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NerdWallet’s Best Credit Card Tips for December 2016

Wait, what? It’s December already? The end of the year is approaching fast, and the Nerds’ top credit card tips this month will help you cross the 2016 finish line and sprint ahead in 2017. Here are four things to consider doing this month.

Check expiring rewards points

You’ve chosen the best rewards credit card so that you maximize your cash back, points or miles. But are you one of those cardholders who have let rewards expire? In a 2011 report, loyalty rewards research firm Colloquy estimated that about $16 billion worth of rewards went unredeemed that year. Don’t let yours go to waste. Many cards now offer rewards that never expire, but others still give their points or miles a use-by date.

Log in to your credit card account to see whether and when your points or miles expire. If the clock is ticking down, use them to purchase merchandise through your issuer’s online shopping mall, buy gift cards for popular retailers or book a winter getaway. And if you have expired miles or points, all may not be lost. Some programs let you restore expired miles — for a fee. Better to check the status of your rewards and use them now.

Donate points or miles to charity

If you have miles or points you aren’t going to use, consider donating them to charity. Make-A-Wish Foundation, which grants wishes of children with life-threatening illnesses, says it needs 2.8 billion miles each year to make travel dreams come true. You can donate miles from frequent flier programs with American, Delta, United, JetBlue and Southwest on the Make-A-Wish website. United Airlines has dozens of other charities listed on its website, including the American Cancer Society, the Muscular Dystrophy Association and Special Olympics, where you can donate a minimum 500 miles from your MileagePlus account. At American Airlines’ AAdvantage, you can earn miles when you make a cash donation to Miles to Stand Up and Miles for the Cure. You can also donate miles to Miles for Kids in Need, Miles for All Who Serve and Miles of Hope. Note: Donated points or miles are not tax-deductible.

Cure post-holiday blues with 0% APR

No matter which end-of-the-year holiday you celebrate, you’re buying gifts for family and friends and doing more entertaining. According to Discover’s annual holiday shopping survey, consumers plan to spend an average of $1,159 this season. With that kind of outlay looming, you might want to look into a card with an introductory 0% APR on purchases, balance transfers or both:

For a great new cardholder bonus 

Discover it®- 18 Month Balance Transfer Offer: You could turn $200 into $400 with Cashback Match™. We’ll automatically match all the cash back you earn at the end of your first year. New cardmembers only. Introductory APR of 0% on Purchases for 6 months and 0% on Balance Transfers for 18 months, and then the ongoing APR of 11.24% - 23.24% Variable APR.

For a $0 balance transfer fee

Chase Slate®: Save with a $0 introductory balance transfer fee, 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee. Plus, receive your Monthly FICO® Score for free. Introductory APR of 0% on Purchases and Balance Transfers for 15 months, and then the ongoing APR of 13.24% - 23.24% Variable APR.

For a long 0% APR period

Citi Simplicity® Card - No Late Fees Ever: Introductory APR of 0% for 21 months on purchases and balance transfers, and then the ongoing APR of 13.24% - 23.24% Variable.

For rewards and 0% on transfers

Citi®Double Cash Card – 18 month BT offer: Earn cash back twice on every purchase — 1% on every purchase, and another 1% when you pay for it. Introductory APR of 0% for 18 months on balance transfers, and then the ongoing APR of 13.24% - 23.24% Variable.

Opt in to 5% bonus rewards

As we get closer to 2017, remember to opt in to the 5% bonus cash-back categories for January-March if you carry a Discover or Chase card with rotating categories. Discover has already announced its first-quarter 2017 bonus categories: gas stations, ground transportation and wholesale clubs. Chase says it will announce its categories for 2017 in mid-December.

The Nerds wish you a healthy, happy and financially savvy holiday season!

Ellen Cannon is a staff writer at NerdWallet, a personal finance website. Email: ecannon@nerdwallet.com. Twitter: @ellencannon.

How to Tell If a Roth 401(k) Is for You

A 401(k) is already one of the best ways to save for retirement, but many plan sponsors now offer one step better: a Roth 401(k).

If you could build the ideal retirement account, this might very well be it. Like a 401(k), there’s a high, $18,000 annual contribution limit, or $24,000 for those 50 or older. As with a Roth IRA, you make contributions with after-tax dollars, but qualified distributions are tax-free. If you earn so much that your Roth IRA contribution limit phases out, a Roth 401(k) gives you access to that coveted tax-free growth.

