Guaranteed auto loans may seem like a good option if you have low credit scores, but these no-credit-check loans can actually cause you to spend a lot more on a car than you expected.

If you have good credit, you may find a lot of financing options available to you when shopping for a car. But if you have poor credit, a guaranteed auto loan may seem like the only way you’ll be able to purchase a car. This isn’t necessarily the case, though.

Before you sign a contract for a guaranteed auto loan, consider the drawbacks, including high interest rates, and explore other potential ways to get a better car-loan offer.

• What are guaranteed auto loans?
• What to watch out for with guaranteed auto loans
• Alternatives to guaranteed auto loans

What are guaranteed auto loans?

Maybe you’ve seen offers for “guaranteed” auto loans, or loans with no credit check, at some car dealerships while out looking for your new ride. (They may also be referred to as “buy-here, pay-here” loans.) No matter the name, these are auto loans financed by the dealership and offered to those with low credit scores or limited credit history.

Lenders typically consider your credit history, including your credit scores, to assess their risk in giving you a car loan.

In general, the better your credit scores, the lower your car loan interest rate could be. According to credit bureau Experian, in the second quarter of 2020 those with lower scores (known as subprime borrowers) paid an average interest rate of 11.33% on new cars, while those with higher scores (prime) paid an average interest rate of 4.21% on new cars. A high interest rate can drive up your car payments.

Unlike other lenders, many buy-here, pay-here dealerships don’t consider credit scores when qualifying you for a loan. Instead, they typically look at your income, employment history and proof of residence. You’ll also likely need to make a car down payment.

The dealership determines the loan amount you qualify for and then you can choose a car that falls within your loan range. After signing the loan agreement, you’ll make periodic payments (weekly, for example) in person at the dealership.

What to watch out for with guaranteed auto loans

If you’re considering a guaranteed or buy-here, pay-here auto loan, it’s important to understand the potential drawbacks.

High interest rates

Buy-here, pay-here loans tend to have much higher interest rates and fees than those offered by other lenders. These loans may carry interest rates up to the 20% range and may also require you to pay high fees.

Borrowing more than the car is worth

Lenders like banks and credit unions limit their loan amounts based on the value of the car you want to buy. When a dealership acts as a lender, it may loan you more money than the car is worth. This is more common with buy-here, pay-here dealerships. When this happens, you owe more on your loan than your car is worth as soon as you sign the paperwork and drive off the lot. This is commonly referred to as being upside down on your loan.

Building your credit

Buy-here, pay-here lenders may not report your payments to the major consumer credit-reporting agencies. That means that even if you make your payments on time each month, this loan probably won’t help you build your credit.

Getting the loan terms you think you’re getting

The lender might promise you a certain interest rate and financing, pending final approval, and let you take the car home. But then the lender might later tell you that the loan it previously promised you wasn’t approved, and you’ll have to pay a higher interest rate — all after you’ve already driven the car off the lot. To avoid this, don’t leave the dealership without finalizing the financing and signing paperwork — and make sure to read your loan terms thoroughly so that you’re not surprised later on down the line.

Alternatives to guaranteed auto loans

A guaranteed auto loan may not be your only option if your credit needs some work. Consider some alternatives that could lead to better loan offers.

Waiting to purchase a car until your credit improves

Continuing to drive your current car, borrowing a car from family or friends, carpooling or taking public transportation could give you some time to improve your credit and save for a car down payment. Paying your bills on time and reducing debt are two of the main ways you can help improve your credit. With higher credit scores and a down payment, you’ll likely receive more loan offers with a lower interest rate, so it just might be worthwhile to wait.

And while you’re waiting, it’s a good idea to monitor your general credit situation by checking your scores regularly.

Borrowing less or reducing your loan term

If you’re willing to consider a lower-priced car, you may be able to get approved more easily for a loan with better terms. The same goes for a shorter loan term. A longer loan term will likely give you a lower monthly payment, but you’ll pay interest for a longer amount of time, which means paying more in interest overall.

Shopping around

Lenders and dealerships aren’t required to offer you the best interest rates, so the only way to know if you’re getting the best deal available to you is to compare multiple offers. Shopping around may also allow you to find lenders offering reasonable loan terms to people with little or poor credit.

Finding a dealership with a special financing department

Some dealerships have a special finance department that specializes in getting customers with bad credit approved for car loans by working with a network of lenders. But like guaranteed or buy-here, pay-here loans, these loans also typically have high interest rates and may require a down payment.

Getting a co-signer

A co-signer with good credit could help increase your chances of loan approval and get you a lower interest rate. But getting a co-signer may not be easy. Co-signers take on substantial risk — they’re legally responsible for making payments on your loan if you can’t. Only get a co-signer if you think you’ll be able to keep up with your monthly payments — otherwise you could burn a bridge or put your co-signer’s credit in peril.

Bottom line

“Guaranteed” auto loans are an expensive financing option that can cause car buyers to pay thousands of dollars more than a car is worth, so consider them as a last resort. Shop around and investigate whether a shorter loan term or smaller loan amount could help you get approved for a car loan with a lower interest rate.

If you have no choice but to get a guaranteed auto loan right now, focus on improving your credit. Once you’ve built up your credit, you could take a look at refinancing your car loan to get a lower interest rate.

A car is likely one of the biggest purchases you’ll make. That’s why it’s important to understand exactly how much you’re paying for it and how that amount is determined.

When you get approved for a car loan, the lender will give you an amount of money that you pay back, with interest, over an agreed-upon period of time (typically three to seven years).

Your car loan payments are broken down into monthly installments, and the price of those installments is largely determined by your loan amount, interest rate and length of your loan term.

Let’s take a deeper look at how each factor can influence your monthly car loan payment, what ways you can potentially save money on your car loan and how to calculate your monthly payment.

1. Car loan amount
2. Interest rate
3. Loan term

1. Car loan amount

The amount of money you need to borrow can be determined by whether you still owe money on your current car, the purchase price of the vehicle you’re buying, the amount of your auto down payment and if you have a car you’re trading in.

If you still owe money on your current car, some lenders will let you roll over the balance into your new loan. But this can be a risky move, because when you do this you’ll likely become upside down on your car loan. When you’re upside down, your car’s market value is less than what you owe on your loan.

If you own your vehicle outright, trading in your current car can work for you.

If you plan to buy a new car from the dealership where you’re trading in your current vehicle, the dealer may give you a credit for your car’s trade-in value. Then you can apply that credit toward the cost of your new car.

