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Debt Consolidation vs. The Debt Settlement Option: What is the Better Option?

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Debt Consolidation and. The Debt Settlement Option: What is the Better Option?

The debt consolidation and the debt settlement Both have advantages and cons. Which is best for you will depend on the circumstances you face.

By Sean Pyles Senior Writer | Personal financial and debt Sean Pyles leads podcasting at NerdWallet as the producer and host of the NerdWallet's "Smart Money" podcast. On "Smart Money" Sean talks with Nerds across the NerdWallet Content team to answer listeners' personal finance questions. With a particular focus on sensible and actionable money advice, Sean provides real-world guidance to help people improve their financial lives. Beyond answering listeners' money questions on "Smart Money," Sean also interviews guests outside of NerdWallet and produces special segments that explore subjects such as the racial gap in wealth and how to begin investing, and the history of college loans.

Before Sean was the host of podcasts at NerdWallet He also covered issues that dealt with consumer debt. His writings have appeared on USA Today, The New York Times as well as other publications. When when he's not writing about personal finances, Sean can be found playing in the garden, taking runs , and walking his dog for long walks. He is based in Ocean Shores, Washington.

Last updated Aug 5, 2021, 12:55 PM PDT

Editor: Kathy Hinson Lead Assigning Editor Personal finance, credit scoring, debt and money management 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 director of design and editing. Previous experience included news and copy editing at several Southern California newspapers, including the Los Angeles Times. She graduated with a bachelor's in journalism and mass communications from the University of Iowa.

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You're trying to pay down . What is the best way to do it? instead of debt settlement?

They sound alike however they are two different things- and one can create more problems for you.

It's the time to pay off debt

Register to join the link and keep track of everything from credit mortgages to credit cards in one place.

Debt consolidation

In this case, several debts are combined into one single one. You can make use of a balance transfer credit card, home equity loan and 401(k) loan.

Why you might choose this option:

to get a lower interest rate than you're paying now, which will save you money and can help you pay off your debt sooner

To reduce the amount of payments you're making

When it's a debt get rid of is a manageable amount and you can type

• How to pay off debt:

Debt settlement

is risky because you withhold payments from a lender and, after your account is in serious delinquency you should try to negotiate a lower payment to satisfy the debt.

Withholding payments can ruin your credit scores and opens you to being sued for payment -- and there's no guarantee that the creditor will accept a settlement.

You may try hiring or trying an organization, but beware that this industry is full with scammers. It was reported that the Federal Trade Commission recently ordered 11 of these companies to stop their advertising, claiming that they stole tens or thousands of dollars in cash from the public and offered them little benefit.

Why you might choose this option:

Try this only if you have a credit card that's long delinquent or in , and you think the creditor is willing to accept a partial payment. There's nothing to lose since the damage is already been done.

About the author: Sean Pyles is the executive producer and host for the NerdWallet's Smart Money podcast. His writing has been featured in The New York Times, USA Today and elsewhere.

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7 Tips to Obtain an Apartment Without a Credit Check

Advertiser disclosure You're our first priority. Each time. We believe everyone should be able make financial decisions without hesitation. While our website doesn't include every financial or company product available on the market We're pleased that the guidance we offer as well as the advice we provide and the tools we develop are impartial, independent easy to use and completely free. So how do we make money? Our partners pay us. This can influence the products we review and write about (and the way they appear on the website) However, it in no way affects our advice or suggestions that are based on thousands of hours of study. Our partners do not promise us favorable review of their services or products. .

7 Tips to Get an apartment without a credit Check

Try offering references, getting someone to share a room, paying an additional deposit, or working with an individual landlord.

Written by Erin El Issa Senior Writer | Data analysis, personal finance, credit cards Erin El Issa writes data-driven studies about personal financial matters, credit cards, investments, travel, as well as student loans. She is a fan of numbers and hopes to simplify data sets in order to help people improve their financial lives. Prior to becoming the Nerd at the beginning of 2014, Erin was an accountant for tax and freelance personal financial writer. Erin's work has been cited as a result by The New York Times, CNBC as well as The "Today" program, Forbes and elsewhere. In her free moments, Erin reads voraciously and is unable to keep up with her two kids. Erin is from Ypsilanti, Michigan.

, Tiffany Curtis Lead Writer Health and Wellness Tiffany Lashai Curtis is a leading writer for the core Personal Finance team within NerdWallet. The former health writer for Livestrong.com as well as a freelancer for various publications such as Refinery29, Business Insider and MTV News, where she was a specialist in issues that affect marginalized communities. In her role as a health facilitator, she's led health-related discussions for organizations like Planned Parenthood and Harvard University. She is located in Philadelphia.

as well as Amanda Barroso Lead Writer | Credit scoring, budgeting, personal finances Amanda Barroso is a personal finance writer that joined NerdWallet in 2021 and focuses on credit scoring. She has also written data studies and participated in NerdWallet's "Smart Money" podcast. Prior to joining the team, Amanda was a journalist for over a decade covering issues facing numerous Americans including her role as a journalist at the Pew Research Center and a policy analyst for the National Women's Law Center and an instructor at a college. Amanda earned a doctorate from The Ohio State University.

Updated Dec 19 2022

Editor: Kirsten VerHaar Senior Assisting Editor eBay and Yahoo! Kirsten VerHaar edits of personal finance, with an English literature degree from the University of Colorado Boulder. In previous positions she was the lead editor at eBay as well as a manager of a team of writers who wrote about eBay's content team across the globe. She also wrote for Yahoo. After she joined NerdWallet at the beginning of 2015 she has written about subjects as diverse as vacuums (yes it really is), budgeting and Black Friday.

Many or all of the products we feature are provided by our partners who pay us. This affects the products we write about and the location and manner in which the product is featured on a page. However, this does not affect our assessments. Our views are our own. Here's a list and .

A good credit score is essential for a variety of reasons, including the possibility of obtaining credit accounts or contracting for cell phones. In many cases, you'll need credit in order to lease an apartment. Do not be afraid to ask your landlord if they have a particular credit score requirement before you spend time or money applying.

No credit homes tend to be located in low or rural populations than in big cities with lots of competition mean that landlords face more demanding requirements.

The reason landlords usually require a credit check in order to lease an apartment

The majority of landlords employ a combination of background and credit checks to determine a potential tenant's ability to pay rent regularly punctually. While these measures don't tell the complete story about a person's financial situation but they are among the most frequently used tools to assess the risk and protect the landlord.

If you are looking over you credit score, landlords are likely to be looking for signs such as previous bankruptcy or expulsions or late payments. A history of large debts or of collections might be indications of trouble.

>> MORE:

How do I find a place to live with little or no credit

If you do not have a credit history yet -- or your credit is lower than you'd like -- there are some methods to get around this and (hopefully) be accepted.

1. You can rent from an individual owner, but beware of frauds

The majority of apartment complexes and management businesses require an . However, some individual owners will allow you to rent without established credit.

Usually, landlords still ask you to prove your income stability. Apartments are rented only within the area your budget, even if it is possible to get approved for an expensive property.

And be cautious of listings that advertise no credit check apartments that seem too good to be real. There are a few indicators that indicate renting listings are scam, according to the Federal Trade Commission include:

A rental owner asking for a security deposit or the first month's rent, before you've signed a lease or visited the apartment.

The owner of a rental property says they're out of the country but has someone acting on their behalf to arrange for you to get the apartment. Don't transfer money to another country and be cautious when you're unable to meet an individual or visit the property before making a decision.

A rental owner wants you to wire them money. A wire transfer is similar to handing over cash. You can't return it.

2. Offer to move in right away

A few empty homes is costly for landlords. They must pay for the utility bills and mortgage without compensation in the form of rent. Because of this -- especially if you reside in an area where rental demand is low- you may be able to rent a house without a credit history when you are able to move in immediately.