With that list of high points, you might be wondering where to sign. And with rare exceptions, most workers who are offered this retirement account should take it. But here’s what to consider before you do.

Your current and future tax rates

This is the dividing line between a Roth and traditional tax treatment: If you expect your tax rate to be higher when you pull the money out in retirement, you’re better off paying taxes now and avoiding them later with a Roth 401(k).

Many people fall into this box, either because of a standard of living that increases over time and requires them to draw more income in retirement, or because they expect across-the-board tax increases between now and then. With a Roth, you get to lock in that current low tax rate, then enjoy tax-free growth on your investments.

Even if you expect your tax rate to go down in retirement, a dollar in a Roth 401(k) is worth more than a dollar in a traditional 401(k), says Tim Maurer, a certified financial planner and author of “Simple Money: A No-Nonsense Guide to Personal Finance.”

“Virtually all the time, for people who are considering making a contribution, the Roth dollar is more valuable, because the traditional is going to require tax payment,” he says. When you pull a dollar out of a Roth, you put that dollar in your pocket. When you pull a dollar out of a traditional 401(k), you put that dollar minus taxes in your pocket. That could leave you with 75 cents — maybe a little less, maybe a little more.

The only way a traditional meets the value of a Roth is if you expect your future tax rate to be lower — and you immediately invest the value of the tax deduction you receive now from contributing to a traditional 401(k). If you put $4,000 into a traditional account this year and you do the math to determine that the tax deduction on that contribution is worth $1,000, you need to invest that $1,000 as well.

You can do that out of cash flow or from your tax refund. But many people don’t get a tax refund, and about half of those who did expect one last year planned to spend it, according to a National Retail Federation survey. That means the second part of this decision comes down to behavioral finance: Can you trust yourself to invest, rather than pocket, those tax savings each year? If not, go Roth.

It doesn’t have to be all or nothing

Despite the growing availability of these plans, less than 10% of employees who are offered a Roth choose that version of a 401(k), according to a survey this year from global advisory firm Willis Towers Watson. One possible reason: Because you lose the initial tax deduction, it costs more on the front end to make that choice.

“I typically suggest that a person who is considering introducing the Roth 401(k) do so slowly and over time. Year one, you can split the contribution so 75% goes to the traditional and 25% goes to the Roth. You won’t feel the tax bite as much,” Maurer says.

If you do that, you’ll also head into retirement with tax-deferred and tax-free pots of money, which can help you manipulate your taxable income each year. For instance, the ability to pull some of the money you need in a given year from a Roth can lower your taxable income, which could help you reduce or eliminate taxes on Social Security benefits and lower Medicare premiums that are tied to income.

“Even if you’re someone for whom the tax benefit seems to be negligible, merely having a bucket of money that is tax-free can be a huge advantage in retirement,” Maurer says.

Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: aoshea@nerdwallet.com. Twitter: @arioshea.

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

Sean Talks Money: You Can Ease the Bank Fee Bite

On a balmy September morning in 2013, an email hit my inbox that too many Americans see regularly: an overdraft notice. My rent bill had been paid automatically before my paycheck was deposited in my checking account, so I was $1,649 short. To make matters worse, I had used my debit card several times before I knew I was out of money.

This proved to be costly. My account was linked to a credit card, which covered the difference. But my bank charged a $20 fee for the overdraft, followed by rapidly compounding interest charges. It could have been worse, though: My rent check didn’t bounce, which meant I avoided hot water with my landlord. I called my bank, which agreed to remove additional overdraft fees that piled on for each purchase I’d made before I was able to move money into the account.

Still, this was not a one-time error on my part. This was the last in a string of five overdrafts from 2010 to 2013.

Bank fees are relatively easy to avoid, but I hadn’t done my homework, and I was paying the price for not paying attention. Let me save you that pain.

What I did wrong, and then right

Mistake No. 1: My simplest mistake was neglecting to keep extra cash in my checking account. I tried actively managing my deposit accounts, moving as much money as possible from checking into a separate savings account and hoping to maximize my interest yield there. Looking back, this was a misguided goal. While I had a good job, I was fresh out of school and didn’t have nearly enough cash to generate meaningful interest yields, and it left me exposed to costly missteps.

