If you need money for larger financial goals like debt consolidation or home improvements, you may be considering a personal loan or home equity line of credit.

While both can be good borrowing options, it’s important to understand the difference between them to choose the one that works best for your financial situation.

A home equity line of credit, or HELOC, is secured by your home, while a personal loan is typically unsecured and lending is based largely on your credit and income.

In this article, we’ll review the pros and cons of HELOCs and personal loans to help guide you through the decision-making process.

What are the main differences between a HELOC and a personal loan?

The main difference between a HELOC and a personal loan is how they are typically secured and what this means for your loan terms.

A HELOC is a line of credit that uses your home equity as collateral. A personal loan is typically an unsecured loan, meaning it’s not backed by any collateral.

In most cases, your possessions aren’t immediately at risk if you default on a personal loan. In some cases, however, a personal loan lender could sue you for nonpayment of debt, which could mean your assets are at risk. Your wages could be garnished or a lien could be placed on your home to satisfy the unpaid debt.

Typically, unsecured personal loans have a higher interest rate than secured debt, but that’s not the only difference between a HELOC and a personal loan. Let’s take a look at other ways these loans differ from one another.

Interest rates

HELOCs typically have lower interest rates than personal loans, but the interest rate is often variable, which means it may go up — or down — over time. A HELOC is a revolving line of credit, so like a credit card, you’ll only pay interest on your outstanding balance.

For instance, if you have a $50,000 line of credit but are using only $4,000 of your credit limit, you’ll only owe payments and interest on the $4,000.

Unsecured personal loans don’t require security or collateral and have fixed interest rates and payment amounts. Unlike a line of credit, you’ll borrow a lump sum upfront and can count on the terms being constant for the life of the loan.

Qualifications

Like any other loan, qualifying for a HELOC or personal loan means you must meet the lender’s requirements on criteria such as credit, income and debt-to-income ratio.

With a HELOC, you must meet the lender’s financial requirements and own a property that you can borrow against. You’ll also need enough equity in your home — often no more than 85% of your home’s worth (minus what you owe on your mortgage).

For instance, if your home is worth $400,000 and you owe $250,000 on your mortgage, the maximum you may be able to borrow would be $90,000.

Collateral

Personal loans are usually unsecured and don’t require collateral. For this reason, your interest rate is typically higher than it would be with a HELOC because the lender sees it as a greater risk.

A HELOC, however, is secured by your home, so defaulting on this loan could put your home at risk of foreclosure.

Loan amounts

Lenders offer personal loans anywhere from $1,000 up to $100,000, though many lenders cut off their maximum loan amounts closer to $50,000. The stronger your credit, income and overall financial profile, the better chance you’ll have of qualifying for a larger loan with competitive rates.

Because HELOCs are tied to your home’s equity, the loan amounts are often higher than they are with personal loans. For instance, some lenders offer HELOCs up to several hundred thousand dollars and, in some cases, up to $1 million.

Although you can finance home improvements with a personal loan, you may not qualify for as much money as you would with a secured debt like a HELOC.

Repayment terms

The repayment terms on personal loans are pretty straightforward. You’ll usually have a fixed payment that covers the principal and interest portion of the loan. These terms are the same for the entire loan term (length of the loan.)

Your lender may offer different options to repay your HELOC. One option is to make payments that cover the principal and interest on the outstanding balance.

Another option is an interest-only payment, which will not pay down your loan’s principal. Keep in mind if you choose this option, your monthly payment can increase a lot once you hit the repayment period.

Some lenders may let you convert your repayment plan to a fixed-term installment loan.

Fees

Both HELOC and personal loans often come with fees. With HELOCs and personal loans, you could be on the hook for origination fees and other costs. Some personal loan lenders waive these fees, but you should be aware of lender fees so you know exactly what you are paying for on your loan.

A HELOC may have closing costs and other fees that could include one or more of the following:

• Appraisal fee
• Application
• Points
• Attorney fees
• Title search fees
• Document fees
• Taxes
• Annual fee or account maintenance fee

Some lenders may choose to waive a portion or all of the fees for a HELOC.

Tax incentives

The interest you pay on a HELOC may be tax deductible for qualified uses, while the interest on a personal loan is not.

Keep in mind that there are restrictions on receiving tax deductions for the interest you pay on a HELOC, though. You’ll need to use the money to make improvements to your home.

To learn more, it’s a good idea to consult a tax professional who can provide specific guidance for your situation.

Credit risk for default

If you default on a personal loan, this can harm your credit. Additionally, your assets won’t be immediately at risk.

With a HELOC, default is different. The lender may have the right to foreclose on your home if you default on your loan. Additionally, this activity may be reported to the credit bureaus and appear on your credit reports.

Is a personal loan better than a HELOC?

HELOCs and personal loans both have pros and cons, but which one suits you best will depend on the amount of money you need and the purpose of the loan.

Here are times when you might consider a personal loan or a HELOC.

Personal loan

• Consolidating high-interest debt
• Covering a cosmetic procedure like braces or tattoo removal
• Paying for a wedding

HELOC

• College tuition and expenses
• Ongoing home improvement projects
• Debt consolidation

A personal loan is ideal for smaller expenses you don’t plan to encounter often. A HELOC could be best for ongoing expenses that allow you to pay down and reuse the line of credit over an extended period of time.

What’s next?

No matter what you choose to do, it’s smart to compare offers from multiple lenders before making a decision. Shop around for the best interest rate and terms that fit your needs. Calculate the total interest you’ll pay with both options — don’t only consider the monthly payment.

Whether you opt for a personal loan or a HELOC, it’s important that you understand the risks and benefits before signing on the dotted line.