And if you’ve sold your car to a dealership but don’t plan to buy there, you’ll typically get a check for the value of your trade-in that you can use as a down payment toward your new car purchase. Both the check or trade-in credit can bring down your loan amount and maybe even your monthly payment.

For example: If you want to buy a $25,000 car with no trade-in or down payment, excluding sales tax, your monthly payment on a five-year auto loan with a 5% interest rate would be around $472. But if you got a credit of $7,000 for your trade-in, your monthly payment would drop to about $340. That’s a savings of $132 per month.

If you want to drop your loan amount but don’t have a vehicle to trade in or you aren’t able to make a substantial down payment, try negotiating the car price at the dealership.

2. Interest rate

Your monthly car payment serves to pay down the loan’s principal, as well as interest and fees. The higher your interest rate, the higher your monthly payment will be.

Let’s say you’re able to get a lower interest rate of 4% on that five-year $25,000 loan. With no down payment (and excluding sales tax), your monthly payment would drop from $472 to $460 — a savings of $12 per month and $720 over the length of the loan.

But how can you qualify for lower rates?

Auto loan rates are determined by several factors, such as your credit, income, debts, loan amount and loan term.

Generally speaking, the better your credit, the lower your interest rate can be.

Lenders can also look at your debt and income. If you’re carrying too much debt, the lender may decide to charge you a higher interest rate (or require a shorter loan term or a larger down payment).

Here are a few ways you may be able to get a lower interest rate.

• Wait to build your credit before buying a car. Making on-time payments and reducing debt are two key ways to work on improving your credit.
• Shop around and compare offers. Car loans are available through dealerships, banks, credit unions and online lenders. Applying to get preapproved for a car loan from multiple lenders before you go to the dealership lets you compare the loan amounts you might be approved for, as well as estimated interest rate and loan terms, across lenders. Just be aware that a preapproval is not a guarantee that you’ll actually get the loan on those terms.
• Refinance down the road. If you improve your credit later on, you may want to consider refinancing your car loan to see if you can get a lower interest rate.

3. Loan term

With a shorter loan term, your monthly car loan payment will likely be higher — because you’ll pay off the loan balance with fewer monthly payments.

If you took out a $25,000 loan with a 4.5% interest rate and six-year term instead of a five-year term, you’d pay $69 more per month with the shorter loan term.

But keep in mind that, in this scenario, the extra 12 months of payments means another 12 months of interest, too. The additional interest would add about $608 to the total cost of your car.

In addition to paying more interest, you may also pay a higher interest rate with a longer loan term. Loans of six years or longer can have higher interest rates than shorter-term loans.

When deciding on what loan term length is right for you, consider your overall budget and financial situation. But if you want to save on the total amount you pay for your car, you may want to stick with a shorter loan term or opt for a less-expensive car.

How do you calculate a loan payment?

Your loan amount, interest rate and loan term are all used to calculate your monthly car loan payment. You can calculate your estimated monthly payment with an online auto loan calculator or by using an Excel formula.

1. Type the following formula into a cell: =PMT([interest rate as a decimal]/[12 for the number of months in a year], [number of months in your loan term], [loan amount plus any fees], [final value])

2. The resulting negative number is your estimated monthly loan payment. (Remember to remove the minus sign in front of the number.)

If sales tax isn’t included in your loan amount, remember to account for that cost, too.

What’s next?

Your monthly car loan payment is largely affected by your loan amount, interest rate and loan term. Your credit, debt and income can play a key role in determining your overall loan cost, so it’s important to know your current credit and take steps to improve it, if necessary.

Your monthly payment is an important factor to think about when you’re deciding if you want to purchase a car and take out a loan — but it’s not only the only consideration. The loan’s interest rate and terms can also have a significant impact on the total amount you end up paying for your car. And be sure to account for the other car ownership costs — beyond your car loan payment — as you establish your auto budget.

Many Americans don’t track where their money goes each month — but learning how to make a budget is easy.

Creating a budget can help you get out of credit card debt, build an emergency fund or even save to buy a house. Even if you don’t live paycheck to paycheck and you feel satisfied with everything you have, creating a budget can help you feel more in control of your personal finances.

The easiest way to start is by using a template, like this one from the Consumer Financial Protection Bureau. Follow these easy steps to learn more about how to budget.

Step 1: Add up your monthly income

Start with your take-home pay, which is your total salary or earned wages minus taxes, deductions for healthcare and retirement contributions. If you have any other regular, dependable income, add it in.

If you work part time or freelance, or otherwise have inconsistent income, it might be helpful to start with your expenses first, and then determine how much you have to work in order to reach your financial goals.

What is disposable income?

Disposable income is the amount that’s left over from your paycheck or other income after you’ve paid for taxes and any necessities, such as housing costs, utilities and food.

Step 2: Identify and categorize your expenses

When it comes to figuring out your expenses, you’ll want to categorize each item so that you have a good idea of what you might be able to tweak. You’ll probably know a lot of your regular expenses off the top of your head, but going through your bank account and credit card statements can help remind you of where else your money goes.

Start with your necessary fixed expenses — things like your mortgage, rent, utilities, car payments, and other debt like credit cards or student loans. These are considered fixed expenses because they’re unlikely to fluctuate from month to month, and reducing or eliminating any of them may be difficult or impossible.

Once you know what your fixed expenses are, you need to figure out your variable and “nice to have” expenses. Items like groceries, gas and entertainment are considered variable because they usually fluctuate from month to month and are areas where you probably have at least some flexibility to cut back in order to save. You can further split expenses into needs (like groceries) and wants (like a gym membership).

Since some of your expenses will be different depending on the month, it can be helpful to look at up to six months’ worth of expenses to get a sense of what your “normal” spending is.

Step 3: Get clear about your financial goals

Maybe your first priority is to stop living from one paycheck to the next, and to have at least a few extra dollars to spare at the end of each month. Or maybe you’re ready to work toward bigger things like retirement or buying a home. Think about your immediate goals and what you want to accomplish down the road — and write them down.

It’s OK if your goals change over time. The important takeaway is that being specific about what you want to accomplish — and keeping those goals top of mind — can help motivate you to stick with your budget.

Step 4: Do the math and plan ahead

This is the point where you start to fill out your budget template. Input your income and use the fixed and variable expenses you tracked to estimate what you’ll be spending in the coming months. How much money do you have left at the end of the month after covering those expenses? Ask yourself if it’s enough to save toward your goals.