Fix: I now keep a sizable cash cushion in my checking account to keep it from running dry. My rule of thumb: one rent paycheck, plus a little extra. If your checking account ever drops below the floor you’ve set, you’ll know something has gone wrong.

Mistake No. 2: I chose the wrong overdraft option. Consumers typically have three options when it comes to overpaying from their checking account: (1) Deny the payment, which results in a bounced check or denied debit card payment. (2) Pull the money from a linked savings account or credit card. (3) Let your checking account go negative, with the amount covered by an automatic loan from your bank.

Each of those options carries expenses, but I was unaware of additional costs with the credit card transfer option (more on that shortly).

Fix: Each of these options has pros and cons. But I should have chosen to transfer money from my savings account, not a credit card, because I usually had the necessary funds in savings. The overdraft fee would have been the same, but I wouldn’t have had the immediate interest charges to worry about. Speaking of which …

Mistake No. 3: I thought, incorrectly, that money borrowed from my credit card would behave like normal credit card debt. Credit card purchases generally don’t begin accruing interest until the bill is due. But an overdraft transfer counts as a cash advance on the credit card, which is different from a purchase in three important ways: (1) It demands a much higher interest rate, around 25% compared with the average of 18%. (2) Interest begins accruing immediately. (3) It charges a “cash advance fee,” which varies by bank.

Here’s my 2011 self, in an email to my wife, upon realizing this mistake after an overdraft: “I’d forgotten that there’s a very evil side to overdraft protection — they charge a very high interest rate on the unpaid amount. … So I just paid off the balance.” I wish I had kept a record of how much money I lost.

Fix: Again, you can choose a different overdraft option. But if that step won’t work for you, make sure to pay off the credit card balance as quickly as possible. Cash advance APRs charge roughly $25 per year per $100 spent, which adds up frighteningly fast.

You probably have better options

It took me years of mistakes to figure all of this out. After that September 2013 overdraft, I fixed my money management issues and haven’t had an overdraft since.

But beyond the lost money, I’d also become deeply frustrated with my bank. Not that any of this was the bank’s fault — it was all mine — but I was frustrated nonetheless. Each time an overdraft fee hit my account, it was a reminder that something was wrong, and these fees came precisely when I didn’t have the money to spare. I was ready for a change.

»MORE: Best checking accounts

So I made one. I took advantage of a $200 cash bonus offer for switching to a new bank, and then a year later I switched again, enticed by the chance to earn interest on my checking account balance.

»MORE: Best bank account bonuses

The big picture

Checking account fees are expensive. A recent NerdWallet study found that Americans spend an average of $97.80 per year in checking fees, $62.52 of which comes from overdraft and nonsufficient funds fees. The Consumer Financial Protection Bureau reports that the median overdraft fee is a hefty $34.

But the good news is that those fees are avoidable. In fact, if you’re paying any type of fee regularly for your checking account, chances are you’re doing something wrong. NerdWallet’s recommended checking accounts waive ATM fees and offer ways to avoid or minimize other account fees.

Take a few minutes to re-evaluate your relationship with your bank. Maybe add a cash cushion to your checking account or change your overdraft preferences, or even consider switching banks. The time you spend will be worth what you save in money and frustration.

Sean McQuay is a credit and banking expert at NerdWallet. A former strategist with Visa, McQuay now helps consumers use their credit cards and banking products more effectively. If you have a question, shoot him an email at asksean@nerdwallet.com. The answer might show up in a future column.

5 Ways to Tell If Your Checking Account’s the Right Fit

Like the roof over your head, the state of your checking account is something you may take for granted. But if you’re seeing money drip from your account in the form of fees, it’s time to stop those leaks before things get any more costly.

“Even the smallest fee [can] burn through whatever you get from interest,” says Rob Rubin, a director at the banking analytics firm Novantas.

» MORE: NerdWallet’s best checking accounts

When you originally signed up for a checking account, you may have taken a quick glance at interest rates, fees, bank branch and ATM networks, and additional services like online and mobile banking. But now that you know what services you actually use and what fees you tend to pay, it’s time to evaluate whether you have the right account.

