Month: April 2020

How to Manage Your Credit Score During a Crisis

Posted on by Bev O'Shea

Even in a financial crisis, credit scoring still works the same as it always has. But managing your credit may look a little different now as the coronavirus pandemic leads to widespread financial upheaval.

As money gets tighter, especially if you can’t pay every bill in full, you’ll need to be strategic — and perhaps accept a lower score temporarily. Understanding how credit works can help you minimize damage and position yourself for quicker recovery.

Using credit vs. emergency fund

If you have an emergency fund, should you tap it before using credit? “I think there are two schools of thought here,” certified financial planner Lynn Ballou of EP Wealth Advisors in Orinda, California, said in an email. “If not a global pandemic, then what in the blazes is an emergency fund for anyway?”

On the other hand, Bruce McClary, vice president for communications at the National Foundation for Credit Counseling, suggests proactively cutting costs first. Your landlord and utility companies, for instance, may be willing to make temporary arrangements, he says. “Have these conversations before you spend a dollar of your emergency fund.”

About 3 in 10 of us (30% of Americans) have tapped emergency funds due to the economic effects of the coronavirus pandemic, according to a NerdWallet survey conducted online by The Harris Poll from April 8-10. But almost 1 in 5 Americans (18%) had no emergency fund to tap.

Be strategic to limit score damage

You may be relying on your credit more than ever. Knowing how credit scoring works will help you pick actions that limit damage to your score. The two biggest factors affecting your credit scoreare:

  • Paying on time. A late payment — one that’s 30 days or more past the due date — can tank your score. The damage is lasting: It will linger on your credit reports for up to seven years.
  • How much of your credit limits you use. The less credit you use, the better it is for your score. When your credit utilization goes up, your credit score will likely go down, but the damage is quickly reversed once you can lower balances again.

Do everything you can to pay creditors on time so you avoid the biggest, longest-lasting score danger, which is paying late.

Paying minimums is fine. It’s much better for your credit to pay minimums on all of your cards than to pay one in full and not have enough to cover the minimum on another. While it’s true that paying minimums leads to rising balances, it’s quicker and easier to reverse the score damage from that.

Manage your balances

Even while you’re putting more on cards or paying minimums, you may still have some latitude to keep credit balances low relative to limits:

  • Ask for higher credit limits from your card issuers. If you qualify, getting a higher credit limit can help you keep credit utilization lower. The recent survey found that 17% of Americans have requested a higher credit card limit due to the economic effects of the coronavirus pandemic.
  • Become an authorized user. See if a friend or relative who has a credit card with a high limit and low balance will add you as an authorized user. The account holder is not required to actually give you a card or let you make purchases. Just being on the account benefits your score.
  • Keep credit cards open. Even old, unused cards may be helping your credit score by contributing to your overall credit limit. Use them occasionally to keep the issuer from closing them for inactivity.
  • Think beyond credit cards. An unsecured personal loan, sometimes called a signature loan, may be a better option, McClary says. The interest rate is likely to be much lower than credit card interest. You may be able to find a low-rate loan by searching online for “pandemic personal loan,” or contact your bank or credit union.

Minimize the costs of using credit

If you’re using credit cards to stay afloat, know how the cards operate, McClary advises. For example, taking out a cash advance will cost you far more in interest than a purchase of the same amount. You can find out by calling the customer service line or looking up the customer agreement online.

Also, don’t assume that the terms you have now are the best you can get. Rather than simply checking APRs, Ballou recommends reaching out to your current issuers to see if they will give you lower rates or lower minimum payments or eliminate fees. You might be able to move some debt from higher-interest to lower-interest cards, she said, adding that telling an issuer you are considering transferring your balance to a competitor can be a good negotiating tool.

If you apply for a credit card hardship program, it’s important to know the drawbacks and decide whether you want to apply for help from your card issuer now if you might need it later.

And if you have autopay in place for bills, adjust the payments or turn them off to avoid paying more than is required or overdrawing your account.

Monitor your credit reports

You are now entitled to one credit report every week from each of the three major credit bureaus, through April 2021. Check them to be sure:

  • You recognize every account and your identifying information is correct.
  • Any account in forbearance or deferment is being reported as current, as required by the CARES Act, if it was in good standing before any pandemic-related concessions were made.
  • A disaster code shows on your credit reports if you requested one. This can help a potential lender or landlord better understand changes in your credit behavior, McClary says. And it won’t hurt your credit scores.

If you see errors, you can dispute them. If an error suggests identity theft — such as addresses you’ve never lived at or accounts you don’t recognize — report it to IdentityTheft.gov.

Harris survey methodology

This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from April 8-10, 2020, among 2,042 U.S. adults ages 18 and older. This online survey is not based on a probability sample, and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Madison Gouveia at mgouveia@nerdwallet.com.

The article How to Manage Your Credit Score During a Crisis originally appeared on NerdWallet.

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College Students Can Get More Aid During the Coronavirus Crisis

Posted on by Anna Helhoski

College students who left their campuses in droves as stay-at-home orders rolled in were often met with a whole new financial reality.