If the answer is no, look for places where you can cut back. The best place to start is your “wants” category under variable expenses. If you go out to eat a lot, plan to cook at home more. If you like going to the movies, try streaming at home at least half the time. After identifying places where you can save, adjust the numbers in your budget template to see how it affects the bottom line.

If you still need more room in your budget, you might have to look at adjusting your fixed expenses by making major changes like moving to a less expensive living situation or refinancing your mortgage for a lower interest rate.

Step 5: Check in regularly and adjust

Scheduling a regular budget check-in with yourself can help keep you accountable and on track. For example, consider taking 30 minutes every Sunday morning to review your spending from the previous week and compare it with the spending you’re projecting for the month.

This will give you a chance to make any necessary adjustments each week if you’ve overspent on one item or another.

Next steps

Creating a budget can help you achieve your short- and long-term goals. It just takes a little time, a plan, and your own commitment to be in control of your financial present and future.

Plan your spending with our budget calculator

You can use our budget calculator to get a clearer picture of how much money you’re spending, what you’re spending it on and where you could improve.

Some people think banks just offer checking and savings accounts, but there are actually other types of bank accounts that financial institutions commonly offer.

There are lots of things you can do with your money: You could deposit all of it into a checking account so you can spend and make deposits easily and often; you could split your money among different types of accounts to earn interest or dividends from investments; or you could cash your paychecks and store your money under your mattress (we don’t recommend that last option).

Here are six common types of bank accounts and how to use them. Keep in mind that accounts can come with all sorts of fees, so be sure to read the fine print and do your homework before opening a new account.

• Bank accounts at a glance
• Checking accounts
• Savings accounts
• Money market accounts
• Certificates of deposit (CDs)
• Individual retirement arrangements (IRAs)
• Brokerage accounts

Bank accounts at a glance

Checking accounts

Checking accounts allow you to have easy, day-to-day access to the money you deposit into them. There are usually no minimum account balances required — you just have to keep enough money in your account to cover your purchases. This is important to avoid overdrawing your account. Overdrawing your account means that you’ve spent more than you have in the checking account, and your bank pays the full amount of your purchase. When you overdraw your account, you almost always have to pay fees.

Savings accounts

Savings accounts allow you to earn interest on the money you deposit. But as the name suggests, these accounts are meant for saving money. So there is a restriction on the number of certain types of withdrawals or transfers you can make in a month and usually a daily minimum balance requirement. Earning interest sounds great — who wouldn’t want to earn money just for having money? Keep in mind, though, that the interest your account earns is considered income and is therefore taxable.

Money market accounts

A money market account is a cross between a savings and checking account. Banks typically offer a higher interest rate on money market accounts than on savings accounts, and can also give you limited monthly access to your money via checks and a debit card. You can only make up to six withdrawals or transfers of a certain type from a money market account per month — and, fortunately, just like savings accounts, neither ATM nor in-person withdrawals or transfers count toward the six-withdrawal limit. The interest rate you earn can depend on the amount you have deposited.

Certificates of deposit (CDs)

Certificates of deposit can be a low-risk way to invest your money for a specified period of time at either a fixed or variable interest rate. CDs are considered low risk because if you get one with a fixed interest rate, you’re guaranteed to earn that percentage rate on your deposit until your CD matures. Typically, CDs with longer periods offer higher interest rates. That means a CD that matures in five years will typically earn interest at a higher rate than a CD maturing in two years. CDs are often attractive savings tools because they typically earn higher interest rates than a traditional savings account. One thing to keep in mind is that CDs have early withdrawal fees. If you withdraw money from the CD before it matures, the fees can be expensive.

Individual retirement arrangements (IRAs)

An individual retirement arrangement (also known as an individual retirement account) is a savings tool the IRS created as a way to give people an easy avenue to save for retirement. Contributions to IRAs are limited to $5,500 per year except if you are age 50 or older, at which point you can invest an additional $1,000 per year. Like other retirement accounts, such as a 401(k), deposits made into an IRA are intended to stay in the account until the account owner turns 59½ years of age. Early withdrawals typically trigger some sort of penalty.

There are two main types of IRAs: a Roth IRA and a traditional IRA.

Roth IRA

• Deposits are made after taxes and are not tax-deductible.
• There is no age limit on when you must start withdrawing the specified minimum amount from your account.

Traditional IRA

• Contributions can be tax deductible.
• Earnings are tax-deferred.
• Your withdrawals will be taxed.

You are not allowed to make contributions starting the year you reach age 70½ and must begin withdrawing the required minimum amounts shortly thereafter.

Brokerage accounts

Brokerage accounts give you another way to invest your money. With a brokerage account, you can invest in stocks and bonds. You can earn money buying stocks if you sell them at a price that’s higher than when you bought them. You can also earn dividend payments, which is when a company distributes some of its earnings to shareholders.

Brokerage accounts are considered higher risk because the value of your stocks can go down, meaning that you could lose money if you sell them at that lower price. But brokerage accounts also have the greatest potential to grow over the long haul. So if you want to earn the most you can with your money and you can afford to take the risk, a brokerage account might be right for you.

Bottom line

Most banks offer a variety of accounts where you can put your money. Different account types help you achieve different goals, so it’s important to be clear about your needs and which bank accounts meet those needs.

Two-factor authentication goes by many names, but the goal is always the same: to protect your data from being stolen.

The standard way to log in to accounts and devices is via a username and password. The problem with this kind of security is that people often use passwords that are easily guessed or the same few passwords for all of their online accounts. Two-factor authentication, also known as 2FA or multifactor authentication, adds an additional layer of security to your online accounts by requiring anyone logging in to have more than just your username and password.

• How does two-factor authentication work?
• Is two-factor authentication worth the hassle?
• Using two-factor authentication

How does two-factor authentication work?

If you have two-factor authentication enabled, your account will ask for two pieces of information in order to verify your identity. This information tends to fall into three general categories:

1. Something you know (a password or PIN)
2. Something you have (a physical device — like a card, smartphone or security token)
3. Something you “are” (biometric data — like a fingerprint)

In order for a successful 2FA, you must correctly provide information from at least two categories.

A common instance of 2FA is when you use your debit card at the ATM. You must insert your debit card (a physical device) and input your PIN. Another common use of 2FA is when a company sends you a text with a randomly generated code after you’ve entered your username and password, and then asks you to enter that code in order to access your account.

