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Military car loans: Drive away with a deal Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by providing you with interactive tools and financial calculators as well as publishing original and impartial content. We also allow you to conduct your own research and evaluate information without cost, so that you can make your financial decisions with confidence. Bankrate has partnerships with issuers, including but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The deals that are displayed on this site are from companies who pay us. This compensation can affect the way and where products appear on this website, for example such things as the order in which they may appear within the listing categories, except where prohibited by law. This applies to our mortgage or home equity products, as well as other products for home loans. But this compensation does not influence the information we provide, or the reviews that appear on this website. We do not contain the vast array of companies or financial deals that may be accessible to you.

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2 min read . Published July 19, 2022

Written by Allison Martin Written by

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When it comes to buying automobiles, U.S. military members have an advantage. A lot of lenders offer military-specific auto loans that function similarly to regular auto loans, but with better loan conditions. If you're a member of the military or retired from active duty, there's a good chance you can qualify for a military car loan with the right terms . Six benefits of military car loans The benefits of military car loans are more advantageous than traditional car loans in many ways. They are easier to get approved. Military car loans generally are available to those with credit scores to qualify for normal car loans. The approval process can be faster as well. Lower interest rates. Most lenders will offer lower interest rates or military car loans like the discount in the range of 0.25 percent to 0.50 percent from their standard rates. A lower rate could save you a great deal of interest over the length that you take out the loan. No prepayment penalty. If you repay an military vehicle loan in advance, your lender will not be charged an interest, like the one you pay for with regular car loans. Reduced down payment. You can pay less money up front to get military car loans as well as certain programs that offer no-money-down loans. This makes it simpler to save enough funds to purchase a car, but the lower cost upfront means that you'll be paying more interest over the long term. Longer repayment period. Regular auto loans tend to have 36-, 48- or 60-month terms, with shorter term loans with lower interest rates. Military auto loans offer even longer options in terms of repayment. Legal security: The Servicemembers Civil Relief Act (SCRA) provides active-duty service members security for installment contracts, such as auto loans. This includes preventing creditors from repossessing a vehicle in case of breach of contract, without a court order. The SCRA also regulates the interest rates charged on auto loans which were issued prior to the time you joined the service. Drawbacks of military car loans The same risks that are present in all auto loans are applicable to military auto loans -- most importantly, the risk that you may not be able to pay payments on your installment payments. Defaulting on your loan could hurt your credit score and make it more difficult for you to borrow money later on. The ease in the ability of military personnel to get an auto loan can make it more crucial to be careful and carefully consider your purchase. Your loan might be cheaper because of your military status however the other costs associated with owning a vehicle -- maintenance and insurance, parking charges and fuel -- likely won't be cheaper. How to qualify for a military car loan Each lender has their own set of criteria for qualifying. However, you'll generally need the following to be qualified for a military vehicle loan Documentation of your military status, such as your active-duty military identification card or discharge papers if are a retired military service member. Contact information for you, which includes an address in the local area of the place you currently reside. Contact information for family members who will be able to manage matters pertaining to the loan when you are overseas. The bottom line Military car loans offer a range of advantages, such as low interest costs, lower down payment requirements, and federal security. But remember, even with a military loan there are risk of borrowing exist, such that you may not be able to make the payments. This is why it is advisable to shop around before you make an application for the auto loan to ensure you get the best rate for your needs. Take a look at rates offered by military credit unions, such as and also, since they offer auto loans with competitive terms to current and retired members of the armed forces.

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What Is a Money Order? How does a Money order Work and Where to Buy One

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What is a money order? How does a Money order Work and Where to Purchase One

Money orders are a payment that you can purchase at locations like Walmart and the post office and your bank.

By Margarette Burnette, Senior Writer Savings accounts as well as money market accounts banking Margarette Burnette is a specialist in saving and has been writing about bank accounts from before when the Great Recession. Her writing has been featured in , and other major newspapers. Prior to becoming a part of NerdWallet, Margarette was a freelance journalist, with bylines appearing in magazines like Good Housekeeping, and Parenting. Margarette is located in Atlanta, Georgia.

Updated Nov 23, 2022

Edited by Yuliya Goldshteyn Assistant Assigning Bank Yuliya Goldshteyn is a banking editor with NerdWallet. She has previously worked as an editor, writer and a research analyst across a range of industries from health care as well as market research. She earned a bachelor's degree in history from the University of California, Berkeley and a master's degree in sociology from University of Chicago, with the focus on Soviet cultural history. She lives within Portland, Oregon.

Reviewed by Kathleen Burns Kingsbury Wealth psychology expert and coach Kathleen Burns Kingsbury, founder of KBK Wealth Connection and host of the Breaking Money Silence podcast, is a widely known writer and speaker. As an expert in financial psychology, Kathleen has appeared on television, and her work has been published by The New York Times, The Wall Street Journal, "PBS NewsHour,"" Money magazine, Today Money, Forbes and CNBC. Kathleen worked as an adjunct faculty member at McCallum Graduate School from 2009 to 2019. McCallum Graduate School at Bentley University from 2009 until the year 2019 and currently teaches in the college of Champlain College.

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Table of Contents

The most important lessons to learn regarding money orders

A money order can be a reliable substitute for cash and personal checks and functions as a check so you can cash it or transfer it to an bank account.

If using personal checks can put you at risk, or they aren't accepted for payment, you can use an alternative method of payment, which is a money order.

You can make use of cash or a debit/credit card to buy money orders at the Post Office, Walmart, Western Union and many other locations.

How do money order transactions work?

A money order is a piece of paper that's a safe alternative to personal checks or cash. The money order specifies who will receive the money order, and you and that person who will receive it must sign the order in order for it to be legal, which cuts down on theft.

It is also possible to prepay a money order when you buy it. They are available at U.S. post offices, Walmart, Western Union and other locations. There are many that have a limit of $1,000 which includes those are purchased at banks. Generally, you must make payment for money orders by cash or debit card.

Nerdy Tip

Money orders are an excellent option to send money if you don't have an bank account or don't want to share your bank information to the person receiving it.

Money orders: Pros and pros and

There are pros and cons of using a money-order. Consider these advantages and disadvantages before you make a purchase.

Pros:

No bank account required to send or receive a money order.

Money orders are widely available.

Cons:

When a money-order is cashed (or lost), it can be difficult if not impossible to recover your money even if it was a result of a scam or fraud.

The cash advance is subject to fees and interest if purchased with credit card. (Read about .)

How can I buy an order for money?

Know how and who you'll pay: Be prepared with cash or a debit card as well as with the names of your payee and the amount you wish to pay. Paying with a credit card is possible, however, it generally, it's more expensive.

Fill it out and add the name of the person who is paying and address, you'll have to include your name (and perhaps an address) and also sign the order. (For steps-by-step instructions read NerdWallet's advice on .) Make sure that everything is accurate because you'll be unable to alter the data afterward.

Keep the receipt. The receipt will be an electronic duplicate of the money order , or a slip of paper that contains the details that are included in the order. You may need it to trace your money order or contact the place where you got it.

Monitor your money order: Your receipt will also include an tracking number which you can use to verify that the money order got to the intended recipient. If there are any issues you should contact the location where you bought the money order to get help.

