Have you received a marketing promotion via snail mail, email, or phone call for a credit card? Chances are this is a credit card pre-approval offer, which means you’ve been prescreened for a specific credit card that you can apply for. Being pre-approved means you are likely to be approved, receive the card, and benefit from limited-time offers and rewards for signing up.

But if you haven’t received a pre-approved card offer, you can increase your odds of getting one by taking the right steps. Find out how to make yourself a more viable candidate to get a credit card pre-approval offer by reading this article.

Credit card pre-approval explained

You can try applying for any credit card you like. You are more likely to be successful if you have been pre-approved.

Credit card pre-approval usually refers to unsolicited credit card marketing promotions and offers you get by phone, email, or snail mail. These deals typically come from a credit card issuer, lender, or bank you already partner with, or from one of their affiliated partners.

What pre-approval really means is that you’ve been screened ahead of time and are likely a good candidate to ultimately be approved for that card. Being pre-approved indicates that your credit rating and payment history have been reviewed by the credit card company. In other words, they didn’t notice any red flags that would initially disqualify you from being worthy of having their card.

If you receive a credit card offer for which you’ve already automatically been “pre-approved,” the credit card issuer has already initially vetted you and determined you are a good candidate for the card. Lenders prescreen consumers by requesting a soft inquiry to check credit and determine who qualifies. It does not mean that you have actually been approved for a credit card though.

Credit card pre-approval benefits

“One of the benefits of getting pre-approved for a credit card is that there is no risk to your credit score. Before a credit company send you a pre-approval offer, they send out a soft inquiry to your current lender to access your credit profile,” says Lynne Martin, a real estate professional and investment advisor in Denver. “Unlike hard inquiries to your credit, this does not affect your credit score.”

Note that if you move forward with the application for a pre-approved card, this requires a hard inquiry and may have a small impact on your credit score.

However, an advantage of a successful application after receiving a pre-approved credit card offer is that it can help rebuild your credit profile if you have poor credit.

“Some credit card companies provide credit card pre-approval offers even to those with poor credit scores. These offers usually promise lower interest rates, which can help you pay off previous credit payments and rebuild your credit,” adds Martin.

Also, pre-approved credit card promotions often come with special offers and perks. These can include a zero-interest introductory period (during which you will be charged 0% APR), free balance transfers (enabling you to transfer the balance of a higher-interest credit card, saving you money otherwise spent on interest), and incentives like free airline miles or cashback perks.

What’s required to get pre-approved for a credit card

According to Carter Seuthe, CEO of Credit Summit, to qualify for a pre-approved credit card, you typically must already have at least one line of credit established – either a student loan, automobile loan, or another credit card, for example. This demonstrates to the credit card issuer that you’ve at least established a credit history.

“You must also have no bankruptcies attached to your name, as this will ruin your chances of getting pre-approved. And credit card companies have various credit score minimums they look for when screening an individual’s credit history – most likely a score of at least 600 or 620,” Seuthe explains.

Furthermore, you usually need a low debt-to-income (DTI) ratio. This is calculated by dividing all of your monthly debt payments by your gross monthly income. According to the Consumer Financial Protection Bureau, a DTI of 46% or less is preferred by many credit card issuers.

“Also, you must have very few or no derogatory remarks on your credit history, such as missed payments or accounts in collections,” says Dennis Shirshikov, a strategist at Awning.com and a professor of economics and finance at City University of New York.

How credit card pre-approval preparation may improve your odds

To up your odds of getting a credit card pre-approval promotion in your mailbox, inbox, or by phone, follow best practices.

First, visit Optoutprescreen.com and opt in (agree) to allow credit card issuers to send you credit card pre-approval offers. After doing so, you should receive prescreened credit offers with a higher chance of being approved after formally applying.

“Try to have at least one credit card already in place with a big holder company. Larger companies already have your information and will be more likely to pre-approve you for many different opportunities,” suggests Seuthe.

Additionally, “check your three free credit reports, review what you see there, and dispute any accounts or remarks you don’t recognize or are in error to improve your chances of getting pre-approved,” Shirshikov advises.

Other recommended steps that can make you a more viable prospect for pre-approved credit card offers include:

• Improve your credit utilization. This means paying down your existing credit card balances and other debts. Only paying the minimum amount owed and carrying a balance from month to month can hurt your chances of being offered future credit.
• Pay your bills punctually. Late payments on credit cards and other accounts will significantly hamper your credit score and make you appear less creditworthy.
• Be smart about closing or opening credit card accounts. Don’t apply for new credit accounts too often or too close together, and avoid closing existing credit accounts. Also, avoid the trap of opening too many credit cards.
• Ask for an increase in your available credit from your existing credit card company.
• Aim for credit variety. In other words, it’s best to have different types of credit accounts, including credit cards as well as loans and lines of credit versus only credit cards.

Lastly, if you don’t want to wait to receive a pre-approved credit card offer, be proactive by visiting a particular credit card company’s website and searching for its pre-approval page/section. There, you will likely find promotions and offers available as well as the ability to answer screening questions that can get you pre-approved quickly.

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

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When you need extra money, there are several options you can consider, including using a credit card, tapping into home equity or a personal loan. Often people use a personal loan as a way to access cash quickly, often without putting up any collateral.

It’s a good idea to time your personal loan application wisely and understand your financial situation before committing to this type of financing.

Understanding personal loans

A personal loan is a form of financing that is typically unsecured. Unsecured means it does not require putting up any collateral like your home. Instead, only your signature is needed if you qualify.

Some lenders, however, offer only secured personal loans, which can put your home or another form of collateral pledged at risk if you do not repay your debt.

The good news about personal loans is that they are commonly paid back over 24 to 60 months, a relatively short period.

The fixed interest rate on a personal loan can be higher (usually over 10%) than for many other types of loans, although rates are typically lower than a credit card would charge. For example, a borrower with a credit score above 720 may be charged less than 12.5% interest for a personal loan compared to the average new credit card APR of 22% (in December 2022).