The reason your authentication comes from two different categories is that it’s unlikely a criminal would have access to more than one category. For instance, a thief might have stolen your debit card, but that person would also need your PIN to use it at an ATM. Or maybe criminals have stolen your passwords, but in order to access your accounts, they must also access your phone.

Is two-factor authentication worth the hassle?

Having to answer additional questions just to log in to an account might seem like an unnecessary hassle. But according to the FBI, it’s not uncommon for a criminal to get your passwords — and it may be even easier to access your accounts than you’d think. For example, if you use the names of your children, spouse or pet in your password, gaining access to your account might be as simple as looking through one of your social media profiles.

Once they gain access to your online accounts — like email, banking, healthcare and investments — cybercriminals can glean all sorts of information about you. They can steal your money, or worse, they can steal your identity. And with your identity, a thief could potentially open up credit cards, take on medical debt and even take out loans under your name.

They typically make no effort to pay these debts back, and you often won’t know it’s happened until you receive a phone call from a debt collector or you happen to notice something awry on your credit reports (reinforcing the importance of reviewing your reports periodically).

Fixing all of the problems associated with identity theft can cost you time, money and heartache. Two-factor authentication is an easy step to help prevent identity theft by making your accounts more secure.

Using two-factor authentication

Many apps and internet-accessible accounts that hold sensitive data already have a two-factor authentication feature available; you just have to turn it on. If you can’t figure out how to do that, or if you’re unsure this security feature is available, contact customer service for the account or app.

Bottom line

Cybercriminals have become increasingly clever in their attempts to steal people’s data and identities, but using a two-step verification system can help thwart those efforts. And many sensitive accounts have a two-factor authentication feature already available. These apps make it easy for you to access your data and protect it at the same time.

It doesn’t matter if you’re newlyweds creating your first budget or a retiree trying to make your money last — solid financial advice from a professional can be a big help in reaching your financial goals.

But you need to know what those goals are — and do some homework — if you want to choose the right financial adviser for you. As you begin searching for someone to trust with your finances, you’ll want to have some questions in mind.

1. What are my financial goals?
2. Can I get by with a robo-adviser?
3. Which advisers specialize in what I need?
4. How do I know I can trust an adviser?

What are my financial goals?

Before choosing a financial adviser, it’s important to think about what you want to achieve and the kind of help you want getting there.

Do you want to buy a house? Save for your kids’ education? Maybe you’re looking for a way to get out of debt or make money by investing. Or you could be thinking that it’s time to get serious about your golden years. Whatever your goals, there are advisers who can help you with different aspects of your financial life, including your savings, investments, insurance, taxes, retirement and estate planning, whereas others might have a more narrow focus.

Once you know your financial goals, you can start trying to match them with the right help.

Can I get by with a robo-adviser?

If you already have a budget that you’re sticking to — and if your money issues aren’t too complicated — you might not need a human financial adviser.

A robo-adviser is an online service that gives you automated investment advice based on information that you provide about yourself and your financial situation. You typically answer a list of questions about things like your how much risk you’re willing to take, your age, your income and your financial goals, and then the robo-adviser uses a built-in algorithm to set up a plan and investments for you.

Robo-advisers are typically a lower-cost alternative to human financial advisers, but they’re often limited in what they can do. If you require more hand-holding or have specialized needs like estate or tax planning, you might want to go the traditional route.

Which advisers specialize in what I need?

Whether someone you know recommends a particular adviser or you find one online, it’s important to do some research before reaching out to them. You’ll want to look closely at the range of services they provide and their backgrounds to ensure that they can offer what you need.

Starting your research

If the adviser you’re considering works for a firm, you can begin by going to that company’s website and looking at its list of services. If the website doesn’t offer enough information, consider reaching out to request a brochure. Do they offer services that match up with your goals and concerns?

You can also read the profiles of individual advisers on a firm’s website. Look for their education, past employment and certifications. Certifications can be important because anyone can call themselves a financial planner, but only some have the education or training required by certain certifications, which could be an indication that the planner is at least capable of offering financial advice.

Understanding credentials

Keep in mind that some certifications require more education, experience and knowledge than others. A Certified Financial Planner, for example, in particular is held to high ethical and continuing education standards. Also, CFPs must have a bachelor’s degree and complete extensive training to help them understand the complex financial landscape and help you address the issues you might be facing.

Some financial advisers might look like they have an alphabet soup of credentials after their name. You should be aware that there are many dozens of certifications that advisers can claim to have — and some of them might not mean much. One thing you can do to cut through the clutter is look for financial advisers with certifications that are accredited. That means those certifications are recognized by certain standard-setting institutions. Here are a few.

• Accredited Financial Counselor (AFC)
• Certified Financial Planner (CFP)
• Certified Investment Management Analyst (CIMA)
• Certified Retirement Counselor (CRC)
• Certified Retirement Financial Advisor (CRFA)
• Certified Senior Advisor (CSA)
• Chartered Financial Analyst (CFA)
• Master Registered Financial Consultant (MRFC)

Another thing you might want to look for is membership with the National Association of Personal Financial Advisors. To be a member of NAPFA, an adviser has to be a CFP and hold a bachelor’s degree (one of the CFP requirements). NAPFA members are “fee-only” advisers, meaning they get paid for their service to you, and not for selling you products.

Keep in mind that certifications, accreditations and memberships can be an indication of education or specialization, but they shouldn’t be all you go by to choose the right financial adviser for you. Make sure to do your research and talk to your adviser in person about how you’d like them to work for you.

How do I know I can trust an adviser?

Even if your financial adviser is not actively managing your money, they will have access to your sensitive financial information and will be giving you advice that could shape your financial future. You need to know that you can trust your financial adviser with both.

Before you meet with a potential adviser, there are ways to check if there’s some obvious reason to question their trustworthiness. Here are a few tips.

Do some sleuthing

The Financial Industry Regulatory Authority, which regulates investment broker-dealers, has a FINRA Disciplinary Actions Online search tool to see if the person or firm you’re considering has been in some kind of trouble recently.

You can also use BrokerCheck, another free tool from FINRA, to research the professional backgrounds of brokers and brokerage firms, as well as investment advisers. BrokerCheck includes info from both FINRA and the SEC (U.S. Securities and Exchange Commission). Note that investment adviers getting paid to give advice about investing in securities is required to register with the SEC or with state regulators. If you can’t tell whether or not the company is registered with the SEC or state regulator by its website or brochure, make sure to ask the question during your in-person interview or contact your state regulator to find out.