They had to relocate in a hurry, racking up unexpected travel and moving costs. Their rented apartments, dorm rooms and meal plans are now going unused. They may have lost a job or left one behind. They may need broadband access or even a new computer to complete the semester remotely.

To top it off, the home they go to may be facing financial straits of its own.

By week three of the coronavirus pandemic, half of college students and college-bound high school seniors said their family’s finances had been affected, according to a survey of 1,000 students by SimpsonScarborough, a higher education marketing and research firm in Alexandria, Virginia. With millions losing their jobs each week, that number has only grown since.

Here are three ways those students can find some help.

Get a refund from your school

Those who had to move out of dorms early will likely get a refund for room and board — the coronavirus relief act allocated money to colleges specifically for this purpose. You can expect a prorated amount, not the full cost you paid for the semester. Your college financial aid office will have information on how to receive a refund.

The funds you get back can be used to pay for any education-, travel- or living-related expenses you’ve incurred as a result.

But if your room and board was paid through a student loan and you don’t need the refund to make ends meet, consider returning it. Making a payment now prevents interest from accruing in the time before repayment officially begins. Contact your student loan servicer, the company that manages your loan, or private lender to make a payment with your refund.

Seek emergency aid from your college

The Department of Education is sending billions of dollars to colleges through the Higher Education Emergency Relief Fund authorized by the coronavirus relief act. Approximately $6.28 billion is specifically intended for colleges to distribute to students in the form of emergency cash grants. The grants can be used to pay for education-related technology and supplies, housing, food, child care and health care, the Education Department says.

“We are turning around applications very quickly, but it’s up to the schools how they choose to get the funding to their students,” says an Education Department spokesperson in an email. So far about half of eligible schools have applied to receive the grant funding, according to the department.

You are eligible to receive an emergency grant whether or not you filed the Free Application for Federal Student Aid. It’s unclear if schools will require the FAFSA from those who didn’t complete it previously in order to receive the aid.

“Some may do a more blanket approach” for students who get need-based aid, like a Pell Grant, while others might require an application, says Ben Miller, vice president for postsecondary education at the Center for American Progress, a public policy research organization. “I could see some doing a balance where some is automatic and some is held back for an application.”

Most schools are still in the early stages of figuring out distribution, but some have a plan.

At Vanderbilt University in Nashville, Tennessee, for example, students with previously identified financial need will receive $1,100 each from the $2.8 million the school will receive. About 20% of the population will qualify, Vanderbilt estimates.

At the University of Connecticut, students are being instructed to email the financial aid office, which triggers a review of their new financial need, according to Stephanie Reitz, university spokesperson and manager of media relations.

Your school may also have its own emergency fund established. These programs typically require students to apply.

At State University of New York at Cortland, a student emergency fund was created and funded by donor gifts. So far the school has received just under 200 applications and authorized around $36,500 in emergency assistance grants to students for food, rent and technology, says Frederic Pierce, director of communications at the college.

The type of emergency and size of awards will likely vary, says Miller, but the common thread will be an ability to demonstrate that need stems, in some way, from impacts of the coronavirus.

Only students eligible to receive federal financial aid can receive the funding, which leaves those in the Deferred Action for Childhood Arrivals program and international students unable to tap this resource.

Update your FAFSA form

Your family’s finances may have looked a lot different when you submitted the FAFSA. But the form you submitted isn’t permanent; you can make changes and receive aid retroactively, even if you already received your financial aid award.

To update the information reported, log in to FAFSA.gov and submit changes under “Make FAFSA Corrections.” Or you can contact your school’s financial aid office and ask them to make changes for you, especially if there will be a significant change in your or your parent’s income this school year, or if there are any other family circumstances to report that the FAFSA form doesn’t require.

The deadline to make updates is June 30 after the school year you need aid. For the 2019-20 school year, that’s June 30, 2020.

If you’re thinking about how you’re going to pay for school next year and you already received a financial aid award, you can file an appeal. Make sure to include a specific amount you’re asking for and reasoning for your request in your appeal.

Anna Helhoski is a writer at NerdWallet. Email: anna@nerdwallet.com. Twitter: @AnnaHelhoski.

The article College Students Can Get More Aid During the Coronavirus Crisis originally appeared on NerdWallet.

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Strengthen Your Financial Resilience With These 3 Insights

Posted on by Sean Pyles

A few months ago you may not have thought much about strategies for managing credit balances or how much of an emergency fund you really need. But with finances strained by the coronavirus pandemic, making smart money decisions is crucial.

To better handle current conditions, ask yourself these three questions.

How much of an emergency fund is necessary?

The answer

Even a few hundred dollars can protect you. Don’t be daunted if you have no emergency cushion or it feels very slim.

“Families with a savings cushion of $250 to $749 are less likely to be evicted, receive public benefits and miss a bill after a job loss,” says Signe-Mary McKernan, a vice president at the Urban Institute. Research by that Washington, D.C., think tank found that less than $1,000 is enough to help families weather a financial crisis.

