This guide outlines four straightforward steps on how to open a business bank account online. It ensures you understand the documentation needed, how to choose the right bank, and how to make your initial deposit, while also providing tips for a smooth application process. Whether launching a startup or expanding your business, these steps will help streamline the opening process, and hopefully, you’ll find your business on the way to profitability.

How to Open a Business Bank Account Online

1. Finding the Right Bank Account

There are so many options when it comes to business bank accounts. Should you go with an online bank or a brick-and-mortar one? We’ll explore the benefits of each so you can decide what works best for you.

But first, let’s review the most common business bank accounts: free, standard checking, online, and savings accounts.

1. Free business bank accounts are delivered in their name. You’ll never pay a monthly maintenance fee, which is ideal for companies that don’t make daily transactions. Online platforms primarily offer free business bank accounts. They have many banking features similar to their traditional counterparts, such as deposits, transfers, and withdrawals.
2. Small business checking accounts charge a low monthly fee, though many financial institutions offset this with welcome offers and sign-up bonuses. This platform gives you access to various branches and ATMs nationwide. You can write checks on behalf of your business and use company credit cards, too.
3. If you don’t need a physical branch or ATM, consider opening an online business checking account. Online banks typically don’t charge fees or handle cash deposits. Put your money to work with an account that offers an annual percentage yield (APY) of more than 1%.
4. Conventional business savings accounts also have APYs above 1%. This makes them one of the safest options for your money, maximizing company savings for future transactions, expansions, and emergencies. Several varieties include business CDs, high-yield savings, and money market accounts.

Once you know what you want, you can narrow your list to the banks that offer those accounts.

2. Choosing the Best Type of Business Bank Account

How you select a business bank will depend on your company’s size, net income, number of employees, and many other factors.

Many people open business accounts at banks where they’re already customers. For example, if you’re a Bank of America user, you have a relationship with the staff and understand what to expect from their financial products and services. The best banking experiences should be seamless in all aspects.

Start by selecting a bank that offers all the services you need, whether in-branch or online. Core in-branch services include making deposits and speaking face-to-face with customer service representatives. Online banking lets you view your balance, initiate transfers and wires, and pay your bills.

Other things to consider when choosing a business bank account include:

• Fees
• Proximity of branches and ATMs
• Website and mobile app quality
• Bookkeeping integration
• Annual percentage yields
• Other financial products and services, such as loans and credit cards

Most business bank accounts are similar, so don’t overthink it. What separates one bank from another is the people. The knowledgeable and friendly staff will make all the difference when using your bank account.

Make sure your financial institution can grow with you. A sage choice will make operating your company’s finances easier and give you more time to focus on running your business.

Related: Best Banks for Small Business

3. Documents Needed, Online or In Person

The documents you need to open a business bank account vary between institutions. However, most banks have the same requirements for online and in-person accounts. As an example, here’s the paperwork you’d need to open some business accounts:

• Two forms of identification, including one government-issued ID, such as a passport, birth certificate, or driver’s license.
• A Tax Identification Number (TIN), Employer Identification Number (EIN), or Social Security number. Non-citizens can use an ITIN.
• Basic information about your business, such as your address, phone number, number of employees, and annual sales.

Depending on your company type, you’ll need to submit additional information. If you run a sole proprietorship, the owners or other authorized representatives must be present when you open the account. You should also bring an assumed name certificate or company trust.

Other structures, such as unincorporated business organizations or associations, have more complicated setups. An authorized representative must be present with the supplemental paperwork, which includes a letter with a company masthead listing current business partners.

The process diverges depending on your EIN. If you have your own EIN, you’ll need articles of association, a charter, and documents from the IRS approving your EIN. If you have a parent company, you should have a letter of approval from the national or regional office.

4. How to Deposit Your Funds into Your Business Account

You can deposit money into your bank account in person, online, and via mobile. The question is: How do you want to account for those funds? You have two options, both with distinct risks and tax consequences.

First, loans. If you want to receive loans, you’ll need a business loan agreement between you and your lender. The contract establishes the loan terms, including how much you’re borrowing and when you’ll repay the sum with interest.

Make sure the loan qualifies as an arms-length transaction. Both parties should act independently without outside pressure or duress. Arms-length transactions are especially important if you receive money from friends or family members who may have a potential conflict of interest.

The federal government taxes the interest on the loan when you repay it. The company should send the lender a Form 1099-INT accounting for the total interest received. Note that you’ve already paid taxes on the principal and don’t need to pay those again.

Second investing. Investing offers another way to bolster your bank account. If the business isn’t incorporated, you can collect checks or money orders before depositing them. In return, you give investors shares in the company, which appear as owner equity on your balance sheet.

A similar process applies if you run a corporation. Investors become shareholders and can take their money out at any time. If you invest in your business, the IRS won’t tax your withdrawals because you should have already paid taxes on your company’s net income.

Benefits of Opening a Business Bank Account

If you want to run a successful company, you have to act the part. A business bank account gives you a professional appearance. Thanks to small gestures like company credit cards and checks printed with your logo, vendors and investors will perceive your organization as more credible.

A business bank account helps centralize your financial information. It keeps you organized, which is handy without in-house accountants. The bank automatically separates business and personal transactions while keeping track of overall profitability.

The bank’s organization saves you time during tax season. The clear and detailed paper trail makes filing tax returns more straightforward and minimizes your chances of IRS penalties. You can also use the business bank account to deduct expenses from your returns.

Credit bureaus will take notice if you maintain your business bank account long enough. The credit monitoring agencies will raise your company’s credit score after you demonstrate a reliable pattern of borrowing money and paying off debts. Some of the other benefits of high credit scores include:

• Lower interest rates
• Improved reputation
• More favorable lending terms
• Increased negotiating power
• Approval for higher spending limits
• Avoidance of certain penalty fees

Your customers will also benefit from your business bank account. Companies can use the platform to accept payments from merchant accounts, which means clients can use credit cards. Most financial institutions handle banking and merchant finances together for added ease.

Two Excellent Business Bank Account Options

Bluevine

The Bluevine Business Checking Account is a compelling option for small business owners looking for a seamless and cost-effective way to manage their finances. This account distinguishes itself with its fee-free structure, meaning no monthly service fees, no non-sufficient funds (NSF) fees, and no minimum balance requirements, making it an excellent choice for businesses at all stages.

Additionally, Bluevine offers an attractive interest rate on balances, which is relatively rare for a business checking account. Thus, businesses can earn returns on their parked funds. With the ease of online account management and mobile banking features, businesses can efficiently handle their day-to-day financial transactions and cash flow management with minimal hassle.

Moreover, the Bluevine Business Checking Account is designed with the modern entrepreneur in mind, providing features such as the ability to deposit checks via the mobile app, make electronic payments, and even access fee-free ATMs across a vast network. The account also supports integration of third-party payment services, facilitating smoother transactions for e-commerce and brick-and-mortar retail businesses.

For businesses looking for more than just a place to store their funds, Bluevine’s emphasis on providing a blend of traditional banking services with the flexibility and convenience of fintech innovations makes it a standout choice in the crowded market of business banking solutions.

Read our Bluevine Review

Lili

The Lili Basic Checking Account is tailored for freelancers and independent contractors looking to simplify their financial management. It combines personal and business banking features into a single, easy-to-use account, eliminating the need for multiple banking relationships. With no monthly fees and no minimum balance requirement, Lili makes banking accessible and affordable for freelancers at various stages of their careers.

The account supports mobile check deposits and direct deposits and provides a Visa business debit card, which can be used worldwide wherever Visa is accepted. Additionally, account holders benefit from fee-free access to thousands of ATMs across the country, adding a layer of convenience for those who need cash on the go.

One of the standout features of the Lili Basic Checking Account is its built-in expense management tool, which allows users to automatically categorize transactions for tax purposes, potentially saving hours of bookkeeping. The account also offers a “Save for Taxes” feature, where users can set aside a percentage of income for taxes with each deposit, making it easier to manage tax obligations.

Lili provides valuable financial insights and expense reports, helping freelancers understand their spending patterns and make informed financial decisions. For freelancers seeking a banking solution that caters to their unique needs, the Lili Basic Checking Account offers a compelling mix of features designed to streamline financial operations and enhance their banking experience.

Read our Lili Review

Frequently Asked Questions (FAQ)

Final Thought on Opening a Business Bank Account Online

Opening a business bank account online simplifies the financial management of your company, providing a streamlined and efficient process to ensure your business’s monetary operations are handled easily. By gathering the necessary documentation, such as personal identification, business licenses, and incorporation papers, and choosing the right bank that aligns with your business needs, you can initiate the application process online in just a few clicks.

While the exact requirements and process may vary depending on the bank and the type of business account, the convenience of online applications allows business owners to set up their banking solutions swiftly, often without the need to visit a branch. Selecting a bank that offers tailored business banking solutions, competitive fees, and robust online banking features will set the foundation for your business’s effective financial management and growth. With these steps, you’re well on your way to establishing a business bank account online, marking a crucial step in your business journey.

The post How to Open a Business Bank Account Online in 4 Easy Steps appeared first on Doughroller.

In this article, we’ve put together a list of the five best banks for international travel, along with what we think makes them so unique. While you can travel and use your regular bank, we recommend looking into one of these banks as an alternative for the next time you hop on a plane.

Best Banks for International Travel

1. Ally Bank

Ally is a popular option for a lot of travelers and provides people abroad with many services that will meet their needs. But doesn’t truly excel in any one specific area–it’s solid all-around. This makes it our choice for the best overall international bank.

This great all-around bank doesn’t have any monthly fees or minimum balance requirements to open an account. Additionally, they don’t charge ATM fees and will reimburse up to $10 of ATM fees from their competitors. By linking your savings account to your checking account, you can enjoy free overdraft protection.

When you bank with Ally Bank, you will be able to easily keep track of your spending thanks to their online banking, and you can enjoy customer support 7 days a week from 7 am – 10 pm (Eastern Time). This is a great feature to take advantage of when you’re abroad, especially if you have concerns about your spending or have lost your debit card. Unlike banks that only operate during U.S. business hours, Ally Bank will pick up the phone and help you when you have an emergency, no matter the time of day or night.

Ally Bank offers three different credit cards, with the Ally Unlimited Cashback Mastercard being the best for international travel. It offers unlimited 2% cashback on all purchases, with no annual fee and no foreign transaction fees.

In addition, the Ally Bank debit card has very generous spending limits, at $5,000 per day, including up to $1,000 in cash withdrawn from ATM machines. While the debit card has no foreign transaction fee, a 1% international transaction fee applies to any point-of-sale debit, retail cashback, OTC, or ATM transaction originated by any merchant or any ATM operator located outside the US area

Overall, Ally Bank offers a lot of support to their customers who like to travel, which is why we think they’re one of the best banks for international travel. They’re always releasing helpful information to their customers to make planning and preparing for international trips easier as they did here.

• Foreign transaction fee (credit or debit cards): None on all three credit cards offered.
• International wires (fees): Incoming international wires are accepted (no fee); outgoing international wire transfers are not accepted.
• Foreign branches/correspondent banks: Ally Bank is an online bank that has no physical branches but can be accessed online at any time.
• Travel credit cards: Ally Unlimited Cashback Mastercard – not specifically a travel credit card, but provides 2% cashback on all purchases.

Read our Ally Bank Review

2. Capital One 360

Many banks charge fees on every purchase you make abroad, or even if you buy something from an international retailer that is based outside of the U.S. One of the reasons we love Capital One 360 is that they don’t charge a special fee on these transactions. This is great for international travel, as you can save a lot of money without having to worry about avoiding purchases.

While most people will bring money with them to exchange when traveling abroad, it’s almost impossible to bring with you all of the cash you need. You’ll inevitably end up purchasing something using a credit or debit card, and while most banks will charge you, Capital One 360 doesn’t. I find that these small fees can add up really quickly, but if you can avoid them, then you can keep a lot more money in your wallet.

Other banks don’t charge you for international purchases, but Capital One 360 is one of our favorites because it offers lower fees than a lot of other banks. In addition to giving you a free pass when making international purchases, Capital One 360 also doesn’t charge you for using non-Capital One 360 ATMs. Remember that the owner of the ATM may cost you, but you won’t have to pay a fee to Capital One 360, which is a great way to save money.