Even if you don’t know what EFT payments are, there’s a good chance you use them regularly.

Whenever you have your paycheck directly deposited into your checking account or use your debit card to make a purchase, you’re authorizing your bank to make an electronic funds transfer. EFTs can make the transfer of money safer, easier and faster than paper-based funds transfers.

Let’s look at what EFT payments are, how they work, and when you’ll use them during the regular course of making and receiving payments.

• What is an electronic funds transfer (EFT)?
• How do EFTs work?
• What are some types of EFT payments?
• What’s next? What you can do if you have a problem with an EFT.

What is an electronic funds transfer (EFT)?

Electronic funds transfers rely on technology and computer networks to move money without the need for paper documents. An EFT is an electronic payment method that works behind familiar processes like direct deposit, ATM transactions, wire transfers, online bill pay and banking, pay-by-phone, and debit card transactions.

One type of EFT payment is automated clearing house payments, or ACH payments. You can pay bills or transfer money between bank accounts with an ACH payment, which works through the Automated Clearing House network. Banks that are part of the nationwide network batch transactions together to send to other banks that are also part of the network.

While all ACH payments are EFTs, not all EFTs occur over ACH networks. For example, wire transfers and payments by debit or credit card are EFTs that don’t use ACH networks.

It may also help to point out that the acronym EFT is often confused with another popular financial acronym, ETF, or electronically traded fund. This is a type of mutual fund that trades like single stock shares on a stock exchange.

How do EFTs work?

All EFTs, whether they’re through the ACH network or not, start through an electronic device — a computer, telephone, point-of-sale card reader or ATM. They may be one-time transactions, like an online debit card purchase, or a recurring transaction, such as your employer directly depositing your paycheck into your bank account.

EFT payments may go through the ACH network, or they may be handled directly between banks.

EFTs that operate through the ACH network are processed by financial institutions like banks or credit unions in batches each day. Banks send each other files of electronic credit and debit transfer information to adjust customer’s bank balances. To process the fund transfers, banks must verify payment details, availability of funds, and authorization for accounts sending and receiving payment information. 

Because of the verification and batching process, ACH transactions can take several days to process.

What information do I need to make an EFT?

If you’re receiving a direct deposit, you’ll need to provide the payor your banking details. These typically include …

• Your full name
• Bank name and address
• Bank account number and type of account
• Bank routing number

You may also need to provide the depositor with a blank and voided personal check.

If you’re authorizing someone to debit from your account, you’ll have to provide your bank account information or debit card information to the person or business you’re paying. This is common when you authorize a utility company, for example, to automatically deduct your payment each month. 

To send money from your account to someone else — for example, if you set up automatic bill pay through your bank’s online tools — you’ll simply tell your bank where to send the funds, along with the amount you’re authorizing. In some cases, you’ll provide an account number for your payee.

For purchases made online or in person, you’ll just use your debit card, usually with a PIN. 

How long does it take for EFTs to clear?

The timeline for an EFT to clear depends on multiple factors, including the type of EFT payment. With ACH, it typically takes a few days.

For example, some payroll companies initiate direct deposits two to three days before they appear in an employee’s account. So if your paycheck appears in your bank account every Friday, your employer likely starts the direct deposit transmission as early as Tuesday or Wednesday and at the latest, Thursday, for the funds to show up in time.

As mentioned previously, when you use debit cards to make a payment, the transfer of funds from your account to the payee is instant.

What are some types of EFT payments?

Direct deposits

When you set up a recurring transaction to have your paycheck or a government check such as unemployment benefits directly deposited into your account, you’re using an EFT.

Electronic checks

Even when you use a paper check — either in a store or through the mail — the recipient may convert it to an electronic check. They’ll send the information from the check, but not the check itself, to request payment from your bank.

Point-of-sale debit card payments

You’ll swipe or insert your physical debit card into a retailer’s payment processing machine. When you enter your PIN, the transaction is authorized in real-time, then processed via ACH at the end of the day.

Online purchases (using debit card)

You’ll enter the numbers from your debit card in a payment form online. These transactions are settled at the end of the day.

What’s next? What you can do if you have a problem with an EFT.

Even though legislation is in place to protect consumers who may have issues with EFT payments, there are times where you could still run into problems with them. Your payment to a vendor could be misdirected, your direct deposit may not come as expected, or your information could be used by someone in a fraudulent transaction. These are common issues with EFT payments, and you have protections under federal law for some transactions.

Here’s what you can do if you notice anything out of the ordinary with your bank account or any EFT transactions.

• Monitor your accounts for strange or unfamiliar activity.
• Contact your bank right away if you notice an issue.
• For deposits, contact your employer or depositor to verify your deposit details.
• Transaction details like the date, time, payee and payment method will be useful in your research — make a note of them and keep them handy to settle disputes.
• Use this information to explain the problem to your bank (preferably in writing).
• Continue to follow up until the issue is resolved.
• If you’re not getting the help you need — especially in the case of fraud — contact consumer advocacy groups like your state attorney general’s office, the Consumer Financial Protection Bureau, the Better Business Bureau or the Federal Trade Commission’s Bureau of Consumer Protection.

There’s really no such thing as overdrafting a credit card.

This is because credit card issuers shouldn’t approve a card transaction that puts you over your limit unless you’ve specifically consented to over-the-limit charges.

You also wouldn’t usually use the term “overdraft” when it comes to spending more on your credit card than what you have in available credit; with credit cards, this is usually known as “going over your credit limit.” Overdrafting is the term you’d use if you spend more money than what’s available in your checking account.