Here are the questions to ask yourself:

1. Did I pay monthly fees this year?

Keeping money at your bank doesn’t have to cost you anything, but monthly maintenance fees are all too common these days. Many banks have stopped offering free checking accounts to offset losses from fee income caused by new regulations in the wake of the 2008 financial crisis.

If you’re paying a monthly fee, ask if there’s a way to get it waived. Options may include setting up direct deposits, maintaining a minimum monthly balance or making a certain number — such as 10 — of debit card transactions per month.

If your bank doesn’t offer any way around the monthly fee, shop around for one that does. Alternatively, find a free checking account at an online-only bank, community bank or credit union.

2. Is my bank’s ATM network convenient?

Count how many times you needed cash recently, and how many of those times you had to pay an ATM fee. This may not be a pressing issue if you use a credit or debit card everywhere. However, some small businesses, such as local bars and coffee shops, may require cash as payment. That’s when having a bank with a free local network of ATMs pays off: You avoid any out-of-network or ATM operator fees.

The biggest banks aren’t the only ones that make cash withdrawals convenient. Many credit unions and community banks take part in shared ATM networks such as Allpoint and the Co-Op network, which have tens of thousands of ATMs nationwide.

Some financial institutions take it a step further.

“Small banks can compete [against national banks] by refunding customers their ATM surcharges,” says David Albertazzi, senior analyst at the research and consulting firm Aite Group.

» MORE: Best banks for ATMs

3. Do I pay any overdraft fees?

Paying even one overdraft fee is expensive — the median cost is $34, according to the Consumer Finance Protection Bureau. Overdraft coverage gives your bank permission to pay any debit card purchases, ATM withdrawals or checks whenever your checking account lacks enough money. And once you’re in the red, any new purchases lead to more overdraft fees.

To cut the cost of those fees, you can try an overdraft protection transfer service, which automatically transfers money from your savings account to complete a purchase, or opt out of overdraft coverage.

Take a hard look at your spending habits when deciding on your overdraft program or lack of one. These are meant to be used rarely.

» MORE: How to avoid overdraft fees

4. What services do I actually use?

Look at your bank statements for the past months to see what types of transactions you’ve made. Take note of whether you’ve had any wire transfers, cashier’s checks, money orders, ACH transfers or bill payments. Fees for these services vary by bank, so if you use them often, look at banks that have the lowest prices.

5. What am I missing out on?

First, see what your bank has. Many banks offer free online and mobile banking services, like remote check deposits and text alerts when your balance is below a certain amount. Explore your bank’s website to make sure you’re aware of all the benefits that come with your account.

Next, see what your bank doesn’t have. The interest rate on your checking account may be next to nothing, but it doesn’t have to be. Many online banks raise the bar with 1% annual percentage yield accounts. Outside of interest, some accounts have rewards.

If you’re already thinking of switching banks, there may be opportunities there, too. Promotions for opening a checking account exist, although they should be the icing on the cake. Your needs, which may range from real-time customer service to mobile app functionality, should come first.

» MORE: How to switch banks

“Ultimately, it’s about feeling confident about where my money is, where my money is going and knowing that I’m on the right track,” says Mark Schwanhausser, a director at Javelin Strategy & Research.

Once your money’s in good order, maybe it’s time to check on your roof.

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

Postdating Checks Is a Waste of Time — Here’s Why

You’re writing a check to your landlord, but you don’t have enough money in your account. So you date the check a few days in advance — also called postdating it — hoping your paycheck will clear by then.

Bad news: The check date won’t delay anything. Here’s what you need to know about postdating and what you can do instead.

» MORE: How to write a check

Postdated checks and payees

“It’s kind of a tricky scenario,” says Matt Foster, founder of the rental property search site iRent and a landlord in Ventura, California.

He receives checks from some renters on the 28th or 29th of the month that are dated for the first of the next month. He suspects his tenants do this to keep him from cashing their rent checks before they’ve been paid, so their rent checks don’t bounce.

Luckily for them, Foster waits to cash postdated checks, but he isn’t legally obligated. And in most cases, neither are banks.

Bank rules on postdated checks

Banks and credit unions generally state rules about postdated checks in their account disclosures. Some of the biggest banks, for example, note specifically that they can honor checks that are made out for future dates.

The Uniform Commercial Code, a collection of business laws adopted or adapted by many states, gives financial institutions the right to process a correctly written check with a future date. But you can ask your bank to delay cashing a specific check, and, depending on your state and the bank, it might comply.