“Because there is usually no collateral required, a personal loan requires a higher credit score and can be more difficult to obtain than a secured loan such as a mortgage or car loan,” says Laura Sterling, vice president of marketing for Georgia’s Own Credit Union.

The money borrowed is paid in a lump sum at closing, and personal loan funds can be used for virtually anything, including home improvements, debt consolidation, medical expenses, and big events like a wedding.

Good candidates for a personal loan

According to Brian Greenberg, CEO/founder of Insurist, a worthy prospect for a personal loan is someone with a steady income and a good credit score (720 or higher).

“Not only does that mean you should have the ability to pay back your loan, but it also means you are more likely to be approved for the loan in the first place,” he says.

A bad candidate for a personal loan is someone who has little or no income or whose income fluctuates widely.

“This person is unlikely to be able to repay their debt, which could lead to defaulting on their payments or even bankruptcy,” Greenberg continues.

Why timing your personal loan is important

Knowing the ideal time to apply for a personal loan is important. You would be wise to apply when your creditworthiness and credit score is high. It’s a good idea to ensure you are in a strong financial position to repay your loan on time, as agreed.

“It can be hard for individuals to perfectly time when they should take out a loan. So it’s important to have an idea of what you need the loan for and when you need it so that you can make sure it can work for you,” says Shawn Plummer, CEO of The Annuity Expert and a certified financial professional.

Furthermore, unsecured personal loans start charging interest immediately, so it’s wise to be sure you get the loan at the right time.

“Getting your personal loan too early means you’re already paying for the loan and paying interest before the money starts working for you. Getting the loan too late means you can’t use the money for what you needed it for,” adds Plummer.

There are “bad times” to apply for a personal loan, such as when you lack the means to repay your debt comfortably.

“What you are using the personal loan for is more important than timing. For example, if you are planning to use loan funds for emergency expenses like a needed operation, it can still be worth it. But if you are considering a personal loan to pay for something that is not a necessity – like a vacation – it may be better to wait for lower interest rates,” suggests Sterling.

When is a good time to take out a personal loan?

The truth is, there is no “best time” to apply for a personal loan. The answer depends on your financial circumstances and money needs. You could always wait things out hoping that personal loan interest rates drop, but trying to time the rate market is often a lesson in futility. After all, rates can rise even higher; meantime, you’ve postponed pursuing money you need sooner not later.

Still, Plummer recommends applying for and taking out a personal loan a little before you need the funds but not more than a month ahead of the latter.

“Remember – if you take out a personal loan too early, you will start paying for it before getting use out of it,” he says.

If you apply for a personal loan at a time when your credit score is high, you are more likely to get a better interest rate. That’s why Sterling recommends reviewing your credit reports and working to improve your credit score well before applying for a personal loan.

If your financial health is in question, it is probably not a good time to consider applying for a personal loan.

“If you’ve just lost your job, it’s not the best time to apply. On the other hand, if you’ve just had an increase in income, that could be a great time to apply for one,” advises Greenberg. “You’ll also want to consider whether or not you have any outstanding debt on credit cards or other loans before applying for a new personal loan. It’s probably not wise to take out another loan until those debts are paid off first.”

Do your homework and shop around for financing options carefully. Compare loan offers and interest rates to get the best deal possible. You may end up choosing a different form of financing than a personal loan after performing the necessary due diligence.

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

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Circle March 10 on your calendar. It is National Pack Your Lunch Day, International Bagpipe Day, Middle Name Pride Day, National Landline Telephone Day and Paper Money Day. March 10, 1962, was the first time United States paper currency notes were regularly issued.

What’s the big deal with paper money?

Consider how hard it would be to make transactions for goods and services today if we used antiquated methods like bartering or coins, as before paper dollars became the norm. Physical cash matters, even in a world increasingly reliant on digital currency.

“Designating a day on the calendar to think about paper currency and its significance is a way to raise awareness and appreciation for the history and cultural significance of physical money,” Sean K. August, CEO of The August Wealth Management Group, says. “It’s also a date to educate people about the benefits and risks of using cash versus digital payment systems, and it may serve as a reminder for people to take stock of their financial habits and goals and consider ways to manage their money or effectively.”

Paper money in 2023

Make no mistake: Paper money remains a crucial part of our financial system in 2023.

“It allows us to buy goods and services, save for the future, and invest in businesses and markets. Paper money is also a means of transferring wealth between generations and providing financial security for our families. Without paper currency, our economy would suffer,” notes investment analyst Tim Doman, CEO of Top Mobile Banks.

August agrees. “Paper money has provided greater convenience and ease of use in transactions and enabled the government to finance wars and other initiatives by printing money,” August continues. “However, the use of paper currency has also been associated with issues like counterfeiting, inflation, germ transmission, and a reliance on physical money that can be lost or stolen.”

The first Paper Money Day

America began using paper dollars 161 years ago, during the Civil War, as a means to finance the war effort and replace previously used gold and silver coins. The first paper dollars were called “Demand Notes” and were backed by the US government’s promise to pay the bearer in gold or silver upon request. Since 1862, the look and design of paper dollars have evolved, with new security features added to prevent counterfeiting and increase durability.

Paper currency and credit

The availability of credit and the health of credit systems are closely linked to the use of paper currency.

“By facilitating transactions and creating liquidity in the economy, paper money has helped to promote the growth of credit markets and the health of credit systems,” says Dennis Shirshikov, head of growth for Awning.com and a professor of finance at the City University of New York.

While the relationship between credit growth and paper currency is complex, the availability of credit can be influenced by the supply of money and the demand for loans.

“When the government prints more money, it can lead to inflation and a decrease in the value of money, which can affect the availability and cost of credit. Additionally, credit health can be affected by the overall stability of the financial system and the regulatory environment, which can impact the willingness of lenders to make loans and the ability of borrowers to repay them,” explains August.

