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This Trick Will Help You Finally Pay Off Your Credit Card Debt

In 2017, one-in-four Americans say they’re thinking about money more than just about anything else. Does that sound like you? One of the best ways to clear some of your head space may be to pay down credit card debt. Less debt means fewer minimum payments, which means an easier time managing your day-to-day cash flow.

That’s not the only benefit of paying off credit card debt early either. With annual percentage rates (APRs) in excess of 15%, credit cards can cost you a big chunk of change in interest. Plus, high credit card balances can do big damage to your credit. (You can see the effect of your current balances by viewing two of your free credit scores, updated every 14 days, on

A Big Trick for Paying Off Credit Card Debt

Paying off credit cards takes planning and discipline. But you can also use a few tricks to make the process easier.

One big trick to make paying off credit card debt both easier and faster is using 0% APR balance transfer offers. It’s a simple strategy that can save you hundreds, or even thousands, in interest, not to mention allows you to potentially pay off your debt sooner.

You’ve got to leverage the offer correctly, however. Here are the basic steps to using this strategy.

  1. Apply for a card with a 0% introductory APR offer on balance transfers.
  2. Move some or all of your balance from an interest-bearing card to the card with the 0% APR. (Wondering what card to use? You can view our picks for the best balance transfer cards here.)
  3. Pay down that card as quickly as you can.
  4. If the card still has a balance when the introductory offer is up, consider applying for another 0% introductory APR card, and transfer the balance again. (More on this in a minute.)

That’s the gist of the strategy. It’s a great option for those with credit high enough to qualify for 0% introductory APR offers. Before you dive in, though, read through these additional tips and tricks.

1. Watch the Balance Transfer Fees

First off, it’s essential that you look at and understand balance transfer fees. Most balance transfer deals come with an upfront fee that gets tacked onto your balance once you make the transfer. This is how credit card companies come out on top with balance transfer deals.

Many times, transferring the balance to the 0% interest card will still save you money. But that may not be the case if you’re transferring a relatively small balance or if you’ll pay off the debt quickly either way.

To know whether or not a balance transfer will save you money, you’ll need to calculate your break-even point. First, estimate how many months it will take you to pay off the transferrable balance. Then, figure out how much interest you’d pay in that period of time if you did not transfer the balance. Finally, calculate the total fee you’d pay on the balance transfer.

If the balance transfer fee is more than the interest you’d pay in your current situation, it’s not worth your while.

2. Keep Track of Timing

Because balance transfer deals typically last between six and 18 months, you’ll need to keep careful track of when each introductory offer ends. If you’re running multiple balance transfer offers to pay off a lot of debt, keep a spreadsheet of offer end dates, current APRs, and future APRs once the offer is up.

Have a look at your spreadsheet each month. When a card’s offer period is about to end, decide whether to roll the remaining balance to a new balance transfer deal, or to leave it where it’s at.

Remember, it’s in your best interest to pay your transferred debt off in full by the time the 0% introductory offers expires. While you could potentially move the debt to another balance-transfer credit card, you’ll likely have to pay another fee. Plus, you’ll incur another hard inquiry on your credit report, which could ding your credit score. That’s why the next step is particularly important.

3. Know Your Credit Situation

This debt payoff strategy won’t work for everyone. You’ll likely only qualify for good balance transfer deals if you have good credit in the first place. And it’s difficult to say for sure how this scheme will affect your score.

On one hand, the hard inquiries generated by additional credit card applications will ding your score. But having a higher overall credit limit will improve it. These two may balance one another out over time.

The key is to keep track of your credit score throughout this process. If your score isn’t currently high enough to qualify for a 0% introductory APR deal, you may want to take time to polish up your credit before you apply.

4. Don’t Add New Debt

The number one key to making this strategy work for you is to not add any new debt. If you can’t avoid temptation to spend because you now have more available credit, you’ll just add to your mountain of credit card debt. One option is to shred your cards, even if you don’t close your accounts. This makes it harder to impulse spend on those cards that now have no balance once you’ve completed the transfer.

As long as you keep from adding new debt and follow the steps outlined here, 2017 could be a great year for getting free from debt.

This article originally appeared on

8 Tips for Refinancing as Mortgage Rates Rise

So you want to refinance, but mortgage rates are rising. Don’t worry — you haven’t missed the boat on your refi opportunity. Mortgage rates are still historically low, and they aren’t expected to exceed 5% in 2017, according to many economists and mortgage analysts.

Here are eight tips to help you successfully refinance your mortgage as rates rise.

1. Make your move fast

Even though rates aren’t expected to shoot through the roof this year, they’ll likely stay on a steady, upward trajectory.

“If you’re thinking about refinancing, now probably is the time to do it,” says Lauren Lyons Cole, a certified financial planner and money editor at Consumer Reports, adding that rates are probably not going to be lower than they are right now.

It’s worth doing your research to see what rate you can get and then acting swiftly before it’s too late.

» MORE: Calculate your refinance savings

2. Prepare in case rates drop

You’ll want to get your refinance application in as soon as possible, not only to catch low rates before they rise, but also to avoid a backup in refinance applications should rates suddenly fall, according to Casey Fleming, author of “The Loan Guide: How to Get the Best Possible Mortgage.”

