards. Households that carried credit card debt last year had balances averaging $16,748, according to an annual study by NerdWallet, a personal finance website. People whose income and expenses won’t allow them to resolve debt problems through consolidation or credit counseling should consider bankruptcy, says John Rao, an attorney at the National Consumer Law Center. Consolidating your debt is only the start of a long process. Here are four keys to making it work. Make a realistic budget “In order for consolidation to work well, there has to be a clear plan of attack,” Isaac says. A basic budget allocates money for debt payments, an emergency fund and contributions to retirement savings, but that isn’t enough when consolidating, says Lara Lamb, a certified financial planner at California firm Abacus Wealth Partners. Successful budgeters avoid adding debt by accounting for infrequent expenses, such as car registration fees, as well as times of the year when expenses run high, like the holidays, Lamb says. They also leave room for fun. “People will go on a spending ‘diet’ and then feel like they’ve restrained themselves for so long that they go out and splurge,” Lamb says. “A realistic budget gives you enough to spend on things you value and you love.” Quit using your cards A cardinal rule of consolidation is not using your credit cards as you pay off debt. People cut up their cards, lock them away or freeze them in ice, methods that seem extreme but experts say can be effective. Such tactics are known as “commitment devices” and help people achieve long-term goals, says Rebecca Rouse, director of the Financial Inclusion Program at Innovations for Poverty Action, a nonprofit that has conducted research on debt repayment. To stay committed, write down why you want to be debt-free and how often you will make payments, and set periodic reminders to check your progress, Rouse says. Locking away cards doesn’t mean closing accounts, which could hurt your credit. The one exception to the no-use rule is a nominal charge on your card every few months — paid on time and in full — to keep the account active and your credit intact, says Shawn Tydlaska, a certified financial planner at California firm Ballast Point Financial Planning. Compare consolidation products Balance transfer cards let you shift over debts from other cards and charge no interest for a limited time — the best ones offer from 15 to 21 months — after which a double-digit interest rate kicks in. Most cards charge balance transfer fees and require good credit scores and high incomes to qualify. To improve your chances of getting one, add up all potential sources of income — including money in your savings account and 401(k) — and list that total on your application, not just your salary, Tydlaska says. Personal loans for debt consolidation typically come with lower interest rates than credit cards, and you can borrow more money. Rates depend on your credit profile and how much debt you have. A lender that sends money straight to your creditors can remove the temptation to spend that cash instead of using it to pay off debt. Only a handful of lenders — including Wells Fargo, Discover and FreedomPlus — offer this option. Enlist moral support for your goal Debt may feel like a shameful topic, but peer support is a powerful motivator and can hold people accountable, say Isaac and Rouse. Debt support groups, online forums or a close family member can keep you on track to reach your goal. Even online lenders — such as Payoff and Prosper — offer tailored recommendations or apps to motivate borrowers. Amrita Jayakumar is a staff writer at NerdWallet, a personal finance website. Email: ajayakumar@nerdwallet.com. Twitter: @ajbombay.

How Amazon’s Whole Foods Purchase Affects Your Portfolio

Like a double shot of organic espresso, Amazon delivered quite a surprise to the stock market Friday when it announced plans to acquire Whole Foods Market. For shareholders of both companies, Wall Street’s initial reaction was positive, but that’s not always the case.

Here’s what you need to know about these types of acquisitions and the impact they can have on your portfolio.

Perception is important

In deal talk, the “acquirer” is the company that agrees to purchase another company, known as the “target.” The terms — and friendliness — of deals can vary widely, but it’s important to understand how a deal is perceived by investors.

In a typical market reaction, the acquirer’s stock falls on news of the deal while the target’s rises. Why? If the acquirer is paying a premium for the other company, which is the case here, investors will readjust how they price the stocks — rewarding the target’s stock price, while lowering the acquirer’s. The difference isn’t always equal and may include perceived challenges in completing the deal, such as approval by the target company’s shareholders.

Market reaction isn’t a perfect science: If a deal is widely anticipated in advance or is contentious, stocks could perform differently.

In this case, both Whole Foods and Amazon shares rose Friday after the $13.7 billion deal’s announcement. The jump in the acquirer’s stock is unusual, though not unprecedented, says Josh Olson, an analyst at asset management firm Edward Jones.