What’s the worst that can happen?

If you write a check and don’t have enough money in your account when it’s cashed — whether or not it’s postdated — your bank can cover the payment or let the check bounce based on its overdraft practices. If the check goes through, you’ll pay an overdraft fee. If it doesn’t go through, the recipient might charge you late fees and a bounced-check fee. But usually it doesn’t get much worse.

“From a criminal law perspective, there is nothing inherently illegal about postdating a check,” says Eric Hintz, a criminal defense attorney at Hintz & Welsh in Sacramento, California.

Hintz says that only criminal intent, such as intentionally not having enough money for a payment, can be grounds for check fraud.

How do you delay or stop payments?

Consider these three strategies:

  • Talk to the recipient. Tell the person receiving your check — your landlord, a merchant, a friend or family member — about your situation. Find out if he or she will accept payment later.
  • Schedule an electronic transfer, such as an online bill payment. This is a much more precise way to make future payments, and you won’t risk sending money before you’re ready.
  • Request a stop payment. Your bank provides this service, usually for a steep fee, but you must give it notice. The amount of notice depends on your bank.

» MORE: How to cancel a check

It’s risky to rely on postdating or processing delays to ensure your check clears. Financial institutions now send digital pictures of checks to other financial institutions, so they can be cashed more quickly.

“In short,” says Mathew Dahlberg, a financial advisor at Main Street Investments in Kansas City, Missouri, “if you don’t have the money in your checking account, then don’t write the check!”

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

Mortgage Rates Today, Friday, Dec. 2: Steady for Now

Mortgage rates showed little movement on Friday. Thirty-year fixed rates and 5/1 ARM rates were down, while 15-year fixed rates increased, according to a NerdWallet survey of mortgage rates published by national lenders this morning.

Mortgage Rates Today, Friday, Dec. 2 (Change from 12/1) 30-year fixed: 4.33% APR (-0.01) 15-year fixed: 3.72% APR (+0.01) 5/1 ARM: 3.78% APR (-0.02) Mortgage applications down

For the week ending Nov. 25, mortgage application volume fell 38% compared with the previous week, according to data released Wednesday from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. On a seasonally adjusted basis, volume was down 9.4%.

“Mortgage application volume in the Thanksgiving week dropped sharply to the lowest level since early January, as mortgage rates increased to their highest point since July 2015,” Mike Fratantoni, the MBA’s chief economist, said in a release. “Refinance volume, which is very sensitive to rates, dropped more than 16% in the most recent week, with refinances of government loans dropping 30%.”

“On a seasonally adjusted basis, purchase volume was little changed last week,” he said. “However, the mix continues to shift towards higher-balance loans, as the average purchase loan size reached a new survey record” of $312,400.

Fratantoni suggested that first-time homebuyers and buyers of lower priced homes may have shied away from the housing market because of increasing mortgage rates. “It appears that many homebuyers rushed to get their applications two weeks ago as rates began to increase,” he said.

According to the MBA’s survey, the seasonally adjusted volume for purchase loans fell 0.2% from one week earlier. The unadjusted volume decreased 34% compared with the previous week. But this number is 3% higher than the same week last year.

Survey data on other mortgage activity included the following:

  • Refinances fell to 55.1% of total applications from 58.2% the previous week, the lowest level since June 2016.
  • Adjustable-rate mortgages rose to 5.7% of total applications, the highest level since June 2016.
  • FHA mortgage applications decreased to 10.4% from 11.7% the previous week.
  • VA mortgage applications decreased to 11.7% from 12.5% the previous week.
  • USDA mortgage applications stayed at 0.8%.

Homeowners looking to lower their mortgage rate can shop for refinance lenders here.

NerdWallet daily mortgage rates are an average of the published APR with the lowest points for each loan term offered by a sampling of major national lenders. Annual percentage rate quotes reflect an interest rate plus points, fees and other expenses, providing the most accurate view of the costs a borrower might pay.

Michael Burge is a staff writer at NerdWallet, a personal finance website. Email: mburge@nerdwallet.com.

5 Browser Extensions to Save You Money and Time

Driven by the pursuit of a great deal, you’ve downloaded bar code scanning apps on your phone and clipped coupons from your local newspaper. But even you — a savvy deal seeker — may not know that your computer can replace both of those money-saving activities.