But it’s still possible to go over your credit card limit if you’ve opted into some sort of over-the-limit program with your card issuer. Here’s what you should know.

What happens if I try to overdraft my credit card?

Declined transactions

In most cases, if a purchase is going to push you over your credit limit, your card transaction will be declined and you won’t have any additional fees or balance overages to deal with.

This is because of the Credit CARD Act of 2009. This law says card issuers can’t charge you any over-the-limit fees unless you’ve specifically consented to transactions that will take you over your limit in advance.

Overlimit fees

Your card issuer may offer you the ability to go over your credit limit with programs known as over-the-limit coverage or protection plans. If you opt into this kind of program, your card issuer can authorize card transactions that exceed your limit.

But these programs come with the potential for extra fees, so make sure you read the fine print. The first time you go over your limit, you can usually be charged a fee of up to $25. After that, the fee can go up to $35 if you go over your limit a second time within six months from the last time you exceeded your credit limit — although it won’t be more than the amount you spent over your limit.

This fee may not be a one-time thing, either. If your balance remains above your limit in the next billing cycle, you could be charged the over-the-limit fee again. And if you can’t pay the minimum payment, you could be hit with late fees. You may also face increased interest rates with a penalty APR if you go over your limit.

Potential credit impact

Another potential consequence of going over your credit card limit is a drop in your credit scores. This is because your credit scores factor in your credit utilization ratio, or how much of your available credit you’re using. Many experts recommend keeping your overall credit card utilization below 30% of your balance.

In other words, if you have $10,000 in available credit but you’ve borrowed $10,500, you could be seen as a credit risk because you’ve got a higher utilization ratio.

What should I do if I go over my credit card limit?

If you’ve opted into over-the-limit coverage, you might already see the impact of going over your card limit with additional fees on your statement.

Here’s what you can do in case you’ve spent over your credit limit.

Opt out of over-the-limit coverage

The first thing you can to do is turn off the over-the-limit coverage. You can request to opt out of the coverage, but it may require sending a written request. Let your credit card issuer know that you don’t authorize any additional transactions that will exceed your available credit.

Pay down the overage

Pay down your card balance until it’s below your credit limit again. This way, you won’t be continually hit with fees each billing cycle that your account balance remains above the limit.

Ask to increase your credit limit

If you’re concerned about going over the limit on your credit card, one longer-term option is to request a credit limit increase.

Some issuers will increase your credit card limit automatically from time to time, and you can also often request a credit limit increase with a quick phone call to your credit card issuer. Sometimes you can even request a credit limit increase online.

Just remember, if you need to request a credit limit increase — and are approved — make sure that you won’t feel tempted to meet that limit by spending more just because it’s there.

Stop using the card

If you’ve gone over your credit limit as a result of deeper financial issues, it may be a good idea to stop using the card and focus on paying down the debt. A budget can help you feel more in control of your finances and get a handle on your debts. Here’s how to make a budget.

Consider closing your account

If keeping the card open and trying to not to use it doesn’t work for you, you might want to consider closing your credit card account altogether. You’d still be responsible for paying your monthly minimum payments on time and in full and as agreed — and you can still be charged interest on the amount you owe — but you won’t be able to put new charges on the card.

The upside is that you’ll stop your balance from growing with new purchases. The downside is that closing a credit card could increase your credit utilization ratio, decrease your age of credit history and negatively impact your credit. But it might be worth it to take the hit if you’re battling unhealthy spending habits with your card.

Bottom line

If you’ve opted into a program with your card issuer that allows you to go over the limit with your credit card, it’s similar to overdrawing your bank account. With a credit card, you can be charged over-the-limit fees — and with your bank account, a negative balance means you can be charged overdraft fees.

If you do find yourself going over the limit and facing these fees, act quickly so you don’t end up owing more on your credit card than what you can comfortably afford to pay off.

The SBA is a government agency designed to support the growth and advancement of small businesses and entrepreneurs. The SBA provides resources to help small businesses start and grow their operations. It also has a loan program that connects small businesses with different financing options.

Over the years, the SBA has helped entrepreneurs all over the nation with loans, contracts, counseling and other types of assistance.

• What does the SBA do?
• How the SBA can help you start a business
• Growing your business with the SBA

What does the SBA do?

The SBA assists small businesses in four main areas: financing, education and training, government contracting, and providing a voice in policy matters. These programs are aimed at helping entrepreneurs start their businesses and keep them thriving.

Business financing

When small businesses need money, they can find information from the SBA on various funding options, including loans that are guaranteed by the SBA (the SBA’s backing can make loans easier to get, with more flexible lending requirements). The SBA aims to connect small businesses with affordable lending options that are suitable for different needs.

“When business owners are ready, they can access SBA’s LenderMatch at sba.gov/lendermatch, a free online referral tool that connects small businesses with participating SBA-approved lenders,” says Jessica Mayle, spokesperson for the SBA Illinois District.

Education and training

With an emphasis on technical assistance and specific support for planning, managing and growing your business, the SBA offers online courses as well as in-person consultations that can help strengthen a business owner’s entrepreneurial skills.

Government contracting

According to federal law, the government has a goal of giving 23% of contracting dollars to small businesses. The SBA helps to connect small-business owners with government contract opportunities, and offers guidance on how to win contracts.

Giving small businesses a voice

The SBA aims to give small businesses a voice in today’s marketplace through its Office of Advocacy. This arm of the agency does independent research on key areas of interest and speaks up for small businesses before Congress and other policymakers.

How the SBA can help you start a business

Have a business idea but don’t know where to start? The online and personal consulting resources offered by the SBA can help you put together a business plan. The SBA can also offer valuable tools for a strong launch.