Return to the top

Where can I find a money order? What is the cost of an order for money cost?

You can purchase a money order at the post office, Walmart, Western Union and many more. Money orders for domestic use come with an array of prices that range from less than a dollar all the way to about $5 dependent on the place you purchase them. You'll get a better deal at Walmart or the market or convenience store but you'll typically pay more at a bank.

Not all providers provide international money orders, but certain post offices do, but they are more expensive than the money orders issued in the US. No matter where you purchase them, it's more secure to buy money orders in person.

Provider

Cost

Walmart

All the way to $1.

Transfer agents for cash (convenience stores supermarkets, convenience stores, etc.)

Depends on the service provider. For example, some in the San Francisco area Western Union providers charge $1.

U.S. Postal Service

Up to $500: $1.65. $501-$1000: $2.20. Military money orders $55 cents. International (up to $700): $49.65.

Credit unions and banks

Depends on the financial institution. Often around $5.

Are you looking for other ways to send money ? Here are some of our .

What is a money order cost at some of the biggest U.S. banks?

Here is a table that lists the money order cost and availability at some popular banks. It is important to note that banks generally only offer money orders to account holders.

Click here to find out the price of a money order and availability at several well-known banks

Bank

Money Order Details

Not available.

Member FDIC

There is no offer.

Not available.

$5 up to $1,000. Free for premium accounts. It must be purchased at the branch.

$5; free for premium checking customers.

$5; no charge for premium checking customers.

$5; Free for premium customers of checking.

$5; no charge for members who are military members.

$5 for any amount up to $1000. It must be bought at the branch.

Return to the top

When do I need to make use of an order for money?

There are instances when cash or personal checks can put you at risk, or they aren't accepted as payment. Here are four instances of when money orders are the ideal method of payment:

You need to send money safely. Unlike check, money orders don't contain your bank account number, and they help ensure that only the person who is receiving it can make use of it, not unlike sending cash.

You're concerned about the possibility of bouncing the check. Because they can be redeemed, they cannot be rejected for insufficient funds. Another option is a certified check or a cashier's check, both of which ensure payment and don't have to be accompanied by an amount limit of $1,000, as do the majority of money orders. ( as well .)

It's a matter of sending money internationally. Money orders are not all compatible with sending money internationally, however U.S. Postal Service money orders can be sent to more than 25 countries. Another option: A wire transfer (see ) for a wire transfer if you require money quicker and you are willing to be able to pay more. Check out our .

You don't have a bank account. Because money orders require that you pay in advance, you don't require an account with a bank account and you can still make payments safely.

Nerdy Tip

For those who don't own a bank account, a different option for paying for regular purchases and bills is to use a .

From top to bottom

(image: https://image.slidesharecdn.com/quickloanssameday-160720063223/95/same-day-payday-loans-with-no-credit-check-option-online-apply-today-5-1024.jpg?cb=1468996539)Saves CD Management Checking Money Market

Savings accounts are an account that lets you keep money safe while earning interest.

A savings account is an account that lets you store money securely and earn interest.

Member FDIC

Savings and SoFi Checking

The APY is 4.00 Per cent SoFi Members with direct deposit are eligible to earn up to 4.00% annually-percentage yield (APY) on savings balances (including Vaults) and 1.20 percent APY on checking balances. No minimum amount for direct deposits needed to earn the 4.00 percent APY on savings. Members without direct deposit will receive 1.20 percent APY on all balances of their checking accounts and savings (including Vaults). The rates of interest are variable and subject to change at any time. The rates listed are current as of 03/17/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet

Min. balance to APY $0

Member FDIC

Marcus from Goldman Sachs Online Savings Account

APY 3.75 percentage 3.75% APY (annual percent yield) with no minimum balance to earn stated APY. Accounts must have at least a positive balance in order to stay open. APY valid as of 02/14/2023.

Min. balance required for APY $0

Member FDIC

CIT Bank Platinum Savings

APY 4.75%

Min. balance to APY $5,000

They combine the services and features similar to savings, checking and/or investment accounts into one product. Cash management accounts are usually offered by non-bank financial institutions.

The cash accounts offer features and services that are similar to savings, checking and/or investment accounts in one package. The cash management account is usually offered by non-bank financial establishments.

on Wealthfront's site

Cash Account at Wealthfront

APY 4.30%

Min. balance to APY $1

on Betterment's website

Betterment Cash Reserve - Paid non-client promotion

APY 4.20 percent Annual percentage yield (variable) is at 03/27/2023.

Min. balance required for APY $0

CDs (certificates of deposit) are a kind of savings account with a fixed rate and term typically, they offer higher rates of interest than regular savings accounts.

CDs (certificates of deposit) are a kind of savings account with the option of a fixed rate and time typically, they offer higher interest rates than regular savings accounts.

Member FDIC

Marcus from Goldman Sachs High-Yield 10-Month CD

APY 5.05 percent 5.05 5 % APY (annual percentage yield) as of 03/28/2023. Special Offer Expires 09/15/2023.

The term is 10 months

CIT Bank No-Penalty CD

APY 4.80 percent

The term is 11 months

Deposits are FDIC Insured

Current Account

APR N/A

Monthly fee: $0

Chime Checking Account

APY N/A

Monthly fee $0

Member FDIC

Axos Bank(r) Rewards Checking

APY 3.30 percent. Your annual percentage yield may be up to 3.30 percent, based on the following combined rate rewards direct deposits (not including intra-bank transfers from an account) totaling $1,500 or more every month earn 0.40 percent. A direct deposit that is eligible for a qualifying amount is required to satisfy the remaining eligibility requirements for interest rates. Ten (10) points of sale transactions per month, using Your Rewards Visa(r) debit card to make regular purchases, with at least $3 for each transaction, or enrolling in Account Aggregation/Personal Finance Manager (PFM) earn 0.30%; maintaining an average daily balance of $2,500 per month within your Axos Self Directed Trading Invest account will earn 1.00%. Maintaining the average balance per day of $2,500 on An Axos managed Portfolio Invest account will earn 1.00%; and making a monthly installment for an existing Axos bank consumer loan (commercial or business loans exempted) via transfers from the rewards checking account will earn a maximum of 0.60%.

Monthly fee $0

Market accounts for money pay interest rates similar to savings accounts, and come with some checking features.

The money market accounts have rates that are similar to savings accounts. They also have certain checking features.

Member FDIC

Bank Money Market Account - Discover Bank Money Market Account

APY 3.50 percent

Min. balance to APY $1

Tracking of money orders

It's relatively simple to find out where the money order is located -- as long as you've kept the receipt. The process is different depending on the issuer. The U.S. Postal Service and MoneyGram allow you to track your online purchases using information such as the serial number found on your receipt as well as the purchase amount. Banks should be in a position to provide you with the same information.

Without a receipt, you'll likely need to file a request to find the serial number of your money order it's costly and lengthy. For MoneyGram, for example, it costs $40 and can take 60 days to finish.

Be sure to trace the money order with the company that actually issued it -- it might have been Western Union or MoneyGram even in the event that you bought it at an convenience store. The money order must clearly indicate who the company is.