The decline of paper money

Digital currency, digital payment systems, and digital credit have become increasingly popular in recent years. Consequently, fewer people use paper money today and more rely on cashless transactions.

“The use of paper money is declining as we move toward a more digital economy,” Doman points out.

But rest assured that paper dollars will remain an important currency in our economy for years to come, especially for cash-based transactions, small businesses, and whenever digital payment methods are not an option.

Managing paper currency efficiently and responsibly is crucial, even in a world where fewer of us carry physical wallets and money clips.

“To manage paper money safely and successfully, it’s important to keep it secure and organized and avoid carrying excessive amounts at any given time,” suggests Shirshikov.

Remember to keep cash stored in a secure place, such as a locked safe or safety deposit box.

“Be aware, too, of common cons and frauds involving cash, such as counterfeit bills or quick change scams,” cautions August.

With digital currency, always protect your personal information and logins/PINs, and monitor your digital accounts regularly for any suspicious activity.

“Use strong passwords, avoid sharing your personal information with third parties, and be vigilant about potential fraud,” Shirshikov adds.

Maintain healthy credit in a digital world

Remember to check your three free credit reports at least once a year, as well, to look for inaccuracies, errors, or fraudulent accounts. And check your bank and credit card statements regularly for suspicious activity.

“Having good credit health is essential for personal finances, financial stability, and overall well-being. Ensuring that your credit is healthy allows you to access credit, such as loans and credit cards, when you need it and save you money in the long run by helping you qualify for lower interest rates and better terms,” says Doman. “Good credit health also helps you secure employment, rent an apartment, and get approved for insurance products.”

Poor credit, on the other hand, can result in you paying more to borrow money in the form of higher interest rates and fees; worse, you can be turned down for new credit altogether.

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Panic Day, Thursday, March 9, 2023, is upon us. Far from an official or nationally recognized holiday, this date on the calendar is one of the copyrighted Wellcat Holidays invented by Thomas and Ruth Roy. It’s meant to be a day when we acknowledge the stresses of everyday life, including financial pressures and economic anxiety, in the hope that we can better cope with these challenges.

“Panic day is a date designated on the calendar to remind people to take a moment to acknowledge and manage any feelings of panic, anxiety, or stress they may be experiencing,” says Daniel Colston, CEO of Upward Financial Planning. “It’s an opportunity to bring awareness to the importance of mental health and encourage people to take proactive steps to address any issues they may be facing.”

While you don’t have to carry around a paper bag to hyperventilate in on March 9, and you won’t find a Panic Day Hallmark card to give to a friend, the second Thursday in March this year can be an opportune time to acknowledge an attempt to resolve any feelings of financial overwhelm. Acknowledging that you may be experiencing financial tension is an important first step; the pros concur.

“Talking about or dealing with financial challenges can be sensitive. In fact, most Americans would rather divulge details about their sex lives than their financial lives,” Colston adds. “With something so sensitive and central to our lifestyles, it’s understandable how such a topic would be shrouded in anxiety for many.”

Behavioral neuroscientist Katherine Grill, PhD, the CEO/co-founder of Neolth, explains that any type of chronic stress can be detrimental to mental health.

“Financial stress is especially dangerous because it’s a threat to our basic needs – we go into panic mode when we don’t have money for housing, food, and other necessities,” says Grill. “When stress is prolonged for six weeks or longer, the higher level of circulating stress hormones like cortisol affects our brain. It’s a maladaptive form of neuroplasticity. That means financial stress literally causes the brain to change and how it is built and how it functions, leading to heightened anxiety, panic attacks, depression, trouble sleeping, and more.”

Financial fears can also cause relationships to suffer, impede our performance at work, and result in social withdrawal, weight loss or gain, and unhealthy coping practices like using illicit drugs or alcohol.

The American Psychological Association reports that money is the leading source of stress for Americans. Additionally, 84% of Americans feel that financial stress affects their mental health, based on a recent study by Northwestern Mutual. Among those in debt, 46% also have a mental health problem, and people are over four times more likely not to pay back their debt if their mental health is poor, according to the Money & Mental Health Policy Institute. Furthermore, two in three students have anxiety about their finances, and 86% of students say debt worsens their mental health, per Trellis Research.

“Keep in mind that good mental health is essential for good financial decision-making. When we are under stress, our ability to make sound financial decisions is compromised. We may be more likely to make impulsive decisions or take unnecessary risks. For these and other reasons, it’s important for people suffering from financial stress to seek help from mental health professionals, financial advisors, or other support systems like family and friends,” recommends Justin Gasparovic, a behavioral psychologist and personal development expert.

Ignoring the problem only puts you at risk for continued financial difficulties and worsens your mental health. Many insist that turning to experts for assistance is your best move.

“A therapist can help, especially if you are experiencing panic attacks, hopelessness, thoughts of self-harm, or an inability to go about your daily routine,” Grill continues. “A peer community, like a secure online forum or talk support group, is beneficial because you can get acknowledgment that you are not alone. And a financial expert can work with you to get a plan in place to manage your finances.”

Grill says using some combination of problem-focused and emotion-focused coping is an effective way to manage financial stress. The former works to address your financial situation, such as by sitting down with an expert to revise your budget and expenses. The latter aims to manage negative emotions related to finances – for example, using self-guided relaxation techniques or getting emotional support from a friend.

Arming yourself with financial education is another tactic that can decrease money-related stress and anxiety.

“Some great places to start are personal-finance channels on YouTube, industry-leading books, and blogs. Just be sure the purpose of the content is to educate you on wise financial decisions and not to sell you on a specific financial product or solution,” advises Colston. “The most helpful content will teach you how to create a budget, prioritize debt repayment, build an emergency fund, seek professional help if necessary, and practice self-care like exercise, healthy eating, and getting enough sleep.”