1. Writing a business plan

Having a full business plan is a must if you’re going to try to get financing for your small business. A business plan can also help you map out future expansion opportunities and outline the development and financing you’ll need to make it all happen. The SBA has a course that walks you through a detailed business plan.

2. Data statistics and market research

From market research and competitive analysis to helping you calculate and scope out funding for your startup, SBA resources can assist you with the statistics and info you need to develop your idea and act on it.

3. Classifying a business and finding funding

Besides helping you decide which business structure to use, the SBA may be able to connect you with specialized funding opportunities depending on your situation too. There may be specific opportunities for veterans, women and minorities that the SBA can help you find.

Knowing which business structure to use and understanding all the funding options may influence how you finance your startup.

4. Tax resources

Your small business will likely have certain tax obligations to meet. State and local tax laws vary, and tax treatments differ according to business structure. The SBA can help connect you with info and advice on how federal and state taxes affect your particular business.

Growing your business with the SBA

The SBA is a valuable resource even for experienced business people, when they want to expand their businesses or make changes. If you’re an established small-business owner, here’s what you can find.

1. Learning center

The SBA has an online learning center with free courses that can help prepare you to take your business global, write government contract proposals and get insights into the needs of your customers.

2. Business analysis help

Knowing how your business compares with its competitors in your industry can help you build a long-term winning strategy. The SBA’s Analyze Your Business tool is designed to benchmark your business, help you map your customers, competitors and suppliers, and uncover opportunities for advancing your company.

3. Marketing

The SBA has info online to help you organize and map out a marketing strategy to grow your business. There are also courses in the learning center to boost your marketing know-how.

4. Local events

The SBA has many local district offices throughout the U.S. The agency also contributes funding to Small Business Development Centers, which are often hosted through universities and provide networking and training opportunities.

Next steps

If you run a small business or are planning to start one, the SBA’s support can give you a leg up. With district offices throughout the U.S., in addition to what you can access online, finding support from the SBA is easy.

By taking advantage of all the programs, training and resources, you can gain valuable insight to start and grow a successful small business.

Automatic bill payment can help you pay your bills on time with minimal effort, once you take the time to set up the payments with your financial institutions and service providers. That might sound appealing, but be careful — there are some pitfalls to watch out for.

Read on to learn more about the rewards — and risks — of using automatic bill payment.

• What is automatic bill payment?
• Pros and cons of automatic bill pay
• When is automatic bill payment a good idea?
• Tips for setting up automatic bill payment

What is automatic bill payment?

Automatic bill payments, once you set them up, allow you to transfer money from an account of yours — say a bank, credit union, or credit card — to a creditor, service provider or other vendor at a preset date, without having to initiate the payment yourself every time a bill is due.

You can set up an automatic bill payment as a “push,” meaning you originate a payment from your bank or other financial institution to a service provider. It can also work as a “pull,” where you authorize a vendor to draw from your financial account for an agreed amount when a bill comes due.

Automatic payments can usually be set for whatever cadence a bill is due — weekly, monthly, quarterly or even annually — though it may be risky to set automatic bill payments too far in the future. More on that later.

Pros and cons of automatic bill pay

Pros

• You can save money: Some lenders offer interest-rate reductions for customers who set up automatic payments.
• You won’t have to remember due dates for specific bills: Once you set up your payments, your bills will be paid at the predetermined time.
• You can avoid late payment penalties: By taking yourself out of the equation after automating payment, you also remove the risk of forgotten (and missed) payments. That’s good protection against service interruptions, fees or possible damage to your credit scores.

Cons

• You could overspend: If you forget about the automatic drafts from your financial accounts, your spending might push your account balance lower than the amount you need to cover your preset bill payments.
• You could get hit with fees: And if you don’t have enough money in your account to cover automatic payments, you could get hit with fees from both your financial institution and the vendor.
• You have to monitor your account balances: See above for what might happen if you don’t!

When is automatic bill payment a good idea?

As you can see, automatic bill payment can be helpful, but only if you’re organized and committed to monitoring your finances.

As long as your monthly expenses are consistently less than your income — for most of us that means a job that pays us more than we spend — automatic bill pay could work for you. But even if you’re confident about it, it’s best to start with one or two predictable bills that aren’t too large. Once you get used to that, you can try adding more bills until you find a system and level of automation that works for you.

Remember, automatic bill pay is not a license to totally check out on your finances. It’s just supposed to help you guard against missed payments and cut down on your worry and time spent on your finances.

It’s also important to remember that even with automatic payment set up and running smoothly, you should still check periodically for errors in your billing statements. Look for changes in prices and amounts billed, or unexpected one-time charges that can throw you off track.

What bills work well with automatic bill payment?

It’s best to use automatic payment for bills that come due relatively frequently, say weekly or monthly, and for a predictable amount. With bills like your mortgage, cellphone or internet service, you know what to expect every billing cycle, and you can set up your payments accordingly.

Infrequent bills, like an annual subscription or semiannual vehicle insurance premium, may not be the best candidates for automatic bill payment, because you’re likely to forget about them. If one of those bills hits your account when your balance is low, you may end up overdrawing your bank account and getting hit with a fee.

Automatic payments for accounts with different amounts due each billing cycle are usually best handled with a “pull” — that is, by authorizing a vendor to debit your account for the amount due. But beware — if you don’t know in advance how much you’ll be billed, you could end up worrying about overdrawing your account or having to check ahead of time how much you owe, which would undermine the main advantages of automatic bill payment.