“Even small amounts of savings can make a difference, and we find that low-income families with savings are more resilient than middle-income families with no savings,” McKernan says.

What you can do

With more uncertainty ahead, dig into your budget and make cuts so you can shore up savings.

McKernan suggests setting up automatic savings from your paycheck — even as little as 2% will add up over time — and saving any windfalls like a tax refund or bonus.

How does carrying a credit card balance affect my credit?

The answer

Relying on credit cards can work as a financial bridge when money is tight, but paying at least the minimums on time is critical to protecting your credit standing.

“Your credit score is like your report card,” says Lauren Anastasio, a certified financial planner at SoFi, an online financial services company. “Every month that goes by is an opportunity for you to have a positive data point.”

What you can do

Because late payments hurt your score the most, pay at least the minimum by the due date.

If possible, pay more than minimums so you can bring balances down over time. The second-biggest influence on your score is how much of your credit limits you’re using, so rising balances may ding your score. But that damage quickly fades as you pay them down again.

Do pay off cards completely if you can, because carrying a balance isn’t necessary for good credit. “It blows me away the number of people who say they don’t pay off their credit card because they believe it will help their credit,” says Anastasio.

Should you take money from your 401(k)?

The answer

The CARES Act enacted in late March provided $2.2 trillion in relief and made accessing funds from 401(k) accounts easier. But you likely have better options for cash in a crunch.

To start, here are the recent changes:

  • Those affected by the coronavirus can now withdraw up to $100,000 from their 401(k) accounts or IRAs without penalty and avoid taxes if the money is repaid within three years.
  • For 401(k) loans, savers can now borrow up to 100% of their vested balance, up to $100,000. While these loans are typically due over five years, the CARES Act allows borrowers to delay payments owed in 2020 for up to a year.

But taking money from your 401(k) will stunt your retirement savings because that money is no longer earning compounded returns.

“Any loan you take from a 401(k), those are funds that are going to be uninvested while you’re paying yourself back,” Anastasio says. “Even though you’re borrowing against assets you’ve accumulated, these are funds that are designed to be appreciated over time, so there is that opportunity cost.”

And if you can’t pay back a 401(k) loan on time, taxes and penalties kick in if you’re under age 59 1/2.

What you can do

You may have some options that won’t interfere with your future retirement plans:

  • Personal loans: Unsecured personal loans are a good option for those with good to excellent credit scores and generally range from $1,000 to $50,000.
  • Credit cards with a 0% period: Also typically for those with good to excellent credit, cards with 0% APR periods, which usually last between 12 and 15 months, give you access to credit without paying interest.

If you need instant cash, services like Earnin and PayActiv can give you an advance on your paycheck without starting the cycle of debt often brought on by high-interest payday loans or car title loans.

Sean Pyles is a writer at NerdWallet. Email: spyles@nerdwallet.com. Twitter: @SeanPyles.

The article Strengthen Your Financial Resilience With These 3 Insights originally appeared on NerdWallet.

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How to Stay Organized When You Have Multiple Credit Cards

Posted on by Sara Rathner

Rewards cards. Store cards. Business cards. Balance transfer cards. With such a variety of credit cards available for such a range of uses, many choose not to limit themselves to just one. In fact, 35% of Americans carry three or more cards, according to a NerdWallet survey of 2,019 U.S. adults conducted online March 5-9 by The Harris Poll.

But each new card added to your collection can make it that much harder to be on top of bills and balances. Here are ways to stay organized.

Keep a list of cards and features

Whether you use a personal finance app, a spreadsheet, a note-taking app or even a handwritten list, create a system to keep track of your credit card collection. Also include the:

  • Date you opened the card.
  • Annual fee and when it will be charged next.
  • Interest rate.
  • Payment due date.
  • Remaining balance, if you carry one from month to month.
  • Rewards program information, such as the required spending minimum for the sign-up bonus, as well as the card’s ongoing bonus categories.

Give each card a purpose

Think of your wallet of credit cards as a toolbox: You can tackle many tasks, but only if you use the right card for the job. Refer to the list above to know which card to use where. And if you have a common spending category that’s not yet covered, now you know what kind of card to shop around for next.

Rewards aren’t the only thing to consider, either. Your card may provide other perks that make it the winner for certain transactions. When Riley Adams, a certified public accountant and owner of the blog Young and the Invested, books travel, he and his wife opt to use their Costco Anywhere Visa® Card by Citi because it offers things like travel accident insurance and car rental insurance. The card earns 3% back on eligible travel purchases, but that’s not its main allure for Adams.

“The 3% cash back might not be as generous as the double or triple points you would receive from using the branded airline credit card that we have; however, the automatic travel insurance could wind up being far more valuable,” he says.

Quick tip: When it comes to card features, there’s no need to rely on memory. Leave a cheat sheet in your wallet or car, decorate your cards with different stickers, or even write the relevant spending categories onto each card in permanent marker.

Carry only the cards you use ‘in the wild’

If you use your airline card only to book flights, there’s no reason to keep it in your wallet all the time. Save that limited space for the cards you use the most in stores and stash the other cards in a safe place.