If you are suffering from financial stress and need help, let Panic Day inspire you to explore these resources:

• If you have suicidal thoughts or feelings, call 988 on your phone or visit https://988lifeline.org.
• Consult with the Foundation for Financial Planning.
• Learn if you qualify for financial benefits from the US government.

If you feel overwhelmed by debt, consult the Financial Counseling Association of America and the National Foundation for Credit Counseling.

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

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It pays to put your goals and aspirations down on paper and review/update them carefully. You are 42% more likely to achieve your dreams and goals if you write them down regularly, research shows.

The same is true of your finances. If you want better control over your money, evaluate your budget and create a checklist of items that you may want to trim out of your budget.

It’s a good idea to scrutinize your finances

Andrew Lokenauth, a budgeting expert and financial executive, says it’s wise for consumers to carefully review their finances and create a budget. He says,

“Doing so helps them better understand their financial situation and make informed decisions about how to allocate their money. By creating a budget, consumers can understand their income and expenses and see where they are overspending or where they can make adjustments to save money. This can help them achieve their financial goals, such as paying off debt or saving for the future.”

But remember that it’s not enough to create and itemize a budget. You also need to track your spending and where you are allocating your dollars so that you can maintain better financial control. The risks of not doing so can lead to being unable to pay your bills and save for future needs and wants.

It’s smart to also consider budget cuts

According to Alastair Hazell, a personal finance professional and founder of The Calculator Site, proper budgeting is essential to maximize your finances and ensure financial security. He suggests,

“It not only helps in the long-term but can also help alleviate any stressful financial situations in the short term. Creating and reviewing your budget should be done on a regular basis – ideally monthly or quarterly. This allows you to track short-term and long-term changes in your spending habits, identify any bills or expenses that have crept up, and adjust your budget accordingly.”

Shawn Plummer, CEO of The Annuity Expert and a certified financial professional, believes everyone should have a budget – even if you think you don’t really need it.

“Budgets help us maximize how our money works for us. Countless people find they can’t make ends meet at the end of each month, just because they don’t know where they spent their money. Budgets help answer those questions and keep us accountable.”

Whether you live paycheck to paycheck or have a decent financial cushion, it pays to scrutinize your spending and consider budget cuts to areas that are less necessary, wasteful, or redundant or will prevent you from paying your most important bills and expenses.

How to create a budget cuts checklist

The best way to itemize, organize, and track your budget and expenses is to make a chart on paper or a computer spreadsheet. Organize your horizontal rows into different budget categories, and then insert each type of transaction into the cells along a vertical column of the chart. Here are some of the categories to consider listing:

Essential expenses for things that likely can’t be cut

• Housing expenses: monthly rent or mortgage payments (including principal and interest payments as well as property taxes and homeowners insurance)
• Home maintenance and repair expenses
• Home improvement expenses
• Utility costs, including bills for heating/cooling, water, waste, Internet, and phone
• Groceries and supplies
• Healthcare costs, including bills for medical insurance, doctor/hospital visits, co-pays, prescription drug costs, and more.
• Clothing, shoes and coats
• Travel costs, including gas or public transportation for commuting to work

Non-essential items:

• Entertainment, such as tickets to theaters, club admission, and live performances
• Dining out at restaurants and fast food establishments
• Leisure travel, like airfare, lodging, and dining while away from home and during vacations
• Subscriptions for streaming services and publications and memberships to organizations
• Hobbies or sports that require purchases/supplies, including golfing, crafting, bowling, etc.
• Shopping for discretionary items, including nonessential clothing and electronics

Your budget items may be different, but Lokenauth advises,

“Take a close look at the items on your checklist and try to identify areas where you can reduce your expenses.”

Where to make cuts

The easiest areas to trim away are non-essential/discretionary purchases like those in the second list. These often constitute variable expenses versus fixed costs. Lokenauth has this to say,

“Ask yourself, are you spending a lot of money on things like going out to eat or seeing movies? Can you reduce these expenses by cooking at home or streaming movies instead? Are you paying for any subscriptions you don’t use or need? Can you cancel any that you don’t use regularly or that you can live without? Are you overspending on clothing or other non-essential goods? If so, can you set limits on your shopping or find ways to save on these items, such as by using coupons or shopping sales? And are you also spending a lot on gas or car maintenance? Can you try carpooling or using public transportation instead?”

But that doesn’t mean you shouldn’t also try to identify ways to save from the list of your essential expenses. Lokenauth continues,

“For example, look for ways to save on your rent or mortgage, such as by negotiating a lower rate or downsizing to a smaller home. Try to save money by using energy-efficient appliances or reducing your energy consumption to lower your utility costs. Shop around for the best insurance rates or increase your deductible. Think about choosing a high-deductible health plan to save money on health care insurance.”

How to ensure you follow through on your checklist

After identifying areas where you can make budget cuts, make realistic action plans and set personal deadlines for enacting these cuts. Think about and write down specific mini goals to achieve these cuts, such as “I will spend no more than $100 this month on entertainment, travel, and dining out combined,” or “I will pack a lunch and bring it to work four out of five days each week.” Jonathan Poston, a business growth consultant recommends,

“To ensure that you follow through on the checked items you plan to cut from your budget, you can try setting specific goals and tracking your progress. You can also try finding ways to motivate yourself, such as setting up a rewards system or finding an accountability partner who can keep you motivated.”

You may also feel more incentivized to make budget cuts if you calculate the net effect in dollars and cents. Hazell notes,

“Once you have a target for budget cuts, calculate the potential impacts of your decisions. Assess possible profit variances in the potential for holding more cash in your pocket.”

How often you should revisit your checklist

Think about revisiting your budget and evaluating where cuts can be made at least twice a year. Plummer says.

“It sometimes takes more time than you think for financial habit changes to catch up with you, and growth can be slow. Reviewing your budget twice annually lets you look at your goals so that you can make changes that will keep you on the right track.”

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post The Ultimate Budget Cuts Checklist appeared first on Credit Sesame.