If an adviser claims to be a CFP, you can visit the website for the Certified Financial Planner Board of Standards to double-check and make sure they don’t have a disciplinary history with the board.

Meet your adviser — and ask the right questions

Once you’ve done the homework of investigating an adviser or firm and their qualifications, a good next step is setting up a meeting and asking some key questions.

NAPFA has a Financial Adviser Comparison Tool to help with this. It provides a list of in-depth questions that you can use along with an “answer key” to help evaluate the adviser’s responses. Be sure to take notes during your meeting — or send the questionnaire to the adviser and ask if they’ll fill it out for you. The questions can help dig up some important info, including …

• How well an adviser can serve your particular needs
• The adviser’s background, including education and compliance with industry regulations
• How the adviser and firm are paid

Beware the free lunch

Be wary of any freebies the adviser offers you, like lunch or golf outings, and think twice before attending retirement and senior seminars advertised as a workshop or educational presentation. Some advisers may try to offer incentives in order to manipulate you into giving them your business, and some firms put on so-called “educational seminars” in order to sell people investments they don’t understand.

Bottom line

The right financial adviser for you is the person who offers the services you need, has the right background and training for your needs and, above all, is someone you trust. The decisions you make around how you manage your money can affect the rest of your life, so it’s important to do your research and stay informed.

A primary goal of the Federal Deposit Insurance Corporation, or FDIC, is to make sure you feel comfortable depositing your money in a bank.

When you deposit money into a savings or checking account, you want to trust that those funds will still be there when you need to use them. During the financial crises of the late 19th and early 20th centuries — before the 1933 formation of the FDIC — depositors could lose their money if banks and thrifts failed.

What is a thrift?

A thrift is a financial institution that often specializes in home mortgages and consumer loans but can also offer the same array of financial products as commercial banks. Also called savings and loan associations, thrifts can offer familiar financial products like savings accounts, time deposits, and consumer and commercial loans.

Unlike banks, thrifts can face statutory lending limits that can limit their lending capacity. Thrifts have become increasingly uncommon in recent decades.

Read on for a look at how the FDIC works, a brief history of the agency, and why it could matter to you.

• How does the FDIC work?
• A brief history of the FDIC
• Why is the FDIC important?

How does the FDIC work?

The FDIC promotes confidence in the banking system by insuring deposits in financial institutions and then monitoring those financial institutions to ensure their behavior isn’t too risky. If an FDIC-insured institution fails, then the FDIC steps in to protect insured funds.

When a failure occurs, the FDIC takes one of two steps. The first option is to set up the insured accounts with a new bank or thrift in the same amount that was insured at the failed bank. For the second option, the FDIC will issue the depositor a check for the insured amount to reimburse the depositor directly, up to a limit of $250,000 per covered account.

The account holder should receive the new account or payment covering the insured accounts within a few days after the financial institution closes, usually the next business day. But if the account’s balance is more than the insured amount of $250,000 or the account holder otherwise has uninsured funds, then the account holder may receive some portion of the uninsured funds if the FDIC finds a buyer for the bank’s assets.

Unfortunately, it can take several years to sell the assets of a failed bank, and there’s no guarantee of how much a depositor will receive after the fact. If you have more than $250,000 with a single FDIC-insured bank, a way to help guard against losing part of your money during a bank failure is to hold no more than $250,000 in any single insured account category. Take a look at the FDIC account category tool for a breakdown of covered categories.

Banks and thrifts are required to pay risk-based insurance premiums to the FDIC and the FDIC commonly conducts examinations of banks and thrifts. The monitoring that these banks undergo makes it more difficult to engage in risky behavior, which means fewer banks fail while under FDIC protection.

What kinds of accounts are FDIC-insured?

The FDIC does not insure every type of financial account you can open at a bank. This table can be helpful to determine which types of deposits are covered at FDIC-insured banks, and which aren’t.

Don’t worry if this list seems complicated. Just make sure you’re clear on which of your current accounts are insured, and pay attention in the future if you choose to open more.

How to find out if a bank is insured

The good news is that it shouldn’t take much digging to find out if your bank is insured. If your bank or credit union is FDIC insured, you can typically find an “FDIC” sticker near the front entrance or teller counter.

If you can’t go into the bank’s physical location, or just can’t track down that sticker, you can always call the bank and ask. Another option is to call the FDIC at 1-877-275-3342 or use its online BankFind tool.

A brief history of the FDIC

Before FDIC protection, depositors risked serious losses in the event of bank failure. In fact, according to the FDIC, between 1930 and 1933, depositors lost a total of about $1.3 billion — around $24.5 billion in today’s dollars — as the result of bank failures.

In response, Congress created an independent agency to supervise and insure banks and thrifts with the goal of bringing some security to the rollercoaster that was the U.S. banking system. FDIC insurance coverage began on Jan. 1, 1934, and no depositor has lost a cent of insured funds as result of a bank failure since.

While much that the FDIC does goes unnoticed, the agency played conspicuous roles during the savings and loan (S&L) crisis of the 1980s and the financial crisis of 2008.

The savings and loan crisis

Mostly used for savings accounts and home mortgages, S&Ls were previously regulated by an organization called the Federal Home Loan Bank Board and insured by the Federal Savings and Loan Insurance Corporation.

As such, S&Ls weren’t subjected to the same regulations as commercial banks, a situation that may have been a factor that led to a crisis in 1980, when S&Ls began losing money because of a number of factors, including traditionally weaker oversight from the Federal Home Loan Bank Board, changes in the industry and rising interest rates.

By 1983, the tangible net worth of the entire S&L industry was almost zero. In 1989, President Bush proposed a bailout of the S&L industry, which terminated the Federal Home Loan Bank Board and gave the FDIC authority over deposit insurance.

The 2008 financial crisis

With the entire financial system at risk of collapse during the 2008 financial crisis — the origins of which can be traced back to the housing market and weakened subprime-mortgage-lending practices — the FDIC was tasked with a number of different, but intersecting, challenges.

On one hand, the FDIC was charged with restoring financial stability by reimbursing depositors at failed insured banks. Additionally, the FDIC decided to increase payments from institutions to manage the Deposit Insurance Fund to help ensure that it too could remain intact. These efforts arguably helped to stabilize the banking system and limit some of the impact of the crisis.

Why is the FDIC important?

When you deposit money, many banks don’t actually hold on to your cash until you decide you want a latte. It may use your deposit to make loans and other investments that can, in turn, make the bank money.