You can make deposits through the mobile app and through bank transfers so you won’t have any problem putting more money in your account. Even if you aren’t close to an ATM.

Capital One offers no fewer than four credit cards specifically for travel. Those include the VentureOne Rewards for Good Credit, VentureOne Rewards, Venture Rewards, and Venture X Rewards credit cards.

Capital One Venture X Rewards Credit Card has a $395 annual fee, but it has the richest travel rewards. That starts with 75,000 bonus miles after spending at least $4,000 in purchases within three months of opening the account.

You can then earn unlimited 10X miles on hotels and rental cars, plus unlimited 5X miles for flights booked through Capital One Travel, then unlimited 2X miles on all other purchases. The card also comes with a credit of up to $100 for Global Entry or TSA PreCheck.

• Foreign transaction fee: 0% using 360 Checking debit card or travel credit cards.
• International wires (fees): Yes, both send ($30) and receive ($0).
• Foreign branches/correspondent banks: Capital One operates outside of the US through Capital One Bank (Europe) plc located in the UK and through Canadian offices in Toronto.
• Travel credit cards: Offers four dedicated travel credit cards

Read our Cap One 360 Review

3. Revolut

If you want an alternative to Capital One 360, Revolut is a great tool for travelers who want to quickly and easily use many different currencies. Revolut is a top fintech app from Europe that recently entered the American market.

When you sign up for Revolut, you’ll get a debit account so you can use Revolut much like a checking account. The app supports more than 36 currencies and can spend in more than 150 currencies, meaning you can use it all over the world. You can also use the app to send, receive, and store cryptocurrencies.

• Foreign transaction fee: Varies by plan and currency.
• International wires (fees): N/A but $1,000 to unlimited international transfers, depending on the plan selected.
• Foreign branches/correspondent banks: Online app, no physical branches.
• Travel credit cards: Not offered.

4. HSBC Bank

HSBC Bank really shines because it caters to ex-patriots by providing exceptional banking services to them while they are abroad. Not only will you enjoy excellent traditional banking services, but you’ll also have access to wealth management services and foreign exchange services, so you always have someone on your side.

Dealing with foreign currency has never been easier than it is now, thanks to HSBC Bank services. Not only can you enjoy simple currency transfers, but they also offer tailored services and support from specialists if you need to set a target exchange rate for automatically converting your money. Also, they provide bespoke services such as pre-agreed tiered margins. While not all travelers will need these services, they also offer others that are geared toward travelers, not ex-pats.

This is a massive international bank that has just a few U.S. branches but has easy online access. Because they offer basic products that don’t charge fees, you won’t have to worry about keeping a set amount of money in your account to offset fees, and can even enjoy a competitive rate from their Direct Savings account.

International transfers are simple with HSBC Bank as well. And you can transfer money online, by phone, or via a smartphone app. This ensures that even if you are out of the country and need more money than you have, you can quickly make the necessary transfer so you won’t run out of cash while abroad. I think that having three ways to access your money is essential and makes it easy for everyone to have complete control over their finances, even when traveling.

HSBC offers two travel credit cards, HSBC Premier and HSBC Elite. Each comes with a sign-up bonus, as well as points for travel. Elite is the more generous of the two, offering 50,000 bonus points after spending $4,000 in the first three months after account opening. That’s followed by 3X points on travel, 2X points on dining, and 1X points on all other purchases.

• Foreign transaction fee: 0% on debit cards or credit cards.
• International wires (fees): Fee-free transfers to/from 27 countries (exchange rate fees apply based on currencies involved).
• Foreign branches/correspondent banks: Locations in 62 countries.
• Travel credit cards: Two travel credit cards.

5. Citibank

Frequent international travelers will love using Citibank for their banking needs, as it offers the best global coverage of all of the banks on this list. While they don’t provide a lot of branches throughout the U.S., this isn’t a problem for global travelers who will have access to more than 4,000 offices around the world. This means that when you’re traveling, you’ll have the best access to your money and won’t have to worry about paying ATM fees.

With more than 45,000 machines located in 30 different countries, you’ll get quick and free access to your money any time you visit a Citibank ATM and won’t ever pay convenience fees. I love that you can also call the international toll-free number if you ever experience problems with your account and need to talk to a bank representative. This will allow you to get the help you need without having to worry about phone fees or when you can call for guidance.

Not only will you enjoy the services that Citibank offers when you’re abroad, but you’ll enjoy their services before you even set foot on a plane. If you’re taking a last-minute trip to another country, you can call your Citibank branch and get foreign currency delivered to your home, Citibank branch, or office the next day.

Once you place your order for foreign currency, Citibank will determine the exchange rate, and your money will be debited from your account. So you don’t even have to step foot inside a branch to get the money you need for your trip.

Additionally, Citibank offers free wire transfers if you’re moving money between Citi accounts, making it easy to pay people in other countries or accept the money you’re owed. Wire transfers were a big thing when I was in St. Lucia–I had to pay for some wedding services this way, so this feature may come in handy for you.

Related: How to Avoid Wire Transfer Fees

Check out some of the other benefits that you’ll enjoy when you bank with Citibank, including access to your accounts 24/7 online, as well as waived monthly service fees if you keep a minimum balance in your account.

Citi provides several credit cards with travel partners. But the Citi Premier Card is designed for travel rewards with any travel vendor. It starts with 60,000 bonus points – redeemable for $600 – after spending $4,000 within three months of account opening.

You’ll then earn 3X points on air travel, hotels, restaurants, supermarkets, and gas stations, then 1X points on all other purchases. Rewards points can be transferred to participating airline loyalty programs. The card comes with a $95 annual fee and no foreign transaction fees.

• Foreign transaction fee: 0% on debit cards and on credit cards.
• International wires (fees): As low as $17.50 or $25.
• Foreign branches/correspondent banks: 150+ countries.
• Travel credit cards: Citi Premier Credit Card plus credit cards tied in with travel partners.

6. Charles Schwab

Charles Schwab is an excellent choice for this list because it offers extensive access to ATMs and has very lenient policies, so you don’t have to worry about overspending on ATM charges. Many different banks reimburse you for fees that other ATMs charge, but most of these banks require you to have individual accounts with high minimum balances.

Charles Schwab is well known for providing their customers who have a High Yield Investor Checking Account reimbursements on all ATM fees worldwide, as well as other benefits. Another significant advantage that you’ll enjoy if you love to travel internationally is that there aren’t any foreign transaction fees, which makes using your credit or debit card a lot less expensive.

Additionally, Charles Schwab offers interest on their High Yield Investor Checking Account, doesn’t charge a monthly fee, and doesn’t require a minimum balance. While these are great features, the best one is the ATM fee reimbursement. There are many times when traveling that you’ll want to have extra cash. And being able to visit an ATM without worrying about paying additional fees will allow you to grab some money as you go.

In addition to being lenient on ATM and foreign debit transaction fees, Charles Schwab has an online banking program that is intuitive, easy to use, and updates quickly so you can keep track of your finances when you’re traveling. Having a checking account with Schwab does require a brokerage account, but this account doesn’t have a minimum balance and doesn’t charge any monthly fees.

The Platinum Card^® from American Express for Charles Schwab offers a sign-on bonus of 80,000 points after spending $6,000 in purchases within six months of account opening. From there, you’ll enjoy 5X points on up to $500,000 in airfare each year, and 5X points on eligible prepaid hotels booked with American Express Travel.

The card also comes with a $200 hotel credit and a $200 airline fee credit. The annual fee is $695, but there are no foreign transaction fees

• Foreign transaction fee: 0% on debit cards or credit cards.
• International wires (fees): Incoming ($15) and outgoing ($25).
• Foreign branches/correspondent banks: In the UK only.
• Travel credit card: Platinum Card^® from American Express for Charles Schwab.

Our Methodology in Choosing the Best Banks for International Travel

In compiling this list of the best banks for international travel, we’ve analyzed multiple banks based on the following criteria:

• Foreign operations, including physical branch locations.
• The number of countries where each bank has locations or conducts business.
• The ability to send or receive international wires.
• Foreign transaction fees on both debit cards and credit cards.
• The availability of travel-related credit cards.
• Other services are offered in support of international travel.

With criteria so specific, few banks we’ve reviewed and made the cut. Even some of the banks included failed to provide a service or two. But we included those institutions because they do offer most services needed for foreign travel.

Bottom Line

With these six banks to choose from, you can quickly pick one that will offer you the best services while you are traveling internationally. Choose one that will best meet your needs and make it easy and inexpensive for you to make purchases and access your money.

The post 6 Best Banks for International Travel appeared first on Doughroller.

But one of the things I was reminded of for this upcoming tax season that I really do miss is the tax deductions for homeowners.

Seriously, owning a home can not only give you a cheaper monthly payment than renting but in many cases, the tax benefits make the decision a no-brainer.

We’re going to cover the main tax benefits you’ll see when you own a home. From there, you can decide on what’s right for you.

Tax Deductions for Homeowners

1. Mortgage Interest is Tax Deductible

If you own a home and don’t have a mortgage greater than $750,000, you can deduct the interest you pay on the loan. This is one of the biggest benefits to owning a home versus renting—as you could get massive deductions at tax time.

The limit used to be $1 million, but the Tax Cuts and Jobs Act of 2017 (TCJA) reduced the limit and made some clarifications on deducting interest from a home equity line of credit.

Prior to the TCJA, you could deduct interest on a mortgage up to $1 million, plus a HELOC up to $100,000. And it didn’t matter what your HELOC was used for (i.e., student loans, credit card debt). The TCJA clarifies that you can deduct HELOC interest but must still stay under the total limit of $750,000 and be used to improve the home.

As you can also see, TCJA is in effect until 2026 and the law applies to mortgages and HELOCs that were taken out after December 15, 2017. If you’ve taken a mortgage out before that date, the $1 million limit will still apply.

You can also include interest that you may have paid as part of your home closing—you can find this on the settlement sheet. For more information, TurboTax has put together a nice set of frequently asked questions on this topic.

2. Property Taxes are Tax Deductible

Another awesome benefit to owning a home is the ability to deduct your property taxes. Before TCJA, the rules were a little more flexible and you were able to deduct the entirety of your property taxes. Now things have changed a bit.

Under the new law, you can deduct up to $10,000. The deduction for state and local income taxes was combined with the deduction for state and local property taxes, too. You also can no longer deduct foreign property taxes as you could pre-TCJA.

As we showed you above, TCJA is in place until 2026 (through 2025). If the law is extended or modified, we could see more of this. If nothing is done, the rules will go back to the way they were before this law was enacted. But for at least the next several years, I’d anticipate a cap of $10,000 in deductions on property taxes.

If your taxes are paid through an escrow account with your lender (i.e., they’re added to your monthly mortgage payment and paid by the lender) you will see the amount you paid in taxes on your IRS Form 1098—so you can apply that deduction directly to your taxes.

If you pay your taxes directly to the municipality you live in, you’ll need to make sure you have a record of the money you paid (i.e., a copy of the check you used). You can also deduct any taxes that you reimbursed to the seller if they prepaid it while owning the home (find these on the settlement sheet).

3. Mortgage Points are Tax Deductible

If you paid points to your lender when you got your mortgage or refinanced an existing one, you can take advantage of a tax deduction. The only caveat is that you have to have actually given money to the lender for these points.

We’ve talked about mortgage points before, but to refresh your memory, they’re almost always expressed as a percentage of the loan. So if each point is 1.5% and your home is $300,000, each point would cost you $4,500.

Where this benefit really kicks in is if you have a home equity line of credit or you’ve refinanced your loan.

Assuming you do meet the qualifications, you can deduct the amount you pay toward points each month you make payments. When you make a mortgage payment, a fractional percentage is built into the loan for points—that’s the amount you can deduct. So, for example, if $10 of your payment each month is for points, you could deduct $120 at the end of the year (12 x $10), given you’ve made payments every month of the year.

I would definitely recommend talking to a tax professional before you take deductions on points. It can be a bit tricky if you’re not familiar with the process.

4. Private Mortgage Insurance – Sometimes

Private Mortgage Insurance (or PMI) is a fee you have to pay when you put less than 20% down on your home. Lenders do this to protect themselves from losses in the event you default on your loan.