“The market likes this deal, that’s the initial read-through,” Olson says. “The market is saying it doesn’t seem like Amazon overpaid in terms of long-term potential. Investors are rewarding shares of both companies.”

Outlook for Whole Foods shareholders

For Whole Foods shareholders, the end of your investing days are likely nigh. As a result of the all-cash deal, you’ll receive $42 per share after it closes, a 27% premium on the closing price from the day before the deal’s announcement. Whole Foods will no longer have a listed stock after the deal is completed, which is expected to happen in the second half of this year. 

The grocer has struggled with same-store sales in recent years, pulling down its stock, so Amazon’s proposal provides a way out for shareholders. Shareholders are unlikely to get a better offer, since few companies have deeper pockets than Amazon or have shown a greater desire to enter the supermarket world. It’s a not a bad conclusion to what has been a very public discussion of the future of Whole Foods.

You also can sell the stock anytime before the deal is completed. On Friday, Whole Foods closed at $42.68, slightly higher than the announced deal price of $42 per share.

Outlook for Amazon shareholders

For Amazon shareholders, the deal looks positive. Besides, there’s little they can do if they don’t like the deal other than sell their Amazon holdings.

However, it’s not been smart to bet against CEO Jeff Bezos so far — he has helped Amazon put up a 49,000% return since its IPO.

The move solidifies Amazon’s longer-term expansion into groceries, which it has flirted with for years. Plus, it potentially allows the retailer to strengthen its online franchise by providing brick-and-mortar distribution points, bringing the company physically closer to consumers. The move may also allow Amazon to expand into adjacent categories such as retail pharmacies, which are mainstays of traditional groceries.

Collateral damage

Even if you don’t own either company involved in one of these Wall Street deals, you may not be insulated from the market’s reaction. If investors see an acquisition as disruptive to an industry, they’ll sell competitor stocks. On Friday, other grocery stores and large discount retailers plummeted — for example, Kroger tumbled about 10%. But there wasn’t much reaction among technology stocks.

Before making any quick trades on the news, it’s important to consider what’s at stake. Mergers and acquisitions aren’t undertaken at whim by publicly traded companies — they’re complex deals requiring a lot of money and are subject to regulatory and shareholder approval.

There can be choppiness in the acquirer’s stock price for a year or more after a deal is completed as the integration between companies takes place.

It’s not clear how Amazon will finance the $13.7 billion purchase, but the e-commerce giant has more than $20 billion in cash, good credit and perhaps its most valuable currency, a highly valued stock. Corporate debt remains cheap, so Amazon should be able to swing the deal.

Olson says investors may need to stomach some volatility even though the longer-term prospect for the stock still is positive. He maintains a buy recommendation on Amazon.

“Arguably, the biggest disruptor in U.S. and global business is partnering with another unique disruptor,” he says. “It’s more interesting than a lot of deals we’ve seen lately.”

Finally, trying to time the market with individual stock trades is notoriously difficult (read more about why). For the average investor, it’s better to keep the vast majority of holdings in index funds or exchange-traded funds, whose diversity can better weather volatility than any one stock.

Anna-Louise Jackson and James F. Royal, Ph.D., are staff writers at NerdWallet, a personal finance website. Email: ajackson@nerdwallet.com or jroyal@nerdwallet.com. Twitter: @aljax7 or @JimRoyalPhD.

You Could Still Get Blamed When Your Autonomous Car Crashes

One day we’ll be able to let go of the wheel and truly let a computer do the driving. It’s less clear whether we’ll be able to wash our hands of car accidents — and car insurance.

Some automakers, such as Audi and BMW, hope to offer fully autonomous vehicles by the early 2020s. As autonomous cars begin hitting the streets in greater numbers, drivers should brace for confusion over exactly who should shoulder the financial burden in case of a wreck.

Levels of autonomy and driver participation  

Today, most drivers rely on liability insurance to pay for damage if they cause an accident. But when computers in our cars are calling the shots, you may wonder if you still need to worry about getting blamed for crashes.

» MORE: What does car insurance cover?

Carmakers and tech companies may accept liability when the car’s system is at fault. But exactly who or what is responsible at the time of a crash might be tough to determine, largely because cars may have autonomous capabilities of varying sophistication — and varying degrees of driver involvement.

The National Highway Traffic Safety Administration has outlined five levels of autonomy for current and future vehicles.