“This is the biggest mistake I think people make,” Fleming says. “If you’re not in the pipeline ready to go when the interest rates start moving down, all of a sudden you have to get in the back of the line, and oftentimes you miss the dip in the rates.”

Fleming says that you’re not obligated to lock in a rate when you submit your application. You can wait and watch the market for as long as you want.

If you’re not ready to submit your application just yet, work on keeping your credit score up, have your financial documents ready to go, and save money for the upfront refinancing fees. Just remember that rates are rising slowly but steadily.

3. Make sure your credit score is in good shape

Acting fast on a refinance may not be worth it if your credit score isn’t in top shape. Your credit score plays a big part in the rate you can get on a mortgage. Just because low rates are out there doesn’t mean you’ll qualify for them.

Lyons Cole says that, in some cases, your credit can be easily bolstered. “I’ve seen people’s scores go from the 500s up to the 700s in about three months just from [quick changes] on your credit report.”

Some ways that you can work on your credit include checking your credit report for errors, paying your bills on time and keeping a safe distance from your credit limit.

“Mortgage rates aren’t going to go up a full point between now and the next three months,” Lyons Cole says. “Taking the time to get your credit score to a place where you qualify for the best possible rate could make a huge difference over the course of a 30-year mortgage.”

4. Use rising home prices to your advantage

Along with rates, home values are rising. Now might be a good opportunity for you to tap into your home’s equity through a cash-out refinance. If you do so, proceed with caution. It’s risky to spend the proceeds from a cash-out refi on things that don’t rebuild your equity, like a car.

You can also access your home’s increasing value through a home equity loan or home equity line of credit.

5. Refinance into an ARM

Refinancing into an adjustable-rate mortgage in a rising rate environment can make sense since these loans tend to come with lower initial interest rates than fixed mortgages. They’re especially useful if you plan on staying in your home no longer than the fixed term of the loan.

Jenny Erdmann, a certified financial planner and vice president of Guide My Finances in San Diego, says that as long as an ARM makes sense for you and you’re aware of the drawbacks with this type of loan — like the possibility that your rate may eventually increase — you should try to get the lowest rate you can.

6. Refinance to a shorter term

Refinancing into a shorter-term fixed-rate loan can save you money in two ways: the interest rate is lower than a 30-year fixed-rate loan, and the shorter term means you’ll save more money over the life of the loan by paying less interest.

Here’s an example: Using NerdWallet’s refinance calculator, we plugged in the numbers for a 30-year, $300,000 mortgage taken out in 2010 with a 4.75% fixed interest rate. We refinanced it to a 15-year mortgage with a 3.50% fixed interest rate. Savings equated to $52,975 over 15 years. While your original monthly payment of $1,565 would take on an extra $311 each month, you would save more money in the long run and build equity faster.

Take into account that if a 3.50% interest rate went up a quarter of a percentage point, your savings would decrease to $47,145 over a 15-year period, and your monthly payment would increase by $344.

7. Pay points

Before your loan closes, you’ll have the option to pay points on your mortgage, which is paying money upfront, to permanently lower your interest rate. Fleming says that “if the additional cost makes sense, then absolutely pay points.”

While one point equals 1% of your loan amount, you won’t always have the option to pay in full points. The amount of money you have to pay to buy down your rate depends on the interest rate market, according to Fleming. He says that if the market is volatile, then you’ll probably have to pay more to buy down the rate. But if the market is stable, then you’ll pay less. Fleming says that it might make sense for you to wait until rates stabilize so you can pay less.

8. Refinance out of an ARM, HELOC

If you’re concerned about the interest rate rising on your adjustable-rate mortgage or on your home equity line of credit, refinancing to a fixed-rate product can allow you to lock in a new rate to make your monthly payments more predictable.

Fleming says that borrowers with a HELOC should watch out for the recast period. That’s when the draw period ends and you can no longer pay just the interest on the loan. Since rates are increasing, “anybody with a HELOC should definitely look at their options,” says Fleming.

Your options include calling your bank and seeing if you can switch your HELOC to a fixed rate, though the rate may go higher if you do. You can also refinance the HELOC into a home equity loan at a fixed rate. Another option is to refinance your first mortgage and wrap the second mortgage into it. However, Fleming says if you end up refinancing to a higher rate, this strategy wouldn’t make much sense.

Michael Burge is a staff writer at NerdWallet, a personal finance website. Email:

Investing Apps Can Foil Financial Planning

New investors need at least two things: money and confidence. But many beginners, especially younger people, lack both.

What they do have are investing apps, carefully designed to plug those holes by removing minimum investment requirements and adding a little encouragement. One company, Acorns, will literally invest your small change.

These apps bring what has historically been a rich person’s game to the masses — fund companies, brokerages and financial advisory firms have long locked out small-dollar investors. The problem: Many people may not be ready to invest, and if they are, an investing app alone isn’t the best place to do it.