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Author bios: Margarette Burnette is a savings account specialist at NerdWallet. The work she has done was featured by USA Today and The Associated Press.

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How I Ditched Debt: My Shiny Nickels

Advertiser disclosure You're our first priority. Everytime. We believe everyone should be able make financial decisions with confidence. While our website does not include every company or financial product that is available on the market We're pleased of the advice we provide, the information we provide and the tools we develop are objective, independent, straightforward -- and cost-free. So how do we earn money? Our partners pay us. This may influence which products we review and write about (and the way they appear on the site) However, it in no way affects our suggestions or recommendations that are based on many hours of research. Our partners do not be paid to ensure positive ratings of their goods or services. .

My Ditched Debt Story: My shiny nickels

Written by Anna Helhoski Senior Writer | Economic news, consumer finance trends as well as loans for college students loan debt Anna Helhoski is a senior writer covering economic news and current trends in consumer finance at NerdWallet. Also, she's an authority for student loans. Her work was published by NerdWallet in 2014. Her work was featured throughout The Associated Press, The New York Times, The Washington Post and USA Today. She has previously covered local news from the New York metro area for The Daily Voice, Daily Voice and New York state politics for The Legislative Gazette. She has a bachelor's degree in journalistic studies from Purchase College, State University of New York.

Published April 4, 2017 6:00AM PDT

A majority of the items featured on this page come from our partners, who pay us. This impacts the types of products we feature as well as the place and way the product is featured on a page. But, it doesn't influence our evaluations. Our opinions are our own. Here's a list and .

This series by NerdWallet speaks to individuals who have overcome the burden of debt through a combination of commitment, budgeting and wise financial decisions. These stories might encourage you to .

My Shiny Nickels blogger Laura Dobbins and her husband, Randy, on a trip to Paris, a vacation they could afford following their getting free of debt.

In the year 2011, Sacramento, California-based IT manager Laura Dobbins, her husband and children lived in an elegant home, complete with all the trappings of wealth -- but their finances were a different story. They were in close to $40,000 debt and had charged an excessive amount on their credit card accounts that Dobbins was unable to pay for a plane ticket for an upcoming business trip.

She realized that they need to alter their lifestyle. Dobbins and her husband, Randy, began saving instead of spending, and then taking care of their debts. They even reduced the size of their house and, in just two years, they had become debt-free. She now provides money-saving tips and details her debt payoff techniques on her blog . Here's their story.

How much was the total amount of debt you owed at the time you began your repayment journey?

Laura Dobbins: 2011: $39,685 overall, including $17,000 in debit card balances, $15,000. of auto loan debt and $8,000 of personal loan debt.

What is your total amount of debt today?

In 2013, became debt-free. To date, there is no debt.

How did you end up in credit?

In a strange way, it was when I was offered my first major promotion and a pay raise. It's not logical from afar; do you make more money, and then you're in debt? While it might sound strange it's "yes." Then we had this surplus money, and even though we were in an excellent home in a lovely middle-class area, we decided to put that extra income toward a bigger and better house in a posh neighborhood. With that came the "need" for more furniture and a professionally-designed new backyard and an SUV just like the neighbors had, a gardener, and ... well, you get the idea. Instead of actually being wealthy, we were financing the design of it. Every month. The downward spiral of debt had started.

What triggered your decision to get out of credit?

It was a realization to realize that we couldn't float the $400 plane ticket to a business trip I was planning. For a long time, we had paid off the credit card just enough to have some available credit for things that came up. That pattern finally stopped the day my boss told me to travel into St Louis for work. I went to our credit card account and found that we only had $90 in available credit (and an additional $52 on the checking account). We'd been able to hide our financial situation from everyone for a very long time, and then it was bubbling up to the surface. And it was terrifying.

What steps did you take to lessen your debt? What were the resources or services you utilize?

We realized that the first thing we had to do was break the cycle of being in debt to "rescue" us. Therefore, before we paid down the debt we owed, we put the equivalent of a $1000 emergency fund.

We were aware that to pay off our debts in the shortest amount of time, we needed to be able to earn more. This wasn't a time to sit back and give a mere $50 to our monthly debt. This was an "hair's-on-fire, call-the-firemen" financial crisis, and we made a big move. Literally. We sold our huge home in the suburbs and moved to a tiny 1,000 square foot house in a neighborhood that is primarily working class. This alone helped us save more than $2,500 per month. (I'll do the math to show you the savings: that's an amount of nearly $30,000 annually.)

We also began eating out less frequently and looking for cheaper ways to enjoy ourselves as a family. With that extra cash every month we paid off the debt by using the "snowball technique." We began with the smallest account balance on a credit card of $1500 to get a quick, psychological win right away and then paid the other debts from the smallest to largest. After we paid each one off, the amount that was used for paying those monthly debts was applied to the next one on the list. The "snowball" of cash that went to debt each month grew like insane.

What has changed in your life in a positive way since you got out of credit?

We're happy. Truly, wonderfully, down-in-your-soul happy. After the debt was paid off and our house expenses were low we could spend on the things that mattered the most. It turns out that the massive home in the suburbs did not make us happy, but traveling all over the globe did. We save a lot of our money and have enough to splurge when it's needed.

A couple of many years back, my husband hated his job as a manager that was a nightmare. With the money we had saved up, we bought our first company -- the one of his lifelong goals. He quit his job, is now his own boss and loves it.

Getting out of debt gives more than just an euphoria of freedom It opens up possibilities you've never imagined.

How to tackle your debt and begin paying it off

The approach Dobbins describes is best for people who require small victories to pay off bigger debts. However, the method where you prioritize paying off debts with high interest such as credit cards or payday loans before lower-interest ones such as mortgage, student and auto loans can assist you in paying off your debt faster and save on interest. This will show you the time it will be to eliminate each debt one at a time.

To better manage your debts, consider debt consolidation, which combines multiple debts into one one with a lower interest rate. Two options for consolidating debt are a or a . Use a to estimate your interest rate.

Anna Helhoski is a staff writer for NerdWallet Personal Finance website. Email: . Twitter: .

About the author: Anna Helhoski is a writer, and NerdWallet's expert in the field of student loans. Her writing has been featured in The Associated Press, The New York Times, The Washington Post and USA Today.

(image: https://i.ytimg.com/vi/lY9cA_ErM_Y/hq720.jpg)In a similar vein...

Dive even deeper in Personal Finance

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The Price of Not Being Banked is Hundreds of Dollars per Year, Always one step further

Advertiser disclosure You're our first priority. Every time. We believe that everyone should be able make financial decisions with confidence. Although our site doesn't feature every company or financial product in the marketplace We're pleased that the advice we provide and the information we offer and the tools we create are objective, independent easy to use and free. So how do we earn money? Our partners compensate us. This could influence the types of products we review and write about (and the way they appear on the site), but it doesn't affect our recommendations or advice that are based on many hours of study. Our partners are not able to be paid to ensure positive review of their services or products. .