Level 0: No automation Most cars on the road today fall into this category. They may have automated alerts — such as blind-spot monitoring or lane-departure warnings — but it’s up to the driver to control the vehicle. Level 1: Function-specific automation These vehicles have one or more automated features that can ease the impact of a crash. Brake assist and stability control are a couple of examples. Level 2: Combined-function automation These cars have interconnected automated features working in tandem to take over the vehicle in certain situations. Drivers should stay focused but can give up control periodically. For instance, a car with adaptive cruise control and lane-centering technology could assume the tasks of steering and maintaining speed on the highway. Level 3: Limited self-driving automation These cars are capable of taking over all aspects of driving but they alert the driver to resume control if a dangerous situation arises. Level 4: Full self-driving automation These are fully autonomous cars that handle all driving functions for the whole trip. Drivers become passengers. Level 4 vehicles are not yet available to the public.

Whether the car’s computer or the driver had control at the time of the crash could determine where the blame lies. Sorting out liability claims after an autonomous car crashes will cause confusion, says Kathryn Haun, an account administrator at the insurance brokerage company Lockton. Figuring out who was in control gets especially complicated with Level 2 and Level 3 vehicles that can take over driving, but require that humans regain control in emergencies.

Haun highlights a fatal 2016 crash involving a Tesla in autopilot mode — meaning it was automatically braking, steering and changing lanes. Initially, it seemed the crash resulted from the car mistaking a tractor trailer for bright sky. But an NHTSA investigation into the autopilot system cleared Tesla of fault and “did not identify any defects in design or performance,” according to the agency’s report.

NHTSA’s evaluation asserts that the autopilot technology is “not designed to reliably perform in all crash modes” and instead “requires the continual and full attention of the driver to monitor the traffic environment and be prepared to take action to avoid crashes.”

“As long as humans have the ability to intervene, there’s liability risk” for the car owner, says Robert Passmore, assistant vice president of personal lines policy at the Property Casualty Insurers Association of America, a trade group. In other words, the need for car owners to have liability insurance isn’t going to disappear anytime soon.

Research shows it may be unreasonable to expect people to react quickly when alerted by their cars to take over. A 2015 study by NHTSA found that drivers needed an average of 17 seconds to respond to an alert and regain control of a vehicle driving itself at Level 3 automation.

Level 4 vehicles would eliminate the need for people to ever take control. But Haun estimates that such cars may not become standard until 2050.

People may get blamed when technology fails

If the past is any indication, lawmakers may have a tough time getting the companies behind autonomous vehicles to take sole blame for accidents. Even if carmakers and software companies have vowed to accept liability when their machines mess up, they may not admit that the computer was entirely at fault.

“There’s a longstanding precedent of blaming humans for crashes,” says David Ratcliff, a researcher at the American Association for Justice, an advocacy group that promotes fair trials for injury victims.

The association’s February report, “Driven to Safety: Robot Cars and the Future of Liability,” points to autopilot in aviation as a cautionary example. Blame still falls to pilots when the plane’s autopilot technology malfunctions, and airlines have been the defendants in trials, rather than autopilot manufacturers.

Similar patterns may be forming in the world of autonomous vehicles, with some companies already deflecting blame for crashes, according to the association. Among other examples, it cites a 2016 crash in which an automated Google vehicle cut off a bus as it was trying to merge. Google admitted it had “some responsibility,” but the company indicated that the bus driver was also to blame for not letting the car in.

Situations like this may create less confusion once the number of human drivers dwindles and more accidents involve only computers. But even if human error is removed, drivers could share in the blame for other hard-to-predict reasons. For example, say you forget to download the latest software update for your car and the technology malfunctions as a result, Passmore says.

Given the difficulty of pinning fault entirely on a machine, he believes personal liability insurance will play an important role as we adjust to the evolution of autonomy.

Lack of data could create liability limbo

Insurance companies will need access to a vehicle’s data to get the best view of accidents to handle claims, Passmore says.

The Association of California Insurance Companies, a trade group, also cited the key role of data in an April letter to the state’s Department of Motor Vehicles.

“In today’s world, an exchange of information or a statement is made to law enforcement. If the automobile is driverless, then the data in that automobile is the statement necessary to determine liability,” the letter states.

Getting this crucial accident data isn’t guaranteed. A lot depends on cooperation from vehicle manufacturers, which Ratcliff notes is far from a sure thing.