If you took out your mortgage after 2007, it’s possible you can claim a tax deduction on your PMI payments. The current tax law states that you can claim the deduction if your adjusted gross income is $109,000 or less if you’re married or $54,500 if you’re single.

This hasn’t always been an option, though. According to House Loan Blog, the mortgage insurance premium deduction extension was one of 30 tax provisions President Trump agreed to extend on February 9, 2018, when he signed H.R. 1892, the Bipartisan Budget Act of 2018.

As of right now, you can take advantage of this, but be mindful that it gets reviewed annually. We always recommend trying to put 20% down on your home loan so you can avoid this, but we know it’s not always realistic. This tax deduction provides a silver lining to having to pay PMI.

5. Home Sale Exclusion Tax Deduction

As our lives change, so do our housing situations. It’s not common for people to take out a 30-year loan and live in their home for all 30 years anymore. The way we look at housing has changed.

With that said, it’s safe to assume we’ll sell our homes at some point. That’s where the next benefit comes in—the home sale exclusion. If you’ve lived in your primary residence for two out of the five years before you sell it, you’re excluded from paying taxes on any profits you make for up to $500,000 if you’re married and up to $250,000 if you’re single.

Let’s say you’re single and you buy a home for $200,000 and live in the home for seven years. Say over time you put $50,000 of improvements into it—making your total investment $250,000.

Then say in the seventh year you sell the home for $400,000, as values in your market have increased significantly. You just made a profit of $150,000. According to the home sale exclusion, none of that $150,000 is counted as taxable income. This could save you thousands of dollars at tax time.

If for any reason you didn’t meet the requirement of living in the home two out of the five years before the sale, you can still take advantage of the home sale exclusion—but your deduction will be prorated.

6. Take Advantage of Energy Efficient Upgrades

Beginning Jan. 1, 2023, the credit for energy-efficient upgrades equals 30% of certain qualified expenses, including:

• Qualified energy efficiency improvements installed during the year
• Residential energy property expenses
• Home energy audits

The most common of these upgrades continues to be the installation of solar and that’s covered under the Residential Clean Energy Credit. The amount of that credit gets a touch lower over time, but you still have a lot of time before it begins to fade.

• 2022 to 2032: 30%, no annual maximum or lifetime limit
• 2033: 26%, no annual maximum or lifetime limit
• 2034: 22%, no annual maximum or lifetime limit

7. Getting Older Can Mean Saving More

According to Senior Living, aging in place means a person making a conscious decision to stay in the inhabitation of their choice for as long as they can with the comforts that are important to them. As they age these may include adding supplementary services to facilitate their living conditions and maintain their quality of life.

If you plan to live in your home for a long time, you can deduct expenditures that assist you with aging. Some common examples are wheelchair ramps that you’d install to enter your home or grip bars in a bathtub to avoid slipping.

You may also be able to get deductions on things like lowering electrical figures or cabinets, among other home adjustments.

8. Work From Home Tax Deductions

Whether it’s a side hustle or a full-time work-from-home position, you can deduct your home office expenses and the space that is used. The current tax law allows you to take a tax deduction of $5 per square foot, for up to 300 square feet of office space.

You can get a maximum deduction of $1,500 but know that there are extremely tight guidelines on expensing your home office. I would always suggest talking to a tax professional, but if you want to read more about it first, TurboTax did a really in-depth piece about this topic.

Frequently Asked Questions (FAQ)

Bottom Line

While it won’t completely squash the rent versus buy debate, understanding the tax benefits of buying and owning a home can help you make a more educated decision. In fact, you may have not known about some of these, or known the degree to which they can benefit you at tax time.

As I’ve stated numerous times throughout the article, make sure you’re consulting with a tax professional before making any serious deductions on your taxes. At the very least, use a premium product like TurboTax, which offers a ton of live help and walks you through all of this stuff, step-by-step.

The post 8 Tax Deductions for Homeowners That Can Save Thousands appeared first on Doughroller.

Best Personal Loans for Bad Credit

Upgrade

Upgrade leads our list as the best place to find your personal loan for bad credit. They offer loan amounts ranging from $1,000 to $50,000 and loan terms that extend as high as seven years. The fixed rate APR range for all loans is 9.99% – 35.99% depending on your credit history and profile.

All personal loans from Upgrade will incur an origination fee of 1.85% – 9.99% which is immediately deducted from the loan proceeds. If you qualify for the lowest rates that Upgrade offers, it will include autopay repayments. There is no fee for paying back your loan early and there is no impact on your credit score when figuring out your rate and repayment loan term.

Upgrade also offers a Premier Savings Account.

• Loan Amounts – $1,000 – $50,000
• Loan Terms – 12 months – 84 months
• Loan APR – 9.99% – 35.99% (Fixed)

Upstart

Loan amounts on Upstart range from $1,000 to $50,000 and you can choose a loan term of 3 or 5 years. Each loan will come with a fixed interest rate of 5.20% – 35.99% and you can prepay your loan at any time without a fee or penalty.

Before a credit pull, you can check your rate with Upstart in a matter of minutes. If you like what you see, select your desired term and loan amount, and 99% of loans are funded in one business day. Upstart charges an origination fee of up to 12% per funded loan.

• Loan Amounts – $1,000 – $50,000
• Loan Terms – 3 or 5 years
• Loan APR – 5.20% – 35.99% (Fixed)

Avant

Avant offers a little bit more flexibility than most, providing loans ranging from $2,000 to $35,000. There are many loan term options starting at 12 months and working up the ladder to the longest term of 60 months. The fixed rate APR range is 9.95% – 35.99% depending on your credit score.

Avant charges an administrative fee of up to 4.75% and that will vary depending on the loan you select. Loans can be funded as quickly as one business day and you can explore your rate options before a hard credit pull.

• Loan Amounts – $2,000 – $35,000
• Loan Terms – 12 months to 60 months
• Loan APR – 9.95% – 35.99% (Fixed)

LendingPoint

LendingPoint is an AI-based loan provider offering loan amounts that range between $2,000 and $36,500. Loan terms start at a low of 24 months and end at a high of 72 months (the second highest on our list). The fixed APR range for all loans is 7.99% to 35.99% depending on your credit history.

A loan origination fee of up to 10% is charged for each loan through LendingPoint. After approval, loans are funded via ACH in as little as one business day and there is no prepayment fee or penalty for paying your loan down early. When checking your rate and term options, a soft credit pull is performed which will not affect your credit score.

• Loan Amounts – $2,000 – $36,500
• Loan Terms – 24 months to 72 months
• Loan APR – 7.99% – 35.99% (Fixed)

OneMain Financial

OneMain Financial offers loan amounts ranging from $1,500 to $20,000. There are four loan terms offered (24,36,48 and 60 months) and the fixed rate APR range is 18.00% – 35.99% depending on your credit history. OneMain offers a calculator to help you figure out exactly how much you’ll need and how long it will take to pay back.

An origination fee of between 1% and 10% is applied for each loan and that fee can be represented as a flat amount depending on the state you live in. Your credit will not be affected while you check your rate and term options and OneMain Financial has the added benefit of having about 1,400 physical branches nationwide.

• Loan Amounts – $1,500 – $20,000
• Loan Terms – 24 months to 60 months
• Loan APR – 18.00% – 35.99% (Fixed)

Personal Loans for Bad Credit to Avoid

If you have a low credit score, you may think you should take what you can get. However, some loan sources’ borrowing costs are too high, and you are better off spending the time to find a loan with the best rates. Below, we look at loan sources to avoid.

Subprime Loans

Various lenders offer subprime auto loans to borrowers with low credit scores. However, subprime loans are generally expensive and come with high interest rates. Some subprime interest rates are three times higher than those for an average auto loan.

Subprime auto lenders are willing to extend loans to borrowers with low credit scores because of the high-profit potential. If you fail to make your loan payments, some lenders will have no problem repossessing your car and selling it to the next borrower.

You also run the risk of a loan default, which will lower your credit rating even further. In some states, you will remain liable for the outstanding loan amount after repossession.

No-Credit-Check Loans and Guaranteed Approval Loans

The loan sizes and repayment mechanisms of no-credit-check and guaranteed approval loans are similar to those of installment loans. However, the interest rates and hidden fees of these loans are significantly higher. For example, the APR on a guaranteed approval loan can be as high as 500%.

Payday Loans

With payday loans, you borrow the amount you need from the lender and pay it back when you receive your next paycheck along with an additional fee. These loans typically don’t involve a credit check or application process, but they come with a high borrowing cost.

A payday lender can charge a fee of up to $30 or higher for every $100 you borrow. Even a relatively low fee of $15 for a payday loan of $100 amounts to an annual interest rate of 390%.

Payday loans may seem like the ideal short-term solution if you need cash immediately. However, with the quick turnaround times for these loans, borrowers often need to repeatedly renew their loans, which ramps up fees.

Related:

• 13 Apps That Loan You Money Now – Payday Loan Alternatives
• How to Get a Payday Loan (if you must)

How to Choose the Best Personal Loan for Bad Credit

Several factors determine the best personal loan for bad credit that fits your needs and financial situation.

• Eligibility requirements: Before lenders extend you a loan, you have to meet specific requirements. Institutions will typically list minimum credit scores, minimum income, and maximum debt-to-income ratio as requirements.
• Interest rates and loan fees: The borrowing costs of a loan are significant in choosing the best bad credit loan company. While these costs are generally higher for borrowers with bad credit, you should spend some time shopping around and finding the cheapest loan.
• Repayment term: A short loan repayment term is best if you want to minimize interest or do not want to remain in debt for long. On the other hand, if you want to reduce your monthly loan repayments, select a loan with a longer repayment term of four to five years.
• Lender: If you prefer to do business in person, consider applying with your local bank branch or credit union. Online lenders such as loan aggregators don’t provide a personal service, but their interest rates are generally the lowest.

Other Types of Bad Credit Personal Loans

Cash Advances

A cash advance is a short-term loan that credit card issuers offer their clients. When you take out this loan, you’re borrowing cash against your card’s available balance. A cash advance is one of the most convenient types of bad credit loans, but they are expensive.

Cash advance fees are the most significant expenses of cash advances. You’ll either pay a flat fee per cash advance or a percentage of the cash amount. The interest on a cash advance is typically much higher than the rate on purchases. The interest will also start accruing immediately upon approval.

You should only consider this type of loan if you have an emergency. If you rely on cash advances to pay for everyday expenses, consider using the services of a credit counselor.

Bank Agreements

Bank agreements are minimal overdraft agreements or short-term loans that banks offer their clients as part of their financial products. Banks typically offer agreements to clients with low credit scores. However, to be eligible for these loans, you may have to meet several requirements that include a steady income.

A short-term loan or overdraft agreement is ideal if you need funding fast for a specific purpose. Bank agreements are not suitable to fund everyday expenses, as their interest rates and fees are relatively high.

Contact your local bank branch to find out if they have bank agreements available.

Home Equity Loans for Bad Credit

Home equity loans are similar to secured personal loans. With this type of loan, you borrow a lump sum of cash, using your home’s equity as collateral. If you fail to pay the loan’s fixed monthly installments, the lender has the right to seize your property.

A home equity loan is easier to get than an unsecured personal loan if you have a low credit score, provided that you have a property to offer as collateral. The interest rates of home equity loans are generally lower than those of personal loans and credit cards.

Whether or not this loan is ideal for you depends on your risk tolerance. If your income is too small to support your lifestyle and make your monthly loan repayments, you run the risk of losing your home.

Home Equity Line of Credit (HELOC) for Bad Credit

In essence, HELOCs are similar to home equity loans. You borrow from a lender such as a bank or credit union with your home as collateral. However, instead of borrowing a lump sum of cash, a HELOC allows you to borrow money as you need it similar to a credit card.

This type of loan is ideal for funding long-term projects, for example, multiple home improvement projects over a year. A HELOC is relatively easy to get if you have a low credit score, but you have to repay the funds at a variable rate.

Related: Can You Really Pay Off Your Mortgage Early with a HELOC?

Student Loans for Bad Credit

A common problem among students is that they don’t have the credit history to get a loan and pay for their education costs. In many cases, education funding is not the purpose of standard personal loans.

Student loans for bad credit are often the only way to get funding for tuition fees, textbooks, and accommodation. If you have a low credit score, the lender may require a qualified person to co-sign the loan agreement.