Ignoring the financial big picture

Advisors frequently compare financial planning to building a house: First, you lay the foundation — an emergency fund, insurance coverage and a balance sheet free of high-interest debt. An app can upend that, says financial technology expert Bill Winterberg.

“For these apps, the answer to the question of ‘what should I do with my money,’ 100% of the time, is that you should invest. An advisor, on the other hand, says, ‘Should you pay down debt? Do you need more insurance coverage? Do you have enough money in an emergency fund?’” Winterberg says. “Those might be really good ways to use extra money.”

Acorns, which rounds up dollar amounts from users’ everyday purchases and invests that change in a managed portfolio, says its technology reframes this issue. By focusing on extra pennies, investing “can happen alongside traditional financial building blocks,” says Heather Gordon, the app’s brand manager.

The scenario Gordon describes is the best way to use these apps; investing rounded-up change or another small amount is innocuous and even helpful as an educational exercise. But Acorns says over half of its users make recurring investments beyond the rounded-up amounts. Other apps, like Robinhood, which offers free stock trading, and Stash, which serves educational content to help users build a portfolio of exchange-traded funds, accept only traditional lump deposits.

Erica Bentley, content manager for Stash, says the service isn’t trying to answer all financial needs. “It would be great if [users] started with paying off debt, or having an emergency savings account built up, but for a lot of people Stash is the first entrance into thinking about saving, and with our content, they learn they should also be considering an emergency savings account.” The question is whether a service like Stash is well-suited to being that first entrance.

Shortchanging retirement accounts

Much as in financial planning, there’s a widely recommended order for how to invest your dollars: Tax-advantaged options, like 401(k)s and individual retirement accounts, come first.

The paradox is that as investing apps target young, beginner investors, many offer only taxable brokerage accounts, directing dollars away from the tax-free or tax-deferred growth of traditional and Roth IRAs.

“If they’re directing these investors to a traditional brokerage account, it doesn’t have those tax advantages, and over time, that could compound to tens of thousands of dollars — potentially hundreds of thousands of dollars if we have a bull market,” says Winterberg.

Acorns and Stash both plan on adding retirement accounts in the next year.

Understanding the risks

Apps typically use a questionnaire to identify an investor’s goals, time horizon and appetite for risk. But “even the process of asking people about their risk tolerance doesn’t have much follow-up to verify that the person — who may be new to investing — really understood the questions, and the risks involved,” says Michael Kitces, director of wealth management at Pinnacle Advisory Group.

Robinhood adds additional risk with “Robinhood Gold,” a fun name for margin trading, or the ability to buy stocks on borrowed money. Robinhood says the service, which charges a flat fee, is reserved for “experienced investors” — federal regulations require a $2,000 account minimum — but the app is bare-bones and provides little education about the risks besides a disclosure and an FAQ. In this kind of trading you can lose more than you’ve deposited.

Margin trading is offered by many brokers, who frequently charge interest rather than Robinhood’s more user-friendly fee. Robinhood says its app is used by many investors as an “educational experience” — but engaging in margin trading could quickly make it a costly one.

Fees drag down small portfolios

Finally, there are the fees. Robinhood offers free trading if users avoid the aforementioned margin activity, and Acorns is free for college students. Otherwise, Acorns and Stash have the same fee structure: $1 a month for accounts under $5,000, and 0.25% per year for accounts of $5,000 or more.

Neither service communicates that flat fee to users as a percentage of assets — which is how most investments are priced — but when sliced that way, $1 a month is 2.4% a year on $500, much more than a financial advisor would charge.

The argument from these apps is that most financial advisors and even online brokers won’t handle an investment as small as $500. Even if a broker has no deposit requirement, mutual fund minimums are rarely under $1,000. And that may be by design.

“People who don’t have $1,000 to invest are people who don’t have $1,000 to invest, and there’s a reason for that,” says Winterberg. “They may be spending more than they earn, or they may have credit card debt. Perhaps investing isn’t the right choice for them right now.”

More from NerdWallet

The Best Ways to Invest $1,000

401(k) Calculator

Best Robo-Advisors

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

This article was written by NerdWallet and was originally published by USA Today.

Retirement Advice From Retired Financial Experts

Most retirement advice has a flaw: It’s being given by people who haven’t yet retired.

So I asked money experts who have quit the 9-to-5 for their best advice on how to prepare for retirement.

They still faced curveballs when it was their turn. Making the right financial moves is important, they said, but so is getting ready mentally, emotionally and socially.

You can’t plan for everything

A central retirement decision is when to do it. Working longer can reduce the odds of running out of money, but delaying retirement too long could mean missing out on the good health or companionship to fully enjoy it.

That trade-off came home to financial planner Ahouva Steinhaus of San Diego when her life partner, Albert, died suddenly last year, just before she was scheduled to hand over her business.

Steinhaus, 69, says she’s grateful she’s not working now, while grieving the loss, but still wonders what might have been if she’d started the process of selling her practice earlier.

“You can’t know those things,” Steinhaus says. “It’s a balance between wanting to make sure that you have enough socked away that you feel confident that you’re going to be OK, and not wanting to spend the rest of your life working.”