Accident data might reveal only so much anyway, Ratcliff says. “The algorithms driving these cars will look like an ocean of math; pinpointing an exact cause of the vehicle’s behavior may be impossible.”

» MORE: Someday we’ll feel silly for being scared of driverless cars

Why You Should Scatter Your Bank Accounts

Checking and saving accounts go together like bacon and eggs, but both are good separately, too. You don’t need to have all your accounts at the same bank. In fact, you might benefit from splitting them up.

About one-third of people who switched banks recently or wanted to switch had checking and savings accounts at different banks, according to research by bank analytics firm Novantas. And about 11% of bank customers switched banks over the course of a year, based on Accenture’s 2016 North America consumer digital banking survey.

Here’s why it makes sense to scatter your money.

1. Maximize your returns

It’s possible to find a bank account with a decent interest rate despite the national averages— 0.06% annual percentage yield for regular savings accounts and even lower for interest checking, according to the Federal Deposit Insurance Corp. But some online-only banks offer checking rates higher than 0.50% and savings rates north of 1% APY.

You might reach savings goals faster with a high-yield account. Having $10,000 in one with a 1% rate earns you $100 in a year, compared with $6 at the national rate.

2. Take advantage of perks

Some banks offer sign-up bonuses, and credit unions tend to charge lower fees than banks do. Other banks and brokerages don’t charge foreign transaction fees.

Ahmed Bhuiyan, a Seattle-based travel industry consultant, switches between his banks when on the road. He likes one bank’s domestic ATM network but uses a checking account at another bank to avoid foreign transaction and ATM fees.

3. Maintain financial flexibility

Certain bank features make it hard to move your money elsewhere, such as direct deposit and recurring bill payments — so you might end up sticking with a bank you don’t love. To avoid that, consider splitting your direct deposit between checking accounts at two different banks or using alternatives to recurring payments, such as calendar reminders or apps.

Watch out for pitfalls

Money transfers between banks can take two to three business days, and it can be hard to keep track of the bills you pay with different accounts. If you’re not careful, you might overdraw an account.

It’s important to keep all of your accounts fully funded and know where direct deposits go and how to avoid fees on each, says Alicia Butera, certified financial planner at Planning Within Reach in San Diego.

Some financial institutions and third-party budgeting apps make this easier by linking various accounts, so you can see all your money at once.

“Thank God for apps like Mint,” Bhuiyan says. “If this were the ’90s, I might not have all these accounts.”

Spencer Tierney is a staff writer at NerdWallet.com, a personal finance website. Email: spencer@nerdwallet.com and follow on Twitter @SpencerNerd.

 