(image: http://www.imageafter.com/image.php?image=b17mattphilip071.jpg&dl=1)The cost of not having a bank account is Hundreds of Dollars per Year, always one step Behind

by Tony Armstrong Lead Assigning Editor | Banking Tony Armstrong leads the banking team at NerdWallet. He has been writing about personal finance for more than 10 years. Tony started his career at NerdWallet as a writer and worked his way up to the position of assistant assigning editor, and then to lead editor. His writing has been featured on such publications as the Los Angeles Times, MarketWatch, Mashable, Nasdaq.com, USA Today and VentureBeat. Tony is a resident of Minneapolis, Minnesota.

Updated Sep 13 2016, 2016

Many or all of the products featured here are provided by our partners who pay us. This influences which products we write about and where and how the product is featured on a page. However, this does not affect our assessments. Our opinions are our own. Here's a list and .

Banks can cause their fair share of headaches However, the lack of access to a bank can be even more detrimental to your financial health. In the absence of a financial institution that offers basic services like free check cashing and loans with reasonable rates of interest Unbanked customers depend on costly alternative financial service providers to cash their checks and cash out money orders. The accompanying fees cost these families hundreds of dollars each year.

Along with the higher day-to-day costs being a member of any credit union or bank can have negative long-term consequences. The unbanked household, which the FDIC defines as those that do not have an account with an insured institution, can't save money to create emergency funds. They are also unable to turn to tools that save time for things like paying bills or transferring funds.

"The conventional banking system remains out of reach for thousands of Americans," says Sean McQuay the NerdWallet's banking expert and credit expert. "While it may appear impossible to open the option of opening a bank account can be the first step towards breaking this cycle that sees us living from paycheck to paycheck, paving the way to financial independence."

A majority of households who don't have a bank account say the main reason is that they don't have enough money. The median income after tax for these households is $18,203, according NerdWallet's analysis of data taken from the Federal Deposit Insurance Corp. The high costs associated with alternative financial services only make the situation even more expensive.

But cheaper services are available and taking advantage of them can allow people to cut down on unnecessary expenses.

The key results

The annual average cost of not having a bank account is $196.50 for people who use the prepaid debit card which has direct deposit. That figure jumps to $497.33 when the card doesn't offer direct deposit.

People who deal only in cash face average annual costs of $198.83 for check cashing or money orders.

With approximately 9 million unbanked households in the United States, down from 9.5 million in 2013, the overall annual cost to the families of these households is between $1.8 billion between $1.8 billion and $4.5 billion.

In the absence of a bank account forces people to take advantage of other financial services. those who do not have a bank account are around six times more likely use costly .

Transacting off grid can be costly

"In many ways you can compare the needs of unbanked households with those of banked households," says John Thompson who is the senior vice-president of the Center for Financial Services Innovation an independent consultancy firm for financial services. Certain transactions require however for consumers who aren't banked, they don't happen through a bank, Thompson says. That's why they can be costly.

Consider cashing a check for instance. When done through a bank or credit union, the process is as easy as it is cheap. But that convenience vanishes in the event that you don't belong to a traditional financial institution, and alternatives is a bit pricey.

Check-cashing businesses generally charge between 1% to 10 percent of the value of a check, and that means unbanked consumers who don't carry a prepaid card that offers direct deposit will pay on average $182.03 per year to access their cash according to NerdWallet's study of FDIC information and using a fee of 1percent of the check's value. People who don't have bank accounts are around 6-fold more likely make use of check-cashing services than those who have.

"Relying on services such as check cashing and money orders can be costly and it's the Americans who can't afford these fees and inconveniences that find themselves unbanked," McQuay says.

Instead for checking account, many individuals utilize prepaid debit cards. They are offered at supermarket stores and other retailers like Target, Walgreens and Wal-Mart. This type of card is fairly uncomplicated: Users are able to spend only the amount of money they have loaded onto the card.

Costs of checking accounts

These accounts, with low overdraft charges and no monthly charges, charge customers about $30 annually. Checking accounts on average cost customers about $150 per year with monthly maintenance charges and two overdraft fees.

" relying on services such as cashier's checks and money orders is costly, and it's those Americans who are the least able to pay these costs and hassles who are left without a bank account. " Sean McQuay , NerdWallet expert in banking and credit

However Prepaid cards are generally thought to be more costly than traditional checking accounts. They cost an average of either $179.70 or $298.50 per year, depending on the card's a free direct-deposit service. If it doesn't, users have to pay high fees for cash loading. In addition, prepaid cards generally have either monthly fees or per transaction costs, along with ATM withdrawal fees.

Anyone who does not have either a checking account or a prepaid card faces average annual fees of $198.83 for cashing checks as well as money-order services.

Along with their expenses Prepaid cards also aren't without their flaws. They aren't able to be used to build credit and the law in the US doesn't require prepaid cards to offer fraud protection, as they do with standard debit cards. However, companies like American Express, Discover, MasterCard and Visa typically offer a specific amount of protection for purchases however, this doesn't include ATM and some online transactions.

Furthermore, the majority of checking accounts are insured by the federal government, which means that the account holders will not be able to lose any money, from $0 to $250,000, in the event that the bank went under. People who use prepaid debit cards have this protection when the card is issued by a bank, but even then it's possible that they won't get all of their money back. If they purchased their credit card from a company that isn't insured by the FDIC and this is not rare, the rules of the issuer determine the amount of protection offered and whether the card will be reimbursed.

Indirect costs impose their burden, too

The dangers of not having a bank account go beyond the expensive costs of other financial services. First, being unaffiliated to a bank takes extra time. Unbanked consumers who don't use prepaid cards don't have access to the many benefits of online and mobile banking, like automatic bill payment and free money-transfer services. Prepaid cards can offer these options, but they usually aren't free, unlike those offered by credit unions and banks.

"If you don't belong to an institution that offers financial services, you can't bank on what you do," Thompson says, adding that this may force people to miss work, hurting their paychecks. If employees have to travel to take care of money-related chores that require transportation, they'll incur expenses also, he says.

Not being able to use traditional banking products can be detrimental in other ways as well. A bank gives people access to tools to assist them in maintaining or improving the health of their finances, like certificates of deposit, protected credit cards. These can, for example, help them create an emergency fund as well as increase credit, which can reduce the requirement for expensive payday loans.

The average of the amount borrowed through payday lenders is just $350 as per a report , a sum that people who are members of a bank or credit union can build by using a savings account, or a secured credit card to pay for. That will allow the borrower to stay away from the risk of taking out loans, which have median interest rates of around .

With the help of savings accounts and secured cards, it's easy to maintain a healthy credit score. In addition, the costs of borrowing are much lower; the most well-known secured credit cards generally have interest rates at around 20%.

"We have systems that allow us to create information about past credit habits," says Gregory B. Fairchild Associate Professor of administration for business of the University of Virginia Darden School of Business. "Absent this information, the real cost for people will be that they're constantly at risk."

"Everyone's a risk," he says, however, the risk for those without credit histories "is extremely uncertain."

And that risk can have a trickle-down effect into different areas of people's lives which could affect their ability to get loans , get credit cards or even begin a business.

If they don't have a credit record, entrepreneurs with small businesses have a harder time getting credit lines, according to Tara Robinson, chief development officer at Mission Asset Fund, a non-profit organization that provides loans as well as other products for underserved families. A lack of credit history can therefore limit people's earnings potential, she says.