While you’re at it, assign each of the cards you carry a specific wallet card slot. After a while, you’ll be able to grab the right card without even having to look.

Security is another reason to limit the number of cards you carry. If your wallet is lost or stolen, you reduce the number of replacement cards you’ll need to request. Some cards have a card-lock function that lets you electronically “freeze” the card to new charges. For protection, you could put locks on cards you don’t use daily.

But don’t keep them unused forever. Try to make a purchase on a card at least every few months.

“If your credit card company discovers no activity, they could reduce your credit limit or close the card altogether,” says Brandon Littleton, founder and president of Form Advisory Group, a registered investment advisory firm in Nashville, Tennessee.

Quick tip: Designate one card for autopay expenses only. It can sit in your sock drawer while still covering your Netflix bill.

Simplify your ‘payment due’ dates

It’s easier to remember one or two due dates than a half-dozen. To avoid a mix-up or missed payment, try one or more of the following:

  • Get every card onto the same schedule. You can request specific payment due dates for your credit cards so that they all land on the same day (or on whatever schedule works for you). Some card issuers allow you to do this online; others may require a phone call.
  • Sign up for credit card alerts. Receive texts or emails when your bill is due, when your card was used for a purchase above a set amount or when your balance exceeds a certain amount. These alerts are especially useful if authorized users also make charges on your account.
  • Set up automatic payments. Connect a bank account to your card and automate the payments each month. Just make sure you have enough money in the account, as overdraft fees can be pricey.

Methodology

The survey of 2,019 U.S. adults ages 18 and older was conducted online by The Harris Poll for NerdWallet from March 5-9, 2020. It included 1,578 people with credit cards. This online survey isn’t based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, contact Brittany Benson at bbenson@nerdwallet.com.

Sara Rathner is a writer at NerdWallet. Email: srathner@nerdwallet.com. Twitter: @sarakrathner.

The article How to Stay Organized When You Have Multiple Credit Cards originally appeared on NerdWallet.

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Master the Quick and Painless Money Check-In

Posted on by Laura McMullen

Like cars, relationships and health, personal finance needs maintenance. Routine care now helps you in the future and alerts you to problems.

But check-ins can be easy to blow off, particularly if everything seems to be running smoothly.

“Comfortable might not be the best thing,” says certified financial planner Lazetta Rainey Braxton.

You can feel comfortable while missing opportunities to invest. “You can take your money for granted,” says Braxton, who’s also the co-founder and co-CEO of 2050 Wealth Partners, a financial planning and wealth management firm.

You may also sink a little too far into comfort while spending more as your salary increases, meaning you can’t save much.

Or maybe the issue is actually discomfort. If the very idea of reviewing bank statements stresses you out, why bother?

Whatever the reason for a laissez-faire money policy, it’s time to start tuning in — especially as effects of the coronavirus outbreak rattle the economy.

No need for a deep dive. Start with quick and painless check-ins:

Schedule check-ins

You’re not alone if you typically wait until something goes wrong, like an overdraft, before reviewing your finances, says Amanda Clayman, financial wellness advocate for Prudential. Cue a traumatizing trifecta: You feel bad, you must scramble to understand your finances and what went wrong — oh, and you have to fix the problem. This experience can lead you to associate checking your finances with stress.

Money check-ins at neutral (not panicked) times can help you remove that association. So put check-ins on the calendar for about once a week, Clayman says. Scheduling also holds you accountable, she adds.

Keep them short and simple

Stick to a short time frame for these check-ins — say, 15 minutes. That way, “there’s less danger of being depleted and overwhelmed,” Clayman says.

To that end, don’t try to solve problems or change behaviors during this check-in. “It can actually be counterproductive if we try to load in too much analysis and change too quickly,” Clayman says. “That could sabotage you.”

Remember, check-ins should feel like neutral activities you don’t mind repeating — not stressful chores.

For the first several check-ins, Clayman recommends eyeing your cash flow. Note your common expenses and whether you spent more or less than you earned. You’re simply trying to become more comfortable evaluating your finances. And after a few sessions, you may notice the first benefit — these check-ins become “less terrible,” Clayman says.

At this point, you’re also trying to get more familiar with your money. That familiarity, Clayman says, “gives you more ammunition for if and when you do want to change.”

For example, you may learn that you typically drop about $40 on lunches during the workweek, which strikes you as too much. Down the road, if you want to cut spending, you know that lunches are a smart place to start. Knowing that $40 baseline will help you set goals — maybe next week you shoot to spend $30 on lunch. That’s a more intentional and achievable goal than just “spend less money.”

Respect your preferred learning style

There are many ways to track your expenses and cash flow: You could scrutinize your bank and credit card statements (either online or printed), download a template or spreadsheet, manually write down each transaction or try a budget app.

When choosing a method for your check-ins, consider how you typically learn best. “Work with yourself,” Clayman says. Do you generally prefer taking notes by hand? Do you understand visuals better than text? Do you get overwhelmed by too much info or prefer having all the facts? Factors like these will determine which of these tools you’re most likely to use consistently.