The rates and fees of student loans vary from lender to lender. If someone is willing to co-sign your agreement, shop around to find the best rates. A high interest rate can increase your borrowing costs significantly over the long run, so it is critical not to accept the first loan offer you receive.

Learn More: Best Student Loan Without a Cosigner

How to Spot Bad Credit Personal Loan Scams

Fraudsters often use bad-credit loan scams to access your sensitive personal information or collect upfront collateral or fees without lending you any money.

• No approval process: Before making you a loan offer, authorized financial services and credit providers will obtain and check your credit report and assess your income and payment history. A lender who extends a loan offer without evaluating your financial situation is likely a scammer.
• Unsolicited calls: If you haven’t recently applied for a loan, reputable lenders will not contact you via phone or email with an unsolicited loan offer. When a lender calls you, requests your personal information, and guarantees approval without doing a credit check, be careful.
• The lender tries to pressure you: Scammers often try to pressure targets into accepting their loan offers by offering low-interest rates for a limited time. Reputable lenders don’t use hard-sell tactics, and their loan offerings are generally consistent over time.
• No license to operate in your state: According to the Federal Trade Commission, all lenders should register as credit providers in the state where they do business.
• Upfront payments: Legitimate lenders will never require upfront cash payments before starting the application process. Another red flag is if the lender asks for loan repayment in the form of a prepaid credit card or gift card.
• No secure website or physical address: When researching a lender, ensure that its website address for any sensitive data entry starts with “HTTPS” and displays a padlock symbol before you enter your personal information. The website should also list a physical address for the company.

What Is Considered Bad Credit?

Different credit scoring models exist for determining a person’s creditworthiness. The three main credit bureaus Experian, TransUnion, and Equifax developed VantageScore, a model that many lenders use:

• 300 499 (bad)
• 500 600 (poor)
• 601 660 (fair)
• 661 780 (good)
• 781 850 (excellent)

Several factors can lower your credit score. For example, if you repeatedly miss payments on your credit card, apply for a lot of credit in a short time, or frequently change your address, your credit score will drop.

Bankruptcy, court judgments, and mistakes on your report can also harm your credit score. If your credit score is low, lenders will see you as a high-risk borrower, reject your application, or offer you credit at a higher rate.

Fortunately, there are steps you can take to improve your credit score.

How to Improve Your Bad Credit

The most effective way to increase your credit score is with Experian Boost, a free service allowing you to link your telecom and utility accounts to your Experian credit report. Every time you make an on-time payment to the linked credit accounts, your credit improves.

To sign up for Experian Boost, you must have at least one active account, such as a credit card. Examples of eligible payments you can link include:

• Landline and mobile phones
• Cable, satellite, and internet
• Gas, electric, and solar
• Water and sanitization
• Streaming subscriptions, including Netflix, HBO, Hulu, Disney+, and Starz

Read our Experian Boost Review

Learn More:

• Best Apps to Boost Your Credit Score
• What is a Credit Builder Loan and Where Do I Get One?

Document Requirements for a Personal Loan Application When You Have Bad Credit

When applying for a loan with bad credit, you need to submit several documents. The specific documents a lender requires depend on the loan type, but they generally include:

• The lender’s loan application: Each lender has specific application forms you have to complete and submit.
• Proof of identity: Most lenders require two identification documents, such as your passport, state-issued ID, driver’s license, or Certificate of Citizenship.
• Proof of address: Documents such as a utility bill or rental agreement proves your lifestyle’s stability.
• Income-verification documents: Lenders require income-verification documents for bad-credit applications, including recent pay stubs, tax returns, 1099s or W-2s, and bank statements.
• Vehicle details: If you apply for an auto loan, you have to provide your vehicle’s make, model, VIN, and resale value.
• Reason for your application: If you have bad credit, the lender may require that you furnish a written explanation of your situation and extenuating circumstances for example, divorce, job loss, or medical problems.

Frequently Asked Questions (FAQ)

Final Thoughts

Are you looking to apply for a loan with bad credit? You have several options available to secure a loan at affordable rates and fees. Start by improving your credit score with Experian Boost, and organize your finances to ensure that all your payments go out on time.

When shopping for loans, stick to reputable lenders such as banks, credit unions, online loan aggregators, and peer-to-peer lenders. Collect as many loan offers from lenders as you can, and make sure that you accept the offer with the lowest interest rates and fees. The loan term should also fit your financial situation.

Before accepting a loan offer, ensure that there are no limitations so that you can use the loan for whatever purpose you want.

The post 5 Best Personal Loans for Bad Credit (FICO Score Under 580) appeared first on Doughroller.

We researched to find the best apps to build your credit score in 2024. This guide will provide insight into what each of these credit builder apps offers and how they work.

We’ll also explain what your credit history is, why it matters, and other ways to build or repair your credit score without necessarily having to rely on one of these apps. With our tips and advice, you’ll soon have all the information needed to make informed decisions about using one of these best credit-building apps.

The 8 Best Apps to Build Your Credit Score

The number of credit-building apps available has grown significantly in recent years, with more and more people looking for ways to build their credit scores. With so many options to choose from, though, knowing which one is best for you can be difficult. So below, we’ll look at our picks for the top eight apps to build your credit score.

1. Experian Boost

With Experian Boost, you’re going straight to one of the sources. Experian is one of the three credit bureaus. It offers a product called Experian Boost, designed to give you a little nudge in the right direction, including helping your Experian credit score by looking at some of your recurring bills, such as rent and your gym membership.*

Experian’s score is based on information in your Experian credit report and uses FICO 8 to determine your score. In addition to offering insight into your credit, you can get a dark web scan to see if and where your personal information has been compromised online.

You use Experian Boost by connecting a bank account or credit card. Then the app will review your spending patterns to identify rent, insurance payments, and gym memberships. Making your regular monthly payment, on time, to these accounts can help improve your Experian credit score significantly.

*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.

Read our Experian Boost Review

2. Self

One of the more active ways to boost your credit score is with Self. The idea here is that you can build a credit history while setting aside money in savings.

With the Self Credit Builder loan, you basically set up a situation where you make monthly payments that are reported to the credit bureaus. At the end of your term, you are given back your initial loan amount (minus interest and fees).

Plans with Self begin with a $25 per month commitment. There is a $9 admin fee to start the loan plus regular interest. Terms are two years in length the larger the loan you take, the greater the potential improvement to your credit.

Read our Self Review

3. Mint

One of the original budgeting apps, Mint offers users the ability to track all of their financial accounts in one location. Connect your savings accounts, credit cards, loans, and investments, and have a single place to see your financial health and wealth. Mint also offers users access to their credit score (TransUnion) and an abbreviated version of their credit report.

The Mint app is free to use and it’s the only app I’ve checked regularly over the past few years. One of the best ways to build your credit score is to pay down your debt so your debt-to-income ratio improves. Knowing what you spend and how you might be able to budget better can really help.

Read our Mint Review

4. Kikoff

Kikoff has a few different products available, the most popular is the Kikoff Credit Account. For a flat $5 monthly fee, you’ll be given a $750 credit line that can only be used to purchase items from Kickoff (not for everyday purchases like gas and groceries). Each month, you make payments to cover the cost of the things you buy and it’s reported to Equifax and Experian.

The KikOff Credit+ Cash Card is another credit-building option and this one does not have a monthly fee attached. Connect your bank account and use your Kikoff cash card to make everyday purchases. The money in your bank account pays off the purchases and the payments are reported to the credit bureaus.

With this product, you’ll have access to 55,000 fee-free ATM’s and when you connect your direct deposit, you’ll receive payment up to 2 days faster.

5. Chime

The Chime Credit Builder is a little different than others on our list because it acts more like a secured card than it does a debit card or loan. After opening an account and connecting your bank account, you’ll have access to a Visa credit card. When you make purchases using your credit card, the funds deposited into your secured account will be used to pay your monthly balance in full.

Chime reports to all three credit bureaus and boasts that members see an average credit score increase of about 30 points. Chime also has a savings account that offers direct deposit payment up to two days early from your employer and currently yields a % APY.

There are no fees or interest payments associated with the Chime Credit Builder account.

Read our Chime Credit Builder Review

6. Extra Debit Card

Extra is one of the more expensive options for building credit but it also comes with a few unique perks. The Extra Debit Card builds credit by connecting with your bank account and using the money in your bank as collateral for your debit card purchases. Every day, your savings are used to cover all the purchases made (the previous day), and the payment history is reported to two of the credit bureaus (Experian and Equifax).

The cost for this service is $149 per year. For an extra $50 per year, you’ll have the ability to earn rewards points on every purchase. The rewards rate is only up to 1%, so in order to make the extra $50 worth it, you’d need to spend at least $5,000 per year on your Extra Debit Card.

Extra writes that members increased their credit score by an average of 48 points by regularly swiping with the Extra Debit Card.

The Extra Debit Card is issued by Evolve Bank & Trust or Patriot Bank N.A. (Member FDIC), pursuant to a license by Mastercard International. Loans provided by Lead Bank. Extra is responsible for credit reporting and reports on time and late payments, which may impact a credit bureau’s determination of your credit score. Rewards points only available with rewards plan.

7. Brigit

The Brigit Credit Builder is similar to the Self Credit Builder in that you loan yourself money, pay it back on time and hopefully watch your credit improve after a history of on-time payments. After signing up, you connect your bank account, select a loan amount each month and Brigit will make auto payments into an FDIC-insured account.

After the term has been completed, the money is returned to you (in full). During the payment phase of the loan, you will not have access to the funds so make sure you can afford to set aside hundreds of dollars across the span of two years. You’ll also have access to up to a $250 cash advance, without fees or interest (not all users will qualify).

There is no credit check when signing up, so your credit will not be impacted negatively. Brigit reports to all three credit bureaus and you can cancel your loan at any time and receive back the loan amounts you’ve already paid.

8. myFICO

The Fair Isaac Company is often considered the premier credit scoring provider. When you go to myFICO, you get access to your FICO scores. However, there is no free version of myFICO. The cheapest access costs $19.95 per month and only includes your Experian credit report.

If you want access to all three of your credit bureau reports and scores, you need to pay $29.95 per month, and your scores only update every three months. For monthly score updates from all three bureaus, you need to pay $39.95 per month.

However, this comes with the advantage of seeing different types of scores, including those that might be considered for car loans or mortgages. You can also get identity monitoring, credit monitoring, and identity theft insurance.

With myFICO, you get detailed information about your score and what’s dragging it down. You can use that information to make tweaks and improve your credit score.

Read our myFICO Review

What Is Credit History and Why It Matters

Credit history is a record of your credit activity over time. It includes information such as the types of accounts you have, how much debt you owe, and whether or not you make payments on time. Lenders can use your credit history to determine if they want to lend money to you and what interest rate they will charge.

Why Does Credit History Matter?

Your credit history matters because it can affect your ability to get loans, lines of credit, mortgages, and other forms of financing in the future. A good credit score means lenders are more likely to approve your loan applications and offer better terms than someone with a bad or no credit history. Having a good credit score also makes it easier for landlords and employers to trust that you’ll pay your rent on time each month.

How Is Credit History Calculated?

Your FICO Score (also known as a “credit score”)” is calculated based on five factors: payment history (35%), amounts owed (30%), length of credit history (15%), new accounts opened (10%) and types of accounts held (10%).

• Payment history – Includes late payments, collections accounts, bankruptcies, etc., while the amount owed looks at how much debt you currently carry compared with the total available limits across all your open lines of credit.
• Amount Owed – Your debt-to-credit ratio is crucially important. Maxing out credit cards is a sign that you’re not ready to take on new credit, so keeping the ratio as low as possible is important to have an excellent credit score.
• Length of credit history – Considers how long ago certain items were reported; newer items may weigh more heavily than older ones depending on their type/severity level.
• New accounts – Look at recent inquiries when applying for new lines of credit; too many inquiries in a short period could negatively impact this factor. Having an established mix between revolving debts like cards and installment loans helps improve this one.
• Types of accounts held – Examines which kind(s) of debts are being managed responsibly – from student loans and auto loans through home equity products and personal finance companies, etc.