The 7 Deadly Sins Of Credit

MoneyTipsCredit is like trust; it must be earned. In order to extend credit to you, a creditor must feel confident that you will repay. Otherwise, you will pay higher interest rates to cover the risk or be denied credit altogether. The key to earning good credit is to avoid making fundamental credit mistakes like these seven errors. Think of them as the 7 Deadly Sins of Credit. 1. Late or Missing Payments – Few things sink a credit score like missing or late payments. Even a single missed payment can produce a significant drop in your credit score, and that error will stay on your report for some time. Should your payment be ninety days late or more, the payment can stain your credit for up to seven years. On the bright side, time will heal your score if you don't compound the problem with other missteps. "The beauty of credit scoring is that it gives greater emphasis to current events and less emphasis on previous events with each passing day," says Greg McBride, Chief Financial Analyst at Bankrate.com. 2. Failure to Budget – The convenience of credit makes it easy to overspend. Perhaps your spending is excessive because you don't realize how much you spend and how that spending matches up with your income. A budget is the building block of financial responsibility. By tracking your income and expenses and managing your cash flow in advance, you are more likely to make wise purchases and avoid impulse spending. Helpful hint: to increase the chances of sticking to your budget, make sure that it contains a bit of money for you to spend as you like. 3. Making Minimum Payments – If you only make minimum payments, you are likely to rack up significant interest debt. Minimum payments should only be made as part of an overall debt reduction strategy, where you make minimum payments on certain debts while devoting the remaining funds to paying off other debts (usually with higher interest). 4. High Credit Utilization – Your credit utilization is the ratio of your outstanding credit to your credit limit. This principle holds for both individual accounts (each of your credit cards, for example) and cumulative credit. When you are using a large amount of your available credit, creditors assume that you are at greater risk of missing payments or defaulting on your obligations. Generally, credit utilization approaching 30% is a danger zone. Experts often suggest staying well below 20%. Interest rates aside, if you have two cards with similar credit limits, it’s better to owe 20% of the limit on each rather than 40% on one. 5. Co-signing a Loan – You take a great risk when you co-sign a loan, regardless of how good your intentions may be. You could end up being stuck with the bill, and should you not realize that your co-signee is missing payments, your credit score will be damaged. 6. Poor Collective Account Management – The number of accounts that you maintain and how you use them has an effect on your credit score. For example, shutting down old, unused accounts may actually harm your credit score by reducing your available credit and lowering the average age of your accounts. Similarly, applying for an excessive number of credit cards at the same time sends a signal to creditors that you may be overextending yourself. 7. Ignoring Your Credit – You always make your payments on time, why should you bother checking your credit report? There may be an error on your credit report affecting your score without your knowledge — until you need to take out a loan and find that you don't qualify for a good rate (or even qualify for a loan at all). There may also be fraudulent accounts opened in your name. Take full advantage of Credit Manager by MoneyTips and check your credit score and read your credit report for free within minutes. Maintaining good credit requires planning and discipline — putting together a realistic budget and having the willpower to stick to it. Granted, budgeting and judicious spending are not always fun tasks, but they are far preferable to repairing bad credit. Heed the words of Rod Griffin, Director or Public Education at Experian: "There are a lot of things in life we want to learn from our mistakes. Credit is not one of those things." Learn more about these sins and how to raise your credit score in our new free eBook, Give Yourself Credit. If you believe there is a mistake on your credit report, you can resolve it with a single click using our credit correction service. Photo ©iStockphoto.com/killerb10Originally Posted at: https://www.moneytips.com/the-7-deadly-sins-of-creditClosing Old Accounts Can Damage Your Credit ScoreVideo: Should You Cancel Your Old Credit Card?How To Boost Your Credit Score Fast

Ask Brianna: What Are My Financial Must-Do’s as a Newlywed?

“Ask Brianna” is a column from NerdWallet for 20-somethings or anyone else starting out. I’m here to help you manage your money, find a job and pay off student loans — all the real-world stuff no one taught us how to do in college. Send your questions about postgrad life to askbrianna@nerdwallet.com.

An occupational hazard of dispensing personal finance advice is that money matters are never far from my mind. At wedding ceremonies I wonder whether the couple has shared their credit reports yet or if they plan to use a joint checking account.

That’s because I know getting married is not just a major emotional step. It’s a financial one, too. Your goals and money management methods may change a lot once you’re hitched. And while divorce may be the last thing on your mind right now, you should learn about marital agreements and whether it makes sense to have one in your plan.

Tackle these financial and administrative tasks now, and you can minimize the money stress that can trouble relationships — and get back to enjoying newly wedded life.

1. Agree on short- and long-term financial goals

Ideally, you’ll already know your spouse’s income, spending habits, debt load and credit score. If not, now’s the time for you both to be upfront about your financial backgrounds and behaviors.

That’s especially important as you discuss the goals you’ll work toward as a couple. If you’re thinking about buying a house together, poor credit or massive debt could affect whether you’ll qualify for a mortgage. If necessary, create a credit repair or debt payoff plan, perhaps with the help of a certified financial planner or credit counselor.

Get in the habit of talking about other priorities, too. Discuss whether you’re each saving enough for retirement or how often you want to take — and how much to spend on — vacations.

2. Decide how to manage bank accounts

There’s no rule that says spouses must combine checking and savings accounts. Discuss your preferences while ensuring the bills get paid on time. If you decide to keep your finances separate, though, it’s often easiest to use one shared checking account to cover joint expenses, says Jennifer Kruger, assistant branch manager at the Fidelity Investor Center in midtown Manhattan.

Make a list of expenses you’ll both contribute to, such as groceries, housing and utilities. You can split the costs in half or contribute proportionally based on your incomes or other financial commitments. Add up the monthly total for each of you, then set up automatic transfers of that amount to the joint account.

3. Update beneficiaries

Doing paperwork may not be your idea of marital bliss, but there’s a lot of it right after you get married. First, update the beneficiaries on your life insurance policy, if you have one, and retirement accounts.