>Sign Up:

3. Document your income or savings balance

In the event that you do not have a solid credit score, you could be approved if your earnings is stable and can pay for the cost of rent. It's generally recommended that you limit your rent to less than one third of your income from your home, so if you make an average of $3,000 per month, it's best to consider apartments that have rents that are less than $1000. Remember that as rents for median homes increase, it's not always feasible to adhere to this guidelines. But try your best to find a place that has a monthly rental that is .

If you do not have a steady income, a substantial savings balance could be enough. The amount of money you need to save will vary according to the management or apartment complex company, but in the ideal case, it should cover at least a month of rent payment.

4. Pay a couple of months' rent in advance to secure the deposit

Landlords are more likely to lease for you when they've got the rent funds in the bank for a couple of months. By making payments of two to three months upfront, your landlord won't run the risk of not making a payment, at least for a time. It is important to ensure that the payment is well documented, so that you can claim your money back when you reach the conclusion of your lease.

5. Provide reference letters

Show your credibility by providing references from former employers, teachers, or professors. It is generally believed that those who are accountable at work and school tend to be accountable in their spending. These reference points to your character are a great way to show you're a hardworking and responsible person who will not pay rent late.

Be aware of how your credit score is scored

Check your score for free and the factors that impact it, and get insights into ways to keep building.

6. Offer to start out month-to-month

By signing a three-month lease or going on a month-to-month basis your landlord may decide to not renew you for a longer term if you aren't paying. Of course, you're sure you'll always pay your rent in time however, you must demonstrate that to your landlord by proving a track record of on-time rent payments.

7. Get a co-signer or a roommate with a strong credit score

If there's no alternatives, consider asking a close friend or family member with good credit to sign for you. Be aware that if the person accepts the co-signer, you will be held accountable in the event that you don't complete the payment in a timely way. To keep your relationship solid, you must make your payment in the full amount and promptly.

It's also a good idea to look into an roommate. If your potential roommate is creditworthy that could boost your chances of being able to rent an apartment. Sharing rent will help your budget.

Strategies to build credit

If you don't plan to move right away or if you're having trouble finding a place to live It's not a bad idea to get started .

Request an secured credit card. These types of cards require users to put down a cash deposit before the account is established. The amount of the deposit is equivalent to the credit limit of the card If you deposit $250, then that would be the credit limit, too. The best secured cards allow you to upgrade to a non-secured card which doesn't require deposit, so be sure to conduct the research prior to submitting.

Ask anyone you trust to see if you can be added to their credit card as an . It will not be a burden for making payments and will benefit from having more credit, which will reduce your usage and boost your credit score.

Take out the money from . The lender, typically a credit union or small lbank, holds the full amount until you pay over time. Once you've paid the loan in full, you get the full amount. This kind of loan helps you build a history of on-time payments as well as accumulating funds to be used for an emergency or for other goals to save.

Credit can be obtained for rent and utility payments. This can assist in getting you credit scores to be reflected in rent payments. Using allows your utility and rent payments to be credited towards your credit score at the credit bureau. The key is making sure that all your payments are in time so that you can get credit and increase your score.

The authors' bios: Erin El Issa is a credit cards expert and a writer for studies at NerdWallet. Her work has been highlighted on USA Today, U.S. News and MarketWatch.

Tiffany Lashai Curtis is a lead writer on the personal finance team. She has over 5 years of experience in reporting on issues that affect marginalized communities.

Amanda Barroso covers consumer credit and debt for NerdWallet. She was previously employed at the Pew Research Center and earned an honorary doctorate from The Ohio State University.

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(image: https://greendayonline.com/wp-content/uploads/2016/12/065e16157780f9b36e815af6455f2aeb.png)Can you pay off your car loan to avoid repossession? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial decisions by offering interactive tools and financial calculators as well as publishing original and objective content. We also allow users to conduct research and compare information at no cost to 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 deals that are advertised on this website are provided by companies who pay us. This compensation could affect how and when products appear on the site, such as, for example, the order in which they be displayed within the categories listed, except where prohibited by law. This applies to our mortgage, home equity and other products for home loans. But this compensation does not influence the content we publish or the reviews that you read on this site. We do not cover the entire universe of businesses or financial offerings that might be available to you. Srinrat Wuttichaikitcharoen/EyeEm/Getty Images

5 min read Published November 28, 2022

Written by Sarah Sharkey Written by Contributing Writer Sarah Sharkey is a contributing writer for Bankrate. Sarah writes about a wide range of subjects, such as banking, savings tips, homebuying, homeownership and personal finances. Written by Rhys Subitch Editored by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain the confidence to control their finances by providing detailed, well-studied information that breaks down complicated topics into bite-sized pieces. The Bankrate guarantee

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At Bankrate we aim to help you make smarter financial decisions. We adhere to the highest standards of editorial integrity ,

this post may contain references to products from our partners. Here's an explanation for how we make money . The Bankrate promise

Founded in 1976, Bankrate has a long track record of helping people make wise financial choices.

We've maintained our reputation for more than four decades through simplifying the process of financial decision-making

process and giving customers confidence about the actions they should take next. Bankrate has a very strict ,

So you can be sure that we'll put your interests first. All of our content is written by and edited by

who ensure everything we publish is objective, accurate and reliable. The loans reporter and editor are focused on the things that consumers care about most -- the various types of loans available, the best rates, the top lenders, how to repay debt, and many more. So you'll feel safe making a decision about your investment. Integrity in editing

Bankrate has a strict policy , so you can trust that we're putting your interests first. Our award-winning editors and journalists produce honest and reliable information to help you make the right financial choices. Our main principles are that we respect your confidence. Our goal is to provide readers with truthful and impartial information, and we have established editorial standards to ensure this happens. Our editors and reporters rigorously check the accuracy of editorial content to ensure the information you're reading is accurate. We have a strict separation between our advertisers and our editorial team. The editorial team of Editorial Independence Bankrate does not receive any direct payment through our sponsors. Editorial Independence Bankrate's team of editors writes for YOU - the reader. Our goal is to provide you the most relevant guidance to make smart personal finance decisions. We follow the strictest guidelines in order to make sure that content is not in any way influenced by advertising. Our editorial team receives no directly from advertisers, and our content is checked for accuracy to ensure its truthfulness. So when you read an article or a review it is safe to know that you're getting credible and reliable information. How we make money