"You kind of get stuck before you begin," Robinson says.

Better options for unbanked consumers

If you do not have a bank account, it may seem like expensive alternatives financial services are the only choices. But that's not necessarily the situation. Here are some ideas that are worth considering.

Take advantage of second-chance checking: If you have had an account closed or a check bounced, or you shut down an account prior to paying a bank fee you could be listed on a consumer report agency. A negative record is typically all it takes for the bank to reject your request for opening a new account.

However, some banks have second-chance accounts for checking. They eliminate the requirement to use check-cashing services and money orders, both of which costs unbanked customers about $17 per year. They are accessible to people listed in ChexSystems and are able to be used to establish a clean banking history. If you've accomplished this, you should consider opening an account with a savings option to help you build and better manage your emergency funds. For opening either account, you'll have to present proof of identity and you may be required to make an initial deposit between $10 and $100.

>> MORE:

You can get a secured credit card: With secured cards you make an amount of money, usually at least $200 or $300 that you later borrow against. After using a secured card in a responsible manner for about a year, you might be given an opportunity to upgrade to a regular credit card.

Perhaps more importantly is that you'll have improved your credit score during the process, making you more attractive to lenders. That's, of course, that you make your monthly installments punctually and completely.

>> MORE:

Join a lending circle or join a small, community lender: Borrowing money and repaying it on time improves your credit rating, and using traditional loans from banks and credit unions isn't your only option. Mission Asset Fund, Robinson's employer, oversees and manages lending circles, which provide an exclusive type of zero-interest loan.

"Each loan is typically around $1,000," Robinson says. "You are a group of 10 people who come together and contribute $100 each month, with one getting the loan each month. The process continues until everyone gets an loan."

As with most companies that manage lending circles, Mission Asset reports repayment behaviors to credit bureaus monthly. For those with poor credit, who make their payments on time can improve their scores to about 700 after just six months, Robinson says.

"It's an opportunity for folks with no credit scores to establish credit quickly , and for those who have damaged scores , to assist in beginning to rebuild them with a positive line of credit," she adds.

Find out if there's an existing community lender or a non-profit in your city that facilitates these types of loans or similar financial services.

>> MORE:

The financial mainstream is about to enter

From checking out checks to using savings accounts, the reasons why people turn to banks may not be thrilling. In the end, however, banks serve as important pillars in families their financial lives. If you're not able to access to a bank managing your finances and managing your financial chores can be harder and probably more costly.

That's why second-chance checking accounts, secured credit cards, community lenders and lending circles important. They allow families access to traditional financial services that they could otherwise miss out on, thus paving the way to a more secure financial future.

NerdWallet analysts of data Sreekar Jasthi and writer Spencer Tierney participated in this study.

METRODOLOGY

To determine the median income for households with no bank accounts using data from the 2015 FDIC national survey of Underbanked and Unbanked Households. The survey revealed that 77% of households had no bank accounts. To determine the check-cashing costs for unbanked households who use prepaid debit cards that do not require direct deposit, and for households using only cash we assumed two checks which were cashed every month as well as a 1% cost of the total amount of the check. We also assumed one money order sent per month with an average fee of $1.40.

For banking costs associated with using a NerdWallet-recommended checking account, we assumed two overdrafts per year costing $15 each and no other fees. In the case of a typical bank account with a checking balance, we assumed two overdrafts per calendar year at a cost of $30 each and maintenance fees of $7.50 monthly. To determine the average cashing of checks and money order fees using the FDIC's data on what frequency alternative financial services used by each kind of household (banked or non-banked) and then added the less frequent usage among households with bank accounts to the costs averaged.

For the calculation of the annual average cost of prepaid debit cards we looked at 69 cards, based on the major issuers, high searches, Pew Charitable Trust's and the card offerings listed on and 's websites. For cards with several plans, we considered each plan as an individual card.

The report covers the annual costs associated with a prepaid debit card with direct deposit and without direct deposit for payroll. The median monthly fee used was $4.98, and the median out-of-network ATM fee used was $2.50. We used the maximum cash load fee of $4.95.

If you choose direct deposit we assumed 12 monthly fees as well as two non-network ATM charges per month. For the alternative that doesn't require direct deposit we assumed 12 monthly fees as well as four ATM fee per month plus two cash-load charges each month. Signature- and PIN-based purchase transaction fees typically don't apply to cards that have monthly charges, which is why they were excluded.

About the author: Tony Armstrong is a banking editor at NerdWallet. The work of Tony Armstrong has been covered on the Los Angeles Times, Mashable and USA Today.

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What is the AmEx Send and Split and How Does It Do Its Work?

Advertiser disclosure You're our first priority. Each time. We believe everyone should be able make financial decisions with confidence. While our website doesn't include every business or financial product available on the market, we're proud that the guidance we offer, the information we provide as well as the tools we design are independent, objective easy to use and completely free. So how do we make money? Our partners compensate us. This could influence the types of products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice that are based on many hours of research. Our partners cannot be paid to ensure positive ratings of their goods or services. .

What is AmEx Send and Split? How does it Work?

The feature lets you send people money with no transaction fees, or divide the bill inside the AmEx mobile application.

Written by Melissa Lambarena Lead Writer | Credit cards, credit cards, Melissa Lambarena is a lead writer on the credit cards group at NerdWallet. She has been a passionate writer covering the subject of credit cards for more than six years. Her previous work experience spans nine years of experience as content creator for various sites and publications. With her efforts, she aims to assist readers in extracting the value of credit cards for financial goals such as increasing their budgets, establishing credit, traveling to their dream destinations and repaying debt. She focuses on these subjects and others in and her Millennial Money column featured in The Associated Press. Her work has also appeared on The New York Times, Chicago Tribune, The Washington Post, USA Today and Yahoo Finance, among others. Melissa has a bachelor's degree of sociology, earned from the University of California, Los Angeles.

Updated October 13, 2022 8:11AM PDT

Editor: Kenley Young Assigning Editor Credit score, credit cards Kenley Young is the director of daily coverage of credit cards on NerdWallet. Previously, he was a homepage editor and digital content producer for Fox Sports, and before that a front page editor at Yahoo. He has decades of experience in digital and print media. This includes stints as chief of the copy desk, a wire editor and a metro editor for McClatchy. McClatchy Newspaper chain.

The majority or all of the products we feature are provided by our partners, who pay us. This affects the products we review and the location and manner in which the product appears on a page. However, this does not affect our opinions. Our opinions are entirely our own. Here is a list of and .

More Like This

Its"Send & Split feature within the American Express mobile app lets eligible cardholders pay cash to or split purchases between, anyone Venmo or PayPal user for no additional cost.

If you're not carrying cash at the moment, or you're in a pinch it's possible to use your credit card, eliminating awkward conversations about how to split a bill and allowing you to pay off the charge at a more suitable time. More importantly, you can reduce transaction costs when you do so, save money.

This option is available only for U.S. consumer credit cardholders. This is how it works.

>> MORE:

Send & Split: The basics

As the name of the feature implies, there are two possibilities -- sending and splitting.