And if you find that a certain method isn’t working for you, try something else, Clayman says. Chances are, you just haven’t found the right fit yet.

Identify your motivation and rewards

Like all new behaviors, there will be some growing pains. “It’s going to feel new, and it’s going to feel weird,” Clayman says. But you’ve got this. “Find motivation that’s personal,” she says. Ask yourself how you’ll benefit from this new behavior and how it will change your life, she adds.

Rewards are pretty motivating, too. After each check-in, treat yourself to something special that you don’t do regularly. Maybe you soak in the tub and read a book, call a friend or hunker down for a nap. Whatever you do, Clayman says, “be extra good to yourself.”

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

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How to Reduce Your Car Insurance Costs During Coronavirus Pandemic

Posted on by Lacie Glover

Amid a pandemic, it’s no time to pay for things you don’t need, and that includes car insurance for an idle vehicle.

You might be thinking about how to ditch your auto policy if you own a car you never drive — and whether it makes more sense to cancel the policy or suspend it temporarily.

Putting your car insurance on hold can be a good way to save money if you have an out-of-use vehicle. But it’s not as easy as halting your Netflix subscription. In addition, your options may be limited depending on why you’re taking a hiatus from driving the vehicle or whether you have a car loan. If you still use the car at all, you’ll want to keep it insured to stay legal and financially protected.

If you’re experiencing financial hardship because you lost work due to the coronavirus, insurers and other financial institutions are likely to be lenient.

Where it concerns your auto insurance, there are five main options to explore:

  • Request a coronavirus-related payment delay or plan.
  • Suspend your coverage.
  • Cancel your policy.
  • Reduce your coverage.
  • Remove yourself from a policy.

Coronavirus-related payment delays or plans

Many auto and home insurers are willing to work with customers financially affected by the coronavirus. Depending on your auto insurer, payment assistance can take many forms:

  • Pausing cancellations due to nonpayment of premiums.
  • Special payment plans, including delayed payments, for coronavirus-related financial hardship.
  • Custom payment options on a case-by-case basis.

No matter who provides your auto coverage, the best thing to do is alert the company before your bills are late — here is a list of financial institutions’ contact information you may need.

Suspending your auto insurance coverage

Pros Cons
  • You won’t pay for insurance while your car is out of use
  • You likely won’t have a coverage lapse, something that could increase your future rates
  • The vehicle won’t be covered if anyone wants to drive it
  • The vehicle won’t have insurance against nondriving problems like fire, animal damage, vandalism or theft
  • Drivers with car loans typically are ineligible

Suspending coverage essentially pauses your policy but doesn’t cancel it. That way, you can probably prevent your hiatus from being called an insurance lapse, which would likely result in higher rates later. Confirm this with your insurer beforehand.

Companies don’t always let customers suspend coverage, or might allow it only in certain situations. If you anticipate being out of work due to coronavirus for longer than your insurer’s available grace period or payment plan terms, the company may suggest this option. However, pausing coverage will leave you uninsured while you’re looking for work.

Only use this option if you have alternate transportation available. You may need to file an “affidavit of non-use” from your state’s department of motor vehicles to halt state-required auto coverage. This document officially lets the state know that you won’t operate your car for a given time.

Suspending your policy probably isn’t an option if you have a car loan. Lenders generally require that you maintain coverage for problems such as theft and vandalism.

Canceling your policy

Pros Cons
  • You won’t pay for insurance while your car is out of use
  • You can cancel your car insurance regardless of your insurer
  • The vehicle won’t be covered if anyone wants to drive it
  • The vehicle won’t have insurance against nondriving problems like fire, animal damage, vandalism or theft
  • You’ll have a coverage lapse, which could increase your future rates
  • Drivers with car loans typically are ineligible

You could consider canceling your auto coverage and getting a new policy when you’re ready to drive the car again. However, like suspension, cancellation probably won’t work if you have a car loan. Your lender likely will want at least some insurance on the vehicle.

Contact your DMV if you’re thinking about canceling. Similar to a suspension, your state may require you to submit an affidavit of non-use to officially take the car off the road and drop state-required insurance.

The biggest downside to canceling is that it creates a lapse in your insurance history. Continuously insured customers generally get better rates than drivers who have coverage gaps, who are typically labeled “high-risk drivers.”

Reducing your coverage

Pros Cons
  • You won’t pay for unneeded insurance while your car is out of use
  • You won’t have a coverage lapse, something that could increase your future rates
  • If you keep comprehensive, your car will be covered for nondriving problems like fire, animal damage, vandalism and theft
  • The vehicle might not be usable if anyone wants to drive, depending on how much you scale back coverage
  • You’ll have to pay for the insurance you keep
  • You’ll likely have to keep certain coverages if you have car loan

Cutting back coverage is a good alternative if you’re not eligible for suspension and don’t want to cancel your policy.

To start, you can reduce your auto insurance to the coverage required by your state. Almost every state requires liability insurance, and others mandate uninsured/underinsured motorist coverage, personal injury protection and/or medical payments coverage.