Federal law says your spouse will receive the balance of your 401(k) if you die unless he or she  signs a waiver. You can name anyone as a beneficiary of an individual retirement account, but your spouse may end up getting half if you live in a community property state. (In Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, divorcing spouses typically must split equally any property obtained during the marriage, no matter who acquired it.)

Each spouse should also fill out a new Form W-4 at work. Getting married often changes your tax rate; updating the form ensures your employer withholds the right amount of federal income tax from your paycheck. Decide which tax filing status to use, too, now that you’re married. Most couples pay less tax by filing jointly, but in some circumstances, filing separately is best.

4. Consider a postnuptial agreement

Like a prenup, a postnuptial agreement dictates the division of assets in case of divorce or death; the only difference is that it’s created at any point after marriage. Without an agreement, state law will determine who owns what, which may not be in line with your wishes.

Marital agreements are particularly useful if you live in a community property state, you enter the marriage with children from a prior relationship, you’re expecting a large inheritance or there’s a big income disparity between you and your partner, says Kelly J. Capps, a family law attorney and owner of Capps Law Firm in Austin, Texas. In these instances, you may have a heightened interest in keeping certain assets separate or clarifying how you and your spouse would split shared property.

Brianna McGurran is a staff writer at NerdWallet. Email: bmcgurran@nerdwallet.com. Twitter: @briannamcscribe.

This article was written by NerdWallet and was originally published by The Associated Press.

Stay Away From Envelope-Stuffing Schemes

Stuff envelopes for $5 each! Make thousands of dollars every week just by mailing brochures! Get paid for staying home and doing a simple task!

Does that sound too good to be true? It is.

It’s unclear how long envelope-stuffing schemes have been around, but they’ve manifested as mailers, fliers and now websites. The Federal Trade Commission shut down an umbrella company for one of these schemes as recently as April. They all promise something similar: Pay an upfront fee for an opportunity to earn thousands of dollars per week doing menial tasks.

“We have yet to see any envelope-stuffing, work-at-home company that really enables you to make as much money as you could make at another kind of entry-level job,” says Katherine Hutt, national spokeswoman for the Better Business Bureau, a nonprofit that focuses on trust between businesses and consumers. “I think one of the reasons you’re still seeing these envelope-stuffing schemes is because they’re operating within the law. Not within the intent of the law, but certainly within the letter of the law.”

Ask questions

These companies expect people to sign up blindly because the deal they offer is too sweet to resist. If you decide to interact with one, ask every question you can think of. Some suggestions from the BBB website include:

  • What tasks will I have to perform? (The employer should train you about the process.)
  • Will I be paid a salary or a commission?
  • Who will pay me?
  • When will I get my first paycheck?
  • What is the total cost of the work-at-home program, including supplies, equipment and membership fees?
  • What will I get for my money?

If they deflect your questions or can’t give a straight answer, stay away. “Be really cautious, particularly if you’re not ever meeting them face to face,” Hutt says. If they make excuses, walk away.

Watch for the red flags

A typical envelope-stuffing scheme comes with these warning signs:

They require an upfront fee

These companies will ask that you pay them a chunk of money to start, much as a multilevel marketing scheme would ask you to pay for the first bit of product you sell. But you’re not actually selling a product, you’re just mailing things.

These fees could be as low as $29.99 or as high as hundreds of dollars. One recently shut down company, Java Enterprises, required between $99 and $399 to participate, with each increase in payment promising you increased income. According to the FTC, the average person who participated made $19.50. “You’re going into the job to make money,” Hutt says. “So why are they asking you for money?”

Payday isn’t clear

In the case mentioned above, those who participated were told they would get paid for every envelope they stuffed. But it turned out that when they received their starting kit, they were expected to market the brochures they were mailing and generate orders for more before receiving any payment.

In complaints against 1200weekly.com, which is currently operating, participants say they never even received anything to ship after they sent in money to pay for it.

Even worse, if you provide these companies with any personally identifiable information, watch out, Hutt says. Now they have what they need for identity theft.

There’s no outlet for questions or complaints

These kinds of companies typically aren’t transparent, and if you want to contact them for questions or complaints, it’s nearly impossible. The BBB received complaints that Saguaro, a now-defunct company investigated by the organization in 2016, had only an unmonitored phone line with no option to leave a voicemail.