What helps, Steinhaus says, is having many supportive friends and projects. She’s remodeling her kitchen after wanting to do so for 18 years, and she’s active in various causes, including San Diego EarthWorks. She also knows from having watched her clients and friends that adjusting to retired life can take a while.

“It does seem like a lot of people do cast around a bit after they retire to figure out what their life is going to look like,” Steinhaus says.

Get your retirement house in order

Theoretically, you can get a better return investing your money than paying off a mortgage. In reality, your biggest asset in retirement could be a paid-off, appropriately remodeled home that allows you to age in place, says financial literacy expert Lewis Mandell, emeritus professor of finance at the State University of New York, Buffalo.

Not having a mortgage allows you to withdraw less from your retirement accounts, which could make them last longer, and your equity could be a source of income later through a reverse mortgage, says Mandell, 73, who wrote his latest book, “What to Do When I Get Stupid,” after moving to Bainbridge Island in Washington.

If you plan to relocate, spending time in your new community before you retire can help you acclimate. Financial planner Bill Bengen and his wife, Joyce, at first divided their time between their home in San Diego and their vacation house in La Quinta, California. They wound up moving five years before they retired.

“We feel plugged into the community now,” says Bengen, 69. When moving to a new area, he says, “it’s strange: You don’t know anybody, you don’t know the ropes. Now we’re part of the ropes.”

Find an objective advisor

Bengen has not one but two advisors: an investment manager and a financial planner. He appreciates their objectivity — and the fact that he doesn’t have to fret over the details.

An objective review of your retirement plans is crucial before you retire, since the decisions you make in the years immediately before and after may have irreversible consequences, planners say. A too-large withdrawal rate, for example, can increase the chances of running out of money. (Bengen should know: His research led to the “4% rule” widely used in financial planning to determine sustainable withdrawal rates.)

Find ways to stay connected

Peggy Cabaniss of Moraga, California, learned from retired clients that staying active in a field where you’re recognized can help prevent the feeling that you’ve lost part of your identity.

“It’s really easy to become a nobody,” says Cabaniss, 72.

Cabaniss counsels other planners about selling their businesses, serves on the boards of three nonprofits and works on a committee that encourages more women to become financial planners.

Cabaniss’ big surprise is how much she’s enjoying her new life. Before she retired, Cabaniss thought her work wasn’t stressful, because she loved it. Within a few months of selling her practice, though, she noticed her shoulders were in a new position — down where they should be, instead of tensed up around her ears.

“I didn’t realize that I felt such a great deal of responsibility,” Cabaniss said. “Now my kids say, ‘Mom, you look so happy.’”

Liz Weston is a certified financial planner and columnist at NerdWallet, a personal finance website, and author of “Your Credit Score.” Email: Twitter: @lizweston.

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

What TCF Bank Suit Means for You: Defend Against Overdraft Fees

When your checking account reaches zero, you may be safe or sorry depending on whether you have to pay overdraft fees. While these fees are common, a government watchdog says one bank may have gone too far in pushing them to its customers.

The Consumer Financial Protection Bureau is suing Minnesota-based TCF Bank, accusing it of misleading customers into signing up for costly overdraft services.

TCF Bank “designed its application process to obscure the fees and make [overdraft protection] seem mandatory for new customers to open an account,” the consumer watchdog said in a news release on Thursday. The agency also claims that TCF Bank opted existing customers into their overdraft service with a “loose definition of consent.”

TCF rejected the claims in a statement, saying, “We believe that at all times our overdraft protection program complied with the letter and spirit of all applicable laws and regulations, and that we treated our customers fairly.”

TCF Bank operates 341 retail branches in Minnesota, Wisconsin, Illinois, Michigan, Colorado, Arizona and South Dakota.

You can protect yourself from overdraft fees at your bank, but the language can get a little tricky.  Here’s what you need to know to avoid them.

» MOREOverdraft fees: What banks charge

How overdraft services work

Overdraft protection kicks in when your bank account doesn’t have enough money to cover transactions. It includes two services that sound similar but differ greatly in cost.

With “overdraft coverage,” in exchange for a fee, a bank or credit union pays a transaction with its money when your checking account doesn’t have enough cash to cover it. This also may be known as “overdraft courtesy.”

When the bank fronts you the money, overdraft fees can be charged multiple times in a single day. The median overdraft fee is $34, according to the CFPB.

Transactions eligible for overdraft protection coverage are ATM withdrawals, debit card purchases, checks and online bill payments.

With “overdraft transfers,” an institution pulls your money from a linked account and puts it in your checking account to cover transactions. Some banks do this for free; others charge $10 or $12, but it varies by institution.

» MORE: How overdraft transfers work

What ‘opting in’ really means

A bank or credit union can’t charge overdraft fees on ATM and most debit card transactions unless you affirmatively “opt in” to the service, according to the Electronic Fund Transfer Act and Consumer Financial Protection Act of 2010. According to the CFPB, accounts that are opted in are three times as likely to have more than 10 overdrafts per year than accounts that are not opted in.