Consider keeping comprehensive insurance (or adding it) if you are storing the vehicle while you don’t drive it, in case it suffers damage while stored. Comprehensive pays to replace your car if it’s stolen, and it covers nondriving problems such as vandalism and damage from falling objects.

Ordinarily, you must buy comprehensive along with collision coverage, but your insurer may make an exception and let you keep a comprehensive-only policy, sometimes known as “car storage insurance,” if you’re storing your car long term. If you have a car loan, your lender may require you to keep both comprehensive and collision coverage.

If your insurer allows you to keep comprehensive and drop everything else, including liability insurance, contact your DMV. You may need to file an affidavit of non-use because your car would no longer have enough insurance for anyone to drive it legally.

Removing yourself from the policy

Pros Cons
  • The vehicle will be covered for nondriving issues like fire, animal damage, vandalism and theft
  • The vehicle will still have the insurance needed to drive it legally
  • You likely won’t have a coverage lapse, something that could increase your future rates
  • You’ll have to pay for insurance while you’re away
  • You’ll have to add yourself back on the policy once you’re home for at least 30 days

Instead of changing your coverage, you may be able to remove yourself from a family car insurance policy temporarily. This option is worth exploring if you’re going away but others in your household will be driving the car.

This option can save you money if you’re a riskier driver than the others on your policy because taking yourself off reduces the odds of a crash. However, if it won’t save you money, there’s little benefit to removing yourself, and it’s probably more convenient to stay on the policy. If you’re not going away and continue to live with other drivers insured on the policy, this may not be an option. Many companies require all drivers listed at the same address to be included on a policy, or else be specifically “excluded.”

Removing yourself from the policy is not the same as being an excluded driver. If you’re simply not listed on the policy, you can still drive the car. Excluded drivers aren’t supposed to drive the car, and may be required to prove they have other insurance in order to be excluded.

There’s no single insurance option that works best for everyone. If you decide to keep your coverage,  a solid payment history should help you get competitive rates down the road.

The article How to Reduce Your Car Insurance Costs During Coronavirus Pandemic originally appeared on NerdWallet.

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What to Do When You Can’t Pay Your Bills

Posted on by Liz Weston

The economic fallout from the coronavirus pandemic could be profound. Many people are already losing jobs, with unemployment jumping at a record pace. Even those who stay employed may face reduced hours or uncertainty about how long their paychecks will continue.

If you’re in a situation where you can’t pay all your bills, or likely to be there soon, you may have some options to limit the damage to your finances.

Prioritize essentials

Before paying anything else, try to cover the basics: shelter (mortgage or rent), food and utilities. Transportation, cell phone service and child care are necessities if they allow you to work.

The recently enacted stimulus package includes a 120-day ban on evictions for many renters, as well as a moratorium on foreclosures for most mortgages. People who have federally backed mortgages (including Fannie Mae, Freddie Mac, FHA, VA and Department of Agriculture) and who can attest to COVID-19-related financial hardship can request forbearance from their mortgage lenders.  If you’re going to miss a mortgage payment, contact your lender about hardship options and consider talking to a housing counselor approved by the U.S. Department of Housing and Urban Development. You can call HUD at 888-995-4673 for round-the-clock foreclosure avoidance assistance.

Housing counselors can help renters, as well. Another good resource is Just Shelter, which can point you to local organizations fighting eviction and homelessness. Also, emergency rental assistance may be available. Start your search for help at www.211.org.

Your local 211 organization can also connect you to resources to pay for other essentials, including food and utilities. Regulators in some states have told utilities not to shut off service for nonpayment during the crisis; elsewhere many utilities have vowed to suspend disconnections. Many also offer lower-cost “lifeline” service or payment plans if you fall behind.

If your car payments are too expensive and you owe less than the car is worth, you may be able to refinance the loan. Otherwise, the best option may be to sell it and buy something cheaper, if possible. If you owe more than the car’s value, you may still be able to sell it if you can get a personal loan to cover the difference in what you owe. Try to avoid repossession, either voluntary or otherwise, since you’ll still be on the hook for any deficit and your credit will suffer.

Identify your next-level priorities

Taxes, child support and insurance are expenses that can have serious consequences when you fail to pay.

The IRS and state tax agencies can take a portion of your wages, seize money from your bank account and even send you to jail (although that doesn’t usually happen unless you’re deliberately committing tax fraud). Similar penalties await people who fail to pay child support.

Falling behind on insurance payments, meanwhile, can cause your policies to lapse, leaving you vulnerable to potentially catastrophic expenses.

Some options for relief:

  • The IRS has pushed back the tax filing deadline to July 15. Many states are following suit. Tax agencies have payment plans if you can’t immediately pay what you owe.
  • You may be able to modify a child support agreement if you go back to court.
  • If your insurance is unaffordable, talk to the insurer about alternatives or shop around for a less expensive policy.

Now consider everything else

Access to credit can help you pay the bills when your income isn’t enough. Ideally you would make minimum payments on any loans or credit cards, since skipped payments can seriously damage your credit scores and cut off your ability to borrow. Miss enough payments and you could face collection calls, lawsuits and wage garnishment.