If you find yourself in contact with one of these companies, report it to the BBB and the FTC. Both agencies have great guidelines on how to avoid scams. In some cases, these businesses have been outright combative with complainants. They lose nothing when they dismiss or fight you; they have your money and know you have little recourse.

There are better ways to get spare cash and work from home. Read up on how to avoid shady online business opportunities and how to make extra cash part time.

Veronica Ramirez is a staff writer at NerdWallet, a personal finance website. Email: vramirez@nerdwallet.com. Twitter: @veraudrey.

Personal Loans For People With Poor Credit

MoneyTipsYou may need a personal loan for a number of reasons — perhaps to deal with unexpected medical expenses, to consolidate high-interest credit card debt, or even to take that well-deserved vacation. Unfortunately, if you have borderline or bad credit, personal loans may be difficult to get at your local bank or credit union. You can resort to payday lenders that loan money for short periods of time at very high interest rates, or you can investigate the growing number of online lenders that focus on loans for people with bad credit. Bad credit personal loans represent an underserved market, mainly because most banks and credit unions have plenty of available business without dipping into that particular higher-risk pool. Many personal loans through traditional banks are unsecured, meaning that the bank accepts that you are a low risk to default on the loan and is willing to loan you money without collateral. Unless you are willing to accept a secured loan backed by some form of collateral such as a savings account, CD, or equity in your home, you generally need a credit score of 680 or above to qualify for a personal loan. (The 630 to 640 range is often considered the boundary defining poor credit, where lending criteria becomes increasingly strict.) Fortunately, innovative lenders are available to offer personal loans for bad credit. They focus on the niche between traditional installment personal loans and short-term payday loans. Consider these three examples that define the ends of that niche. Avant: Avant primarily services the average to poor credit range, defined as credit scores from 580 to 700. Installment loans are available from $1,000 up to $35,000 at rates of anywhere from 9.95% to 36% and repayment periods from 24 to 60 months. Avant also charges no up-front origination fees — a great advantage with bad credit loans. By keeping the process online all the way through signing of the loan contract, Avant streamlines the overall loan process. Approval is fast and funds are provided quickly via direct deposit, potentially as soon as the next business day after approval. Avant offers one of the best loan packages available within the 580 to 700 credit score market with respect to terms and borrowing limits. LendUp: LendUp targets the higher-risk end of loans with bad credit — people who find themselves on the borderline of managing daily cash flow and occasionally needing short-term small loans just to pay bills. Such borrowers can be tempted by payday loans that can charge interest rates in the 300% APR range. Borrowers who have trouble repaying run the risk of renewing the loan and falling into a debt spiral of accrued interest and fees. LendUp's initial loans (up to $250) also start with high APRs commensurate with the risk, but their focus is to keep your debt from growing. Debt-accumulating rollovers are not available; in their place, LendUp offers a free thirty-day extension. By repaying smaller loans on time, you gain "points" that lead to lower interest rates (as low as 29%) and can access higher loan limits on subsequent loans (up to $1,000) with the "LendUp Ladder" program. Points may also be earned through credit education courses. As you climb the ladder, you establish a positive payment history while lowering your risk and rebuilding your credit. OppLoans: OppLoans installment loans don't require one large lump-sum payment as payday loans do. OppLoans spreads out the cost of the loan over consistent, scheduled installments. These fixed payment amounts are more manageable and affordable than payday loans are.Even if you have a poor credit score and earn a low income, you could still qualify for an installment loan. Compared to the average 300-1200% APR interest rates on payday loans, the rates on OppLoans installment loans are much lower at 99-199%. The average 36-month term of their installment loans means that your monthly payments will also be lower. The three examples illustrate an important principle — the greater the risk that you represent to the bank, the higher the interest rate on the loan. Interest rates on loans with bad credit tend to start in the 20% to 30% range. LendUp's lowest interest rate is toward the upper end of Avant's in keeping with the relative risk that their customers represent. Higher credit risk also leads to a lower cap on the amount of money that a lender will be willing to lend. It is important to check your credit score before applying for a personal loan to make sure that there are no mistakes in your credit profile and that the offers you receive are in line with your true credit history. It takes time to correct any errors that you find, so make sure that you check your credit report for accuracy well before you apply for a personal loan. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips. Lenders do take credit scores into account, but they also realize that a credit score is only one part of risk assessment. Careful scrutiny will be given to your income level and the likelihood that your income will remain stable over the life of the loan. Special circumstances may be taken into account, such as a large one-time medical expense that has caused a temporary disruption in your finances. Do not simply assume that a credit score of 640 or below dooms you to a bad credit loan. If you have extraneous circumstances working in your favor, put them to use in your application and see if you can secure a lower interest rate. If you do not qualify for a traditional loan and cannot stomach paying high interest rates under any circumstances, consider a secured personal loan. Secured loans offer a lower interest rate option for those with poor credit, since there is no credit check necessary — the lender has an asset that can be claimed or repossessed in case of non-payment. However, secured personal loans are limited to the value of the asset (or less, depending on the lender's policies). You also have to weigh the lower interest rate against the risk of having an asset repossessed. Not all lenders operate in all states, and your state may have specific laws regulating bad credit loans. Verify with the lender that they service your area and that their terms and conditions are compatible with your state's laws. Nobody wants to pay a higher interest rate than he or she has to, so consider the purpose of your loan before applying. Is it for debts or upcoming expenses that require immediate attention, or can the loan wait until you have an opportunity to build up your credit score and receive a better rate? Only you can answer that question, but at least be sure to ask the question before you rush into any loan agreements. "Bad credit" does not necessarily mean "no credit." You have alternatives, but be sure to check them out thoroughly. Review the terms to make sure that you understand all the fees and potential charges, and calculate the total amount of money you will pay over the life of the loan. Choose poorly, and you could be caught in a seemingly endless debt cycle. Choose wisely, and you could be on your way to improving your financial position while rebuilding your credit. If you are interested in a personal loan, visit our curated list of top lenders. Photo ©iStockphoto.com/JohnSommer Originally Posted at: https://www.moneytips.com/personal-loans-for-people-with-poor-creditPersonal Loans For People With Fair CreditHow To Get A Personal LoanHow To Get A Personal Loan Online