If you don’t opt in, the institution doesn’t cover purchases that would overdraft your bank account, and your transaction is declined. If you’re in an overdraft program, you can “opt out,” or cancel it.

Adding another wrinkle, you may still be charged for bounced checks and other transactions such as online bill payments. These costs — known as nonsufficient funds fees — can be charged regardless of whether you have overdraft protection.

How to minimize overdraft fees

Even the most careful customer’s account may run low occasionally. Minimize the fees by taking the following steps:

  • Set up electronic alerts: Get phone or email notifications when your balance is running low.
  • Add a cash cushion: Keep extra padding in your checking account to avoid overdrafting.
  • Don’t opt in: Purchases will be declined when you don’t have enough money, but you won’t incur overdraft fees, either. If you already have overdraft coverage, you can still opt out.
  • Create a safety net: Link your savings account or a line of credit to your checking account for cheaper or free overdraft transfers.
  • Shop around: Do you overdraft frequently? Switch to a bank or credit union that offers free overdraft services.

If you’re still confused, ask as many questions as possible until you understand your bank’s terms. By taking the necessary precautions, you can prevent your $6 fast-food debit swipe from turning into $34 or more in fees.

Melissa Lambarena is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @LissaLambarena

Sean Talks Money: How to Overcome a Holiday Debt Hangover

Odds are your recent holiday shopping carried some kind of stress. Maybe you agonized over finding the perfect gift for a dad who already buys himself everything he needs. Maybe you waited until the eleventh hour and had to sweat out a shipping deadline or battle throngs of fellow procrastinators in the stores.

Or maybe you were just more generous to your loved ones than your wallet could afford.

According to a 2015 holiday spending survey, people in relationships are willing to take on an average of $200 in credit card debt to buy gifts for each other, and that number is likely higher when accounting for gifts for children and others.

If that was the case for you, don’t let the stress of holiday-related credit card debt linger.

Know your pain points and how to massage them

If you took on debt to pay for the holidays, the pain of your debt hangover is largely determined by where your debt sits — that is, whether you charged it to your everyday credit card, used a store credit card or put it on a card with a low (preferably 0%) annual percentage rate offer. Ideally it’s that last one, because it means you also bought yourself some time.

But if you used your everyday credit card, whether for cash back or travel rewards, you’re potentially paying an average of around 19% in interest annually. That can get costly, depending on how expensive your holiday tally was and whether it added to a balance you were already carrying. If you’re getting buried by interest charges on that card, explore your options for debt consolidation. More on that later.

>>MORE: NerdWallet’s best balance-transfer and low-APR credit cards

If you used a store credit card, make sure you understand what you’re on the hook for, and when. Many store cards may allow 0% financing through a “deferred interest” offer, which sounds similar to a 0% APR introductory offer you might see from a general-purpose credit card — but it’s not the same thing. “Deferred interest” means you’ll potentially still owe withheld interest after the introductory period closes, and these cards also can come with a raft of additional complications. Contrast that with 0% offers from banks, which waive interest charges outright for the introductory period.

You can avoid deferred interest charges if you pay off the debt before the introductory period closes. I’m aiming to do this myself. Last spring I bought an iMac in an Apple Store on a deferred interest offer. To avoid those future interest charges, I’m paying back enough every month to get me in the clear with a few months to spare.

Clean up the mess

Wherever your holiday debt sits, you need a plan to pay it off. I recommend three steps:

1. Recognize that you have the debt and that ignoring it won’t make it disappear. That doesn’t mean shaming yourself. There’s nothing wrong with spending money on yourself or others, especially during the holidays. But the debt is there, and before you can tackle it, you have to acknowledge it.

2. Take action. That means making the minimum payments on your credit card bills — and then paying more. To cut down on the interest owed, I recommend paying at least two to three times the monthly minimum payment, with a target of paying off holiday debt in three months or less. Fortunately, this is a good time of year for that strategy: The holiday season and the months that follow it may provide predictable windfalls, like cash gifts, year-end bonuses and tax refunds. Use those to start digging out.

If you have a sizable amount of debt and your credit score is at least “average” — above 630 or so — you could use a balance-transfer credit card to consolidate your debt onto a 0% offer. Doing so will save you a lot of money in interest payments.

3. Don’t give up. Paying off debt, especially if you’ve accumulated a lot of it, takes time. Look for opportunities to cut unnecessary costs, especially recurring expenses you might no longer value, like an old gym membership or online or app subscriptions. To boost your income, try picking up extra work hours or a new side gig.

>>MORE: 10 financial tips for the new year

Dealing with a holiday debt hangover may require humility, some creative financial adjustments and patience. But the trade-off can mean more financial freedom, and that’s one of the best gifts of all.

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

Mobile Money Apps: Tech Helps Teach Kids to Save

Even the iconic piggy bank is getting a digital makeover.

Feeding the piggy has long been a down-homey, tried-and-true way to teach kids how to save money. Now, these lessons increasingly can be found on smartphones and mobile money apps designed specifically for children.

And why not? The average age for kids to get their first smartphone is about 10, according to research firm Influence Central, so money apps connect with kids in their comfort zone.