This system can be great for the bank and theoretically makes no difference to you — until, that is, the bank makes some bad investments and loses enough money that it can’t afford to give depositors their money back when they go to withdraw their funds.

FDIC-insured banks are monitored and examined to ensure they are managing risk appropriately and avoiding behavior that could put depositors’ money at risk. In the event that an FDIC-insured bank suffers a disastrous event — like many did when risky lending led to the widespread collapse of financial institutions in 2008 — the FDIC can step in and help out. Effectively, the FDIC uses its funds — held in the DIF, or Deposit Insurance Fund — to help ensure that depositors don’t lose theirs.

But if the bank isn’t insured, there probably isn’t an established safety net. So if an uninsured bank fails, that cash will likely only be available on a first-come, first-serve basis and there’s little chance you’ll see more than a fraction of it back. Making sure your bank is FDIC-insured can help protect your money.

FDIC insurance doesn’t protect against all problems you might have with a bank, but it at least keeps you from losing the insured money you entrusted to it in the first place, as long as the bank is insured.

Bottom line

The Federal Deposit Insurance Corporation protects depositors’ insured money and helps to keep the financial system running as a whole. The best evidence of the agency’s effectiveness is its record — no depositor has lost a penny of their insured deposits since the FDIC was formed in 1933.

If you want to maximize your chances of keeping your money safe, you should look for a bank and account insured by the FDIC.

Reverse mortgages can be a way to keep seniors in their homes.

Whether it’s the familiar environment, the surrounding community or the sentimental value of the home itself, many reasons contribute to seniors wanting to stay in their homes for as long as possible. A reverse mortgage can help them do that.

Reverse mortgages are loans that allow seniors to tap into the home equity they’ve built without having to sell their property. And unlike traditional loans, where you make monthly payments against the principal and interest, with a reverse mortgage you only repay the principal and interest once you sell or move permanently from the home.

• Reverse mortgage basics
• What kinds of reverse mortgages are out there?
• Important questions to ask yourself before signing on a reverse mortgage
• Reverse mortgage alternatives

Reverse mortgage basics

If you’ve lived in your home a long time, it’s likely that its value has gone up and you’ve been able to pay down (or off) your mortgage. If this is the case, you probably own a large percentage if not all of your home. The current market value of your home minus what you still owe on the home (if anything) is called your equity.

To find out how much equity you have in your home, subtract the remaining balance of your mortgage (the amount you still owe to the lender) from your home’s current value. For example, if your home is worth $100,000 and you only owe $20,000 on your mortgage, your home equity is $80,000.

Here are two common ways you can borrow against this equity: home equity loans and reverse mortgages. In order for you to get a home equity loan, lenders often require you have a steady source of income so that you’ll be able to make monthly payments. Since many seniors are retired and on a limited budget, they may not qualify. That’s where a reverse mortgage comes in.

To qualify for a home equity conversion mortgage, the most common type of reverse mortgage, you must be at least 62 years old and either own your home outright or have a mortgage with a low balance, along with meeting a number of other requirements, like the home being your principal residence and remaining so. You also have to be able to continue to pay property taxes and homeowners insurance on the home and meet with a HUD-approved counselor.

There are a few ways you can take the loan, including as one lump sum up front, as a line of credit that you draw on as needed until you’ve used up the line of credit, or as regular monthly payments.

Reverse mortgages usually have variable interest rates, but home equity conversion mortgages can offer fixed rates. The interest is not tax deductible until the loan is paid off at least partially, and unlike a traditional loan, you don’t make any monthly principal or interest payments to the lender while you live in the home. Instead, you are responsible for repaying the loan once you move permanently or sell the home. Or your estate can settle the loan once you pass away.

This all sounds pretty good, right? Just keep in mind that while you’re not responsible for paying principal or interest on a monthly basis, you are responsible for keeping current with your property taxes, homeowners insurance and property maintenance. Failure to do so could put you in default of your reverse mortgage, and the lender could foreclose on your home.

Now that we’ve got the basics down, let’s dig into the details.

What kinds of reverse mortgages are out there?

There are three kinds of reverse mortgages: single-purpose, proprietary and home equity conversion mortgage.

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Single-purpose reverse mortgage

If you need money for a specific purpose, like a home improvement, a single-purpose reverse mortgage might be a good option for you. These loans are offered by some nonprofits and state and local government agencies to enable borrowers to do things such as maintain their properties, make medically necessary home improvements like wheelchair ramps, or pay their property taxes. The caveat is that you must use the loan only for its intended purpose that the lender specifies.

Single-purpose reverse mortgages tend to cost less than other reverse mortgage options, but they are also the most elusive as they’re only available through certain state and local government agencies and nonprofits. Contact local senior citizen resources, like an Area Agency on Aging, to see if they have any information about single-purpose reverse mortgages available in your area.

Proprietary reverse mortgage

A proprietary reverse mortgage is a private loan made by a company. Generally, it can be used for any purpose. Since it’s a private loan, it’s not subject to the same dollar restrictions as you see with home equity conversion mortgages, but you may pay more for it. That could mean a higher loan amount if you have a high-value home.

One of the downsides of proprietary reverse mortgages is that they tend to have higher fees. The more you borrow, the higher those fees can be. Also, keep in mind that the loan terms vary from lender to lender. So shop around and compare different loan amounts, costs and terms. And even if the lenders don’t require you to see a financial counselor, it’s probably a good idea to have a neutral third party explain the benefits and total annual costs of each option.

Home equity conversion mortgages

Home equity conversion mortgages, or HECMs, are reverse mortgages insured by the federal government and backed by the Department of Housing and Urban Development. The loans can be used for any purpose and often have lower costs than proprietary reverse mortgages. But because these are federally insured loans, the requirements can be stricter and more streamlined.

Here are some of the HECM eligibility qualifications.

• The borrower must be 62 years or older
• Your home must be your principal residence
• Your home must be a single-family residence, HUD-approved condo project, manufactured house that meets FHA requirements, or a two- to four-unit building where you occupy one unit
• You own your home outright or have a low enough mortgage balance that you can pay it off with the loan proceeds
• You have the financial means to continue paying for your property taxes, homeowners insurance, repairs and maintenance on your home, and homeowners association fees, if applicable
• You’re not delinquent on any federal debt
• You must visit a federally approved financial counselor, who will explain the HECM process, requirements, costs and loan alternatives to you

Your loan amount is based on the age of the youngest borrower (or eligible nonborrowing spouse), your home’s value (or the maximum claim amount or sales price, whichever is less), and the interest rate. Generally, being older and having more equity in your home means you can borrow more money. Regardless of your home’s value though, the maximum amount you can borrow with an HECM is $679,650. But even if your home is worth $679,650, you won’t necessarily qualify for the full amount.