Events over 2022 have made it trickier than ever for Americans to pay their bills and salt away extra savings. Inflation remains a major problem and wages often don’t keep pace with the higher costs of goods and services. It’s also true that many people lack the discipline and know-how to spend less and budget properly.

You can pad your savings by following proven cash-saving methods and avoiding going into the red. While there are common strategies for saving dollars, several lesser-known/used tactics can help you better control your finances.

Why it’s a good idea to use money-saving hacks in 2023

If you’ve visited a grocery store, gas pump, restaurant, or virtually any place that charges for goods or services lately, you already know that it requires more cash today to pay for these things than it did last year. This is the impact of inflation, which has escalated since the 2020 pandemic began. As a result, Americans have had to stretch their dollars and be more cautious about discretionary spending.

But the truth is that it’s smart to strive for greater savings regardless of prevailing economic conditions. By following surefire methods for money conservation, you can weather most economic storms and setbacks – including times of high inflation and rising interest rates as well as periods that are more prosperous. Says Jake Hill, CEO of DebtHammer,

“It’s a good idea for consumers to work hard to save money because this is how you develop good habits and eventually end up with a comfortable blanket of savings for emergencies as well as more financial stability in the present. By working hard to save money, you are investing in yourself and creating more opportunities for happiness in your life,.

Andrew Lokenauth, a personal finance expert in business executive, agrees.

“Saving money is always a good idea, but it can be especially important for those on a tight budget. It can allow you to build up a financial cushion that can help you endure unexpected expenses or financial challenges. It can also help you achieve your financial goals like paying off debt and saving for retirement.”

How saving more money can pay off

Let’s say you can set aside an extra $100 monthly by cutting back on unnecessary expenses – perhaps by eating out less or canceling subscription services. Lokenauth adds,

“If you invest these extra savings in a high-yield savings account with an interest rate of 2%, for example, after five years you will have saved $6,000,.

Or, if you remain disciplined and salt away an additional $50 per week,“ Mike Yon, general manager of Kids’ Money, explains,

“That can add up to over $2,600 by the end of the year. That’s enough money to cover an unexpected medical bill or a much-needed vacation.”

9 money-saving hacks to consider

Whatever way you can effectively save money can be a worthy strategy to pursue. But here are a few overlooked and underrated hacks to consider implementing:

1.  Use a cash-back credit that matches your spending style. Per a study by Gigapoints, the average credit card user misses out on around $1,000 worth of cashback each year by using the wrong type of rewards card. “Paying attention to where you spend the most could help you find a card that will give you more cash back in that area to ultimately maximize reward earnings and help give you extra money back in your bank account,” says Andrea Woroch, a money and budgeting expert. “Look at your year-end credit card statement and learn where you spent the most money. Then, find a card that gives you more money back for that category. Otherwise, opt for a flat-rate cash-back card if you anticipate spending more in different categories in the year ahead.”
2.  Automate your savings. “You can set up an automatic transfer from your checking account to a savings account each month or more often if you are able. This makes it easier to save without having to think about it,” says Yon. For example, set up an automatic transfer of an extra $50 per month, which would equate to an extra $600 in savings over a year.
3. Negotiate your bills. “Many people don’t realize they can negotiate their bills, such as their cable or Internet service, to get a lower price. You can often do this by threatening to switch to a different provider or by negotiating during a promotion or sale,” suggests Lokenauth.
4. Meal plan better to reduce food waste. Americans spend roughly $4,942 on groceries every year but waste around 40% of all food purchases, according to Woroch. That comes to nearly $2,000 worth of grocery transactions that end up in the trash every year. “Look over your weekly schedule to determine which meals you need to prep and find recipes for them that use the same ingredients so that you can use everything in its entirety. I also suggest cooking in bulk so that you have leftovers, which you can even freeze in single-serve portions that are easy to reheat on nights when you are too busy or tired to cook,” adds Woroch.
5. Utilize a money-saving app. “Doing so can help hold yourself accountable. The right app can help you track your spending and set goals for your saving at the same time,” notes Hill, who personally uses the Spendee app for this purpose.
6. Create a personal money challenge for yourself. “Set a goal for yourself in terms of how much you want to save every month and then challenge yourself to stay under budget,” Yon advises. “Give yourself incentives, such as putting all the money saved into an emergency fund or toward something you’ve been wanting to buy.”
7. Recalculate your actual mobile data usage. “If you signed up for unlimited data with your wireless carrier, when was the last time you checked how much data you actually use? Although these unlimited plans seem like they offer the best value, many consumers don’t need it,” Woroch points out. In fact, a recent study found that 90% of wireless customers waste money on unnecessary unlimited data plans and could save a lot by switching to a lower-tiered plan. “Even better, consider switching to an online-only wireless carrier like Mint Mobile, which sells plans in bulk and also doesn’t have the high overhead costs of maintaining brick-and-mortar stores.”
8. Use price-comparison websites. “When shopping online, compare prices across different retailers to make sure you are getting the best deal,” continues Lokenauth. “Price comparison websites can help you do this quickly and easily, allowing you to save money on a wide range of products.”
9. Think beyond regular retail. “You can save up to 60% off electronics, appliances, and power tools by purchasing certified refurbished models from reputable retailers like Amazon, eBay, and Best Buy. You can snag up to 80% off clothing, accessories, and shoes using fashion resale sites like Poshmark and ThredUp. You can score free kid’s clothing by swapping through Swoondle Society. And you can join groups like the Buy Nothing Project on Facebook to trade other goods with people in your community,” recommends Woroch.

The more you strive to conserve dollars, the better you’ll become and the more you’ll accumulate in savings. Yon says,

“The secret sauce of these money-saving tips is that they make saving easier and more automatic.”

Don’t forget to focus on building income, too. Explore new sources of revenue like a side hustle, smart investing, or requesting a raise or promotion at work.