All these elements together help create an overall picture of financial responsibility that lenders use when deciding whether or not someone should qualify for their services. Good credit history is essential to your financial health and should be taken seriously. A great way to build credit is using a credit-building app, which we’ll discuss in the next section.

What is a Credit Builder App?

Credit builder apps are designed to help people in their 20s build and improve their credit scores. They provide an easy way for users to manage their finances, pay bills on time, and keep track of spending habits.

How Do Credit Building Apps Work?

A credit builder app works by allowing users to set up automatic payments for recurring bills such as rent or utilities. This helps ensure that the user bills user’s on time each month, which is a critical factor in building good credit. The credit-building app also tracks spending habits so users can better understand where their money is going and make more informed decisions about how they spend it.

Benefits Of Using A Credit Builder App

• Using a credit builder app has several benefits, including:
• Improved financial literacy
• Increased control over budgeting
• Easier tracking of expenses
• A better understanding of personal finance concepts like debt-to-income ratio
• Improved access to financial products such as loans or mortgages with lower interest rates due to higher credit scores

Using a credit builder app may even lead to rewards from certain lenders who offer incentives for having a good payment history.

Advantages Over Traditional Banking Methods

Compared to traditional banking methods, such as opening up a savings account at a bank or applying for a loan through an online lender, using a credit builder app offers several advantages:

• It’s free (most don’t charge)
• It’s fast (users usually get started within minutes)
• It’s secure (encryption technology similar to what banks use)
• It provides real-time feedback on progress (credit reports only look backward)

Methodology: How We Select the Best Credit Builder Apps

At the start of any research project, it must use a transparent methodology for selecting the best credit builder apps. We understand that everyone has different needs and preferences regarding personal finance tools, so we’ve taken an in-depth look at each app on our list to ensure they meet specific criteria.

First and foremost, we looked at App Store and Google Play user reviews. This is one of the most reliable ways to gauge how an app works. We also considered customer service ratings and features like budgeting tools, debt-tracking capabilities, and rewards programs.

We also ensured that our list’s apps are artists and compliant with industry standards such as GDPR or PCI DSS. Security is always a top priority when dealing with sensitive financial information, so we paid close attention to this during our selection process.

In addition to security considerations, we wanted to ensure that all of these apps were easy for beginners who may not yet be familiar with personal finance concepts or terminology. That’s why we have several tutorials within each app description and helpful tips about using them effectively over time.

Finally, the cost was another factor that weighed heavily into our decision-making process. No one wants their budget blown by unnecessary fees, so all the apps featured here offer competitive pricing plans (or they’re free) without sacrificing quality or features. You can rest assured knowing you’re getting your money’s worth on every purchase.

We’ve researched the best apps to build your credit score to help you make intelligent financial decisions.

What Are Some Other Ways to Build Your Credit Score?

Secured Credit Cards

Secured credit cards are an excellent way to build credit. They require a cash deposit that acts as collateral for the card, and they report your payment activity to the three major credit bureaus. This means you can use them just like any other credit card type without worrying about high interest rates or fees. When used responsibly, secured cards can help you establish a positive payment history and build your credit score over time.

Personal Loans

Personal loans are another great option for building credit. These loans come with fixed payments that must be made on time each month to maintain good standing with lenders and creditors. If you make all your payments on time, this loan will show up positively on your credit report and help boost your credit score over time. Examples of installment loans include car loans, student loans, personal loans, etc.

Rent Reporting Services

Rent reporting services allow landlords to report their tenants’ rental tenants directly to the three major credit bureaus (Experian, Equifax & TransUnion). By using these services, renters can take advantage of their rent payments being reported every month, which helps them build a positive payment history and improve their overall scores over time – even if they don’t have any type of debt or accounts open. Not all landlords participate in rent reporting services, so you must check before signing a lease agreement if this is something you want access to.

Becoming An Authorized User On Someone Else’s Card

Being an authorized user on someone else’s account. Another way people can build their individual credit histories is by helping out family members or friends who already have established accounts in good standing with creditors and lenders. Being added as an authorized user allows one person access to another person’s credit line, meaning both parties benefit from responsible spending habits and timely payments made by either party.

What Builds Credit the Fastest?

Credit is important, from getting a loan to renting an apartment. Knowing what builds credit the fastest can help you make intelligent financial decisions and improve your credit score quickly.

Paying Your Bills On Time

Paying your bills on time is one of the most effective ways to build credit fast. Making payments for all accounts—credit cards, loans, rent—on or before their due dates will show creditors that you’re responsible with money. This will have a positive impact on your credit score over time.

Keeping Balances Low

Keeping balances low is another way to build up your credit quickly. When it comes to revolving debt like credit cards, try not to exceed 30% of the total available balance at any given time; if you have a $1,000 limit on a card, don’t let it go above $300 at any point during the month. Doing so shows lenders that you manage debt responsibly and won’t overextend yourself financially.

Applying for New Credit Sparingly

Applying for new lines of credit too often can be detrimental to your overall credit score. Each inquiry takes points off temporarily until they are removed after two years or more, depending on how long ago it was done.

It’s the best practice to only apply for new credit when necessary, such as when making large purchases like cars or homes where having good terms may save thousands in interest rates over the lifetime of repayment. So be sure to weigh whether applying for new lines of credit makes sense based on current needs versus future goals.

Staying With The Same Creditors for Longer

Sticking with creditors longer also helps build trust, which increases chances for better terms down the road should additional borrowing become necessary later in life. If possible, try not to close accounts unless necessary, as doing so could lower scores due to the shorter average account age, which affects scoring models used by lenders today.

Checking Reports Regularly

Finally, checking reports regularly ensures accuracy and allows individuals to avoid potential issues that may arise, such as identity theft or incorrect reporting from creditors themselves. Everyone has access to a free annual report through the AnnualCreditReport website, but other services are available for those who wish to monitor activity more frequently than once a year.

Frequently Asked Questions (FAQ)

Bottom Line

The best credit-building apps can help you build your credit score quickly and easily. Credit history is essential for various reasons, so it must understand what it is and how to improve it.

Credit builder apps make it easy to start building your credit without taking on additional debt or spending money. It’s also worth saying that there are other ways to build your credit, such as making payments on time and using secured cards responsibly.

Finally, the fastest way to build your credit is by ensuring all accounts are paid in full each month and keeping balances low on revolving accounts like credit cards. With these tips in mind, you’ll be well on your way toward improving your financial future.

The post 8 Best Apps to Build Your Credit Score of 2024 appeared first on Doughroller.

About Bluevine

Founded in 2013 and quickly expanding to three locations across the United States, Bluevine helps small and medium business owners streamline their finances. Bluevine also provides flexible funding that allows you to leverage your clients’ creditworthiness instead of relying solely on your own credit score.

Bluevine offers a complete suite of business banking services to help you keep your company in good financial standing:

• Business checking with no fees or monthly minimums plus interest paid
• A revolving line of credit to ensure your ability to continue to pay your vendors and other business expenses on time

Trustpilot users rate Bluevine 4.2 stars out of 5, based on more than 7,500 reviews.

Highlights

• Dedicated Account For: Checking, business financing
• Account types: Checking, business loan, business line of credit
• Min Opening Deposit: None
• Minimum balance required: None
• Monthly Fee: None
• ATM Access: MoneyPass network of 38,000+ ATMs
• Availability: Online
• 3rd Party integrations: Quickbooks

How Bluevine Works

Online Business Checking

Bluevine’s online business checking accounts are FDIC-insured up to $250,000 through Coastal Community Bank. Bluevine requires no minimum deposit or balance and charges no monthly, NSF, or incoming wire fees. It only takes 60 seconds to sign up for an account.

You’ll be able to perform unlimited transactions, and Bluevine currently offers a % APY on all balances up to and including $250,000.

Easy Deposit Options

Bluevine’s mobile app makes it simple to deposit checks. Just take a picture of the check from within the app, and your deposited funds will typically become available in only two business days. If you need to deposit cash, Bluevine partners with GreenDot, which has more than 90,000+ locations nationwide. You can also transfer money easily between Bluevine and other bank accounts using wire transfer options.

Streamlined Payment Options

With Bluevine, you can pay vendor invoices and bills quickly and easily. Send payments using your bank account or a linked credit card as a funding source, and choose how you want your recipient to receive their funds: via ACH, wire transfer, or check. Bluevine customers also receive 200 printed checks to use when a paper payment is needed.

Debit Mastercard

Your Bluevine Business Debit Mastercard helps you keep purchases made for your business separate from those made for personal use. You can also use your debit Mastercard to make fee-free withdrawals at partnered MoneyPass® network ATMs located at more than 38,000 branches. In many cases, withdrawals at non-network ATMs are still processed and only incur a small fee (determined by the ATM owner).

Customer Service

Bluevine offers a live support customer care line so you can quickly get help with your account when needed. If anything happens to your debit card, you can lock it in a matter of minutes. Support is also available via email or through Bluevine’s resource center.

• Phone Number – 1.888.216.9619

Linked Accounts

You can link third-party accounts and credit or debit cards to your Bluevine account. You can also receive incoming wire transfers for free, and send outgoing wire transfers for only $15. You can use linked credit cards to pay bills or vendors, with only a 2.9% fee.

Other Bluevine Features and Benefits

Revolving Line of Credit

Bluevine also provides a revolving line of credit to business banking clients who meet specific qualifications. You’ll need to have been in business for three years or longer, have a FICO score at or above 625, and show regular revenues above $40,000 a month. Approval for a line of credit typically takes less than five minutes.

Your line of credit can range from $5,000 to $250,000 and you can draw against it at any time by requesting funds through your online dashboard. Funds will typically arrive in your account in hours, and you can repay them on a fixed weekly or monthly schedule spanning six to 12 months.

There are no fees to open or maintain a line of credit with Bluevine. Your interest rate will vary depending on your business and you’ll never need to submit prepayment fees or account closure fees. As you pay back each draw, your line of credit automatically replenishes for future use as needed.

How to Sign Up with Bluevine

To be eligible for a Bluevine account, you must be:

• The owner of a small business
• At least 18 years old
• A U.S. citizen or resident (with a verifiable U.S. address)

Your business cannot be in any of the following industries:

• Adult Entertainment
• Gambling
• Weapons and Firearms
• Illegal Substances

To apply for Bluevine, you need to complete two steps:

• Provide your name, address, date of birth, social security number, and other personally identifying information, including a copy of valid photo ID
• Provide information about your business, including your business address, tax ID number, and last three months of banking statements

If you plan to apply for Bluevine’s line of credit, you’ll also need to provide:

• Information about your business
• A read-only connection to your bank account

Bluevine Pros and Cons

Pros

• Account linking – You can link your other financial accounts for sending and receiving money.
• Easy vendor payments – Pay vendors and bills via ACH, wire transfer, or check, including paper checks.
• Respectable APY – Earn % interest on balances FDIC-insured (up to $250,000).
• No fees – Pay no fees for incoming wires, ACH, in-network ATMs, or monthly account maintenance.
• Streamlined access – Gain web and mobile access to your account, and live customer support via email or phone.

Cons

• Repayment terms are short – Short repayment terms that require large payments on a weekly or monthly basis for line-of-credit advances.
• Some services are not available in all states – Line of credit is not available in North Dakota, South Dakota, or Nevada.
• Personal guarantee requirement – A requirement of personal guarantee (ties to both your business’ tax ID and your social security number).

Bluevine Alternatives

Novo

Novo is not just a business bank account, but a business toolbox. You can connect your account with all of the tools you use most, including TransferWise, Slack, Zapier, Stripe, Xero, and QuickBooks. You can also connect your Bluevine account to your other bank accounts to readily transfer money back and forth.

The Novo business debit card works to make purchases or withdrawals in many countries worldwide, and it refunds all ATM fees. You can make payments, send money, and pay bills from the mobile interface in real time. A Novo account also comes with $5500 worth of perks in business tools and apps.

Read our Novo Review

Lili

Lili is a bank designed for freelancers. It has a heavy focus on its mobile experience, making it perfect for freelancers who want to manage their money while on the go.

The bank account comes with no minimum balance and no monthly fees. There also are no fees for things like overdrafts, making it one of the cheapest and easiest ways to bank. You can easily manage your money through the Lili app and you maintain easy access to cash with more than 30,000 fee-free ATMs around the country.