Important questions to ask yourself before signing on a reverse mortgage

Reverse mortgages are complicated contracts that can have dire implications for your future if you don’t plan appropriately. You need to consider the total cost of the loan, how well it solves the issues you face, what will happen if property values fall and you end up owing more than your home is worth and a host of other questions. A financial counselor can help explain the details of your loan so that you can make the best decision.

What are the costs?

Before choosing a reverse mortgage, ask for a detailed schedule of the total costs associated with the loan, with a breakdown of which fees will be collected upfront and which will be collected throughout the term of the loan. Here’s an idea of what you can expect for HECMs.

• Mortgage insurance premium — This is to pay for FHA mortgage insurance. You will be charged an initial MIP at closing equal to 2% of the loan amount. Then you will be charged 0.5% of the outstanding loan amount annually. The cost of MIP is usually consistent among lenders.
• Third-party costs — To determine your home’s value (and by extension, your equity), your lender may require you to get, and pay for, an appraisal. It could also require you to pay for a title search, insurance, surveys, inspections, mortgage taxes, recording fees and more. Third-party costs and requirements can differ between lenders, so make sure to compare your options.
• Origination fee — The lender will charge you an origination fee for processing the loan. The origination fee can be the greater of $2,500 or 2% of the first $200,000 of your home’s value, plus 1% of the amount over $200,000. That means if your house is worth $300,000, the lender can charge you $4,000 on the first $200,000 of value + $1,000 on the remaining $100,000, to equal a $5,000 origination fee.Origination fees can differ between lenders and are often negotiable, so if two loans look similar in cost, you might try asking if either lender will lower their fee in order to get your business. And you should know that HECM origination fees are currently capped at $6,000.
• Servicing fees — Lenders can charge a maximum servicing fee of $30 per month for fixed-interest-rate loans and loans that have interest rates adjusting annually. For loans that have interest rates adjusting monthly, lenders can charge a maximum of $35 per month.
• Property taxes and insurance — If your lender determines that you don’t have the financial ability to pay for your property taxes and insurance, it can require you to set aside a certain amount of your loan to make these payments as part of the loan. That means you would pay interest on the money you use to make property taxes and homeowners insurance premiums, and the cost of these payments will be deducted from the funds you get disbursed.

What problem is this loan intended to solve?

If you plan to live out your life in your current home and want a reverse mortgage to provide cash for living expenses, then you might want to make a budget. Ask yourself some important questions.

• What are your current living expenses? In addition to things like groceries, make sure to include medical costs, property taxes, homeowners insurance and HOA fees in this calculation.
• What condition is your home in? Will you need to pay for major repairs in the near future or long term? If so, get an estimate of what those might cost. Maintaining your property will be part of your reverse mortgage agreement, so you want to make sure you will have enough money to make repairs and keep things like your plumbing and electrical systems up to date.
• Do you have an emergency fund for unplanned expenses, like natural disasters and unforeseen medical expenses?
• When you take the total loan amount less loan expenses, how much are you left with?
• How long will that last? Some loans disbursement options offer a regular monthly payment for as long as you live in your home, regardless of the total balance. Others will give you a finite dollar amount that you can take as a lump sum, line of credit or regular monthly payments until the entire loan has been disbursed.

If you plan to move to an assisted living or other medical facility once you can no longer live alone, you’ll want to make sure you’ll have enough funds to pay for your new living arrangements. That means one of two things. Either your reverse mortgage leaves you with enough home equity that you can sell your home, pay off your loan and pay for your new living arrangements or your up-front disbursement is large enough to last through that transition and you’ll have enough money in the bank to pay the loan back.

What if the loan amount exceeds your home’s value?

HECM loans insured by the FHA are nonrecourse, meaning if your total loan obligation exceeds your home’s value when it’s sold, you or your estate is only required to pay 95% of the current appraised value of your home. The FHA insurance will cover the rest.

The terms of proprietary reverse mortgages vary, so if you are going to sign up for one of these, make sure you understand what you or your estate will be responsible for if the loan amount grows larger than your home’s value.

What will you leave to your heirs?

A reverse mortgage must be paid back once the last borrower passes away or permanently moves from the home. That means that if you were intending to leave your home to your children or grandchildren, they will have to pay off the balance of your loan in order to keep the house. If they can’t afford to pay off the loan balance, they will have to sell the house, and when they do your home’s value might not be high enough to cover the cost of the loan and leave them an inheritance in the form of cash. If the reverse mortgage is an FHA-insured HECM, and the balance of the loan is more than the home’s worth, they’ll only have to pay 95% of the home’s current appraised value.

Reverse mortgage alternatives

If you want to stay in your home but you can’t afford to, and the costs associated with reverse mortgages are too onerous, there are a few other options you can consider. One option is a sale-leaseback. A sale-leaseback is when an investor buys your home and agrees to lease it back to you in the form of a long-term lease for an agreed-upon rent. This can allow you to continue living in the home but also gives you access to cash from the home’s purchase.

An alternative to the traditional sale-leaseback is to have your children purchase your home if they are able and rent it back to you. If your children have steady income, they may qualify for a traditional mortgage, and by pooling their financial resources they might be able to come up with the required down payment and closing costs. This arrangement doesn’t work for every family, but it is a possible solution.

Other options include selling your house and downsizing into a smaller, more affordable property. Or you could also try refinancing to lower your mortgage payments.

Bottom line

Reverse mortgages are a tool through which seniors can extract cash from the home equity they’ve built without having to sell their property outright. But they’re expensive and complicated financial contracts and should be entered into with care. Make sure you discuss what it means to get a reverse mortgage fully with whoever is involved. If you’re considering a reverse mortgage, it’s a good idea to meet with an independent reverse mortgage counselor to go over the contract and costs in detail.

A cash advance is a short-term loan you borrow against the available balance on your credit card.

While a cash advance seems both quick and easy, it can also be expensive — so you should think carefully about whether you really need to spend the money and if a cash advance is the best option for you.

• How does a cash advance work?
• Cash advance terms and fees
• How a cash advance could affect your credit
• Alternatives to a cash advance
• What the experts say about credit card cash advances

How does a cash advance work?