Making Money With Online Surveys: What to Expect

Looking to make a quick $100 tomorrow through online surveys? You’re much more likely to make that same amount in gift cards by the end of the month.

Online surveys may seem like a quick and easy way to make more money, but how much you make varies by site and survey. Before you try them as a way of bringing in some cash, make sure you’re aware of these potential drawbacks.

You won’t rake in money

“The average SwagBucks member is generally looking to make a little extra to stretch his or her household budget,” Hal Lublin, director of referral marketing for the survey and rewards site, said in an email. Online surveys are great if you’re looking for a way to make some money in your downtime, but survey sites aren’t for paying the bills.

Cash or gift card?

Survey sites don’t have to pay in cash. Many of these sites also — or exclusively — offer gift cards to popular retailers like Amazon or Walmart. At SwagBucks, you earn points that you can redeem for gift cards or cash. Inbox Dollars offers a straight cash value for surveys.

When you redeem for cash, the delivery method may vary. SwagBucks redeems via PayPal, while Inbox Dollars sends a check or prepaid Visa card, depending on your membership level.

How much are you really making?

If you want fast cash, online surveys may not be for you. Surveys take different amounts of time, and few are lucrative. For example, a five-minute survey that pays 50 cents comes out to about $6 per hour — $1.25 less than the federal minimum wage.

Payday may be later than you think

Sites offer varying payout thresholds. Inbox Dollars won’t let you redeem until you’ve hit $30, while Valued Opinion lets you cash out once you make $10. How quickly you receive your payout may also depend on if you get paid with a gift card, PayPal deposit or check. Also, research the sites you plan on using to see what users have to say about the payment process.

Disqualification is possible

You may not be qualified for all surveys, and you can be booted from a survey while you’re taking it. Unfortunately, there’s not much you can do about this. Sites like SwagBucks try to minimize disqualifications by having you answer detailed profile questions, thus creating better survey matches.

“The best way to make sure this does not happen is to pay close attention and be honest with your answers,” Lublin said in an email. “That will allow us to find and present you with preselected surveys that you are more likely to qualify for based on your profile.”

If you want to make some spare cash in your downtime or score some gift cards for the holiday season, online surveys may be for you. But re-evaluating your budget may prove more lucrative in the long run.

Veronica Ramirez is a staff writer at NerdWallet, a personal finance website. Email: vramirez@nerdwallet.com. Twitter: @veraudrey.

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