But some bills have a “pause” button. You can ask for forbearance on federal student loans, for example, which allows you to temporarily stop making payments. Since interest on federal education loans has been waived during the crisis, forbearance won’t increase what you owe. Plus, federal loans have income-driven repayment plans that potentially can reduce your required payments to zero. The U.S. Department of Education’s federal student aid site has details.

Meanwhile, some banks and other lenders are offering their customers more options after federal regulators encouraged financial institutions to help consumers affected by the pandemic. For example, credit card issuers, including Capital One and American Express, are allowing customers who ask for help to skip a monthly payment without penalty. Contact your lenders to see what’s available and how to qualify for any assistance.

Unfortunately, sometimes the available help isn’t enough. A credit counselor’s debt management plan could allow you to repay your debt at lower rates, or you may need to consider bankruptcy, which stops collections activity and legally erases many debts. You can get referrals from the National Foundation for Credit Counseling and the National Association of Consumer Bankruptcy Attorneys, respectively.

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

The article What to Do When You Can’t Pay Your Bills originally appeared on NerdWallet.

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7 Kinds of COVID-19 Relief for College Students

Posted on by Anna Helhoski

Colleges nationwide are closing their doors and moving to online-only learning amid the coronavirus pandemic. If you’re left in the lurch, the federal stimulus provides some student loan relief, but you’ll want to turn to your college for answers, too.

All students with federal loans qualify to delay payments, interest-free, through September. Some private lenders are offering forbearance as well.

Here is additional financial help that may be available to college students.

Independent students can get a stimulus check

Under the Coronavirus Aid, Relief, and Economic Security Act, most undergraduate college students will not receive a stimulus check. That’s because your parents might have claimed you as a dependent on their tax return, and dependents don’t qualify. Most students under age 24 are considered dependents.

But students who are independent — like many graduate students and undergraduates older than 24 — will get the full $1,200 one-time amount if they have an income of $75,000 or less. Students who are married with no children will receive a total $2,400 if their combined income is $150,000 or less. Those with children can receive an additional $500 per child.

The amount phases out for those earning $99,000 as a single person, $136,500 for heads of household (usually single parents) or $198,000 for married couples.

You might qualify for unemployment benefits

If you worked part-time or full-time while enrolled, and you were laid off — or if you’re a gig worker whose work is affected by the pandemic — you may be eligible for unemployment benefits. On top of that, you could receive an additional $600 of Federal Pandemic Unemployment Compensation per week. The benefits will last up to 39 weeks.

Compensation will vary by state. Contact your state’s unemployment office to apply for benefits, usually online or over the phone.

You can still receive federal work-study

If your school or employer closes and you lose your federal work-study job, you may be eligible to receive multiple payments or a one-time grant for the remaining period you were set to work.

The amount you receive will be based on your award amount rather than hours worked. Contact your college to find out how they are carrying out this policy.

You may get reimbursed if your campus closes housing

If you had to leave campus and are now learning remotely, you may be able to get some of your money back. Most schools are reimbursing students for some of their non-tuition costs, such as housing, meals and facility fees.

Don’t count on a tuition discount if your college switches to online learning. But ask about potential refunds for classes that can’t be held remotely, such as physical fitness or hands-on lab courses.

Getting a reimbursement will be similar to returning a purchase — you’re either going to get a credit to use for a future payment to the school or a direct refund, and it all depends on the school’s policy.

Any amount you receive back into your account or as a future credit will be prorated, meaning you’ll receive a portion of the overall costs you paid according to how much time is left in the semester.

You can keep refunds from unused loans, but it’s still borrowed money you have to repay. Consider returning those funds to your lender, especially if you have an unsubsidized federal loan, PLUS loan or a private loan, which all accrue interest while you’re in school.

Few colleges have canceled classes entirely without moving to remote learning. Berea College, a nontraditional working school in Kentucky, closed its doors and will offer prorated refunds to students. If it happens to your school, you’re likely to be reimbursed for all costs for the rest of the semester, including tuition.

Not every school will provide a refund. For example, Georgetown College, also in Kentucky, has stated it cannot offer a refund for room, board or parking passes.

Check with your school’s financial aid office if you have questions.

You could still stay on campus if you have nowhere to go

If your dorm is your primary residence, contact your college housing and financial aid offices to find out your options for remaining on campus.

Colleges are making concessions for students with extenuating circumstances, such as those who are low-income, homeless or are international students from countries with travel restrictions.

Northeastern University in Boston, for example, is not requiring students to move out. Neither is Evergreen State College in Olympia, Washington. At Smith College in Northampton, Massachusetts, students who have nowhere else to go can apply to continue receiving room and board.

Your school may keep a certain portion of housing open, but contact your school’s housing office to find out if meal services will continue and about your options for food.

Emergency aid may be available

Colleges may have emergency funds already available, and the CARES Act provides $7 billion in funds to colleges specifically designated for emergency financial aid.