For either option it is necessary to sign up by accessing the AmEx app, going to the account tab and selecting the "Send & split" option. After you've enrolled, you'll need to link your Venmo or PayPal account to be able to transfer or receive money.

>> MORE:

How do I transfer money using 'AmEx Send'

You can transfer money using the AmEx app, Venmo app or PayPal app. If you choose any of these options, the money is routed via the "AmEx Send" account that is created automatically when you sign up for Send & Split.

Transferring money using the AmEx app

This feature lets you use your AmEx card to transfer money to anyone PayPal or Venmo customer , without incurring the standard fees that apply to credit card payments. (Normally when you try to use a credit card this way through PayPal or Venmo you'd be charged a fee of about 3%.)

You can add money to your AmEx Send account instantly with the help of your AmEx credit card and transfer it to any other Venmo as well as PayPal user. The funds you transfer will show as a credit on your card's statement and will be treated as a purchase. But, you won't get any reward points for the transaction. Conditions apply.

AmEx limits how much money you can deposit into your AmEx Send account. That amount is identified in the application as "Available to Add." AmEx says that it's determined by your card's "rolling 30-day limit for transactions between individuals that is contained in your card's member agreement," and is subject to AmEx approval.

Nerdy Tip

The majority of consumers who qualify can add up to $2,000 in the AmEx Send account. Its Platinum Card(r) of American Express can add up to $4,000 while the Centurion card could increase the amount to $5,000. The terms and conditions apply. You are able to send up to $10,000 per transaction using your AmEx send account. The transactions, too, are limited to a roll-over 30 day limit on transactions. Terms apply. PayPal and Venmo can also restrict the amount you can send.

Paying with the Venmo app or PayPal app

To send money via Venmo or PayPal you need to add funds to Your AmEx Send account to Venmo or PayPal and then pay money in the same manner as you would with these apps.

To pay for the transaction, switch the method of payment to an AmEx Send account. The balance that you're sending must exceed the value that's in your Venmo balance. Otherwise you'll be charged the Venmo balance will become the default method of payment.

>> MORE:

How do you split your purchases using 'AmEx Split'

If you choose this option you can purchase something using your credit cardand earn the rewards from the purchase -- - and then divide the cost with fellow Venmo and PayPal users. There is no cost to splitting purchases.

In the AmEx application, you can choose one or more purchases that you can split among 20 or more people. You can divide the cost equally or create a custom allocation. These people will receive a payment request through Venmo or PayPal like they normally will.

When they pay you back, you can choose whether you'd prefer the funds to be deposited directly into your credit card in the form of a statement credit or to a PayPal or Venmo account. Be aware, if you're not paid, you'll be responsible for the charge on the card. The original transaction may be subject to fees or interest. Terms apply.

For a hefty expense that you aren't able to pay in full, the amount of interest could chip away at the value of any rewards earned through the purchase. If this was the reason you were using to pay for the expense, it defeats the purpose. To keep your finances on track, only use this feature to split the cost of purchases between people you trust to repay you.

Nerdy Tip

AmEx Send and AmEx Split are compatible with any Venmo or PayPal user; they are not required the requirement to have American Express cardholders.

>> MORE:

The author's bio: Melissa Lambarena is a credit card writer at NerdWallet. She has had her work featured by The Associated Press, New York Times, Washington Post and USA Today.

In a similar vein...

Find the best credit card for your needs. If you're looking to pay lower interest or earn higher rewards, the right card is out there. Answer a few simple inquiries and let us narrow your search for you.

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How to Get Started If You've Never had an Account with a Bank

Advertiser disclosure You're our first priority. Every time. We believe that every person should be able to make financial decisions with confidence. While our website does not feature every business or financial product on the market, we're proud that the guidance we offer, the information we provide as well as the tools we design are objective, independent simple, and free. How do we earn money? Our partners compensate us. This can influence the products we write about (and the way they appear on our site), but it doesn't affect our suggestions or recommendations that are based on many hours of research. Our partners cannot promise us favorable reviews of their products or services. .

How to Begin If You've Never Had an Account with a Bank

Written by Spencer Tierney Senior Writer | Certificates of deposit ethics, ethical banking, bank deposit accounts Spencer Tierney is a consumer writer for banking at NerdWallet. He has written about the personal financial sector since, with a particular focus on certificates of deposit and other banking-related topics. His work has been featured on The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is located in Berkeley, California.

Published Aug 11, 2020 6:46AM PDT

Edited by Carolyn Kimball Assisting Editor Banking Los Angeles Times, San Jose Mercury News Carolyn has worked in newsrooms around the across the country as a reporter as well as an editor. Her interests are personal finances, science-fiction novels and ridiculous Broadway musicals.

The majority or all of the items featured on this page are from our partners who compensate us. This impacts the types of products we feature as well as the place and way the product appears on the page. But, it doesn't affect our opinions. Our opinions are entirely our own. Here is a list of and .

Managing your money without the need for a bank account is doable. However, it isn't without challenges -- and the COVID-19 pandemic has only increased the risk.

Your economic impact check may've come in a few weeks or months later than others' did with a check or prepaid debit card since you weren't able to choose the speedier transfer option of direct transfer into an bank account. If you've visited the market recently you might be asked to pay with a credit or debit card or in exact change due to the widespread shortage of cash and fears over germ transmission.

The opening of a bank account can make life more convenient in these circumstances and many other situations. To avoid any future problems Consider opening oneor revisiting after being rejected in the past. Here's a guide to getting going.

Assess your money needs

If you're one of the 14 million people without a bank account in the U.S. You may have a system that is working for you. It could be that you are the use of alternatives such as credit cards that are prepaid and Check cashing companies. Financial advisor Brandy Baxter has assisted clients who used check cashing services for practical reasons.

"They preferred to enter and leave with cash," says Baxter who is a certified financial advisor and financial coach who manages the company Living Abundantly in the Dallas-Fort Worth area.

Check cashing shops like Check 'n'Go and ACE Cash Express may operate for more hours that banks, and offer easy approval procedures to receive cash fast. But they do charge a steep fee, which can range from 1% to 6 percent, or even more, of the check amount.

Bank accounts can meet money needs beyond what pre-paid cards or check cashing services can. For instance, their anti-fraud protections can limit what you pay if you're targeted, and a lot of accounts let you lock debit cards remotely when stolen.

>> Tips on spotting fraud and scams • Learn

After you've formed an association with a bank, other doors open such as credit cards as well as small or auto loans and other less expensive alternatives to payday loans may eventually be within your reach.

Checking accounts "don't only aid in saving costs, they're also the foundation for using different financial services," says David Rothstein director of Cities for Financial Empowerment Fund, who manages BankOn the national platform that encourages financial inclusion.

Find a bank that will work for your needs.

If you find banks intimidating or you've had difficulty obtaining an account before the community banks or credit unions are generally more accommodating than national banks and often have a mission -- for instance, they focus on the financial health of their surrounding communities.

"We're extremely lenient when it comes to offering an applicant a second chance," says Pedro Murillo the area branch manager for the San Francisco Bay Area for Self-Help Federal Credit Union. "If someone comes in to request a loan and doesn't have pay stubs, is there anything they (can they) provide us? Perhaps a letter sent by (their) boss? We don't want to give up."