Credit card bills present challenges when it comes to automatic bill pay, because you’ll want to cover at least the minimum amount due, but may or may not have enough money to pay more every month. One solution is to authorize a credit card to debit your bank account for the minimum amount due each billing cycle, and then make a manual payment for anything over the minimum you want to pay. This way, your automatic payment protects you from being charged any late fees or penalties, but you can still pay more than your minimum as your budget allows.

Tips for setting up automatic bill payment

Most financial institutions offer online bill pay these days, and many of them will allow you to set up recurring automatic payments. It’s usually a matter of navigating your bank’s or credit union’s website to the bill pay area and then following prompts.

If you want to set up automatic bill pay, have recent bills from service providers and creditors handy. When prompted, enter the appropriate account numbers, addresses, dates and amounts you want to pay. Once you’ve entered the information, and followed the appropriate prompts, your financial institution will send the money to the service provider each billing cycle.

Keep in mind, when you set up automatic bill payment through a vendor — the “pull” method — you’re authorizing a company to deduct money from your financial account. So make sure you verify the identity of the company and understand how its automatic bill payment system works. Some companies will require that you use a checking account to pay the bill. Others will allow you to pay with a credit card.

Bottom line

Automatic bill payments — once you take the time to set them up — can help you handle your bills with minimum effort and cut down the time you have to spend each month making sure you pay bills when due.

If you choose to use automatic bill pay, start with just a few bills to get used to the system, monitor your available cash to be sure it will cover your preset bill payments, and check your bills regularly for changes or mistakes.

If you’re a member, Credit Karma offers your free VantageScore 3.0® credit scores from Equifax and TransUnion. But what about your free Experian credit score?

If you’re looking for your Experian FICO® score, read on to learn where to find it as well as the difference between the VantageScore and FICO scoring models that lenders typically use.

• Where can I get my free Experian FICO scores?
• What about paying for my Experian credit scores?
• What is a good Experian FICO score?
• Will checking my scores hurt my credit?
• What are the different credit-scoring models?
• What factors make up my credit scores?

Where can I get my free Experian FICO scores?

Free options

Under the Fair Credit Reporting Act, you have the right to periodically get your credit report from each of the three major consumer credit bureaus for free. But under the FCRA, each of the bureaus is allowed to charge a reasonable fee for your scores.

With that in mind, here are some ways to access your FICO scores from Experian.

You have a few ways to get your credit scores for free. The Federal Trade Commission has information on getting your free credit reports from all three bureaus through annualcreditreport.com, but this won’t necessarily include your credit scores.

If you’d rather go through Experian directly for your credit report information, you could create an account to check your credit reports and credit scores for updates every 30 days when signing in free of charge through its CreditWorks℠ Basic service.

Another free alternative for checking your FICO score is freecreditscore.com. The Experian-owned and -operated service allows you to check your Experian credit report and FICO score, based on the FICO Score 8 model, every 30 days.

Your credit card issuer may also provide your credit scores for free, though which scores, if any, are displayed varies depending on which credit card company you use. For example, American Express and Discover offer TransUnion credit scores, and Chase offers credit monitoring to identify potential identity theft or other fraud.

What about paying for my Experian credit scores?

To view your FICO scores via Experian more than once a month, you can sign up for monitoring services like Experian CreditWorks℠ Premium. This paid service — which has a free 7-day trial and then costs $24.99 a month after that — allows you to see your FICO scores from the other two major credit bureaus and offers tools for better understanding your credit.

You can also access your FICO scores from Experian via myFICO.com for a monthly fee that ranges from $0 for its Basic plan to $39.95 for its Premier plan, depending on whether you want reports from all three main consumer credit bureaus or just from Experian. The plans also offer features such as credit monitoring and identify theft insurance.

What is a good Experian FICO score?

A good Experian FICO score is considered to be 670 or better when looking at the FICO 8 scoring model. The chart below shows the ranges of credit scores from poor to excellent.

It’s important to know your credit score and what a good credit score is because having a poor or fair Experian credit score could cost you — lenders may be reluctant to give you a loan or approve you for a credit card, or you may pay a higher interest rate than a borrower with a good credit score.

Image: crupdatescorerange-fico-2

Will checking my scores hurt my credit?

Generally, no. Checking your own credit is generally considered a soft inquiry, meaning it won’t have a negative impact on your credit.

Even so, you’ll want to check the specific language in the terms and conditions whenever you use another service to check your credit file for your credit scores or other credit information.

What are the different credit-scoring models?

VantageScore and FICO are companies that offer different credit-scoring models. Both are widely used in lending decisions, but they differ a little in how they calculate credit scores.

VantageScore and FICO use their scoring models to turn your credit reports into credit scores for each of the three main consumer credit bureaus — Equifax, Experian and TransUnion.

What factors make up my credit scores?

There are a few factors that make up your credit scores, whether you’re looking at FICO or VantageScore scores. It’s worth briefly covering these to help you better understand your credit scores.

• Payment history — Having a history of on-time payments is most important for credit scores and gives lenders an indication of how likely you are to pay back a loan.
• Credit usage or credit utilization — Credit utilization is how much of your total credit you’re using compared to the amount you’ve borrowed. Lenders might view a higher credit utilization rate as a sign you have too much debt to pay back a new loan or credit card balance.
• Length of credit history — A longer credit history may help your credit scores by demonstrating a history of more on-time payments.
• Credit mix and types — Having a mix of different types of credit can help show lenders you have experience with different types of loans.
• Recent credit — The number of hard inquiries on your credit reports can signal to lenders that you’ve been actively seeking credit and might be a riskier borrower.