If you have questions about money. Bankrate has the answers. Our experts have been helping you manage your finances for more than four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life's financial journey. Bankrate adheres to strict standards , so you can trust that our information is trustworthy and precise. Our award-winning editors and reporters provide honest and trustworthy content to help you make the right financial decisions. Our content produced by our editorial team is factual, accurate, and not influenced through our sponsors. We're open regarding how we're capable of bringing high-quality information, competitive rates and helpful tools for our customers by describing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for the placement of sponsored products and, services, or when you click on specific links that are posted on our site. This compensation could impact how, where and when products are displayed within the categories of listing, except where prohibited by law for our mortgage home equity, mortgage and other home loan products. Other factors, like our own website rules and whether a product is offered in your region or within your personal credit score could also affect the way and place products are listed on this site. We strive to provide an array of offers, Bankrate does not include specific information on each credit or financial products or services. Car repossession has increased rapidly in the last few years, as per reports . If you're in debt on your obligations and your car is at risk of repossession There's good news that you have the option of taking steps to prevent this dreadful outcome. Between reinstatement and loan modification There are a variety of options to prevent repossession. Do paying off a vehicle loan end the process of repossession? The rules of repossession vary according to the state you live in. In many states there is a possibility that the lender may take possession of the vehicle at any time you are in default. Based on the terms of your loan agreement, this could be a result of missing only one payment. There are several steps between missing a payment to the final repossession of your car. Based on the situation you're in you're able to take proper steps . If you've never received any notice If you're unable to make your auto payment, you'll probably know about the financial situation well before your lender is aware. Don't wait for your lender to discover that you miss a payment take the initiative and contact the lender to discuss your situation. The lender may be willing to hear you out to save the cost of repossession. Try to come to an agreeable solution. For instance, you could provide more details about your situation, when you'll be able to make the next payment , or the amount you're able to pay now. Depending on the history you have with the lender it is possible that you will be able to negotiate a temporary reprieve or . This is especially the case if this is the first time you've had to make a missed payment. If the lender has sent only notice to you, the lender can legally repossess your vehicle with or without notice in many states. However, your lender is likely to send you a notice of its intentions to repossess the vehicle before it happens. If you receive a notice of repossession, the first call you should make is to your lender. Again, an open line of communication between you and the lender may result in an option that prevents repossession. If you wait until you receive an email means you'll be caught up when you explain the issue with your lender. If your lender is willing to hear your concerns, provide as much information as you can regarding the time you'll be able to make a payment. Additionally, let them know how much money you have available to put to make a payment now. Ultimately, it can be in the lender's best interest to negotiate a temporary arrangement. In the end, the company is looking to be paid, and you'll probably need your car to get to work. Depending your lender and your personal history it is within the realm of possibility. When the lender has already begun the process. If the lender has already begun the repossession process it is possible that you will not be able to access your vehicle. In this case, restitution of your loan (also known as curing the default -may be the best option. In some states, you'll need to pay the full past due amount. That includes every missed payment and any late fees that have accrued. Typically the lender may also require that you pay for repossession costs before releasing the vehicle to you. In other states, you could have to pay off the total loan in order to receive your vehicle back -- that process is called redemption. Not every state allows for reinstatement. If your state does not have reinstatement laws and it's not a part of your contract, you should nonetheless contact your lender. They may be willing to amend the terms of your loan in order to incorporate it. How auto repossession works Auto repossession can be a painful experience. Understanding the process can assist you to work through it and eventually find solutions. 1. If a borrower fails to pay, your lender has the right to repossess the vehicle in the event that you become in default, and then be able to transfer the vehicle to a debt collection agency. The number of missed payments needed to be in default on your loan will depend on the state you live in as well as your loan contract. In certain situations it is only necessary to miss one payment in order to be in default. In other cases you may need to miss two or three payments in order for an issue to occur. In this situation, clear contact between you and your lender is critically important. If you are able to work out an extension, now's the right time to inquire. 2. Lender takes your car Once you're in default Your lender could or might not notify you of its intent to repossess the car. Call your lender to ask for a temporary payment arrangement to avoid repossession if you get an official notice. In the event of a state-wide restraining order and the state of your car, the lender could be able to repossess your car at any time , regardless of whether you've received a notification. 3. Lender sells the car once the lender has taken possession of the vehicle the lender may hold the vehicle until you pay up with the loan. The most likely scenario is that the lender will sell the vehicle. In many states the lender will notify you of the sale and offer you the opportunity to reinstate your loan. If you wish to purchase the car back before the sale, you'll have to pay for the entire amount due and any costs associated with repossession. However, many repossessions are sold through auction. You have a right to attend the auction and put in a bid on your vehicle. 4. Lender pays you for any outstanding balance. After you sell the vehicle the lender will use the proceeds to pay what you are owed. But the sale price may not cover the entire amount owed. If you have more debt than your lender receives for selling the car, that's a deficit. In most states the lender may claim any deficiency. For example, let's say you owe $10,000 however, your lender is able to sell it at $7,000. In that case the deficit is $3,000 and the lender may be entitled to claim the difference. In the event of surplus to the sale and the lender might be required to transfer it to you. This is rare however, if it does occur, you'll at the very least get a tiny gain by selling the property. Other ways to avoid repossession Avoiding repossession is a important concern for the majority of consumers. In the end, your car is likely a key piece of your ability to earn money. There are a few options to prevent repossession include Reestablishing the loan If you are able to make your overdue payments and the lender will reinstate your loan. This means that you're bringing your situation back to the beginning. When you are reinstated, you'll need to continue making your regular car payment. Take care to pay off the loan Then that paying off the entire auto loan is a lot easier said than done. If this is in your reach, it is one solution to avoid this. Refinancing: This can be difficult as your credit score suffers a hit from missing payments. If you can locate an alternative loan with the lowest interest rate, or regular payments, it might be the best option for your financial situation. Declare bankruptcy. If you are behind on other debts If you are in debt, bankruptcy could be an alternative. However, while there are options to do so , it's not a guarantee. Repossession may still happen when you don't find a workable solution. The disadvantage of these options is that you'll probably have to raise some amount of cash to resolve the situation. In the end, if you're faced with the possibility of repossession, which is uncomfortable contact your lender as soon as possible. With open lines of communication with your lender, the lender may offer a deal that works for everyone.

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The article was written by a contributing writer Sarah Sharkey is a contributing writer for Bankrate. Sarah writes on a variety of subjects, including banking, savings tips homeownership, homebuying and personal finances. Editor: Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain confidence to take control of their finances by providing clear, well-researched information that breaks down complicated subjects into bite-sized pieces.

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How They Split Debt

Advertiser disclosure You're our first priority. Each time. We believe that every person should be able make financial decisions with confidence. Although our site does not include every company or financial product that is available on the market We're pleased of the advice we offer and the information we offer and the tools we create are impartial, independent, straightforward -- and free. So how do we earn money? Our partners pay us. This could influence the types of products we write about (and the places they are featured on the site) However, it in no way affects our advice or suggestions, which are grounded in many hours of research. Our partners are not able to promise us favorable ratings of their goods or services. .

How They Ditched Debt

They tamed debt in their own way. Check out their tales to inspire your own payoff process.

The article was written by Amrita Jayakumar Writer The Washington Post Amrita Jayakumar is a former special assignments writer for NerdWallet. She also wrote a syndicated column about the millennials and money. She also covered personal loans and consumer credit and debt. In the past, she worked as an editor at The Washington Post. Her work has appeared within The Miami Herald and USAToday. Amrita has a master's degree in journalism from The University ofMissouri.

Written by Kathy Hinson Lead Assigning Editor Personal finance, credit scoring, financial management and debt Kathy Hinson leads the Core Personal Finance team at NerdWallet. In the past, she worked for 18 years working at The Oregonian in Portland in positions such as copy desk chief and team editor and designer. Prior experience includes news and copy editing for a variety of Southern California newspapers, including the Los Angeles Times. She received a bachelor's degree in mass communication and journalism from The University of Iowa.

The majority or all of the products featured here are provided by our partners, who we pay. This impacts the types of products we feature and where and how the product appears on a page. However, this does not affect our opinions. Our opinions are entirely our own. Here's a list and .

How Two Teachers Wiped Out More Than $53,000

Jae Bratton as well as her husband

This rumor about children being cost-conscious? Fact! This is why Jae Bratton and her husband who was a teacher with whom she worked was focused on paying their debts in the three years leading up to the birth of their first child.

From $20K to 0 in 5 years and 8 Steps

Photo taken by Jonathan Sharpe

It took a few yearsand almost every method in the book- for Kenley Young to wipe out more than $20,000 in charge card debt. In that time Kenley Young learned a lot about how paying down dreams can be entangled in reality major life situations. Now a NerdWallet editor, the author reveals what tools made the biggest impact on his journey to reach $0.

The pursuit of a goal leads to Helping Others

Photo taken by Sandra Leigh Photography. Sandra Leigh Photography

The present of a book about personal finance inspired Holly Carey to get serious about understanding and removing her debt. She was introduced to zero-based budgeting, and cut back on expenses whenever she could, for example, sharing a room with a friend. After spending less than $55,000 in 26 months, she was compelled to share her advice with family and friends -and ultimately, she landed an editor position at NerdWallet.