If you enjoyed 9 Money-Saving Hacks for 2023, you may also like:

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post 9 Money-Saving Hacks for 2023 appeared first on Credit Sesame.

The post Build credit by reporting your rent payments appeared first on Credit Sesame.

Are you eager to get a credit card but worried you might get rejected after applying? Do you want to take advantage of special rewards a certain credit card provides? Perhaps you should consider applying for a card you’ve already been “pre-approved” for. Pre-approval means that you seem to fulfill many of the criteria required for approval. However, pre-approval does not guarantee approval.

Nevertheless, a pre-approved credit card has pluses and minuses. You should consider the benefits and drawbacks of pre-approval, and what happens if you are pre-approved but ultimately rejected for the card.

Understanding what getting pre-approved for a credit card means

Credit card pre-approval is not something you can usually apply for on your own. Instead, pre-approval typically refers to credit card marketing offers you may receive by mail, email, or otherwise, often from a bank or credit card provider you already do business with or one of their affiliated partners. Pre-approval indicates you’ve been prescreened based on particular criteria, such as your payment history and credit rating.

If you receive a credit card offer for which you’ve already been “pre-approved,” it means that the credit card issuer has already initially vetted you and determined you are a good candidate for the card. Lenders prescreen consumers by requesting a soft inquiry to check credit and determine who qualifies.

Good candidates for getting pre-approved for a credit card

You may be a worthy prospect for receiving a credit card pre-approval offer if you have a good credit history and an established record of managing credit cards.

“When you have one credit card, companies can very easily prescreen you and send you offers for other cards throughout the year,” he says.

Carter Seuthe, CEO of Credit Summit, says “individuals who have not applied for credit very frequently, those with at least a  good or average credit score, and individuals who are most likely to use the credit card for travel and/or groceries often receive pre-approved credit card offers.”

Good candidates for accepting a credit card pre-approval offer include those with higher credit scores who can pay the annual fee, if any, and those who are offered promotions like a 0% introductory APR for a certain period, per Lyle Solomon, a financial expert and attorney with Oak View Law Group.

“Using a no-interest card can allow you to pay off your pre-existing high-interest accounts and save on interest while paying off the new card’s balance,” Solomon notes.

The benefits of getting pre-approved for a credit card

The primary advantage of receiving a pre-approved credit card offer is that it saves you time and effort.

“You don’t have to go out searching for the right new credit card to apply for. Instead, lenders come to you, hopefully with good offers,” Solomon adds.

Additionally, if you have a poor credit score, accepting a credit card pre-approval and eventually getting approved for that card can help boost your credit score.

“Also, lenders typically provide better or lower interest rates when they approach consumers with credit card promotions. These pre-approval offers are usually better than what you would find when shopping around for a card on your own you are not pre-approved for,” explains Solomon. “Plus, many times, pre-approved credit cards offer special bonuses and rewards.”

Lastly, as mentioned, pre-approval only results in a soft credit check, which means your credit score won’t take a ding.

The disadvantages of getting pre-approved for a credit card

Of course, accepting a credit card pre-approval offer has its downsides, too.

“You’ll have the responsibility of owning yet another credit card, which can be irresponsibly used if you are not careful,” Hill cautions. “That’s why it’s best to be cautious of pre-approval offers and only initiate the application process when you can afford and budget for the new card and its use.”

In addition, “if you’re not careful, you could end up with a critic card that has a higher interest rate than you anticipated,” says Zach Larsen, a small business owner and finance/investment expert.

Furthermore, you may be limited in the number of cards you can apply for in the future if you’ve already been pre-approved for a particular card, Larson continues.

What happens if you are ultimately not approved for the card?

Just because you are pre-approved for a specific credit card doesn’t mean you are guaranteed to be approved and receive the card. It’s important to be aware of this possibility.

“It most commonly happens because the lender found something negative when conducting a hard search of your credit history that was not automatically sensed in the prescreening,” Seuthe says.

For instance, perhaps adverse changes in your credit report occurred between the time you received the offer and when the credit card company conducted the hard inquiry.

“Or, maybe you moved or had your name changed. Possibly you racked up charges on other accounts, made numerous inquiries to your credit, increased your debt, or made late payments, too,” Solomon points out.

If you are rejected after formally applying for a pre-approved credit card, you can strive to improve your credit and reapply.

“Call the card issuer’s reconsideration line or try applying for a different credit card. But it’s best not to apply for a different card soon after getting rejected – give it a little time,” recommends Solomon. “This is because multiple hard inquiries in a short period suggest to lenders and credit card issuers that you may be short on cash or are getting ready to rack up a lot of debt. Consequently, you might get labeled as a high-risk candidate, making it harder for you to get credit in the near future.”

Is applying for a pre-approved credit card worth it?

If you are looking to build stronger credit, don’t have too many credit cards already, are financially healthy enough to pay off your credit card debt responsibly, and can benefit from certain rewards promised by a credit card pre-approval offer, applying for and getting a credit card you are already pre-approved for can be a smart move.

That can be especially true if you currently have high-interest credit card debt and the pre-approved credit card provides a zero-interest introductory period and allows you to transfer a balance from a high-interest credit card.

“The advantages of a pre-approved credit card offer typically outweigh the disadvantages. With a pre-approved credit card, you know exactly how much credit you have available to you, which can help you budget and avoid overspending. Additionally, pre-approved credit cards often come with special offers and perks that can save you money,” advises Larsen.

Just be sure to do your homework and weigh the pros and cons carefully before pursuing a pre-approved credit card. Remember that if the application is not successful this impacts your credit score negatively.

“Carefully read and understand the terms and conditions of getting pre-approved for a particular card before applying,” adds Solomon.

You may also be interested in:

Does Credit Card Pre-Approval Mean You Will be Approved?

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post The pros and cons of getting pre-approved for a credit card appeared first on Credit Sesame.