Bottom line

Whether you choose a free or paid option to monitor your Experian FICO scores, it’s a good idea to review your credit reports and credit scores regularly.

For more information on VantageScore credit scores, read our articles explaining VantageScore 3.0 and the newer VantageScore 4.0. And if you’re interested in learning how to build credit over time, check out the Credit Karma Guide to Building Credit.

If you log in to your credit card account portal and see a negative balance, you may be alarmed. How did this happen? What does it mean?

Contrary to what you might think, having a negative balance on your credit card account, known as a credit balance, doesn’t necessarily mean that your available credit is reduced or that you’ve done something wrong. In fact, a negative balance on your credit card account could simply mean that your card issuer owes you money.

When you make a purchase on your credit card, the amount of that purchase is typically added to your credit card balance, which is how much you owe on that account at a given time. Paying off a credit card generally means bringing the account balance down to $0.

But what if your balance is -$10, or -$100? A negative balance on your credit card is potentially a sign that you’ve overpaid what you owe.

Other events that could cause a negative credit card balance include …

• A returned purchase
• A refund of certain credit card fees (annual fees, late fees, interest charges, etc.)
• A refund due to an erroneous or fraudulent charge
• A statement credit granted by the card issuer as part of a sign-up bonus or promotion

Greg Johnson, co-founder of Club Thrifty, explains that there are instances when you may be issued a statement credit, such as rewards card redemptions.

“Should you make a payment toward your balance, then claim a statement credit, you could end up with a negative balance,” he says.

Johnson illustrates how this might work: “Let’s say your outstanding balance is $500. You make a payment of $400; then claim a statement credit toward travel expenses of $300. You would then end up with a balance of -$200.”

In most of these situations, you have options for how to handle the resulting negative balance.

We’ll get to that. But first, let’s dive into some common questions associated with having a credit card with a negative balance.

Is my credit limit higher now that I have a negative balance?

“Overpaying does not mean you have a higher credit limit,” says Ashley Tufts-Freimuth, vice president of corporate affairs and communications at American Express.

“Your credit limit remains the same, but a card member would be able to spend more than the credit limit (by the amount of the overpayment) without exceeding their credit limit.”

Tufts singles out overpayments, but the same logic should apply if your negative balance resulted from a refund or a statement credit as well.

If your credit card balance is -$100 and your credit limit is $10,000, you can technically spend $10,100 on your credit card before exceeding your credit limit. (Most experts recommend keeping your credit card utilization below 30%, so treat this as purely hypothetical.)

Your credit limit is typically set by the issuer when you apply for your credit card. You can ask for a credit limit increase from the card issuer (which may or may not result in a hard credit inquiry), but don’t treat a negative balance as a de facto credit limit increase.

How do I bring my credit card balance back up to $0?

When you have a negative balance on your credit card account, you have a couple of options.

On one hand, you could do nothing and use your card as you normally would. As you charge purchases on your credit card, your credit balance will be applied to your new purchases, and the balance will gradually move toward $0 until you’re back at square one.

On the other hand, you could request the credited amount be disbursed to you in some form other than a statement credit. Other options available to you may include cash, check, money order or credit deposit.

You should know that banks and creditors are required to deal with negative balances in a specific way. For example, if your credit balance is more than one dollar, your creditor must handle the credit balance by …

• Crediting your account for the amount of the credit balance
• Refunding any part of the remaining credit balance within seven business days after receiving a written request from you
• Making a good-faith effort to refund the amount to you by cash, check or money order, or crediting your deposit account any part of the credit balance remaining in your account for more than six months

The creditor isn’t required to take any additional action if it doesn’t know your current location and can’t trace your location through your last-known address or telephone number.

Sandra Bernardo, a corporate communications leader at Experian, says you should still understand how your specific credit card issuer handles negative balances, as each issuer can have its own policies in addition to federal requirements.

“That’s one reason it’s so important to understand the contract you have with each of your creditors,” she says.

Bernardo continues, “The contract should explain how overpayment amounts will be treated — both while the account is open and … if you choose to close the account.”

Bottom line

A negative credit card balance is usually not a negative at all. In some cases, it’s actually more of a positive!

It could mean that you have some extra wiggle room when it comes to how much you can spend on your card.

As for your options, you may consider either using the statement credit on an upcoming purchase or requesting a refund from your card issuer. It’s probably worth reaching out to your credit card issuer for more insight if you’re confused about how the negative balance got there in the first place.

A federal appeals court recently struck down the fiduciary rule, an Obama-era rule that requires retirement account managers to put their clients’ interests above their own.

The U.S. Court of Appeals for the Fifth Circuit in New Orleans ruled to vacate this rule in March. In its opinion, the court concluded that the Department of Labor overstepped its regulatory authority by implementing the fiduciary rule.

According to Bloomberg Businessweek, the Trump administration has not yet appealed the ruling. And given the unlikelihood that the Trump administration, which directed the Department of Labor to examine the rule in February of 2017, will appeal it, the future of the fiduciary rule remains unclear for now — along with the future of investment adviser–client relationships.

What does this mean?

The fiduciary rule, or Fiduciary Duty Rule, is actually a package of seven rules issued by the DOL in 2016. It requires retirement account managers to put their clients’ interests first when advising them on retirement planning and related investments.

Since the fiduciary rule’s introduction, companies in the financial industry have moved to comply with the new rules. Merrill Lynch’s Investment Advisory Program, for example, has stopped charging clients commissions and moved to a fee-based model.

One of the goals of the fiduciary rule is to prevent unethical or exploitative financial recommendations that could negatively affect consumers.

Why should you care?