Pandemic After Payoff Tests Couple's Resilience

A few months before the COVID-19 disease struck the United States, Anthony and Jhanilka Hartzog paid off the one-third of their $114,000 debt. They'd devised an effective budget for them, and they'd created new income streams and took advantage of a reduced cost of living following the move from New York to Dallas. We spoke to them nearly two years later -- were the Hartzogs successful in avoiding debt even in the midst of the global pandemic that was straining the finances of numerous families? What advice do they have for others looking to get rid of debt on their own?

The Home is being remodeled, and the Business is growing the business

After job losses slowed down household incomes for Karen Akpan and Sylvester Akpan, the couple made the bold choice to move out of their home in Los Angeles and buy an RV. They set their sights on expanding their travel blog and an associated Instagram account and were able pay off their debt in a year. The way they went about it is unique but it is a sign of an underlying truth: reducing costs and increasing income yields more cash available to tackle debt.

Getting On Board With a Budgeting for Baby

Former Zookeeper Steffa Mantilla says she didn't use any animal training techniques to convince her husband to come on the same page with his plan to reduce debt.

However she might have persuaded him, the Houston couple have paid off over $70,000 of debt over five years. Planning for a baby was the catalyst for their money makeover.

Eliminating small expenditures was achieved is a Major Goal

Refinancing students loans was the first step in the payoff journey for Neal and Laura Fogarty. They then searched for expenses to trim to make sure they could use every dollar they earned towards eliminating debt. They paid off $36,600 over eight years.

Rebounding From Bankruptcy

Rashad and Nirvanna Muhammad slogged through student debt and financial struggles when they were married and began to build a family. After experiencing a bankruptcy, they narrowed their focus and made the sacrifices necessary to pay off $179,000 in just less than four years.

You're Keeping a 'Passion to Fashion on the road to Repayment

The prospect of a fresh start in her lifewith a house and a family -- inspired Caitlin Forni to get more serious about paying down her debt. She paid off $123,000 in car and student loans in nine years.

A Spender, a Saver and the Dreams of a Family

As Kendall Berry and her husband began to plan for children, they got serious about repaying their debt. This is how they paid off nearly $54,000 in just one year.

'Happiness Journey' Fueled Payoff

(Photo taken by Abby Bengs)

After incurring more than $200,000 in student loans for law school, Okeoma Moronu decided to take a purposeful approach to her financial and personal life and paid off her debt in six and six and a half years.

From 'Extravagantly Bloke' to the Comfortably Frugal

DeShena Woodard, a nurse from Texas, had nothing in savings and lived paycheck till payday until the day she changed her habits and was able to pay off over $50,000 in just three years.

Small Splurges on the Path to Freedom

Brian as well as Lindsey Baldwin wiped out $130,000 in student loans in under four years. And they still managed some treats for their families along the way.

Small wins can help you achieve a Big Dream

Bernadette Joy and AJ Maulion paid off student loans and two mortgages, a staggering sum of $309,800 while building a small business. The recipe for success: Live on a single salary, celebrate small wins.

Whipping Up a Payoff 'Tornado'

When Steven Donovan didn't want to plug his debt numbers into a budget app He knew he needed to act. In the end, tackling his most hated debt helped him pay off $118,000 in five years.

"I Just Pretended I didn't have Money'

Sarah McGowan's aim was to be free of student loans when she reached 25. By maintaining a frugal life right after college and taking advantage of every opportunity she could, McGowan got rid of a little over $36,000 in debt in just two years.

"It made our marriage so Strong'

(Photo by Amelia Campbell Photography)

Ray and Bailey Robertson paid off over $33,000 in 18 months thanks to a shrewd strategy, lean lifestyle, close partnership and lots of planning.

Redefining "Best Life," Reducing the size

Sonia Sears ended up deep in debt while trying to live her "best life" at university and later. But she conquered her mountain of debt by working harder while traveling less, and then returning home. She paid off $79,000 in just over two years.

The Frugal Lifestyle is Kicking into High Gear

Ben and Melissa Panter were always frugal However, when they had to face an enormous mortgage and increasing student loan balances, they realized they needed to shift their frugality into high speed. The Panters have paid off $117,000 in just over four years.

Food Planning, Side Jobs and Faith

(Photo by Brok (Photo by Brok Amanda Hansmeyer)

As teachers, Jamie as well as Jenna Griffin were overwhelmed with student loans. They employed their budgeting skills and perseverance to pay off over $100,000 in five and five-and-a-half years.

How to Make the Most of a gig economy

(Photo taken by Shane Henderson)

Kara Perez doubled down on part-time jobs in order to repay student loans that totaled $25,302 in three and a half years.

Holiday expenses can eat away at a couple's Budget

Christmas gifts piled over existing debt led Anthony Hartzog and his wife to pay off $114,151 within 23 months.

The Thrifty Living along with Side Gigs

By balancing her budget, working full-time and supplementing her income, Tanya Nwamkpa completed the repayment of $57,000 in just five years.

"We Have Choices And Again'

Their finances began to slide due to a loss of jobs in 2009. Despite making mistakes along the way, Adam and Sally Cleary have gotten out of more than $11,000 of high-interest debt.

Conquering College Credit Card Balances

Natalie Tomko aimed to pay off $50,000 credit card debt by her 30th birthday. It took her six years, a plan for hardship and support from the community to achieve it.

Change in Habits, Budgeting for a Baby

After discovering that a child was on the way The Baggerlys overhauled their carefree spending and began budgeting. two children later, they paid off $111,108.

Smart Solutions for 'Stupidest Decision'

Cameron Merriman paid $95,000 of student loan debt in just five years, while living in one of the most expensive cities in the country.

"It was a Game to Us'

Josh as well as Jessie Boyce paid off $147,000 in debt in just more than three years after realizing that debt was keeping them back from financial freedom.

An Olympian's Medal-Worthy Juggling Act

John Coyle's loan of $147,000 was used to finance his Olympics race, and, after being offered a six-figure job, Coyle paid it off over 15 years.

Affirmative Concentration on the End Goal

A recent college grad Samantha Ealy paid off more than $70,000 in less than three years doing multiple jobs and at times even neglecting her health.

The process of becoming a budget obsessive

A combination of student loans and the car loan, credit card debts, and home improvement financing has left the Browns with debts of $72,000 which forced them to come up with their own budget.

Engineer Reminisces Old-School with Pen and Paper

Despite receiving scholarships, Brianna Harrington graduated college with $40,000 in college loan debt. Determined to eliminate it her debt, she created a budget that was strict for paying it back over 26 months.

Distinguishing Pride Away and Asking for help

Jesse Nuno was laid off during the recession and was in debt on mortgages or auto loans. Cara couldn't pay her bills due to disability. The couple turned to a credit counselor to pay off $272,261 over five years.

A Wish List Kept Her Going

(Photo taken by Jim Gion, 2015)

Melanie Lockert set out to wipe out $57,426 in debt and encouraged herself to do so by writing wish lists of things she'd like to be able to do after becoming debt-free.

"Born Spender" goes on a Spending fast

Anna Newell Jones entered married life with a debt of $24,000. She forced herself to go on a spending speedy pace and paid it off in 15 months.

New Parents Stop Credit Cards

Lydia Senn and her husband claimed they didn't have a lot of debt until they found out they were expecting the first of their children. Working part-time jobs and budgeting helped them pay off $36,000 within just two years.

Grads Give A Gift to Her Future Self

Ogechi Igbokwe didn't want to become another students loan statistic. To set herself up for success, she lived frugally and paid off $26,000 over three years.

Financial Goals Are Family Goals

The newlyweds Nicole as well as Andy Hill saw debt as a roadblock to achieving goals. The couple turned budgeting into a routine and wiped out almost $50,000 of debt in the span of one year.