Similar to other credit unions, Self-Help will require a person to create a savings account in order to become a member; the minimum required to start an account is usually a few bucks. Then members can apply for additional products such as a credit building loan.

It is possible to search the internet for the word "CDFI" which is a reference to community development financial institution- to . Many require those who join to be located in the same state where the credit union or bank has branches.

What to know about applying

To open an account, you'll typically need your Social Security number, one or two forms of identification as well as money for your first deposit.

It is common to open two accounts with a bank simultaneously: a checking and a savings account. The checking account allows access to debit cards, bill payment system and other features, while the savings account allows you to set funds aside and, in the ideal case increase its value by making interest.

Banks usually screen applicants on ChexSystems which is a nationwide reporting agency that maintains records of closed accounts against the will of an individual. If you've been denied access to an bank account in the past and you're not sure if you'll be rejected by different banks until you pay off the ChexSystems account. This could include the payment of debts to a bank or disputing errors in the records.

Once you're cleared, consider what banks call it the BankOn-approved checking account. Most of these do not charge fees for overdrafts, which occur if you attempt paying for something that will put your balance in the negative.

Opening the correct bank account involves some effort. However, once you've been approved finding a safe location for your money and a better chance to get low-cost loans can make it worthwhile.

"To have an account with a bank... is the foundation of any financial empowerment initiative," Rothstein says.

This post is written by NerdWallet and was first released in The Associated Press.

Author bio Spencer Tierney is a writer and NerdWallet's official authority on certificates of deposit. He has had his work highlighted by USA Today and the Los Angeles Times.

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Check out NerdWallet's recommendations for the top high-yield savings accounts online.

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Is Your Debt Too Many Debts?

Advertiser disclosure You're our first priority. Everytime. We believe that every person should be able to make financial decisions with confidence. Although our website does not feature every company or financial product available on the market however, we're confident of the advice we offer, the information we provide and the tools we develop are objective, independent simple, and free. So how do we earn money? Our partners pay us. This may influence which products we review and write about (and the places they are featured on our website) However, it doesn't affect our suggestions or recommendations that are based on thousands of hours of study. Our partners cannot pay us to guarantee favorable ratings of their goods or services. .

Is Your Debt Too Much Debt?

Take the sum of certain kinds of debt. Compare the sum to your income to determine if there's an issue and how you can proceed.

Through Our Nerdwallet contributors are specialists in their fields and have a range of backgrounds in journalism, finance, and consulting. Our editorial standards are the most stringent standards of editorial to ensure that our readers have the knowledge needed to make sound financial decisions with confidence. Find out more about the services we offer.

Last updated Aug 5, 2021 11:28AM PDT

Written by Kathy Hinson Lead Assigning Editor Personal finances, credit scoring managing money and debt Kathy Hinson leads the Core Personal Finance team at NerdWallet. Previously, she spent 18 years working at The Oregonian in Portland in capacities such as chief of the copy desk and team leader for design and editing. Her previous experience included copy and news editing for various Southern California newspapers, including the Los Angeles Times. She earned a bachelor's degree in mass communications and journalism in The University of Iowa.

Many or all of the products featured here come from our partners, who pay us. This influences which products we write about and where and how the product appears on the page. However, it does not affect our opinions. Our opinions are our own. Here's a list and .

Are you concerned about having excessive debt? Looking into your debt-to-income ratio can help answer your question. Add your monthly obligations to pay (things like auto loans, housing payments and credit card debts) and divide it by your gross monthly income. A debt load that is higher than 36% of your DTI could be difficult to pay back and make it more difficult to access credit.

If you're struggling to keep up with payments, or you're facing unrest or stress If so, it's the time to come up with a strategy to consider or research .

Watch your debts dwindle

Register for an account to link your credit cards, loans and accounts to manage them all from one location.

Figure out your debt load

Utilize the calculator below to tease out whether is problematic. The calculator can also provide suggestions for what you should do next.

Enter all debts -- like credit card charges and medical bills as well as your earnings into this calculator. The student loans and mortgages tend to be less problematic forms of debt, so set those aside for now.

View your result for these more risky kinds of debt in terms of possible solutions:

If it's lower than 36%, your debt load is within the limits of being reasonable based on your earnings.

If the number is between 36% and 42% , consider DIY methods like or

If it's between 43% to 50%, you should take steps to lower your debt burden; consulting a may be beneficial. If it's 50% or more your debt load is high risk; consider consulting with an attorney.

Consider these guidelines as general guidelines. "There is no single guideline for dealing with credit," says David Nash an accredited financial advisor with Magister Wealth in San Antonio, Texas. But, he says "If your debt is growing as a percentage of your earnings, it suggests that you need to make tougher choices in the tradeoffs to be considered."

Differentiate between good debt and bad debt

It's crucial to differentiate between the good from the bad and the toxic. A mortgage with an annual percentage rate of 3.5 percent, for instance, can be weighed differently as a credit card with a 20% APR.

What's good debt?

If it is low and fixed, it is also when it is fixed and low, the loan can be used to buy something that grows in value, such as an investment property, a business or a college education. It's also good to know if the interest can be tax-deductible, like most student and mortgage loan interest.

What's bad debt?

The loans are characterized by higher or variable rates of interest which are used to purchase items that are worthless or get consumed. Examples include high-interest personal loans to purchase items that are not essential, like holidays, auto loans lasting up to five years or loans that pay high-interest and have growing balances.

What is toxic debt?

No credit check and with APRs over 36 percent, loans so long you are paying more than the item is worth or loans requiring collateral you can't afford to lose, such as your vehicle.

The burden of bad debt is the high cost of interest and can limit your savings, cash flow and the ability to borrow for purposes like purchasing a house, says Erika Safran who is a certified financial planner working with Safran Wealth Advisors in New York City.

A low-interest mortgage you are able to afford should not cause you to stay up all night.

Common warning signs of problem in the area of debt

Your debt balance is not decreasing despite your regular payments.

You're living paycheck-to-paycheck and have no cash at the at the end your month.

It's not like you're contributing a retirement plan that's sponsored by your employer because you need the money.

You're unable to build an minimum of $500 to protect yourself from financial unexpected events.

You're using credit cards for cash advances.

Are the other forms of debt a problem?

The following guidelines will give you an idea of how much is too much in these debt categories , and how to handle it in the event that you're burdened:

Housing

Guideline: When buying a house, keep the mortgage cost to . This calculator can help you determine .

How to handle an overload: Look into alternatives to downsizing or moving to a less expensive location. If you're refinancing, or moving houses in your 40s or 50s, consider a so you can be mortgage-free when you retire.

Student loans

Guidelines: Don't take out more to complete your degree than the amount you anticipate earning during your first year of the workforce. If you are expecting a start-up income of $40,000 for instance, make sure you limit the amount of loans to $10,000 per year for a four-year college degree. This is a frequent resentment among student loan recipients, as per NerdWallet's research.

How to deal with the stress: Consider your options alternatives, including income-driven repayment programs and refinancing.

Car loans

Guidelines: Experts suggest that the total cost of your car -- including -- should be borne out of your home pay. Car loans should last for at least four years, and ideally coupled with 20% down. That way you don't spend years owing more than the car's worth.