For the time being, while the Department of Labor examines the rule, your adviser is still expected to put your interests ahead of their own as spelled out in the Fiduciary Duty Rule. But depending on the outcome, that could change.

Despite the DOL’s examination of the rule, the Fifth Circuit judges said the case “is not moot,” since the rule has already “spawned significant market consequences” in areas of the brokerage and retirement investor industry.

With the fiduciary rule in limbo, the Securities and Exchange Commission has proposed a new package of rules — Regulation Best Interest — which claims to have similar goals as the fiduciary rule.

While it’s a good place to start, as the fiduciary rule is examined, the SEC-proposed regulation may not offer the same level of protection for consumers as the Department of Labor rule.

What can you do?

No matter the outcome of the fiduciary rule’s examination, one of the best courses of action may be to educate yourself — especially when it comes to understanding fees associated with your retirement accounts and other investment products you may be interested in.

Financial products can be complicated, and you should feel like you can ask your adviser how the products they’re offering work and how they’d receive compensation. If you’re not satisfied with their answers, consider working with a different adviser or another financial professional, such as a certified financial planner or a fee-only adviser.

Here are some other steps you might consider taking.

• Ask anyone handling your investments how their compensation structure works. If you’re satisfied with their answer, get it in writing, if possible.
• Consider taking your business elsewhere if you’re not confident that your investment broker or adviser is operating in your best interest.
• Keep your eyes peeled for new developments regarding both the fiduciary rule and the SEC’s Regulation Best Interest proposal.

The pathway toward retirement may be a lot more treacherous than older Americans would like to admit. And for many, one of the main culprits goes all the way back to the college years.

According to new data from the U.S. Department of Education, student loan debt for people aged 50 and older has risen precipitously over the past year. Between the second quarter of fiscal year 2017 and the first quarter of fiscal year 2018, Americans aged 50 and older saw their student loan bill increase by about $18 billion.

A report released in 2017 by the Consumer Financial Protection Bureau seems to confirm that older Americans’ student loan debt has increased at alarming rates over the last decade. It says that consumers aged 60 and older are the fastest growing age segment of the student loan market.

Putting two and two together, this means many people who should be thinking about their retirement plans may instead be contending with large amounts of student loan debt.

That sounds like a bad recipe for a happy retirement.

Why do so many older Americans have increasing student loan balances?

The growing student loan debt for older Americans may be related to a number of factors.

According to the CFPB’s 2017 report, older Americans have a host of financial responsibilities. For one, many older Americans carry other types of debt in addition to student loan debt, such as mortgages, auto loans and credit card debt. Dealing with debt in those categories can make it more difficult to focus on paying down student loan balances.

And make no mistake about it — older Americans don’t just carry student debt related to their own education. As the cost of going to college has skyrocketed, a growing number of parents (and grandparents, too) have taken on student loan debt to finance their children’s education.

Although not addressed in the CFPB report, there could be borrowers who simply enrolled in higher education later in life. This group may include those who return to school to further their education with an advanced degree or learn new skills for a career change. With potentially less time spent in the workforce to recoup the cost of that investment, they may struggle to pay off loans until much later in life.

So what?

The CFPB and other organizations have reported some alarming issues when it comes to older Americans carrying student loan debt.

The CFPB reports that among heads of household ages 50 to 59, those saddled with student loan debt have saved less for retirement than those without any outstanding student debt.

That may sound somewhat obvious, but it can have serious repercussions that extend beyond retirement. Older Americans who struggle to pay off student debt may also struggle to find the money for the most basic necessities.

For example, a recent survey by NORC at the University of Chicago and West Health Institute showed that baby boomers and Gen Xers would skip medical care because of the cost.

It seems clear that student loan debt isn’t just a siloed issue among a few older Americans. And it might not just affect those on the cusp of retirement (or already retired). It may also trickle down to affect those who become their caretakers later in life, such as adult children and grandchildren.

What can you do?

In light of what could be at stake, it might be a good time for families to come together and talk about how student loans can be handled better.

Here are some suggestions for getting the conversation started:

• If your parent or grandparent has taken out a student loan on your behalf, check in with them. This can help you find out how they’re faring with the payments.
• If you’re an older American with student debt, speak up. If you have outstanding loans because of your children or grandchildren, it’s OK to let someone know you might need help — either with payments or understanding your payment options.
• If you’re a parent, have the money conversation with your parent (or child) as soon as possible. Find out if the loan burden can be shared or if there are payment options that can help take the sting out of higher loan balances. After all, if someone’s financial security, well-being and quality of life are at stake, it’s better to be proactive.

Renting may present fewer hassles and commitments than buying, but it still costs millennials a huge chunk of their paycheck.

According to a new study by RentCafe, millennials shell out an average of $92,600 in total rent payments by the time they turn 30.

Citing U.S. Census data on total income and total rent paid for an eight-year period, the study found that millennials spend as much as 45% of their income on rent between the ages of 22 and 30.

That’s significantly more than what Baby Boomers (36%) and Gen Xers (41%) spent on rent relative to their income when they were the same age. (Interestingly, all three generations violate the decades-old rule-of-thumb that you shouldn’t spend more than 30% of your income on housing — perhaps a sign that the “rule” could benefit from a caveat or two.)

One potential explanation for millennials’ high rent burden is that they’re less likely to buy homes than previous generations.

Millennials grapple with financial factors that didn’t affect previous generations, including coming of age in a recession and higher student loan debt. This makes it difficult to afford a down payment for a mortgage.

Add that to millennials’ preference for living in cities — where rent and amenities tend to be more expensive — and you have the recipe for a huge rent burden.