There is no rest for the new parents Till Payoff

Chelsea as well as Nate Day ended up owing her family $52,000 following an unintentional home purchase. The family debt left the Days uncomfortable as they cut costs to pay it off over six months.

Homemade Tracker Kept Her Cooking

Chef and food writer Stephanie Stiavetti racked up debt to pursue her culinary dreams. But she knew the if she did not change to a more relaxed lifestyle, she'd be stuck with debt of $64,000 for decades.

I was newly single, and I knew I Had to Help Myself'

At the age of 25 Carrie Smith Nicholson found herself divorced and owed $14,000. She realized she would need to find a new job, cut down on spending , and get herself out of the hole.

Learning to be a student with Student loans

After college, Kara Stevens found herself struggling with student loans as well as credit card bills. Once she was educated about the subject, Stevens determined to take on the issue head-on and pay off $65,000 over six years.

The Extra Payments She Received became Her Obsession

After Jackie Beck lost her job and was unable to pay for food and housing She was forced to face her financial obligations. Beck was obsessed with the smallest payments and paid off $147,106 in 10 years.

Making the most of Cents

At the age of 23, Michelle Schroeder Gardner earned three college degrees, gotten married and bought a house. She graduated with $38,000 of student debt , and decided she'd be able to pay it off as quickly as possible.

Money under 30

David Weliver didn't tackle his $80,000 debt until he was faced with an unpopular choice: pay rent or pay for a debt from his credit card. He consolidated his debts, cut his expenses and landed at a second job to pay it off within three years.

Lauren Greutman

Lauren was a shopper, was ashamed to let her husband Mark, a saver, be aware of how poorly she had managed their finances as a family. When she acknowledged the problem and changed her spending habits she paid down $40,000 in two years.

Money Peach

Chris Peach and his wife Andrea had a rough time when they maxed out their credit cards and couldn't pay for food items. Peach was a firefighter in training, applied a step-by-step approach to pay off $52,000 in seven months.

Debt Discipline

Brian Brandow had his debt epiphany when the father of three had to tell his family there'd be no vacation this year. The Brandows had exhausted their credit cards. They used a debt management plan to pay off the balance of $109,000 in four years.

Cait Flanders

In her early 20s Flanders accrued debt of more than $30,000 after saying "yes" to every purchase. By monitoring expenses and cutting down on spending on unnecessary items, she paid it off in two years.

Active Budgeting pays off

Newlyweds and recent graduates with a debt of $20,000, Johnny and Joanna Galbraith decided to develop an attack plan and make it clear that they were in the red. They paid off the debt in 1.5 years.

My Shiny Nickels

Laura Dobbins and her family lived in an elegant home with all the amenities of wealth however, they were $4000 in credit. They restructured their lives and started saving. And within a mere two years, they had become debt-free.

Smart Spending, Dedication

Zina Kumok graduated from college with $24,000 in students loan debt. Since she was earning an average of $28,000 per year, she realized she had to get serious about the debt. The debt was paid off in three years.

The Family CEO

Julie Mayfield and her husband had to take on 18 years of debt -- totaling $59,000 -- to help finance their daughter's first year of college. They put any money they had to use towards debt, and then paid it off in 22 months.

'Monster Payments'

Amanda Page graduated with $48,500 in student loan debt. After 10 years, realizing that she had paid off less than $1000 of her balance after which she resigned herself to additional work. She employed a plan to make "monster payment" to pay off the debt over 14 months.

Penny Pinchin"Mom

Before getting married, Tracie Fobes declared bankruptcy to pay off debt. But by the time the couple were expecting the first baby, they had accumulated $37,000 more. Discussions about money led them to complete the repayment in just over two years.

Queen of Free

Cherie Lowe and her husband Brian were carrying more than $127,000 in debt spread across payday loans, medical bills and student loans. After the birth of their son, they spurred an overhaul in their lifestyle, and they were debt-free after four years.

The Budgetnista

(Photo by Tinnetta Bell.)

Tiffany Aliche was saddled with $55,000 in graduate school loans, $40,000 in credit card debt, and the sum of $200,000 due to a mortgage that was in default. Then she returned to her home and opted for an all-cash lifestyle in order to get rid of the debt.

A Wallet that is well-kept

Deacon Hayes and his wife Kim used credit to fund their lifestyle. In the event that they were in debt and living paycheck from paycheck to paycheck, the couple decided they had to take action. The Hayes paid it off within 18 months.

His and Her Money

When they were newlyweds, Talaat and Tai McNeely were financially different and had approximately $30,000 of debt. They made a living on one income, and utilized the other to pay off their debts in a year.

Debt Free Guys

John Schneider and David Auten had years of experience in the financial sector -- but they still managed to accrue $51,000 of debit card balances. They cut down on expenditure, utilized the balance transfer method and paid off the debt in 18 months.

From top to bottom

About the writer: Amrita Jayakumar is a former writer at NerdWallet. She previously worked at The Washington Post and the Miami Herald.

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The smartest money moves are for Black Americans in Financial Distress

Advertiser disclosure You're our first priority. Everytime. We believe that every person should be able to make sound financial decisions with confidence. And while our site doesn't feature every company or financial product on the market, we're proud of the advice we provide and the information we offer and the tools we create are impartial, independent, straightforward -- and completely free. So how do we make money? Our partners pay us. This could influence the types of products we write about (and where they are featured on the site), but it in no way affects our advice or suggestions, which are grounded in hundreds of hours of research. Our partners do not pay us to guarantee favorable ratings of their goods or services. .

Smart Money Strategies to help Black Americans in Financial Distress

Written by Sean Pyles Senior Writer | Personal finances and credit, and personal finance Sean Pyles leads podcasting at NerdWallet as the producer and host of the NerdWallet's "Smart Money" podcast. In "Smart Money," Sean talks with Nerds from the NerdWallet Content team to answer listeners' personal finance questions. With a particular focus on sensible and actionable money advice, Sean provides real-world guidance that will help consumers improve in their finances. In addition to answering listeners' financial questions on "Smart Money," Sean also interviews guests who are not part of NerdWallet and also creates special segments that explore subjects such as the racial gap in wealth and how to begin investing, and the background of student loans.

Before Sean took over podcasting for NerdWallet, he covered topics concerning consumer debt. His work has appeared throughout the media including USA Today, The New York Times and other publications. When when he's not writing about personal finances, Sean can be found working in the garden, taking runs and taking his dog on long walks. He is based in Ocean Shores, Washington.

Updated February 5, 2018

Written by Hanah Cho. Cho is Vice President Personal finance Hanah Cho is Vice President of Content. She managed multiple NerdWallet teams focused on personal finances before becoming director and deputy director. She originally was hired by NerdWallet as a journalist, covering small businesses. Before that, she covered startups and business for The Dallas Morning News, as well as a prior Business writer at The Baltimore Sun. She also served as treasurer for The Texas Chapter of the Asian American Journalists Association.

The majority 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 appears on a page. However, this does not influence our evaluations. Our views are our own. Here's a list of and .

The record-breaking credit card debt and fluctuating incomes cause financial difficulties to many American households, particularly those with lower incomes. These effects can be felt especially keenly in households of blacks, where historic and systemic racial discrimination has led to greater disparities in wealth and debt.

There are steps families who are struggling could take to improve their finances, including improving their credit score and seeking alternatives to products that are risky like .

Widely-rooted inequalities between wealth and debt

Disparity in wealth and debt are a result of one another According to Pamela Chan, project director of human insights at Prosperity Now, a non-profit based within Washington, D.C.

"If you're a person with a lack of money to begin with ... when emergency situations arise, that usually makes people rely on borrowing to help through these times," Chan says. "Then once someone takes the loan, especially if they don't have a lot of money, they're more vulnerable to a disaster while trying to pay back your debt."