» MORE: NerdWallet’s best savings accounts for kids

“It’s where they are and what engages them,” says Ted Gonder, co-founder and CEO of Chicago-based Moneythink, a nonprofit that mentors young people and helps them adopt positive financial habits. Moneythink develops money apps to use as teaching tools, having found they can be more effective than dry lectures or drier textbooks.

There are a few wrinkles in their approaches, but most money apps for kids act like virtual banks, offering lessons on how to budget and sock away money for spending goals. They tend to emphasize child-parent interaction; a common feature tracks chores the child needs to accomplish before receiving an allowance from parents.

A few banks also offer apps for kids. Parents retain control and children can’t actually make financial transactions, but the same money lessons apply.

Most apps, however, fail to address the most important consideration a parent should have when teaching a child about money — making a distinction between wants and needs, says John Buerger, a financial planner and president of Altus Wealth Solutions in San Luis Obispo, California.

“All we’re looking at in most app cases is, ‘You work, you get paid for your allowance,’ and that may be problematic from a philosophical standpoint. Your chores are your chores [and] you do them for your family,” Buerger says.

Still, Buerger praises financial literacy apps for starting conversations with kids about money. “I like kids paying attention to money as early as 5 or 6,” he says.

If you’re looking for a financial education app for your child, Buerger advises picking one that incorporates interactive features or gamification to help hold a kid’s interest.

James DeBello, CEO of mobile deposit technology company Mitek in San Diego, has another take: Keep it simple. The best apps “require fewer steps to get from point A to point Z,” he says.

Here are five highly rated financial education apps vying for your child’s attention — and yours — in a growing and crowded digital field.


Bankaroo — developed in 2011 by then-11-year-old Dani Gafni and her father, Etay —  helps children track their savings and what their parents owe them for chores. Designed for kids ages 5 to 14, the free app features tools for learning how to budget, save, set goals and do basic accounting.

Bankaroo, available for iOS, Android and Amazon devices, says it has about 100,000 users in more than 100 countries. In April, it released a new version of the app in Spanish.


The iAllowance app is another one in the vein of allowance trackers for parents and their kids. It’s not free — and available only on iOS for $3.99 — but iAllowance has some handy features not found in other apps.

Parents can push alerts to children to get chores done, and set up automatic allowance payouts and rewards when kids meet certain goals. They also can create an unlimited number of piggy banks for each of their kids.


Also built around the idea of a virtual banking, allowance-tracking platform, PiggyBot is aimed at kids ages 6 to 8. It has some neat features, such as the ability to post photos of things your children want and a screen to show off the things they’ve purchased, giving them an idea of their goals and rewards. The app’s developer says it reinforces principles of saving.

Piggybot was developed in association with Kasasa, a national brand of free checking and savings accounts that works with community banks and credit unions across the country. Piggybot is free, but available only on iOS.


An offering from Union Bank for children ages 6 to 11, the Yuby app lets them track their earnings, spending and the chores they need to do to earn their allowance. The free app is a virtual experience only, and no financial transactions occur. It’s available in iOS and Android.

Children also can keep a wish list and compare the costs of the things they’re saving for. Another feature allows earmarking of money for charity. A parent’s approval is needed for some actions.

USAA Bank’s mobile app

This members-only bank doesn’t have a special app for children, but it allows kids ages 13 and over to access their youth savings and spending accounts online and on the bank’s regular mobile app with their parent’s approval. The free app is available for iOS and Android devices.

Some app features, such as USAA Money Manager, which categorizes spending,  aren’t accessible to children under 18, and parents control other features they wish to extend to their child, such as remote check deposit.

“This comes down to teaching the basics of banking in a real-world scenario,” says Brian Hurtak, an executive director with the bank. USAA is open only to active and former military members, their families, and cadets or midshipmen.

Juan Castillo is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @JCastilloNerd.

This article was written by NerdWallet and was originally published by USA Today.

Use American Airlines Card, Avoid Low-Fare Carry-On Ban

American Airlines has introduced a class of bare-bones, “Basic Economy” fares that offer lower prices but eliminate several privileges for fliers, including access to overhead bins for carry-on luggage. But for holders of the airline’s co-branded credit cards, there’s good news in the fine print: They won’t suffer some of the most painful cuts.

Most significant: Holders of eligible AAdvantage credit cards can buy the cheap fares with their cards and continue to have access to overhead bins and priority boarding. An example is the Citi® / AAdvantage® Platinum Select® World Elite™ MasterCard®.

American’s move follows United Airlines’ announcement two months earlier of its own no-frills fares, also called “Basic Economy.” Both airlines said they would limit basic economy passengers to a single carry-on item that fits under the seat in front of them. That allows for a purse, briefcase or small backpack, but essentially prohibits standard roll-aboards and duffels. Customers must check other baggage — for a fee.

The other major network carrier, Delta Air Lines, already offers no-frills fares, but it doesn’t restrict overhead bin access.

Airline executives have said basic economy seating is an attempt to cater to price-sensitive infrequent fliers and keep them from defecting to ultra-low-price discounters such as Spirit, Allegiant and Frontier.