Having outstanding unpaid debt can be stressful, especially if you have multiple debts owed to different creditors. One strategy for getting out of debt is pursuing debt consolidation, in which you use a debt consolidation loan to bundle several debts into one and make a solitary payment.

Prior to choosing debt consolidation, learn the facts, weigh the advantages and disadvantages, determine what’s involved, and consider alternatives.

What is debt consolidation?

Perhaps you have multiple outstanding balances due to different creditors, including credit card companies, personal loan lenders, and retail accounts. Having various creditors to pay off can be challenging and confusing. There’s always the risk of forgetting to pay one or more of these companies, which can hurt your credit and result in paying extra fees or penalties assessed.

With debt consolidation, you take out a new loan to repay your outstanding debts, thereby simplifying the payment process. Any unpaid debts you choose can be rolled into this new loan.

Debt consolidation loans are offered by various lenders, including banks, credit unions, and installment loan lenders.

Pros and cons of debt consolidation

Instead of making numerous payments each month, you’ll only have to make one payment on your new debt consolidation loan. This is the main advantage of going this route.

Additionally, a debt consolidation lender may offer an introductory interest rate that is lower and more attractive than the interest rates you currently pay for your credit cards or loans you want to be consolidated. However, many of these introductory rates are considered “teaser rates” that expire after a particular time. After the teaser rate ends, your lender may charge a higher rate.

Depending on the term of the debt consolidation loan you choose, your monthly payment might be lower than the combined monthly payments on the loans and debts you are currently paying. Put another way, your monthly payments may be more affordable, especially if you have a long repayment period. But chances are that you may pay more in total interest, principal, and fees for the debt consolidation loan than if you had not opted for a debt consolidation loan.

That’s why it’s wise to carefully compare interest rates and loan terms to determine how much interest and fees you’ll pay in total. Doing so can help you select the right debt consolidation loan for your needs and budget.

Keep in mind that a debt consolidation loan will not erase your debts. You are still responsible for completely repaying what you owe on any loans and debts you consolidate.

Also, while a debt consolidation loan can make it easier to manage your debt repayment, if you continue to make additional purchases using new or existing credit, you likely won’t succeed in paying down your debt efficiently. In fact, without financial discipline, you could create a more significant debt problem that can ruin your credit.

Lastly, be aware that if your debt problems have impacted your credit score, you probably won’t qualify for lower interest rates on a debt consolidation loan or alternative form of debt consolidation (more on alternatives later).

Who is debt consolidation best for?

Debt consolidation doesn’t offer a magic bullet cure for getting out of debt. But it can be a good choice for those who can continue to afford to repay their monthly debt obligations but who are seeking a more straightforward “one-payment” strategy that can eliminate having to make multiple payments every month.

The key determinant here is your ability to make the new monthly payments on time and in full. If you don’t stick to the plan and the monthly deadlines, debt consolidation can backfire, resulting in more outstanding debt and damaged credit.

Additionally, debt consolidation may not be your best choice if a new debt consolidation loan doesn’t provide a lower interest rate than the rates you are currently being charged. If most or all of your debts come from credit cards, chances are that the interest rates your credit cards will charge will be much higher than the rate a debt consolidation loan can offer.

If your credit score is relatively low, debt consolidation may not be the best option. That’s because a debt consolidation lender may charge a higher interest rate if your score is low.

Alternatives to a debt consolidation loan

A debt consolidation loan from a lender, credit union, or other financial institution isn’t your only choice. If you are determined to consolidate your debts into one payment, you can instead pursue a:

• Home equity loan. Also called a “second mortgage,” this loan allows you to borrow against your home’s equity. According to the Federal Trade Commission (FTC), you obtain the loan for a particular amount of money that must be repaid over a set period; you usually repay the loan with equal monthly payments over a fixed term. But this option can be risky because if you fail to repay the home equity loan, your property could be lost to foreclosure. You may also be required to pay expensive closing costs, too.
• Home equity line of credit (HELOC). Like a credit card, this is a revolving line of credit. Per the FTC, a HELOC lender approves you for a specific amount of credit; so long as you remain below that credit limit, you can borrow as much as you require whenever you need it. Many HELOCs have an initial “draw period” when you are allowed to borrow from the account. Following this period, you may be able to renew the credit line; but if not, you will likely be required to begin repaying the amount due. HELOCs typically offer variable interest rates and payments. Like a home equity loan, a HELOC uses your residence as collateral, meaning you can lose your home to foreclosure if you don’t repay the HELOC on time.
• Credit card balance transfer. Some credit card issuers offer a zero-percent or low-interest balance transfer option to entice you to consolidate your debt via one new credit card. However, be forewarned that the promotional interest rate generally lasts for a limited time only, after which the rate can rise significantly. You may also have to pay a balance transfer fee, calculated as a fixed amount or a particular percentage of the amount you transfer.
• Debt management plan (DMP). A DMP, offered by a nonprofit credit counseling agency, enables you to merge your unsecured debts into a sole monthly payment. The agency will attempt to negotiate more affordable repayment plans with your creditors.

Before committing to debt consolidation

The Consumer Financial Protection Bureau (CFP) cautions that due diligence is required before taking out a debt consolidation loan of any kind. They offer the following tips:

• Review your spending carefully. It’s essential to comprehend why you are in debt. If you’ve amassed significant debt due to poor financial habits and spending beyond what you earn, a debt consolidation loan likely won’t aid you in climbing out of debt unless you make more money or decrease your spending.
• Devise a workable budget. Calculate if you can pay off your existing debt by altering your spending habits over a specific period of time.
• Remember that any loan you open for the purpose of consolidating your debt could result in you paying more in the long run via higher interest rates, fees, and unexpected costs than if you had merely repaid your previous debt payments.
• Attempt to contact your individual creditors and inquire if they will agree to decrease your payments. Some creditors could be amenable to receiving lower minimum monthly payments; or they may agree to lower your interest rate, waive particular fees, or amend your monthly due date to better correspond to when you get paid – steps that can help you repay your outstanding debt.