Browser extensions are plug-ins you can download on web browsers like Chrome or Safari, and some of these tools can do your bargain-hunting homework for you.

These are our picks for five of the best browser extensions for online shopping.

Honey

Honey is a browser extension that promises to help you find and automatically apply the best coupon codes at checkout before you complete an online order. So rather than opening a separate tab and searching for coupons and sales from coupon aggregator sites, you just shop as usual and let Honey do the work for you.

The extension also promises to find the lowest prices at Amazon. Additionally, Honey members can earn cash back on their eligible purchases through something called HoneyGold. Simply click “get bonus” at checkout, complete a transaction and you’ll stand to receive anywhere between 0% to 100% back on your purchase as a surprise bonus.

Honey is available for Chrome, Firefox, Safari and Opera.

» MORE: What to know about cash-back shopping sites

Ebates Cash Back Button

Similar to Honey is Ebates, a cash-back website that calls its browser extension the Cash Back Button. Members can use the button to activate cash back directly at store sites (rather than clicking through from the Ebates portal first) and automatically apply coupon codes at checkout.

Unlike Honey, cash-back percentages aren’t a surprise at Ebates. The store has rotating offers of various cash-back percentages from a wide selection of retailers, so you can compare exactly how much you’ll get back depending on where you shop and choose accordingly. For instance, at the time of this writing, Ebates is offering 1% back at Target and 4% at Wal-Mart.

The Ebates extension is compatible with Chrome.

Goodshop Fetch Button

Goodshop’s version of an online shopping tool is the Goodshop Fetch Button. Goodshop is a coupon website with a twist. It helps its members locate deals and donates a portion of eligible member purchases to the shopper’s school or charity of choice.

Install the extension to activate coupons (which will automatically appear on your screen) and a donation. Users will be able to see the available donation percentage in their search engine results page for a given store. For instance, at the time of this writing, Goodshop will donate 1.5% of what you spend to your favorite cause when you shop at Kohl’s.

Goodshop’s browser extension is available for Chrome, Firefox and Safari.

The Camelizer by CamelCamelCamel

The Camelizer is the brainchild of CamelCamelCamel, an Amazon price-tracking website. CamelCamelCamel tracks the price history of items sold on Amazon so shoppers can get a sense for any given product’s regular price — and thus judge when a sale is really better than the ordinary selling price.

The Camelizer extension provides users with price history charts without having to leave a product page on Amazon. So while you’re scoping out that Beats Pill speaker, you can quickly pull up how much it was selling for last month or earlier this year.

The browser add-on is supported by Chrome, Firefox and Safari.

Slice Watch

Slice Watch is a browser extension that monitors prices so you don’t have to. The extension is a self-described “smart shopping assistant that allows you to track product prices when you shop, and get email notifications whenever they drop.”

When users shop at supported retailers, such as Amazon, Target and Best Buy, they’ll see a teal icon in the top right of their browser. Click it when you find an item you like and want to track. Slice Watch will alert you when that product goes on sale or gets a price reduction so you can buy it for less.

Slice Watch can be added to Chrome.

Check out the websites for these browser extensions for more information and for links to download them in your compatible browser of choice.

Courtney Jespersen is a staff writer at NerdWallet, a personal finance website. Email: courtney@nerdwallet.com. Twitter: @courtneynerd.

Ask Brianna: Will Trump Hurt or Help My Student Debt?

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

Q: I’m already struggling to pay back my student loans. Will a Trump administration make it better or worse?

A: This is a tough one. President-elect Donald Trump and the Republicans who now have a majority in both houses of Congress didn’t focus much on higher education during their campaigns, says Jason Delisle, resident fellow at the American Enterprise Institute, a right-leaning think tank in Washington, D.C. That makes predicting the next four years of student loan policy tricky.

“We’re left a little bit empty-handed,” Delisle says.

But Trump recently spoke about simplifying a program that lets student loan borrowers repay their loans based on their incomes, which some policy experts have recommended for years.

Here’s how it works now: If you’re struggling to afford your monthly student loan bills, federal income-driven repayment plans will cap them at a percentage of your income. On the Revised Pay As You Earn (REPAYE) plan, introduced by the U.S. Department of Education in December 2015, payments are no more than 10 percent of your income, and your loans are forgiven after 20 or 25 years. You’ll be taxed on the amount forgiven.