There are also perks specifically for freelancers, like the option to set aside a portion of your income to pay taxes. Lili will also track your debit card purchases and categorize them for you, making it easier to take deductions, and reducing your tax bill.

Read our Lili Review

NorthOne

NorthOne is a bank for small businesses and freelancers. Newcomers can open an account in three minutes to unlock benefits like mobile check deposits, faster payments, and remote banking.

Through its versatile app, customers can do payroll, settle bills, and move money around in just a few taps. Debit card holders can withdraw cash for free through ATMs and NorthOne automatically categorizes purchases seconds after the transaction has gone through to make bookkeeping easy.

Read our NorthOne Review

Frequently Asked Questions (FAQ)

Bottom Line: Is Bluevine the Right Choice for You?

Bluevine can be the perfect solution for small business owners looking for ways to expand their company and stabilize their cash flow. You’ll be able to access all of the benefits of a traditional bank account with fewer fees and no need to visit a physical bank branch. Use your phone to complete every transaction with maximum speed and efficiency.

The ability to fund outstanding invoices can resolve nagging cash flow issues and enable you to pay employees and vendors on time and in full. You can transfer funds and make payments directly from the app. You’ll also be empowered to schedule one-time or recurring payments days or months in advance.

If you’re in the middle of an expansion and need a working capital infusion, a revolving line of credit will help you scale efficiently. You can pay down your draw rapidly or take out another one as needed. The interest rate on your line-of-credit draws is typically less than the fees charged for a merchant cash advance or a traditional business loan.

Bluevine Business Checking Account

Chris Muller

Interest Rate

Mobile App + Features

Fees

Customer Service

Summary

Bluevine has everything a small business needs in a checking account. No fees, solid interest rates, and multiple account offerings.

4.8

Open a Business Checking Account with Bluevine

The post Bluevine Review – Small Business Banking Without a Monthly Fee appeared first on Doughroller.

Related: Wealthfront Review

What is Wealthfronts Cash Account?

Wealthfronts Cash Account is a new account offered through Wealthfront that gives you the ability to earn % APY on any cash you don’t have invested within your Wealthfront account. Wealthfront created this account to sock away money you may need later–whether it’s to invest or not.

The account has some nice features, too. Here are the highlights:

• FDIC insured up to $5 million: you can read more on this below, but Wealthfront uses what they call Program Banks to multiply the traditional FDIC insurance you’d typically get.
• No market risk: this money isn’t invested, so it’s not subject to significant fluctuations up or down like you’d see in a stock market.
• Unlimited, free transfers: unlike a standard savings account, you can move money both in and out as much as you’d like with no fees.
• No fees: speaking of fees, there are none with this account. That includes advisory fees and management fees.
• $1 minimum: yep – it only takes $1 to get rolling with this new account.
• Fast and easy setup: you can actually set up a cash account from your phone in two minutes.
• Checking features: you’ll have access to a debit card for purchases, plus the ability to pay bills, direct deposit your check (and get it up to two days early), pay others, deposit paper checks, and more.
• Self-Driving Money: Put your savings plan on autopilot. You tell Wealthfront what you’re saving for and how much you want to save, and they’ll automate the rest.
• Organize your cash: Create buckets for your savings goals, like an emergency fund, a down payment on a home, or a large purchase.

More on the Checking Features

In addition, the checking features allow you to pay others using apps like Venmo, PayPal, and Cash App, make purchases with Google Pay and Apple Pay, and deposit paper checks using the mobile app. So for all intents and purposes, it functions as a checking account–only with a much higher APY.

Wealthfront Cash now gives you the ability to set up a direct deposit into your Cash account and get paid up to two days earlier. On top of that, you’re now able to immediately invest in the market, using funds from your Wealthfront Cash account. Not only does this make things easier, but it also gives you more investing days out of the year (if you’re getting paid early).

Self-Driving Money

Wealthfront offers a suite of cash-management tools that it calls Self-Driving Money. The idea is that customers who use Wealthfront Cash won’t have to worry about the day-to-day management of their money. Instead, Wealthfront can handle the little stuff like making sure you have enough money to pay the bills.

With Self-Driving Money, you set basic savings and investing goals. You might tell Wealthfront that you want to save $50,000 for a down payment on a home, $3,000 for a vacation, and invest for retirement.

Wealthfront automatically monitors your cash flows and will distribute your income among your various goals automatically, always making sure you have enough cash on-hand to spend on essentials.

What is the Interest Rate?

The account pays % APY, which is pretty good considering it’s also a checking account. Interest will accrue daily, and it’s credited to your account monthly–but usually within the first week of the next month. Remember that this interest rate can change as the market fluctuates.

It takes only $1 to open a cash account and get started, and you don’t even need to have a Wealthfront investment account to be eligible.

Are There Fees?

There are no fees for the Wealthfront cash account. They charge no advisory, withdrawal, or other fees for this account. The standard Wealthfront investment advisory fee of 0.25% doesn’t apply to the cash account. Note that if you have a fee waiver on your Wealthfront investment accounts, the cash account balance you hold won’t count toward the amount being managed for free.

So you’re probably wondering how Wealthfront makes money. I was too.

Wealthfront does get a small piece of the interest earned on the money sitting in your cash account. That’s typical for banks. But since Wealthfront uses so much automation already, their overhead costs are low and, like their investment platform, they can pass the savings on to their customers.

Is My Money Protected?

The short answer is yes. But it’s kind of complicated. To give you FDIC insurance, the money that sits in your cash account is automatically moved into what Wealthfront calls unaffiliated banks to provide you the standard $250,000 insurance coverage through the FDIC.

But here’s the kicker. Since Wealthfront uses a multitude of affiliated banks, you get FDIC coverage of up to $5 million on your cash deposits in this account or up to $10 million for joint accounts.

You don’t do or see anything happening behind the scenes–Wealthfront handles this with what they call Program Banks. You just need to log in and access your money. Wealthfront will move cash between these banks to ensure you’re covered. If you want to learn more about this, just check out the Cash Sweep Program Disclosure Statement. It’s actually common for this to occur.

Moving Money Around

Moving money around is easy! Wealthfront now allows you to transfer money from your cash account to your Wealthfront investment account.

What About Taxes?

Like any other savings account, you’ll get a 1099-INT around tax time to make sure you’re paying taxes on the interest you earn with your Wealthfront cash account. You’ll want to talk to a tax professional if you have specific questions on this.

Why Wouldn’t I Sign Up?

The rate is appealing, and it’s making banking even easier for consumers. But you have to consider the data impact. Founder Dan Carroll has been on record saying he wants to create self-driving money and the company needs data to do that adequately. Long-term, he wants to fulfill a client’s every financial need.

So by opening a cash account, you’re giving Wealthfront access to more of your personal financial data. Now, this isn’t necessarily a bad thing–all banks capture their customers’ data, but it’s something to think about.

Learn More: Related: Best Cash Management Accounts

Bottom Line

This sounds like an excellent addition to Wealthfront. They’re making strides to become your go-to provider for everything money. Andy Rachleff, CEO of Wealthfront, said “Our cash account is another important milestone on our path to deliver our ultimate vision of Self-Driving Money,” In order to optimize and automate all of our clients’ finances we need to offer ideal short and long-term destinations for their cash. You can expect us to further extend our services into the banking sector this year.”

The post Wealthfront Cash Account Review appeared first on Doughroller.

So, in this article, we’ll explore how much net worth you should have. Let’s get started by understanding net worth in a bit more detail.

What Is Net Worth?

Net worth is the value of any assets you own minus any liabilities you owe. Your net worth shows you your overall financial position and how well you’re doing against peers of the same age and income range. Your net worth can be positive or negative.

Your net worth is positive if your assets exceed your liabilities. It’s negative if your liabilities exceed your assets. Net worth can be applied to individuals, countries, companies, or entire sectors.

For example, for a business, net worth might also be looked at as the book value or the shareholders’ equity. Individuals with a high net worth are known as high-net-worth individuals or HNWI.

Assets and Liabilities

Assets could be both liquid and illiquid. Illiquid assets are difficult to convert into cash quickly, and they might be things like real estate property or a business you own. Liquid assets are investments or possessions that can be sold for cash relatively quickly and lose little value. A good example of a liquid asset is something like a bank account.

Other examples of liquid assets include CDs, mutual funds, stocks, bonds, or any possessions with real value, like antiques, artwork, or jewelry.

Liabilities are any debts you owe. Liabilities include things like auto loans, home mortgages, your student loan debt, credit card balances, personal loans, any taxes you haven’t paid, liens and judgments, medical debt, business loans, and more.

Ways to Calculate What Your Net Worth Should Be

There are a few simple ways to calculate what your net worth should be. For simplicity, I will give you two examples.

The first comes from the book The Millionaire Next Door and authors Thomas Stanley and William Danko. Their book uses the following formula for calculating your net worth as a rule of thumb. It says:

Net Worth = (Your Age x Your Pre-Tax Income) / 10

This is a good starting point for calculating what your net worth should be.

The next method for calculating your net worth comes from financial advisor David John Marotta, and he uses a formula where it looks at how much you have saved based on your age and determines what your net worth should be. So as you get older, you should have a higher multiplier of whatever your annual spending is.

For example, he has a couple of variations of this article and his formula out there, but the one I have just looked at shows a 1x multiplier for age 30. That means whatever you spend a year, at age 30, you should have equal savings. Here’s the full chart from his website:

As you get older, that multiplier increases. So, for example, by age 45, you might have a 7x multiplier, meaning you should have seven times whatever you spend every year put away in savings. And that should determine what your net worth should be.

Using the example above of a 30-year-old person who makes $100,000 per year, let’s assume that they spend $60,000 per year. So, using this formula, your net worth should be equal to whatever your annual spending is, so $60,000. This is a little bit more of a realistic number than the ones that the authors of The Millionaire Next Door came up with.

Now, let’s jump ahead to age 45. Let’s say this person has increased their income to $150,000 per year. According to this formula, you would then use a 7x multiplier to determine your net worth. So, if you make $150,000, let’s say by this point, you spend $80,000 per year. So let me take $80,000 and multiply that by seven, which gives you $560,000.

So, this formula says that by age 45, if you’re spending $80,000 a year, you should have a net worth of around $560,000. This number is more realistic when you’re younger in your career, but I think it’s a little bit unrealistic as you get older.

By age 45, to have a net worth of $560,000 is great, but the bigger concern is, should you be spending $80,000 a year? So there’s more due diligence to be had with this formula. However, it should be a good quick pulse check for you.

Learn More: Tools to Track Your Net Worth

Net Worth Targets by Age and Median Household Net Worths

Below, we will talk about some net worth targets combined from several sources. First, looking at the two formulas mentioned above, and considering other research that’s available online, these are some general guidelines as a starting point for what your net worth should be.

Remember, a lot of this will depend on your financial situation, where you live, what you do for a living, and what your investment horizon looks like. So this is just a starting point.

General Net Worth Targets by Age

• The 20s – When you’re in your 20s, it’s generally accepted that you will be focusing on getting out of any debt like student loans or credit card debt you may have accumulated in college. You’ll also get started with your first job and get set up with a retirement plan so you can build your net worth. Anything in your 20s in terms of positive net worth is generally okay.
• The 30s – By the time you reach your 30s, you might have at least half of your salary from your 20s saved. For example, if your salary in your 20s was $60,000, you may have a net worth of about $30,000 by the time you’re 30. Again, this is just a general guideline and may differ based on your situation.
• The 40s – By age 40, aim for two times your annual salary as your net worth. So, if at age 40 you are now making $100,000, your net worth should be at least $200,000. You can see the stark differences in the formula used above, where the person at age 45 spending $80,000 per year should have had a net worth of around $560,000. As you can see, it depends a lot on what you make and how much you spend when calculating your net worth.
• The 50s – At age 50, your net worth should be roughly about four times your salary. So, if your salary at age 50 is $150,000, your net worth should be right around $600,000. Usually, around this time is when you’re making the most money in your career.
• The 60s – By age 60, your net worth should be around six times your annual salary. So if at 60 years old, you’re making $175,000 a year, your net worth should be about $1,050,000.

These are just general guidelines. So much depends on how much you make and how much you spend. How much you spend can be more critical for net worth than how much you make.