How to handle an overloaded vehicle: If you have an idea of selling your vehicle to a cheaper one.

Medical debt

Guidelines: Medical debt is a special case since health care expenses are typically out of the consumer in their control. This kind of debt generally has no interest charges, but the amounts involved could make it difficult to manage.

How to handle an overload If you are experiencing an overload, try to negotiate with the billing department to reduce the amount due or create an affordable payment plan. If you can, do it yourself, but you may need to research .

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How to get preapproved for an auto loan and gain negotiation power Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make smarter financial decisions by offering interactive tools and financial calculators, publishing original and objective content. This allows users to conduct research and evaluate information at no cost and help you make financial decisions with confidence. Bankrate has partnerships with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this website are provided by companies who pay us. This compensation can affect the way and where products appear on the site, such as for instance, the order in which they appear in the listing categories and other categories, unless prohibited by law for our mortgage, home equity and other home lending products. However, this compensation will not influence the content we publish or the reviews that you see on this site. We do not cover the entire universe of businesses or financial deals that may be available to you.

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4 min read Published 7 March 2023.

Writen by Rebecca Betterton Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the details of borrowing money to purchase a car.

Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to control their finances with clear, well-researched information that break down complex subjects into bite-sized pieces.

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When it comes to negotiations, you should do all you can to keep the negotiations under control. The application process in the process of applying for an car loan preapproval is one way to have an edge when purchasing a vehicle. This means a potential lender has looked at your credit score, your application and required documentation and is willing to give you a formal loan offer in a certain amount. This is , though these terms can be used to refer to the same thing. If you are prequalified for the loan, the lender only does a soft credit check, and your approval isn't guaranteed until you submit the full application. Preapproval for a car loan just takes a few minutes of extra time, and it ensures that you have a firm estimation of what you can spend once you've gone car shopping and the you'll likely be given. Step 1. Make sure you have all the documents needed. are able to get pre-approved for the car loan via banks, online lenders and credit unions. Whatever option you decide to go with first, you must begin making sure you have the required documents for your application. The information you need to gather includes: Personal details, like your name, Social Security number, driver's license, information about your contact and your home address. Income, including your employer's name, contact details and your annual earnings. The documentation for income you could be asked to provide can include an W-2, tax returns and pay stubs. The amount you wish to finance and the preferred auto loan term. Information on the condition as well as the mileage on your car when you purchase a used. Trade-in information, if applicable. Tip from Bankrate

To make the process simpler, collect the required financial documents prior to the deadline and save them in PDF files on your computer.

Step 2. Find out about loan options Just like you shop around for your automobile, it's also an excellent idea to shop around for loan options . Your interest rates are affected by your credit history along with other aspects and can differ from lender to lender. If you shop at different lenders, you might be able to , and also get better loan conditions. Achieving an interest rate less than a tenth percentage point lower could make a big difference in the amount you pay on a loan. To get the best deal, fill out applications for multiple lenders. Bankrate's tip

Take a look at Bankrate's top picks to kick off your search.

3. Submit the preapproval application In the majority of cases, the application process is similar to a typical fully loan application. It is possible to apply on the internet, via phone , or in person. If you decide to apply online, you should research the most trusted lenders. Whatever method you choose to fill out your application -online or in person you can expect to spend about 15 minutes completing every application. Certain lenders offer an extensive preapproval application process, and others may require an absolute credit score or details about the vehicle's age and mileage. Find out more information about application requirements on lender websites before applying. Once you've provided the required information, most applications are generally processed in about 30 minutes. Bankrate tip

When your loan is preapproved and you are approved, you usually get 30 to 60 days to look for a car before the loan offer expires.

Benefits of auto loan preapproval Car loan preapproval offers many benefits which include putting you in the driver's seat in negotiating the best deal and getting the best interest rates. Confidence Dealerships can feel intimidating, and the purchase process can be a daunting one. Entering this process with a preapproved loan offer in hand offers an additional layer of confidence and convenience. With an approved loan you already know your loan duration and the interest rate. This knowledge makes it easier to determine your monthly payment in relation to the price you agree to with a dealer. Instead of stressing about locating the right financing for your vehicle, you can focus on for you and your lifestyle. Protection from unnecessary add-ons when closing a deal on a car, particularly when purchasing a car that is financing by a dealer and the sales team will often try to push to increase their profits. It could include things such like rust-proofing your vehicle or fabric protection as well as extended warranties. By coming in with an approved auto loan you have a firm number in mind. This makes it simpler to turn down any additional expenses that aren't included in your budget for purchases when it comes time to conclude the purchase. Get a better idea of what you can expect to pay. The true tends to be higher than expected for those who are buying for the first time. An accurate estimate of how much you can borrow makes it easier to budget and help you stay on track when you shop. Consider potential auto loans prior to time so you know what you can afford to get. And when calculating your monthly costs be sure to include the cost of auto insurance. You could also look for insurance quotes on the vehicle you're considering buying so that you understand what the true total cost will be. Greater negotiation ability Despite the fact that dealer financing is an excellent option for certain drivers, preapproval ensures that you're not able to utilize the finance options suggested by the salesperson. Dealers will also see your determination to purchase a car and are likely to be to get your business. They might even be able to offer a more competitive rate from their lenders' network. What next steps to take if you're planning to shop for a car Pre-approval on a car loan will provide you with a clear estimation of the amount you can spend. This puts you in the driver's seat when it comes time to negotiate. Before submitting your preapproval application be sure to gather all the documents you need. If you intend to submit your application online, make sure to look for reliable lenders. Some of the best ways to accomplish this is by looking up the lender's Google reviews of past customers, and analyzing their ratings through The Better Business Bureau and Trustpilot.

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Authored by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the ins and outs of securely borrowing money to purchase an automobile.

Edited by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers gain confidence to manage their finances by providing precise, well-studied information that breaks down complicated topics into bite-sized pieces.

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Add your expenses and income to this template for your monthly budget, and we'll show how your spending complies with the 50/30/20 rule.

By Lauren Schwahn Lead Writer | Personal finances and debt Lauren Schwahn is a writer at NerdWallet who covers budgeting, debt and ways to save money. She is a contributor to the "Millennial Money" column for The Associated Press. She has been covered by USA Today, MarketWatch and other publications. Lauren has a bachelor's level degree in history from her home at the University of California, Santa Cruz. She is based within San Francisco.

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Budget planners are a tool like templates or worksheets, which you can use to design your budget. A successful budget planner helps you choose the best way to spend your money while cutting down or eliminating the amount of debt. NerdWallet suggests the , which suggests that 50% of your income goes to necessities, 30% toward wants and 20% for the savings account and repaying debt.

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NerdWallet breaks down your expenditure and shows you ways to cut costs.

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The best financial planner will be one that that can stick with, so tweak your approach according to your needs. For example the 50/30/20 breakdown is an option to help begin. If you need to until you get to your desired budget.

If a hand-on monthly budget template doesn't work for you, consider one of . Most of them sync with your financial accounts, which means they could be useful for you.

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Utilize the budget worksheet for free below to find out how your spending compares with the 50/30/20 budget guidelines.

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