REPAYE is one of five income-driven plans. They each have small differences in their benefits and requirements, and they all involve a thorny application process. You must apply through your student loan servicer and recertify your income every year. That means if you suddenly lose your job — meaning you qualify for a $0 payment — you can’t get relief until you fill out a form and wait until your loan servicer processes it.

Trump said in an October speech in Columbus, Ohio, that he’d replace the current maze of plans with a single program. The plan would limit student loan payments to 12.5 percent of income, slightly higher than REPAYE’s cap, and forgive the remaining balance after 15 years, five to 10 years sooner than the current options offer.

More change needed

A simpler income-driven repayment program would be refreshing news for many borrowers. But those most at risk of default may need more help. Former students who attended community colleges or for-profit colleges, for instance, are less likely to complete their studies or see a boost in earnings — and they often can’t keep up with student loan payments, according to a report published in the Brookings Papers on Economic Activity.

One possibility for improving the income-driven repayment program is to eliminate the need to apply in the first place or to reapply every year. By automatically enrolling all borrowers, even those most likely to default could start repaying their loans as soon as their first bill is due. The government could set payments based on borrowers’ current income and collect them directly from paychecks, a process called payroll withholding. That would ensure that borrowers’ payments drop or stop as soon as their incomes do.

Making payroll withholding work would mean navigating many bureaucratic hurdles, but it’s possible.

“There are countries that have figured it out and it’s happening at full scale,” says Susan Dynarski, professor of public policy and education at the University of Michigan. Those countries include Australia, Britain and Chile, according to Dynarski’s paper “How to — and How Not to — Manage Student Debt.”

No need to wait on Trump

As for the U.S., both Republicans and Democrats have expressed interest in improving the federal government’s student loan repayment options, says Matthew Chingos, senior fellow at the Urban Institute, a left-leaning think tank. But the scale of the possible change isn’t certain.

“I don’t know if we’d see an Australia-style system where it’s done automatically through the tax system, but we might see some consolidation of those plans, streamlining of those systems,” he says.

In the meantime, you can sign up now for REPAYE, or any of the other plans you qualify for, at studentloans.gov. The current options and recertification requirements aren’t perfect, but income-driven repayment could keep you from feeling overwhelmed by your bills.

“Consumers need to understand that these protections already exist,” Chingos says. “They’re not out of luck.”

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

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

Wire Transfers Explained

Sometimes you need to send money somewhere fast.

Wire transfers are one of the most effective and quickest ways to move money for things like closing on a home or sending funds to relatives abroad. They cost a bit more and take more effort than other methods of sending money, but you’ll have peace of mind.

Here’s what you need to know.

» MORE: Best ways to send money to individuals

What is a wire transfer?

A wire transfer is a fast way to move money electronically from one person to another using a bank or a nonbank provider such as Western Union or TransferWise. No physical money moves between locations. The term “wire transfer” comes from an era when banks relied on telegraph wires for this type of money transfer.

A bank wire consists of instructions about who will get the money, including the bank account number and how much the recipient should get. Nonbank wire transfers might not require a bank account, depending on the service, but they will require the recipient’s name, the transfer amount and the destination. You pay the amount upfront, so the transfer is final once processed.

Types of wires

There are two main types of wire transfers: domestic and international. The cost and delivery time vary for each. If you’re sending money overseas through your bank, you’ll generally use a wire transfer. Banks can wire amounts in the tens of thousands of dollars and send money in a foreign currency.

» MORE: Best ways to wire money internationally

How long does it take?

Your money doesn’t go straight from one bank or provider to another. A real-time wire processing system like FedWire clears the payments, similar to the way the Automated Clearing House processes ACH transfers like direct deposits and bill payments. For domestic wire transfers, money generally gets processed the same day the wire goes out — usually within a few hours. International transfers, which involve a U.S. clearinghouse and at least one foreign country’s processing system, take several days.

What does it cost?

A wire transfer can be one of the more expensive ways to send money, especially through banks. On average, there’s a flat fee of around $25 to wire money to another person in the U.S. and about $43 to wire abroad, based on some of the bigger U.S. financial institutions’ current pricing. Recipients might also have to pay their bank, usually around $8 to $10, to receive the money.