The discrimination imposed by institutions against generations of black Americans and the ramifications of this have contributed to black households facing greater financial hardship than white households, Chan says.

The wage gap is just one illustration. As of 2015, black males earned 22% less than white men with, for example, the same education, experience and residence region the report of the Economic Policy Institute found.

In 2016, the average family wealth for whites was more than 10 times that of the median wealth of black families -$171,000, compared to $17.600 -- as per the Federal Reserve's Survey of Consumer Finances.

How to improve your finances in order to increase wealth

is the first step toward creating wealth. Before taking action, Michigan-based accredited financial coach Weslia Echols recommends planning a long-term plan.

"The first thing I advise clients to do is take a deep breath. Once you've done that and look at the situation in depth it is unlikely that you will seek an instant answer such as a payday loan," Echols declares. "Getting out of debt is a lengthy process."

Echols recommends establishing a clear budget and payoff schedule. Here are tips to improve your financial situation.

Build your credit: Your credit report and score is among the top vital factors in your financial health. If they're in the best shape possible, you become more appealing to lenders, increasing your access to credit with lower interest rates. NerdWallet provides both a and credit score that is regularly updated.

Start by checking your for incorrect information, for example, an account that's not yours which could lower your score.

Then start raising your credit score by making timely payments on all accounts, including credit cards and loans and credit cards. Payment history is the most significant element that can affect it. The credit bureau Experian advises keeping your -- or how much of the credit limit you have less than 30%..

Be strategic about debt: In 2017, the Survey of Consumer Finances shows that black families tend to carry ratios of debt-to-income -- how much debt you have compared to your income -- higher than 40%, a marker of financial stress, according to the Federal Reserve. Nine percent of black families had DTIs higher than 40%, compared to the white household's 6.

Control your debt as efficiently as possible as you can and repay it more quickly by lowering the interest rate. Transferring the balance onto a zero-interest credit card is an option for those with solid credit.

If you're not eligible for such a card, look into whether a can help you pay down the credit card debt more quickly and more affordably. If your monthly payments for debt exceed your income by half it is recommended to seek legal advice on what's best for you. While it's not able to erase all types of debt, it can offer a fresh start and help you meet other financial goals like savings for retirement. Resources such as LawHelp.com will direct you to local legal aid.

Avoid risky products A majority of black Americans are likely to use high-interest loans such as payday loans in comparison to 21 percent of white Americans as per a 2016 report from the Financial Industry Regulatory Authority. These loans could have interest rates upward of 300%, and can lead to repeated borrowing, trapping the borrower in a cycle of debt.

If you're in need of cash, you can get more favorable loan rates from your nearby credit union. Additionally, apps such as Earnin provide you with an advance on your paycheck without any fees or charges. If you're not able to establish credit Also available at many credit unions -- can provide the cash you need while you improve your credit score.

To get more assistance, you can tap the free advice of an organization that is not for profit, such as the National Foundation for Credit Counseling.

This piece was designed by NerdWallet and was first released in The Associated Press.

Author bios: Sean Pyles is the executive producer and host of NerdWallet's Smart Money podcast. His work has appeared on The New York Times, USA Today and elsewhere.

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How to Handle Debt Collectors in 3 Easy Steps

Advertiser disclosure You're our first priority. Everytime. We believe that every person should be able to make financial decisions without hesitation. While our website doesn't feature every company or financial product on the market We're pleased of the advice we offer and the information we offer and the tools we develop are objective, independent, straightforward -- and cost-free. So how do we make money? Our partners pay us. This may influence which products we review and write about (and where those products appear on the website) however it in no way affects our advice or suggestions, which are grounded in thousands of hours of research. Our partners cannot promise us favorable ratings of their goods or services. .

How to Deal with Debt Collectors in 3 Easy Steps

Don't rush into paying. Validate your debt and know your rights.

By Sean Pyles Senior Writer | Personal finances and credit, and personal finance Sean Pyles leads podcasting at NerdWallet as the host and producer of NerdWallet's "Smart Money" podcast. On "Smart Money," Sean talks with Nerds from NerdWallet's NerdWallet Content team to answer listeners' questions about personal finance. With a focus on thoughtful and practical money tips, Sean provides real-world guidance to help people improve the financial situation of their lives. Beyond answering listeners' money concerns on "Smart Money," Sean also interviews guests who are not part of NerdWallet and also creates special segments to explore topics such as the racial gap in wealth, how to start investing and the background of college loans.

Before Sean took over podcasting at NerdWallet the company, he also wrote about topics concerning consumer debt. His writings have appeared on USA Today, The New York Times and elsewhere. When when he's not writing about personal finance, Sean can be found digging around his garden, going for runs and taking his dog for long walks. Sean is located at Ocean Shores, Washington.

Updated Mar 17, 2023, 5:00 PM PDT

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

A majority of the products we feature come from our partners, who pay us. This impacts the types of products we feature and the location and manner in which the product appears on the page. However, this does not affect our assessments. Our opinions are our own. Here is a list of and .

The debt collection agency is trying to hound you to pay an outstanding consumer debt. These tactics can be irritating at best -- and criminal, or even illegal, at worst.

It's crucial to know how to deal with debt collectors --including understanding -- so you can assert your rights and decide on the most appropriate method of handling them . Before you make any statements or make any payment be sure to follow these steps:

Watch your debts dwindle

Create an account to link your cards, loans and accounts to manage them all from one place.

3 steps for dealing with the debt collector

1. Don't give in to pressure to pay at first contact

As you wouldn't dive in to a deal without understanding the terms of the contract, don't be rushed to make a payment when a debt collector contacts you. It is important to take the time to analyze your .

"A lot people are embarrassed about being in debt and that's exactly what debt collectors prey on," says Ramon Khan who was a debt collector from Texas who is now working in the field of online marketing.

"They create this urgency and prey on those pain points to get you to pay something. In the final analysis, even if are owed $50,000 or $100,000, they really don't want to pay it all. If they can convince you to pay a portion of the amount, it works toward their limit of."

Don't make a payment, don't pledge to pay and don't give any payment information the collector could utilize in the future. Request information about the debt, and then say that you'll contact them to discuss the issue in the future.

Making one paymentas little as $5 or $10 -- is an acknowledgement of the debt, and could have severe repercussions. If the debt is past the date, for instance the payment could reset that clock and could lead to a lawsuit or .

Readers also ask

Can you go to jail for not repaying the payday loan?

Refusal to repay a loan is not a crime offense. It is actually illegal to be the duty of the lender to threaten a borrower with arrest or imprisonment. Nonetheless certain payday lenders have had success using bad check laws to file criminal complaints against borrowers, with judges mistakenly stamping the complaints.

How do I dispute the loan?

There are two options you can utilize to contest the amount of debt you owe first, the debt collector must provide you with a letter outlining the debt and your rights in disputing the debt; and secondly, you can request a letter of verification. You can make a written request to get more information and temporarily halt collection efforts.

What happens if we don't cooperate with a debt collector?

Ignoring a over a delinquent debt could put your salary, bank account or property at risk. Additionally, you may lose the ability to dispute the debt.

2. Find the information you need

When the original creditor sells a debt to a third party -- which might go on to resell the debt and on and so forth recording often falls off the radar. Many sold debts are erroneous regarding the amount due or who is owed it.

Debt collection practices are one of the largest sources of complaints from consumers with the Consumer Financial Protection Bureau as the result. About 70,000 complaints were filed in 2021 on the matter; the biggest reason was consumers being asked to settle debts they did not have to pay [0] Consumer Financial Protection Bureau . . Accessed April 7, 2022.

.

Ask for a letter from the debt collector if you don't receive one within five business days from the first time you contact. It should contain details about the amount owed, the collection company and the best way to contest the debt.