I have a relative who made no more than $50,000 running his own business for his entire career, and he retired by the time he was in his early 50s because he saved so much of his income. So, it doesn’t matter how much you make. I would focus more on how much you save.

Real Estate and Retirement Accounts

Another common way to grow your net worth without tying money up into retirement accounts is real estate. As real estate typically appreciates over time (again, this will vary greatly depending on where you live), it can help grow your net worth exponentially.

Remember, the calculation of net worth includes your assets. It doesn’t have to be liquid assets or cash. If you own a home that’s worth $500,000, that gets added to your net worth total. Now, remember that if you have a mortgage on that home, that’ll be considered a liability and lowers your net worth.

In this example, if you have a $500,000 home, but you owe $400,000 on it, you’re positive $100,000 in your net worth.

Retirement accounts are also a great way to build your net worth. It’s probably the most common asset involved in your net worth as well. And this includes things like a 401k or a 403(b) if you’re at a nonprofit organization, but you can also have your retirement savings in something like a Roth IRA or a Traditional IRA.

Another thing to remember is that an HSA is a great way to boost your retirement savings, as it can be converted into an asset much like an IRA after a certain age.

Read More: Is Your Net Worth Below or Above Average?

Ways to Improve Your Net Worth

Now that you have a better understanding of what net worth is, how it’s calculated, and some of the general guidelines, let’s consider some ways to improve your net worth.

Reduce Your Spending and Pay off Debt

To increase your net worth, you have to have a positive cash flow. The best thing you can do is track your spending. See if you’re living below your means, so you’re spending less than you make.

If you’re spending more than you make, you have to cut your spending to avoid going into debt or cover expenses with more debt like credit cards. Also, to set money aside for savings and to increase your net worth, you have to spend less than you make.

I always recommend creating a budget as a starting point. There are a couple of options.

If you’re someone who likes to watch where every dollar comes and goes, I would look at You Need a Budget, but if you’re someone who wants something simple, check out Empower.

(Personal Capital is now Empower)

Related: Empower vs. YNAB – Which Will Best Benefit Your Financial Life?

Snowball Method

Along with creating a positive cash flow is paying off your debt. Reducing your debt will reduce your liabilities, allowing your net worth to increase. You could pay off your debt in many, many ways.

I would advocate for two methods, the avalanche method and the snowball method. The snowball method became popular with Dave Ramsey, and it includes listing out your debts from the smallest dollar amount to the highest dollar amount.

And you start by paying off the balance with the lowest dollar amount. Once that debt has been paid off, you move on to the next smallest dollar amount, adding the money from the payment you made with the first debt to the second one.

Math doesn’t get factored into this because it does not include interest rates. So common sense and math would tell you to pay off the highest interest rate debt first. However, psychology shows that paying off small balances creates smaller wins and keeps you motivated to keep going. Plus, it reduces the total number of debts you have.

One thing to know is that the snowball method does require a lot of discipline because after you pay off a debt, you’re supposed to take that payment and apply it to the next smallest payment. One risk you run is taking that extra payment you no longer have to pay and spending it.

Avalanche Method

The next method is the avalanche method, also called the stacking method, and this involves listing your debts from highest to lowest interest rate, and you pay off your debt in that order.

Mathematically, this makes a lot more sense, but it does not count how much debt there is. Even if you have a $1,000 balance at 20% interest, and that’s your highest interest rate, it will be paid off before any larger balances at a lower interest rate. Much like the snowball method, once the first debt is paid off, you move to the second-highest interest rate debt. You can even take the same payment application method as a snowball method and apply that payment to the next highest interest rate.

Put More Money in Savings or Increase Your Salary

Try to put more money in savings. The first way to do this without making more money is to take a long, hard look at your budget and see what kind of cuts you can make to free up more income.

Maybe this means cutting out a gym membership or cutting out subscriptions you don’t use anymore. You also may be able to negotiate better interest rates on loans you have or debt you have and utilities, things like your phone bill or your cable bill.

After you have gone through your budget to find things to cut out, try making more money either at your current job or through a side hustle.

At your current place of employment, depending on the job and the job level and the company, consider trying to get a pay increase every two years, if not every year. Some companies will give an annual pay increase to keep up with inflation, but not all companies do this.

If you haven’t received a pay increase in two years, I would recommend finding a way to talk to your boss about that.

The other option is to pick up a side hustle, whether it means delivering groceries through Instacart, starting a blog, or selling stuff online through Etsy. Picking up a side hustle is far more commonplace than it was several years ago, and it’s a great way to make extra money. You can then use that extra money to either pay off your debt or put it in savings.

Some Other Financial Markers to Look At

Hopefully, by this point, you have a better understanding of net worth, how to calculate it, and how to improve it. We will finish the article by giving you other milestones or financial markers to look at as you’re growing your net worth. And these aren’t necessarily hard and fast rules, but they’re just different things for you to consider as you’re growing your net worth.

Positive Net Worth 10 Years After Your Graduation

After you graduate, you’ll usually be entering the workforce. One measuring stick is to look at ten years out from your full earning potential, which doesn’t include residencies or internships. You are considering ten years into your career.

So, if at age 23 you get a full-time job and get a paycheck, by age 33 is when you would use this measuring stick. And the measuring stick is that your net worth should be positive.

If your net worth is positive ten years after you graduate and start in the workforce, this is a good indicator you have upward-trending financial health. If you have a positive net worth earlier in your career, that’s better.

For some people, five to seven years is a better measuring stick, but considering the environment today, having a positive net worth ten years after graduation is a good milestone.

Average Rate of Savings

According to research by the Federal Reserve Bank of St. Louis, Americans’ average savings rate as of early 2020 is around 7%. However, the median is a lot lower. For example, 31% of people are saving nothing, 27% of people are saving between 1 and 5%, and 41% save 6% or more.

The study also found that more income didn’t correlate to more savings. The income percentages for the most common savings rate were similar across all income levels.

People always compare savings rates to countries like China, which might be extreme because the economy and lifestyle are so different. However, just as a point of reference, the latest data shows that the average savings rate is around 40 to 45% for people living in China.

According to the study we just referenced, if 7% is good, aiming for somewhere between 10 and 20% of our savings rate, if not more, is better.

Determining When to Retire

You may have heard of the FIRE movement before. But I want to talk about the FTI ratio, and this was created by a guy named Doug Massey in the early 2000s.

It’s not something that you’re going to find on many blogs or in a lot of videos. It’s pretty well-hidden throughout the forums on places like Quora and Reddit. However, it’s an interesting way of looking at retirement.

So the FTI ratio (I’ll let you look up what FTI stands for) is your age times your net worth, divided by your yearly expenses. So:

FTI = Age x Net Worth / Annual Expenses

If you’re 50 years old and your yearly expenses are $50,000, then you would take 50 times your net worth and divide it by $50,000.

Massey says that if your FTI number is greater than 1,000, it’s safe to retire, and you have enough net worth to cover your expenses for the rest of your expected lifetime. It also applies to quitting your job to find something else.

So by following this formula, you should have enough net worth to last while you’re looking for another job.

Other metrics to use, such as the Barista FIRE, Fat FIRE, and other variations of FIRE, determine when to retire. But I thought this one was interesting because it’s less known, and it’s a unique way of looking at when you can retire.

Final Thoughts

Well, there you have it. This hopefully showed you how much net worth you should have based on your age and other varying factors. I have to reiterate that this information will differ depending on your current financial situation, your job, where you live, and many other factors.

However, if you use this as a starting point, it could be helpful because you could compare where you stand versus where other people might stand, and it might allow you to set financial goals.

Regardless of your net worth, the key things you should remember are to spend less than you earn, save as much money as you can, and pay down your debts. Following just those three simple rules will have you well on your way to creating a positive and high net worth in time.

The post How Much Net Worth Should You Have? appeared first on Doughroller.

Good thing then, that Chime®–a new platform that is backed by Bancorp Bank or Stride Bank, N/A/, Members FDIC–offers checking, savings, and debit card accounts.

Before you decide to start an account with Chime, look over the fine print. In this article, I’ll review Chime in detail, so you can determine if it’s right for you or not. Let’s start with learning more about Chime itself.

What Is Chime?

Many of us are getting fed up with traditional banks. Banking is something that we need to have access to, but the associated fees and other nuisances that go along with it are less than desirable.

So, we’ve been seeking banking alternatives that do things in a more customer-friendly fashion. One such financial app is Chime.

Chime is an online or “mobile-only” app that offers you an alternative to traditional financial managing methods. If you are sick of having to pay high fees or if you don’t want to deal with overdrafts, then you might be interested in this financial app.

It makes things convenient and offers you a streamlined service that’s easy to understand.

How Chime Works

The layout of Chime is simple: every one that signs up will have access to a checking account (Chime calls this a “Spending Account”), a savings account, and a debit card.

All the money that you deposit into your Chime account will initially go to your checking account. You can use that money to make everyday purchases with your debit card, use it online like a standard checking account (to send money), or write paper checks using the Chime Checkbook app.

Money from your checking account can be transferred to your savings account. Then, you can choose to keep it there or set up external transfer accounts (there is no charge to transfer cash).

Chime Key Features

SpotMe®

SpotMe lets you make debit card purchases that may overdraw your account free of any overdraft fees. Chime will “spot” you whenever you want that little extra cushion to cover the cost of a purchase.

There isn’t any fee to use SpotMe, but you’ll have the ability to leave Chime an optional tip (note that whether you tip or not will not affect your eligibility for SpotMe) as soon as you repay your negative balance. Chime says this tipping helps them offer this service to its members at no strict cost.

To be eligible for SpotMe, Chime members who receive a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each month. Limits are determined by Chime based on factors such as account activity and history. It’s important to know that any purchase you make that would overdraw your account over your SpotMe limit will be declined. It’s also important to know Chime Member Services can’t manually boost your SpotMe limit.

Compared to other banks, SpotMe is pretty unique. Most banks offering overdraft protection require you to open a savings account to cover the overdraft or you’ll get bank fees for those overdrafts. But as you’ll see in the rest of the review, Chime is different. That’s why they’ll allow you to overdraft up to $200 with SpotMe without even charging a fee. In addition, they don’t ask that you link your savings account to your Chime Checking Account or charge you a fee for SpotMe.

Finally, know that SpotMe only covers debit card purchases. If you choose “credit” when you’re buying something, you won’t be covered with SpotMe. To begin using SpotMe, according to Chime:

Open the Settings tab in your Chime app to find out if you’re eligible for the SpotMe feature (make sure you have the latest version of the app).

Once you agree to the SpotMe Terms and Conditions, you are officially enrolled in SpotMe!

When you’re enrolled in SpotMe, you will be able to make debit card purchases that overdraft your account up to $200*.

When we receive your next deposit, we will automatically apply it to your negative balance. No overdraft fees are applied. Ever.

Chime Savings Round-Ups

Every time you use your debit card to make a purchase, Chime will automatically round the change up (to the nearest $1). Then, it will deposit that change into your Chime savings account.

For example, if you make a purchase at the grocery store for $44.26, Chime will charge your debit card $45. The additional $0.74 will be transferred into your savings account automatically. This is done for every single purchase you make.

On the surface, this may not sound all too different from other money-rounding apps, like Acorns or Qoins.

Savings round up bonuses will be deposited every Friday, and the max amount of bonus money you can earn as a result of these round ups is $500 annually. When you consider the example above, I would venture to say that hitting the $500 figure in a single year would require many thousands of annual purchases. It would be very difficult to do (meaning the cap should not be considered a negative factor).

Also read: Best Round-Up Apps

High Yield Interest Rate

Chime is now paying an APY right in line with the best online savings accounts available. So not only can you score with their top-notch features, but you’ll also earn a top-notch interest rate.

Related: Best Online Savings Accounts with High Interest

Automatic Savings Feature + Checkbook

Chime allows all of its members to have direct deposits placed into their checking accounts. From there, users can choose to set up an automatic savings feature, which allows 10% of your direct deposit to automatically be placed in your savings account for direct deposits over $500. You’ll find this in your Chime account.

Chime Checkbook allows you to send a paper check free of charge, to anyone you need. The app can be found on any mobile device or in your Chime online account. Plus, there is no limit to the number of checks you can send each month. However, there is a limit of $5,000 per check sent and $10,000 per month in the total amount of checks sent.