The case for airline credit cards

The new basic economy fares make airline cards more valuable than for just earning frequent-flier miles. They allow cardholders to pay less for a plane ticket but not suffer some of the worst downsides to no-frills fares.

Luggage room: Besides being exempted from overhead bin space restrictions, cardholders typically get their first checked bag free. The privilege often extends to others traveling on the same flight itinerary. With the Citi® / AAdvantage® Platinum Select® World Elite™ MasterCard®, it covers the cardholder and up to four others.

At $25 each way for a checked bag, a cardholder could make up the typical $95 annual fee on an airline credit card in a single roundtrip with a companion, if each checked a bag. While several general travel credit cards offer higher rewards rates and more flexible redemption options, airline cards are the only ones to offer free checked bags.

Priority boarding: Although Basic Economy fliers will board the plane last, those who paid the fare with their AAdvantage credit card will still get priority or preferred boarding. So, if they do have carry-on luggage, they are more likely to find a place for it before the overhead bin space is full.

The Citi® / AAdvantage® Platinum Select® World Elite™ MasterCard® has an annual fee of $0 for the first year, then $95. The Citi® / AAdvantage® Executive World Elite™ MasterCard® offers more perks, including airport Admirals Club membership, for an annual fee of $450. The business version is the CitiBusiness® / AAdvantage® Platinum Select® World MasterCard®, with an annual fee of $0 for the first year, then $95.

Basic economy downsides

Purchasers of American’s Basic Economy fares will lose other privileges, even if they’re cardholders.

Seat assignments. Basic Economy customers will not receive a seat assignment until check-in, meaning they could be headed for an undesirable middle seat and might not be able to sit with travel partners. (American says it will continue to try to seat children under age 13 with an adult.) Basic Economy passengers can pay extra for seat assignments 48 hours before the flight.

Flight changes. Basic Economy passengers won’t be eligible for upgrades or same-day standby or flight changes, making the tickets “use it or lose it.”

Loyalty earnings. Basic Economy customers will earn half as many frequent-flier miles or segments toward elite status as customers who buy regular fares.

Aside from overhead bin space and seat selection, in-cabin service is the same: the same seats and free entertainment options, soft drinks and snacks.

Besides credit card holders, travelers with elite status on American will also be exempted from some restrictions that come with Basic Economy fares.

In its mid-January announcement, American said Basic Economy fares would go on sale the next month in 10 markets, with the first flights shortly after. The airline said it expected to expand to more markets later in 2017. Not all American Airlines flights will offer the new Basic Economy fares.

Gregory Karp is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @spendingsmart

As Tax Season Approaches, So Do Scammers

Last summer, Cindy Hockenberry decided she’d had it with threatening phone calls claiming she was behind on her taxes.

“One day — I’m not kidding you — I got called three times,” she said.

Sometimes the calls were automated. But once, when she got a call from a live person, Hockenberry — who is an Enrolled Agent and also happens to be the director of education and research at the National Association of Tax Professionals — decided to play along.

The caller told her she owed over $5,000 in back taxes. “He was pretty convincing,” Hockenberry recalls. ““He was saying the right things … using the right tax lingo.”

“Then I said to him, ‘Do you realize that it’s not lawful to impersonate an IRS employee?’ … He came back and said, ‘Well, do you realize it’s unlawful not to pay your taxes?’ I said, ‘Yes, as a matter of fact, I do — which is why I know for a fact I have paid all my taxes.’”

There was a pause, she said. Then the caller cursed at her and hung up.

Hockenberry’s story is just one example of how brazen tax scammers can be. In roughly the last three years, the Treasury Inspector General for Tax Administration, the body that oversees the IRS, has received more than 1.8 million reports of calls from people impersonating IRS employees, and almost 10,000 victims have lost nearly $50 million. Tax-related email phishing and malware incidents shot up 400 percent in the 2016 tax season, according to the IRS.

» MORE:  Tax filing deadlines for 2017

Recent schemes include calls threatening arrest for an overdue, fictitious “federal student tax,” emails with fake tax bills attached and IRS impersonators demanding payment via gift cards or prepaid cards.

Portland, Oregon-based CPA Joe Seifert says even tax preparers receive emails from scammers, asking for the usernames and passwords that let them access special IRS online tools.

Criminals pose as state tax officials to make a buck, too. For example, the Kansas Department of Revenue has received complaints about calls from employee impersonators, according to a department spokesperson. Scammers are also issuing letters and emails under the state’s name.

» MORE:  7 reasons the IRS will audit you

As tax season approaches, people will likely see more scams, the Federal Trade Commission warns. There’s little to prevent a criminal from picking up the phone or sending a bogus email, but there are four things you can do when these fishy communications arrive.