The CARES Act also mandates that schools can use Supplemental Education Opportunity Grant funds to provide emergency aid to students experiencing a qualifying emergency due to COVID-19. This could include emergency grants, loans, scholarships or vouchers to cover expenses related to schooling and housing.

Some colleges, like Columbia University in New York City, are offering an emergency fund for students who need help with travel or storage expenses in order to leave campus.

Loan and Pell Grant limits are waived

For those who don’t complete college this semester, the CARES Act calls for colleges to waive lifetime limits on certain aid, including Pell Grants. That means any federal direct loan or Pell Grant money you used for school this semester won’t count toward your lifetime limit for either aid type.

You can request more financial aid. Even if you have already filed the Free Application for Federal Student Aid, you can appeal your award. This is useful if your family’s finances have changed due to events like job loss or medical expenses.

To update the FAFSA, sign in to fasfa.ed.gov and click on “Make FAFSA Correction.” Enter your FSA ID, make changes and submit. You can make changes up until the FAFSA deadline — June 30 after the school year you need aid. So if you need more aid to help out with expenses this school year, you have until June 30, 2020, to do it. To update your FAFSA for 2020-21 you have until June 30, 2021.

You can also contact your school’s financial aid office with your request for more aid via email or phone. Include a request for a specific additional sum you’ll need and supporting documents.

Anna Helhoski is a writer at NerdWallet. Email: anna@nerdwallet.com. Twitter: @AnnaHelhoski.

The article 7 Kinds of COVID-19 Relief for College Students originally appeared on NerdWallet.

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Take the Credit Card You Can Get, Work Toward One You Want

Posted on by Bev O'Shea

Trying to choose a credit card can feel like deciding who to swipe right on in a dating app — especially if you’re new to the game or have been out of it for a while.

With both, you might revise your wish list of qualities if the pool of possibilities is smaller than you had hoped. Unlike dating, however, the advice to “just get out there and try” isn’t useful with credit cards. Lots of applications close together hurt your credit.

But focusing on a card you can get will help you build a strong credit history and eventually qualify for one you want.

Find out what kind of customer they want

Credit cards are designed for specific audiences — there are cards for people recovering from mistakes, cards where you earn rewards for travel and cards that won’t charge you a fee the first time you pay late.

First, find out how creditors will see you. If you don’t know your credit score, you can check it for free at several personal finance websites or you may have access to scores through a credit card issuer or bank.

If you’re unsure what credit scores are acceptable for a particular card, call the issuer and ask, says Kelley C. Long, a certified financial planner in Chicago.

Cards that allow you to earn rewards or cards offering 0% APR for transferred balances typically go to customers with good credit profiles. If the card you want is out of reach, apply instead for a card that is designed for customers similar to you.

How to improve your odds

A qualifying score is often just the first hurdle in getting approved for credit. Income, debt obligations, credit age and history can also play a role.

Still, there are ways to tilt the odds in your favor, says Leslie H. Tayne, a financial attorney in the Long Island, New York, area.

  • Request your free credit reports from annualcreditreport.com and check for mistakes. Dispute errors that could be holding your score down, such as an account that isn’t yours and shows credit missteps.
  • Build a savings account. It won’t directly affect your score, Tayne says, but it can affect whether you are approved and for how much.
  • “Money in the bank is super key to lending,” she says. “They want to see security so you don’t have to go to credit if there’s some change in your circumstances. Money in the bank can help you improve your odds.”

If you’re a credit newbie

If you don’t have enough of a track record to qualify for credit, you can get on the radar by:

  • Becoming an authorized user on someone else’s credit card. That lets you benefit from their credit history, so ask someone with a long record of on-time payments.
  • Taking out a credit-builder loan. Unlike traditional loans, you get the cash after the loan has been paid off, which minimizes the lender’s risk.
  • Getting a secured credit card by putting down a cash deposit.

You should have a VantageScore in a couple of months and a FICO score, the kind used for most credit decisions, in about six months. Being added as an authorized user to an established account can speed up the process, says Can Arkali, senior director of Scores and Predictive Analytics at FICO.

Don’t expect excellent credit right away, because your score is based in part on the age of your accounts. You can’t do anything about the time it takes to build credit, so focus on factors within your power.

“Something you can control is paying bills on time every month,” Long says. Paying on time and using a small portion of your limit are the most important of the factors that influence your credit score.

If you’re recovering from mistakes

While it’s easier to start with a clean slate, it’s possible to rebound from major slips. You can use a secured card or credit-builder loan to add more positive information to your credit reports. Also:

  • Keep credit accounts open unless there is a compelling reason to close them, like a high annual fee.
  • Look for cards or loans designed for people with low credit scores.

If there is an option for prequalification, take it, says Long, who serves as a volunteer consumer financial advocate with the American Institute of CPAs. While prequalification doesn’t guarantee your application will be approved, being unable to prequalify is a strong signal you shouldn’t apply.

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

Bev O’Shea is a writer at NerdWallet. Email: boshea@nerdwallet.com. Twitter: @BeverlyOShea.

The article Take the Credit Card You Can Get, Work Toward One You Want originally appeared on NerdWallet.

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