Gather your own records on the debt, if it's yours, including the information about the original creditor as well as your payment history.

Keep accurate records of communications with the debt collector, as well as any prior payments. You might want to consider using certified mail to ensure the highest quality of documentation.

Make sure you track your debt in an easy way

Sign up to NerdWallet to view your current payment schedule and breakdown of your debt all in one spot.

(image: https://i.ytimg.com/vi/pVCbIubacL0/hq720.jpg)3. Know your rights and know how to use them

Your ally is. This law provides you with rights as a buyer and shields you from predatory collection tactics. For instance:

Communication: You are able to specify how and when can contact you and request that they cease communication altogether. Debt collectors are not allowed to using profane language or threatening violence.

Honesty: Debt collectors are not able to mislead you about who they are, the much money you owe or the legal consequences of not paying the debtfor instance threats of arrest.

The debt is disputed You are entitled to dispute the debt. If you dispute your debt in the first 30 days of first contact, the collector will not be able to request payment until the dispute has been settled. After 30 days, you may continue to challenge the debt but the collector can seek payment while the dispute is being looked into.

You may be able to claim if your rights under the FDCPA have been violated. Your state may offer additional consumer protections. Consult with the legal aid office in your local area or the State Attorney General's Office.

Understand your federal and state safeguards during the collection process. Your state's as well as the federal government can be a good resource.

It's a matter of writing a letter to debt collectors to request more information on the debt or demanding that a debt collector cease contact, you should know how to assert your rights as a consumer and don't be afraid to assert them.

The author's bio: Sean Pyles is the host and executive producer on the NerdWallet's Smart Money podcast. His work has appeared in The New York Times, USA Today and elsewhere.

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(image: http://djzone.hu/wp-content/uploads/2010/01/P1228893.jpg)Emergency Fund: What It Is and Why It's Important

Advertiser disclosure You're our first priority. Each time. We believe that every person should be able to make sound financial decisions without hesitation. And while our site doesn't contain every financial institution or product on the market We're pleased that the guidance we offer, the information we provide and the tools we create are independent, objective, straightforward -- and completely free. How do we earn money? Our partners pay us. This could influence the types of products we review and write about (and where those products appear on our website) however it does not affect our recommendations or advice which are based on hundreds of hours of study. Our partners are not able to be paid to ensure positive reviews of their products or services. .

Emergency Fund The Emergency Fund: What Is It and Why It's Important

The best place to keep it is savings accounts, an emergency fund is useful for unexpected costs.

By Margarette Burnette, Senior Writer Savings accounts as well as money market accounts bank accounts Margarette Burnette is an savings expert who has written about bank accounts since prior to the Great Recession. Her work has been featured in major newspapers. Prior to joining NerdWallet, Margarette was a freelance journalist with bylines in magazines like Good Housekeeping, and Parenting. She is based near Atlanta, Georgia.

Updated Feb 17, 2023

Read 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 published speaker and author. As an expert in financial psychology, Kathleen was featured on TV and her work has been featured 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 the McCallum Graduate School at Bentley University from 2009 until 2019. She is currently teaching for the Champlain College. Champlain College.

At NerdWallet our content is put through a rigorous . We have so much confidence in our reliable and helpful content that we have experts from outside examine our work.

The majority or all of the products featured here come from our partners who compensate us. This influences which products we review and the location and manner in which the product is featured on a page. But this doesn't affect our opinions. Our views are our own. Here's a list of and .

The information on investing provided on this page is provided for informational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or counsel investors to purchase or sell specific securities, stocks or other investments.

What exactly is an emergency fund?

A savings account is an account in a bank account with money set aside to pay for large, unexpected expenses like:

Unforeseen medical expenses.

Home-appliance repair or replacement.

Major car fixes.

Unemployment.

Compare top savings accounts

Find a savings account that is high yielding with a great rate. Compare rates side-by-side.

Why do I require an emergency account?

Emergency funds provide an emergency fund that will help you stay afloat during a emergency without having to rely upon credit card or higher-interest loans. It is especially crucial to have an emergency fund in case you have debt, because it could help you avoid borrowing more.

What should I save?

The short answeris that if you're just starting out start by putting aside a portion of money that could be sufficient to cover a major expense like $500. But keep working your way up. You'll want to max out around half a year's expenses.

The answer is long and complicated: The right amount for you depends on your financial circumstances However, a best practice is to have enough to cover 3 to 6 months for living costs. (You may require more in case you freelance or work seasonally as an example or if you lose your job will be difficult to replace.) If you are forced to quit work, then you can use the money to pay for necessities while you look for a new job, or the funds could supplement your unemployment compensation.

Having savings can get you out of many financial scrapes. Put something away today, and then build up your savings over time.

Are you in search of the top savings alternatives? These are our recommendations for you

Where should I put my emergency fund?

Ideally, you'd put your emergency fund into a savings account with high interest rates and quick access. Because an emergency can happen at any moment and access to it quickly is vital. So it shouldn't be tied to a longer-term investment account. The account should however be distinct from your bank account you use daily, so you're not tempted to dip into your reserves.

A is a safe place for your money. It's federally insured up to $250,000 for each depositor, by ownership category, for each financial institution so it's safe. (Read more about how savings accounts are insured through the Federal Deposit Insurance Corp. or, and also the National Credit Union Administration, or .) Furthermore, the cash earns interest and you can access your cash quickly when needed either through the withdrawal process or via a transfer of funds.

Although a savings account can be an excellent choice, certain people might not be able open one in the near future. If a bank shut down a previous account of yours such as, for instance it might have reported the closure to a consumer reporting agency like . That can prevent the new bank from accepting your account application. If that's the case you have choices. You can collaborate with the agency to . In addition look into opening an account . After a few months of building an impressive bank history You'll be more likely to be able to establish an account with a good interest rate.

Saves CD Management Checking Money Market

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SoFi Checking and Savings

APY 4.00 Per cent SoFi Members with direct deposit are eligible to receive up 4.00 percent annual percentage yield (APY) on savings balances (including Vaults) and 1.20% APY on checking balances. No minimum amount of direct deposit required to qualify for the 4.00 percent APY on savings. Members without direct deposit receive 1.20 percent APY on their total balances of their checking accounts and savings (including vaults). Interest rates are variable and subject to change at any time. These rates were last updated on 03/17/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet

Min. balance for APY $0

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APR 3.75% 3.75% APR (annual percentage yield) with $0 minimum balance to earn stated APY. Accounts must be in an open balance in order to stay open. APY valid as of 02/14/2023.

Min. balance to APY $0

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CIT Bank Platinum Savings

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Min. balance required for APY $5,000

They combine the services and features that are similar to savings, checking and investment accounts in one product. The cash management account is typically provided by non-bank financial institutions.

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

on Wealthfront's website

Wealthfront Cash Account

APY 4.30%

Min. balance for APY $1

on the Betterment's website.

Betterment Cash Reserve - Paid non-client promotion

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

Min. balance to APY $0

CDs (certificates of deposit) are a type of savings account with an interest rate fixed and a term, and usually have higher interest rates than standard savings accounts.

CDs (certificates of deposit) are a type of savings account that comes with the option of a fixed rate and time, and usually have higher interest rates than traditional savings accounts.

Member FDIC

Marcus is a Goldman Sachs High-Yield 10-Month CD

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

Ten months of term

CIT Bank CD with no penalty

APY 4.80 percent

The term is 11 months

Checking accounts are utilized for day-to-day cash deposits and withdrawals.

Checking accounts are utilized for day-to-day cash deposits and withdrawals.