ATM Access

You can enjoy many free ATMs to withdraw money from your account when you sign up for Chime. The ATM network is robust with more than 60,000+ fee-free ATMs through the MoneyPass and Visa Plus Alliance ATM networks. If you use an out-of-network ATM, then the fee will only be $2.50, which is better than most traditional banks. *Out-of-network ATM withdrawal fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.

Automatic Deposits and No Foreign Transaction Fees

You can make use of features such as an automatic deposit for your paycheck. This makes it possible to get your paycheck early and is one convenience that draws people to the app.

You also won’t have to put up with any annoying foreign transaction fees so those who travel abroad can rest easy.

Chime Pricing & Fees

The reasons why you would generally incur a fee on your checking account are somewhat universal. They are:

• Your average daily balance dropped below the required amount to keep the account fee-free.
• You did not make enough debits from the account in a month.
• The account you had signed up for was discontinued, and you were automatically enrolled in a different program… one that now incurs fees.

However, Chime does not charge for any of these things.

In fact, the only fee you will ever find from using your Chime savings, checking, or debit card account is if you make a withdrawal from an ATM that is not on their network.

No minimum fees, no monthly fees, and no membership fees. Ever. But that’s not the only reason to consider using Chime for your everyday money management needs.

Also, the fact that there are no foreign transaction fees to worry about is a real upside for people who travel out of the country regularly. If you travel out of the country on business or if you have family in another country, then you will not have to worry about fees hampering your experience. The fees are kept to a minimum here, and that is the most positive aspect of this app.

Signing Up for Chime

Signing up for Chime shouldn’t be overly complicated, but it is not always instantaneous. Some users have reported not getting their debit card for up to two weeks after signing up.

This can be quite an inconvenience for some and is something you will want to consider before moving forward. The actual application process is simple enough, but you may wind up waiting longer to take advantage of the account than you would like.

You will only need to provide the standard forms of identification to get things started. Getting an account is easy enough to make this a practical option for most people. As long as you have a smartphone, it should be simple to sign up and then manage your account as necessary.

Just remember that there are no traditional bank branches for you to rely on so you will be doing everything using your smartphone.

Chime Security

The security of your money is very important, and you want to make sure that you can trust any bank before doing business with them. Thankfully, Chime has the fundamental security credentials you would expect from a bank.

They are partnered with the FDIC so you can feel confident that your money will be in good hands if you use Chime. You can set up both a checking (again, called a spending account) and a savings account with no problems.

Being this is a mobile-only app, you may not get the same help you would at a traditional bank. If you do encounter security problems, it will likely be more difficult to resolve these issues. They do not have the same robust support structure that most traditional banks do, so remember this before you sign up.

Chime Mobile Support & Accessibility

Chime’s mobile support and accessibility is its best feature, aside from the lack of fees. You will be managing your Chime account entirely from your mobile phone.

You can access your account at any time and can make whatever moves are necessary on the fly.

Keeping track of how much money is in your account will always feel effortless. You won’t be left guessing and should be able to keep your money moving smoothly. This is a straightforward experience that allows you to do what you need to do without making it a hassle.

Chime Customer Service & Support

Customer service and support staff might be lacking when you use Chime. Being a mobile-only app puts it at a disadvantage in several ways.

For example, you’ll never have the option to talk with someone about any problems you are experiencing face-to-face. If there is an unresolved issue with your account, then you must try to solve it over the phone.

The level of their customer support staff is not up to the same standard as many traditional banking options. This could wind up harming your overall experience and will make some people shy away from signing up.

If you are worried about having a tough time with the customer service situation, then go with a traditional bank. Using Chime won’t be as easy if you’re expecting a robust customer service platform.

The customer service agents are there and will work to assist you. Just understand that customer service is not an area where Chime shines.

Pros & Cons

Alternatives

One of the alternatives to using Chime will be signing up with a traditional bank. Choosing one of the big branches in your area might be more beneficial to you.

These large banks can also act as lenders when you need loans, so it’s helpful to build a relationship with a renowned bank. There are other options closer to what Chime offers as a mobile-only option, too.

You could consider signing up at Simple. This is another fee-free checking account you can take advantage of. It has no monthly fees and a 0.01% APY. It might be worth it to consider going this route instead, so take your time to consider your options before moving forward. It is another all-digital option, but it might be better than Chime in a few key ways. This option will still have some downsides that Chime does.

If none of these options work for you, check out our list of free checking accounts you can open right now.

Learn More: Best Mobile Banking Apps

Bottom Line – Is Chime Right for You?

When you consider what Chime has to offer, this is a terrific offer for anyone in need of a fee-free debit card and a fee-free checking account.

To anyone that cannot use a cash back credit card to make routine purchases, this is a fantastic alternative. For this reason alone, I would highly recommend Chime.

I’d also recommend Chime to anyone in need of an online checking account. The ability to send paper checks without cost is a huge plus, and it would be nice not to have to worry about unnecessary banking fees.

Utilize the Chime savings account and take advantage of their automated savings tools, but also be smart and set up external savings accounts. Interest rates are on the rise and it would be foolish to miss out.

The post Chime® Review appeared first on Doughroller.

What is MoneyPatrol?

MoneyPatrol is a personal finance app that monitors all of your financial accounts securely and assists you in tracking your spending and managing your personal finances overall. The app tries to set itself apart by offering “advanced Money Tracking, Monitoring, Alerting and Budgeting” tools.

Once you sign up, MoneyPatrol will share alerts, insights, and notifications so you can make better financial decisions.

The way it works is fairly straightforward:

• Register. Sign up with MoneyPatrol through a simple signup form (more on this below) and receive a 15-day free trial.
• Add your financial institutions. Easily connect your bank accounts, credit cards, mortgage loans, and other financial institutions to MoneyPatrol so it can begin monitoring.
• Start receiving alerts and insights. Once you’ve connected everything and MoneyPatrol has a chance to do its thing, you’ll start to get alerts and insights via text and email, as well as have access to a customized dashboard.

From there, you can begin to make more sound financial decisions and manage your money more efficiently.

MoneyPatrol Features

Broad Coverage of Financial Institutions

One of the things that frustrate me the most about these types of apps is that they don’t support a full list of financial institutions. MoneyPatrol offers support for more than 15,000 different financial institutions in both the U.S. and Canada. They also offer support for a wide range of account types.

Advanced Dashboard With Data Drill Down Facility

MoneyPatrol creates a customized advanced dashboard once you sign up and connect your accounts, which allows you to see data at any level you need–from a high level all the way down to super-detailed.

Get Latest Transactions Along With One Year Data History

Because your accounts are linked directly to MoneyPatrol, you’ll get real-time updates from all of your accounts, meaning you will see all transactions centralized in one location. You can also go back a full year to retrieve any transaction data you need, which is helpful at tax time.

Get Informed About Money Out-Flow and Money In-Flow

With insights and alerts, you can customize MoneyPatrol to tell you about money coming in and money going out. What I like about this feature is a) the ability to get reminded of when my paycheck comes, and b) the ability to see when large transactions occur–especially on accounts I don’t use.

Know Your Credit Usage, Rates, Balances, and Payments

Part of the insights MoneyPatrol provides is your credit usage and other pertinent information about your credit cards. This is extremely helpful when you’re looking to pay down debt as it gives you a quick overview of where you can transfer balances, where you can try to reduce rates, and if your utilization is too high.

Track Your Available Money and Investment Holdings

With a custom dashboard, you’re able to see how much free cash you have available to spend, as well as where your money is invested (assuming you’ve linked your investment accounts). I like this feature because it tells me not only how much I have to spend but also how much I have to invest–and where I need to focus my next investment.

See Your Spend Trends and Patterns Over Time

In addition to seeing your day-to-day transactions, you’re able to review your spending trends and patterns over time. This will allow you to see where you spend the most (in what categories, how often, etc.) and make more informed spending decisions in the future.

Know Your Top Merchants and Categories by Spend

Building off the point above, you are able to see where you spend the most by merchant and category. For example, if you spend a lot at Target, MoneyPatrol will be able to provide you that level of detail.

Get Weekly, Monthly, and Yearly Summaries

You’re able to see summaries of your spending and saving for each week, month, and year. Not only is this helpful for tax purposes, but it gives you a real-time summary of everything that is happening in your accounts. It’s almost like having your own personal accountant.

Create Budgets to Manage Your Expenses

Once you understand your spending patterns and key insights, you can put together a budget that fits your needs. This allows you to set clear, actionable goals to spend less and save more.

Receive Detailed Text and Email Alerts and Insights

As mentioned before, MoneyPatrol is big on alerts and insights. You can get these via text message or email, so you know exactly what is going on in your account. You can also customize these.

Pricing for MoneyPatrol

So this part is really frustrating. On their Pricing page, it doesn’t list the cost of the service anywhere. In fact, it just says that it’s free for 15 days. I wasn’t able to find the pricing until I signed up for an account and went into my account settings. There, I found the following comment under Billing:

“You haven’t subscribed for any membership, *$7 per month subscription, billed annually $84 after 15-days free trial. You can cancel your subscription anytime.”

So the cost of the service is $84 for a year, which they advertise as $7 per month–but you can’t sign up for a monthly option.

I can’t help but feel slightly deceived by this and think that MoneyPatrol needs to do a better job at being transparent with their pricing, as well as allowing for a money-back guarantee if people aren’t happy (though I guess that’s what the 15-day free trial is for).

Signing Up with MoneyPatrol

Signing up for MoneyPatrol was easy. A little too easy. Simply click “Sign Up” in the upper right corner of the homepage.

From there, you simply fill out your email address, and phone number. They’ll send a text confirmation code to your phone to validate, as well as an email to validate your account. The whole process took me 3 minutes.

MoneyPatrol Security

MoneyPatrol focuses heavily on security. To start, they securely transmit data from your financial institutions using 256-bit military-grade data encryption. They also participate in security scanning to help ensure security for sensitive data transfer.

In addition, MoneyPatrol uses measures like multi-factor authentication to help protect access to your account and they don’t store your bank and brokerage credentials on their servers, either (meaning that NOBODY can access your accounts or move money from one account to another but YOU).

Finally, MoneyPatrol will never ask nor require you to share any sensitive info such as your Social Security Number, or even your name and address. The data you provide is private and MoneyPatrol does not and will not share your data with any third-party.

Overall, their security features are top-notch, and I Iove that they don’t ask for ANY information aside from your email and phone number.

Mobile Support for MoneyPatrol

While the app isn’t available yet, it’s currently in development and will be available for both iOS and Android. This will allow you to access your financial information anywhere, anytime, and on the go. You will be able to do basically everything you can do on the desktop version on the app.

MoneyPatrol Customer Service

Unfortunately, the only way to contact MoneyPatrol is through email–which is a contact form at the bottom of their website.

MoneyPatrol Pros and Cons

Alternatives to MoneyPatrol

YNAB (You Need A Budget) is probably the best comparison I can make. I use YNAB. YNAB forces you to be highly in touch with your money–meaning you DO need to monitor and track every dollar coming in and out. You can link accounts, but you definitely need to be way more in touch with your money, since there aren’t auto alerts and trends.

Personal Capital adds more automation to your finances (like Mint and MoneyPatrol) and it also helps track and manage your investments (like MoneyPatrol). The visual dashboard is incredible and it has a ton of features. I see Personal Capital as more of a holistic money management tool, versus just a budgeting tool like YNAB. Be sure to read our complete review of Personal Capital for more information.

Who Is MoneyPatrol For?

MoneyPatrol is for someone who wants a hands-off approach with their money and is willing to pay for it. Also, if you don’t mind not being able to use an app to manage your money (at least for now), you will appreciate MoneyPatrol.

You’ll love the alerts and insights MoneyPatrol provides you, as it really lets you take a step back and focus on making better money decisions, while the app does the hard work for you.

Bottom Line

MoneyPatrol is new to the game with money management and budgeting, and they seem to have a lot to offer. I love the idea of being hands-off with my money and being served up alerts and insights via text.

Despite the concerns I have, I am willing to accept it because they’re a newer company. The price point is still affordable but I would fully expect to see an app in the next couple of months.

The post MoneyPatrol Review: Alerts and Insights About Your Cash appeared first on Doughroller.