What does this mean for you?

If you’re a millennial paying rent every month, you probably don’t need a study to understand the effects on your bank account.

Still, it’s worth examining the overall impact that high rent costs can have on a young person’s life.

The more income that rent takes up, the less money left over for saving, investing and paying off debt. That could translate to higher interest costs on your credit cards and student loans — not to mention a longer timeline for retirement.

Even today, we’re seeing the effects of a generation ill-prepared for retirement. As the Chicago Tribune reports, many Baby Boomers have scant retirement savings and plan to work long past the traditional retirement age of 65.

Why should you care?

Millennial or not, all renters could feel the pinch of rising rates in rents.

In fact, rising rents have zero regard for age or generation. Millennials may be paying more in rent over the course of their lifetimes than their generational forebears, but we’re also seeing a rise in the number intergenerational households. This trend began during the Great Recession, when adult children moved back in with their parents to make ends meet, and it doesn’t seem to be slowing down.

If rents continue to rise, more Baby Boomers may find themselves supporting their adult children. And that cycle could continue on into the next generation, as millennials struggle to reach financial milestones that help set their children up for future success.

The bottom line? Everyone may be affected by increased rent costs — though right now millennials are certainly feeling the brunt of it.

What can you do?

Perhaps the best course of action is to assess your current living situation. You may not be able to find cheaper housing, but you can take a few steps to minimize costs and set yourself up for a better future.

• Examine your spending. If you live in a city — as many millennials do — you may spend more than you can afford on “luxuries,” such as entertainment, dining out and Uber rides. Take an honest look at your budget and see what you might be able to cut out.
• Consider housing alternatives. Though this isn’t possible for everyone, some people may be able to save on rent by looking for housing in a more affordable neighborhood, finding a roommate (or two), or even moving in with their parents for a short period of time.
• Develop a plan for paying off debt. Paying off debt can seem like a huge task, but it’s easier when you break it down. Start by assessing the amount you owe, then dive into the details and make a repayment plan.
• Save in smaller ways. Saving and investing doesn’t have to feel like a burden. Apps such as Acorns let you invest your spare change by rounding up your purchases to the nearest dollar and depositing the difference into an investment account, all for a small fee.

Federal Reserve Board Chairman Jerome Powell announced Wednesday that the Fed would raise its key interest rate to the highest level in a decade. It’s a signal that the economy is strong, but how might this interest rate hike actually affect you and your hard-earned money?

Historically, interest rate hikes imposed by the Fed affect consumer finances in a number of ways.

While the Fed’s interest rate hike directly impacts banks, it could indirectly affect consumers by raising the cost of borrowing money. If you have a credit card, loan or adjustable-rate mortgage, you may see an increase in your interest rates. And if you plan to get a variable- or fixed-rate version of these products, you could face higher interest rates from the get-go.

The good news is that higher interest rates don’t just mean higher costs for consumers. If you have a savings account, certificate of deposit (CD), money market account or interest checking account, you may start to benefit from higher interest rates on those products.

What does this actually mean?

As of March 19, 2018, average interest rates for savings products such as CDs, money market accounts and interest checking accounts were still less than impressive.

The Federal Deposit Insurance Corporation, or FDIC, which is responsible for insuring funds in banks, compiles a list of the national average interest rates on the following products:

• Savings accounts: 0.07%
• Interest checking: 0.04%
• Money market: 0.10%
• 12-month CD: 0.33%
• 60-month CD: 0.97%

These rates are a far cry from the rates consumers enjoyed in the 1990s, when interest rates on CDs rose to a high of over 8% on a five-year CD!

While there’s not a direct relationship between the Fed rate hike and the interest rates on savings products, the former tends to affect the latter.

This doesn’t mean you should expect the interest rates for savings products to shoot back up to their early-1990s highs. But they could continue to creep upward — meaning any money you’ve placed in a high-yield savings account, CD or money market account could receive a higher rate of return.

Why should you care?

If you’ve been thinking about putting some money away in a savings product that earns interest, this could be a good time to do it.

As competition for deposits heats up, banks may begin to increase interest rates offered to customers in an effort to both keep pace with Fed rate hikes and attract more depositors.

Since the Fed began raising short-term interest rates in 2015 — the first time since the financial crisis — rates on savings accounts and CDs have increased, albeit slowly.

The average rate on 36-month CDs are up to 0.65% for deposits of less than $100,000. Before the rate hikes began in 2015, they hovered around 0.48%.

What can you do?

Higher interest rates are good for savers. Just a small change in interest rates can have a significant impact on savings balances.

Even if you don’t have a ton of money to save, there are a few ways you can position yourself to take advantage of better deposit rates.

• Switch to a high-yield savings account. Savings accounts at many of the larger banks just don’t stack up. Even after you factor in a slight increase in interest rates, you could be looking at an annual percentage yield below 1%. The good news is, there are better products out there! Consider a high-yield online savings account. The best ones currently offer APYs of 1.5% or higher, and they may get even better in the near future.
• Consider a CD. CDs tend to offer even higher rates than high-yield savings accounts and other savings products. With a CD, you can lock in your interest rate for a certain period of time; generally, the longer the period, the higher the interest rate. The downside is you typically won’t be able to withdraw your principal balance before the CD’s maturation date within incurring a penalty. If you have some money you know you won’t need in an emergency, a CD might be a great option to consider.
• Do your homework. Be proactive when it comes to researching banks, and be willing to change things up if you find a much better interest rate. Watch for future rate hikes and see if your banks’ offerings follow suit. Don’t be afraid to shop around, and be sure to take advantage of competitive savings offers as they pop up.