International wire transfers have another cost, which can be hidden. Banks both in the U.S. and abroad charge consumers higher exchange rates than what they charge other banks.

» MORE: What wire transfers cost at banks

For transfers through nonbank providers, the fee can depend on the provider, amount, destination, delivery and payment options, and method of sending money, such as online or in person. Generally, you’ll get a better exchange rate than you would at a bank.

For domestic transfers that are less urgent or involve a smaller amount, ACH transfers, such as external funds transfers, are better. Deliveries can take several days, but they cost a few bucks at most.

How safe is it?

A wire transfer is secure and can’t be canceled once it’s been sent, so make sure you know the person you’re sending money to. Scam artists might say you won a lottery or sweepstakes you never signed up for and then ask you to wire money to pay supposed fees. If you fall for a trick like this, you can’t get your money back. The one exception is if you make an international transfer and then cancel it within a half-hour, assuming the wire hasn’t been picked up or deposited yet. This is one of several federal protections you have when sending international money transfers.

A wire transfer isn’t the type of money service you’ll need often, but when speed is crucial, it can be a lifesaver.

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

Updated Nov. 29, 2016.

Banking Whether you’re hunting for a high-yield savings account, a low-fee checking account or a CD, we’ll make your options a lot clearer.
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The basics Savings Accounts Get advice on savings accounts, one of the simplest types of accounts available to consumers. Banking Basics Deciding which bank accounts are best can help minimize your costs and maximize your savings. Checking Accounts Learn more about checking accounts and find accounts with low fees and the best interest rates. Prepaid Debit Cards A prepaid debit card is a convenient way to make payments without a bank account.
The article Wire Transfers Explained originally appeared on NerdWallet.

This Student Loan Move Could Save You Thousands

There may not be a magic bullet for getting out of student loan debt, but there is a holy grail, of sorts, for some borrowers: student loan refinancing.

Here’s how it works: If you qualify, a lender will buy your existing loan, or loans, and issue a new one. Depending on your credit, you could get a lower interest rate, which would save you money in the long run.

Say, for example, you left college with a $30,000 private student loan with a 7% interest rate and a standard 10-year loan term. If you refinanced that loan right away at 3.5%, you’d save more than $6,000 in interest over the life of your loan. You could use the money to start an emergency fund, save for retirement or go on vacation.

Here’s what you need to know about refinancing your student loans.

How to qualify

In general, you’ll need three things to qualify:

  1. Solid credit score: Most lenders require a score of 700 or higher. If your score is lower, you can apply with a co-signer whose score qualifies.
  2. Low debt-to-income ratio: The lower your debt is in relation to your income, the better. Aim for a ratio that’s lower than 50%. For example, if you make $60,000 a year, your total debt should be below $30,000.
  3. Steady source of income: Borrowers with traditionally stable, high-paying careers will find it easier to qualify. Freelancers and those who are between jobs will have a harder time qualifying.
How to make it work

Refinancing is a great option for borrowers who have private loans with high interest rates. Federal loans also can be refinanced, but you’ll lose access to federal loan protections, such as income-driven repayment and forgiveness options. That’s why it’s usually best to exclude federal loans during refinancing.

Nerd Tip: If a lender offers prequalification, you might want to go through that process to get an idea of how much you could save without having a hard inquiry on your credit history, which lowers your credit score.

To determine if refinancing is a good option, compare your current loan terms against your potential loan terms. You’ll save the most money by getting your interest rate as low as possible. Consider other aspects of your loan as well to get the full picture. For example, if you have a loan with a 6% interest rate, refinancing it at 5% would make sense only if you didn’t have to extend the loan term.

Use NerdWallet’s student loan refinance calculator to estimate your potential savings and see if refinancing is right for you.

If you don’t qualify

You can use a co-signer if your own credit score isn’t 700 or above. But if you’d rather refinance on your own, focus on paying your bills on time and reducing any credit card debt to boost your credit score before applying.

Check your credit score here.

If refinancing makes sense and you’re willing to make the effort, it could help you save thousands of dollars in interest payments over the life of your loan. That’s at least worth considering.

Devon Delfino is a staff writer at NerdWallet, a personal finance website. Email: ddelfino@nerdwallet.com. Twitter: @devondelfino.

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