Action steps involved

Still determined to seek a loan for debt consolidation? Follow these recommended steps:

• Review your credit reports. Visit Annualcreditreport.com to access your three credit reports (from Equifax, TransUnion, and Experian) for no charge. Look over each report for errors or inconsistencies and work to resolve these with the creditors involved.
• Review and improve your credit score. Your bank, credit card, or mortgage lender may offer access to your credit score for free online or upon request. If your score is in the 600s or lower, work to improve your score by making timely debt payments, not opening any new credit accounts, and avoiding closing existing credit accounts.
• Shop around for a debt consolidation loan or alternative loan carefully. Request rate quotes and loan packages from different lenders and compare rates and terms to choose the best deal. Be sure to learn what the total cost of the loan will be (principal plus interest plus fees).
• Aim to remain financially disciplined. Create a budget that works for your finances, create reminders about your monthly debt payment due date, and don’t overspend beyond your means.

You may also be interested in:

• Five Tips on How to Become Financially Independent
• Tactics for a Debt-Free Life and More Control Over Your Money

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post All There is to Know About Debt Consolidation appeared first on Credit Sesame.

Good timing can make a big difference in life. This is certainly true of buying a home and getting a mortgage loan. While many matters in this process are out of our control, carefully determining when to shop for a mortgage, apply for financing, and close on a loan may reap benefits.

Learn what the experts have to say about the ideal timing when you decide to buy a house and apply for a mortgage.

Why timing can be important when financing a home

Mortgage interest rates have increased in the first half of 2022. That makes some prospective home buyers wish they would have pulled the trigger earlier. But the truth is that it’s impossible to predict mortgage rates and where they will land in the future. Trying to perfectly time the rate market can lead to frustration and disappointment.

Still, with proper advanced planning, you may be able to position yourself into a better mortgage loan deal and apply for a mortgage at the best time.

“The timing of your mortgage application will help you manage a couple of competing factors,” explains Martin Orefice, CEO of Rent To Own Labs. “First, especially in the current market, interest rates are going up all the time. With this in mind, applying earlier than anticipated is usually a better idea.”

Additionally, it’s wise to get pre-approved for a mortgage loan well before you start making offers on homes.

“The time of the month when you shop for loans and apply for financing can also have an impact,” he adds.

Also, if you expect mortgage interest rates to rise soon (current trends and the Federal Reserve’s plans to raise interest rates as the year progresses suggest that this is a foregone conclusion), it makes sense to time your home buying and financing plans carefully with the goal of acting sooner versus later. Wait too long and you may end up paying a higher interest rate and a higher home sale price.

The best time to begin shopping for a mortgage loan

Herndon Davis, a mortgage loan officer/broker in Fort Lauderdale, Florida, believes the best time to start shopping for a mortgage loan is four months before you begin home hunting.

“That’s because you must devote one solid month of research and due diligence figuring out which lender to choose – whether it’s a bank, credit union, or mortgage company,” he says.

This four-month timeline enables you ample time to save up for the down payment, closing costs, and cash reserves needed after you move in.

“Some lenders require a strict six months of cash reserves,” Davis notes.

After month #1, you’ll need the remaining three months to demonstrate financial responsibility and prudence.

“To prove your creditworthiness, your lender will want to see pristine bank statements with no outrageous cash deposits or withdrawals that cannot be easily explained away, he adds.

Starting plenty early can also give you time to work on improving your credit, if needed, notes Eric Jeanette, owner of Dream Home Financing in freehold, New Jersey.

“Once you are confident that you can qualify for mortgage financing, you can begin rate shopping,” Jeanette suggests.

The best time to apply for a mortgage

It’s wise to start the mortgage application process at the beginning of the month, the pros concur.

“The end of the month is always chaotic, with last-minute closings and rejected files getting last-minute approvals. You don’t want to get caught up in that rushed monthly madness,” cautions Davis. “I recommend applying for a mortgage loan between the third and fifth of the month if possible, making sure you provide all the necessary documents. Also, give yourself breathing room to get pre-approved by the 10th to 15th of the month – before the end-of-the-month rush.”

Consider that the start of the month is when lenders are most hungry for new business, Orefice points out. You’ll likely find that loan officers and processors are more eager to return your phone calls and carefully review loan options and terms with you earlier in the month versus later.

“However, the time of the month when you apply for a mortgage should have no impact on the deal, terms, or rate you are ultimately offered from a lender,” explains Jeanette.

In other words, the main benefit here is that you’ll get more personalized attention from lenders if you start the application process earlier in the month.

The best time to close on a mortgage loan

Want to save on closing costs? It can be best to close on your mortgage at the end of the month.

“Closing costs will often include a prorated charge for homeowners insurance, property taxes, and interest based on how many days are left in the month. So closing on or close to the last day of the month will keep these fees down,” Orefice continues.

Jeanette seconds those sentiments.

“If you close on the first day of the month, for example, you will owe about 30 days of interest. But if you close on the last day of the month, you will owe only one day of interest,” he says. “Therefore, the timing of when you close could have a significant impact on how much you will owe at the closing table.”

Adjustable-rate mortgages: Another way to time the market

In this era of higher interest rates, you might want to consider an adjustable-rate mortgage (ARM). This type of home loan usually starts with a lower rate than a fixed-rate mortgage; a few years later, the rate can change. ARMs are generally 30-year loans that span two specific phases: a fixed-rate period in which the interest rate stays the same (often lasting five, seven, or 10 years), and a second phase in which the interest rate can increase or decrease depending on market trends.

“You can pursue an ARM and then time it to refinance your loan or sell your home before the adjustable phase kicks in,” advises Davis.

You may also be interested in Guide to Buying a House and Getting a Mortgage.

The post Timing is Everything: When is the Right Time to Apply for a Mortgage? appeared first on Credit Sesame.