  • Know how the IRS initiates contact. “The IRS should never, ever be contacting you by email, ever. They should never ever be contacting you by phone. They should only be contacting you via letter,” Seifert says.
  • Report creepy messages. You can forward shady tax-related emails to and report suspicious phone calls to the Treasury Inspector General for Tax Administration and the Federal Trade Commission. Collecting these reports recently helped the Department of Justice indict dozens of people in an alleged international call-center fraud scheme.
  • Verify issues with the IRS or your state tax authority. Question out-of-the-blue communications about alleged tax balances. If you owe back taxes, or think you might, call your tax professional, the IRS or the state tax department directly, Seifert says. A new online tool at also lets you look up unpaid taxes, penalties and interest.
  • Never pay over the phone. Even if you owe, the IRS never asks for credit, debit, prepaid card or bank information via phone, email, text or social media. If someone does, “Just hang up on them,” Seifert says.

» MORE:  What’s your federal income tax bracket?

Tina Orem is a staff writer at NerdWallet, a personal finance website. Email:

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

How to Prep (or Not) for Trump’s Proposed Tax Changes

Now that Donald Trump has been sworn in as president, changes might be on the way for the tax code. But it’s unclear what will change and how much.

During the campaign, Trump brought his original tax plan more in line with House Speaker Paul Ryan’s “A Better Way” economic proposal. That should help the plan move through Congress more easily — but even though the same party controls the House, Senate and White House, it’s unlikely to pass as-is.

It’s never a good idea to make tax moves before there’s a law in place. However, it doesn’t hurt to consider changes that might be on the horizon. Here are some steps you may want to take — or not take — once we know more.

Hold off on buying a house

One argument for buying a house is that owners can claim many expenses, notably mortgage loan interest and real estate tax payments, as itemized tax deductions. Under the Trump plan, these deductions might lose value.

Trump has proposed dramatic increases in the standard deduction, which around 70% of filers use. The amounts would increase from $6,350 to $15,000 for single taxpayers and from $12,700 to $30,000 for married couples filing jointly. For the roughly 30% of taxpayers who itemize, Schedule A deductions would be capped at $100,000 for single taxpayers and $200,000 for married joint filers. (Ryan’s plan proposes removing the option to write off property tax payments altogether.)

Homeowners who don’t pay large amounts of mortgage interest or live in areas where property taxes are low might find Trump’s larger standard deduction more than covers the housing costs they itemized — and it would make tax filing easier. But it would also make buying less tempting from a tax perspective. And homeowners who have large mortgages and expensive properties could lose money with a deductions cap and the loss of the real estate tax write-off.

The proposed changes could affect your decision to buy. They might also lower demand for homes and cause property values to fall — so consider waiting until there’s clarity to house shop.

Delay charitable giving

Donations to IRS-approved nonprofits are tax deductible if you itemize. Higher-income taxpayers, however, might want to delay such charitable gifts in case Trump’s proposed limit on itemized deductions becomes law.

And because Trump didn’t mention keeping the deduction for charitable donations in his revised version of tax reform, the philanthropic community worries that he might think of it as an expendable tax loophole.

“Cuts, caps and limitations on the deduction mean less money for charities and those they serve. That can’t be what Mr. Trump intends,” Sandra Swirski, executive director of the Alliance for Charitable Reform, said in a statement following the release of the revised tax plan. “The charitable deduction is not a loophole, it’s a lifeline.”

Reassess your investment strategy

The traditional financial advice that you should invest for the long haul will likely apply during the new administration. But you could pay higher capital gains taxes under the Trump tax plan.

Trump wants to keep the current 0%, 15% and 20% tax rates for long-term capital gains, which apply to profits from assets held for more than a year. However, his three ordinary income tax brackets will shift taxpayers into higher capital gains brackets.

The current capital gains tax rates look like this:

Current ordinary income tax bracket Long-term capital gains tax rate Single payers' affected income Married joint filers' affected income 10%, 15% 0% Up to $37,950 Up to $75,900 25%, 28%, 33%, 35% 15% $37,951 to $418,400 $75,901 to $470,700 39.6% 20% More than $418,400 More than $470,700

Higher-income investors also face the 3.8% Affordable Care Act surtax.

Under the Trump investment tax plan, the three capital gains rates would apply as follows:

Proposed ordinary income tax bracket Long-term capital gains tax rate Single payers' affected income Married joint filers' affected income 12% 0% Up to $37,500 Up to $75,000 25% 15% $37,501 to $112,500 $75,001 to $225,000 33% 20% More than $112,500 More than $225,000

(Trump would eliminate the head of household filing status, moving these taxpayers to the single status.)

Twenty percent is lower than Trump’s proposed top ordinary income tax rate of 33%, but if you now pay 15% tax on long-term capital gains, the added 5% could be an unwelcome surprise.

However, if Ryan can convince the new president that “A Better Way” is indeed better, investors would be able to deduct 50% of their net capital gains, dividends, and interest income. This would mean tax rates of 6%, 12.5%, and 16.5% on such income, according to the speaker’s economic blueprint.


If Trump’s proposal does pass, you’ll still need to know its effective date. Past tax law changes have taken effect either on the date the bill was signed, a specific date cited in the legislation or made retroactive to a past date, generally the start of the tax year in which the measure became law.

If you’re planning on making any financial moves that might be affected by tax law changes, wait if you can. Acting too early could produce a costly tax bill.

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