With a cash advance, you’re essentially using the available balance on your credit card to take out a short-term loan. Instead of borrowing money to buy a good or service with your credit card, you’re borrowing cash against your credit limit. Unfortunately, credit card companies don’t treat these two types of transactions the same.

If you buy a good or service with your credit card, the credit card company will charge you the purchase interest rate stated in your contract, usually listed as the purchase APR, or annual percentage rate. And if your card offers a grace period, you won’t start accruing interest on that purchase until your payment is due. That means that as long as your card has a grace period and you pay your balance in full and on time each month, you might never have to pay interest on your purchases.

Cash advances work a little differently though — grace periods typically don’t apply. You’ll start accruing interest on the advanced amount as soon as you take the money out, and your credit card company will likely charge you a higher interest rate for cash advances than it does for normal purchases, plus a processing fee.

The difference between a personal loan and a cash advance

Though a cash advance can work in an emergency, a personal loan could be a cheaper option.

A personal loan allows you to borrow a fixed amount of money that you pay back in installments over a specific period of time. This can help you stick to a budget and get out of debt.

And, often, personal loans have lower interest rates than credit cards.

According to Federal Reserve data for August 2024, the average APR across all credit card accounts was 21.76%. And cash advances from banks and card issuers typically charge much higher rates than that. On the other hand, for the same period of 2024, Fed data show that the average APR for a 24-month personal loan was 12.33%.

If you’re looking for fast cash, fees are also worth considering. While you’re typically charged a transaction fee for taking out a cash advance, some personal loans don’t come with fees.

Personal loan amounts vary among lenders but can range from $1,500 up to $100,000. With a secured personal loan, a borrower provides collateral — like a car, for example — that the bank can take if that borrower defaults on the loan. Unsecured loans, on the other hand, don’t require any collateral. Though borrowers with strong credit are more likely to qualify, lenders often view unsecured loans as riskier — and typically charge higher rates for them.

Cash advance terms and fees

Between fees and higher interest rates, cash advances can be costly.

Card issuers typically charge a fee if you use your credit card for a cash advance. This can either be a flat fee per cash advance or a percentage of the loan amount. Depending on the lender, this transaction fee can be as high as 5% of the advance or $10, whichever is greater. For example, if you take out $500 as a cash advance on a card with a 5% cash advance fee, you’ll be charged $25 on top of the $500 loan.

When you use a credit card for a purchase, most lenders give you a grace period to repay the balance before interest starts to accrue. But most credit cards don’t have a grace period for cash advances. Instead, interest charges start accruing as soon as you borrow the money.

If you pull your cash advance from an ATM, you may also face ATM or bank fees, which are separate from the credit card company’s fees. Check with your credit card issuer to find out what ATMs you can use to avoid surcharges.

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How a cash advance could affect your credit

When you take out a cash advance, you’ll be adding to your credit card debt. If this extra burden increases your credit card utilization (how much of your available credit you’re using), it could hurt your credit scores. As a general rule, you should use less than 30% of your total available credit to keep your credit utilization rate low.

If taking on high-interest debt makes it harder to pay your bills, you could find yourself struggling to make on-time payments. And if you fall behind, your credit could take a hit since payment history is one of the biggest factors in your credit scores.

Beyond the possibility of taking on too much debt and hurting your credit, you should try to avoid getting a cash advance because of the high interest rates and fees.

Alternatives to a cash advance

There are lots of reasons you might need quick-and-easy access to cash, and luckily there are some alternatives to paying the high fees and interest associated with cash advances.

Personal loans

Depending on your credit profile and the type of loan you get, a personal loan could be less expensive than getting a cash advance on your credit card.

Pro: Personal loans generally have a fixed interest rate, fixed term and fixed payments. And you may not need collateral to be approved.

Con: If you don’t have great credit, the annual percentage rate on a personal loan could be about the same or even higher than the APR on a cash advance.

Friends and family

Borrowing money from a friend or family member can be less costly and more flexible than other loan options.

Pro: Informal loans from family or friends, which may not involve any kind of contract, can come with a lower interest rate than a bank would charge.

Con: A broken loan agreement can cause tension with the person who loans you the money.

Payday alternative loans

A payday alternative loan, or PAL, is a short-term, small loan offered by some federal credit unions.

Pro: PALs typically have much lower fees and annual percentage rates than traditional payday loans.

Con: You’ll need to be a credit union member for at least a month if you’re applying for a traditional payday alternative loan.

‘Get-paid-early’ apps

These cash advance apps allow you to borrow a portion of your next paycheck before payday.

Pro: Many of these apps don’t charge interest.

Con: They can include fees such as monthly memberships.

Request a paycheck advance

You may be able to get a cash advance from your employer to cover an emergency expense.

Pro: Employers are unlikely to assess fees or charges for a payroll advance.

Con: Your employer may not allow employees to take advances.

What the experts say about credit card cash advances

Be mindful of your budget before taking out a cash advance

“Getting a cash advance is a decision that should not be made lightly or quickly. It means that you are essentially borrowing money when you’re already short on cash. That can create an even bigger financial headache because the borrowed money typically has to be repaid with interest.”

— DeShena Woodard, Certified Life Coach and founder of Extravagantly Broke 

A personal loan could offer better terms than a cash advance

“There are other options available that may be a better fit for your needs, with the first being a personal loan. A personal loan will carry a much lower interest rate than a cash advance and will also give you a fixed repayment timeline, so you’ll know exactly when the loan will be paid off.”

— R.J. Weiss, certified financial planner and founder of The Ways to Wealth

Using your credit card as an alternative to a cash advance

“You should only choose a cash advance in an emergency where cash is the only option. If it is an expense that you can put on a credit card, that is a better choice than either type of cash advance.”

— Matthew Sexton, financial writer for Fit Small Business

Next steps

If you’re short on funds, getting a cash advance on your credit card can be a quick and easy solution. But it can be costly. High transaction fees and APRs can add up fast and weigh on your credit health.

But if you decide to get a cash advance, there are some actions you can take to minimize the costs.

First, only borrow what you actually need. The less money you take out, the less you’ll have to pay back in principal and interest.

Next, you’ll want to pay off your loan as quickly as possible. Without a grace period, interest on your cash advance starts to accrue on the same day you get your funds. So the sooner you pay off the loan, the more money you can keep in your pocket.

Remember, it’s a good idea to think of credit card cash advances as a last resort. If you think you have to go that route, paying off what you borrow as quickly as possible will save you a lot of money in the long run.