The deposits are FDIC Insured

Current Account

APY 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 can be as high as 3.30 percent depending on the following combination rate-rewards direct deposits (not including intra-bank transfers from another account) that total more than $1500 every month earn 0.40%. A qualifying direct deposit is required to satisfy to meet the other interest rate eligibility to apply. Ten (10) point-of-sale transactions each month using your Rewards Checking Visa(r) debit card for ordinary purchases that have at least $3 for each transaction, or registering for Account Aggregation/Personal Finance Manager (PFM) will earn 0.30 percent; and maintaining an average daily balance of $2,500 in an Axos self-directed trading Invest account will earn 1.00 percent; and maintaining the average balance per day of at least $2,500 per month for an Axos managed Portfolio Invest account will earn 1.00%; and making each month a payment to an open Axos bank consumer loan (commercial and business loans exempted) via transfer from your Rewards Checking account earns up to 0.60%.

Monthly fee $0

Market accounts for money pay interest rates similar to savings accounts. They also have some checking features.

Market accounts for money pay interest rates that are similar to savings accounts and have certain checking features.

Member FDIC

Bank Money Market Account - Discover Bank Money Market Account

APY 3.50 percent

Min. balance to APY $1

How can I set up an emergency savings account?

Calculate the total that you wish to save. Utilize the following formula if need help figuring out the expenses you will incur for six months.

Set a monthly goal for savings. Instead of focusing on one huge savings goal, you should focus on smaller, achievable monthly goals. Reaching monthly milestones can boost your confidence and encourage you to keep saving. This will help you stay on top of the and make the overall task less daunting.

You can transfer money into your savings account immediately. If your employer allows direct deposit, inquire if they can divide your paycheck between checking and savings. So your savings goals for the month can be achieved without the money reaching the checking account.

Save the money. Use mobile technology to save every time you make a purchase. You can open savings accounts and which connect with checking accounts or other accounts for spending to make it easier to round up purchase amounts on your transactions. The additional amount is then automatically transferred into a savings account.

Make sure you save your tax refund. You get a shot at this once a year -and only if you are expecting an income. It can be an easy way to boost your emergency stash. If you are filing your taxes, consider having your refund transferred directly to your emergency account. You could also think about changing your deductions to have less amount of money that is that is withheld. If modifying your deductions is the best option for you, you could transfer the extra cash to your emergency reserve.

Review and adjust your the amount of your contributions. Check in after a few months to see how much you've saved, and adjust as necessary. If you've saved enough for six month of expenses, think about investing some additional cash .

>> Here's what to do if you suspect you may have

When saving you should draw a line between emergencies and everything else. In fact, once you've reached a certain amount in emergency funds, it's probably a great idea to begin another " " savings bank account for unexpected but necessary items such as car repairs and vacations as well as clothes. If you're struggling to stay organized, consider opening different savings accounts, or even subaccounts that are geared towards different financial objectives.

Everyone needs to save for the unexpected. The ability to have a reserve fund could mean the difference between weathering the whims of a financial storm for a few days or slipping into deep debt.

Make use of this calculator to start. It takes only a few minutes:

From top to bottom

Author bios: Margarette Burnette is a savings account expert at NerdWallet. The work she has done was highlighted on USA Today and The Associated Press.

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What Is a Credit Card Cash Advance?

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(image: https://s-media-cache-ak0.pinimg.com/236x/c0/92/4a/c0924a59e58f81d784010942777de64b.jpg)What Is a Credit Card Cash Advance?

Cash advances are short-term cash loan -- an expensive one -that is secured against the credit line on your card.

By Lindsay Konsko

Updated on Aug 9, 2021

Edited by Paul Soucy Lead Assigning Editor Credit scoring, credit cards Personal finance Paul Soucy has led the Credit Cards content team at NerdWallet since 2015. He was an editor with USA Today, The Des Moines Register and the Meredith/Better Homes and Gardens family of magazines for over 20 years. He also established a profitable freelance editing and writing practice with a focus on business and personal finance. He was editor of the USA Today Weekly International Edition for six years and won the most prestigious distinction of the year from ACES: The Society for Editing. He has a bachelor's degree in journalism, as well as a Master of Business Administration. He lives in Des Moines, Iowa, with his fiancée, his two sons and a dog named Sam.

Many or all of the items featured on this page are from our partners who pay us. This affects the products we feature and where and how the product is featured on the page. However, this does not influence our evaluations. Our opinions are our own. Here's a list of and .

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Cash advances allow you to use your credit card to get a short-term cash loan at a branch of a bank or ATM. As opposed to a cash withdrawal from your bank account, a cash advance has to be repaid -- exactly like any other loan that you can make on the credit card. Consider it as making use of your credit card in order for "buy" cash, not goods or services.

It's convenient, but it's quite expensive.

Do you need money quickly? Consider:

* * * *

What is the process of a cash advance?

If you only carry credit cards to pay for everyday expenses You could be in a pinch when confronted with a cash-only purchase, such as buying lunch from a street vendor or a variety of vegetables at a farmers market or a sandwich at an deli owned by mom and pop. In that case the cash advance option could seem appealing. Some people also turn to credit card cash advances when they require cash but don't have enough in their bank account.

The top credit cards for 2023

Cash back, 0% APR, the transfer of balances -- check out our Best-Of Awards for the year's top credit cards.

If your credit card is equipped with a PIN, you can obtain cash advances right from an ATM. If not, you can bring your credit card to a bank which offers advances via your card's payment network like Mastercard as well as Visa. You'll need to present your ID.

Be aware that a majority of credit card companies won't allow you to use your entire credit line in form of a cash advance. For most people, cash advances can be limited to just a few hundred dollars. This means that you can't rely on your credit card to supply you with many dollars in the situation of an emergency.

>> MORE:

The reason cash advances are costly

The process of getting a cash advance straightforward, yet it's one of the most expensive methods to receive some cash. This is due to the fact that cash advances are subject to a variety of expenses:

Cash advance charges. They are charged by the card issuer. Some cards charge a flat fee per cash advance, for example, $5 or $10. Other cards charge a percentage of what's that is withdrawn, often up to 5percent. There are times when it's a percentage based on a minimum dollar amount -like the equivalent of 3% or $10, whichever is greater.

ATM or bank fees. These fees are imposed by the financial institution that handles the transaction -the person who owns the ATM or the bank where you can get the advance.

Interest. This can be costly in two ways. The first is that the rate of interest that a credit card charges on cash advances is usually significantly higher than the rates that is charged for purchases. The second reason is that interest on cash advances typically begin taking effect in a matter of minutes. This isn't something you earn with purchase.

>> MORE:

Given the costs associated with taking a cash advance, you may be in financial trouble If you're thinking about one since there aren't enough funds on the bank account. Cash advances should be used only in the case of extreme emergency. If you find yourself using them regularly then it's the time to alter your approach or seek assistance, for instance via a specialist or a.

>> MORE:

Alternatives to cash advances

If you find yourself having a cash shortage and you're not sure of where to turn, take a look at the following options. They're not all ideal however, they may end up costing less than cash advances in the end:

The personal loan. It can be costly even if your credit score isn't the best, but the interest charges and terms are superior to an advance in cash. ( )

Offers from your credit card's issuer. In recent years, several options have been offered, which include the ability to convert your existing credit into the form of an installment loan without requiring a new loan application. There will be interest charges for this feature, but potentially at a moderate rate.

Borrowing money from family or friends. It might be uncomfortable however the savings will be worth it.

Overdrawing your checking account. Instead of cash advances at an ATM, consider overdrawing your checking account with your debit card. You'll be charged a fee however, you don't have to be concerned about paying interest.

In summary the short version, taking out a cash advance on your credit card is you are taking on a costly short-term loan. This is rarely an ideal choice, so consider all other options before using a cash advance.

What's next?

About the writer: Lindsay Konsko is a former staff writer who covered credit cards and consumer credit for NerdWallet.

On a similar note...

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