What 6 Financial Planners Wish They’d Known About Credit Cards

As a boy, Travis Tracy watched his mom struggle with credit card debt. Consequently, he avoided credit cards until age 23. John Bovard, Ron Strobel, and Marcus Blanchard grew up hearing horror stories about credit card debt and so they steered clear as young adults. Marguerita Cheng says she was initially afraid of credit since her father warned her early on about the risks of interest and fees. And Justin Green wasn’t taught much of anything about credit cards, so he didn’t use one until he was 22.

And yet, Tracy, Bovard, Strobel, Blanchard, Cheng and Green each grew up to be certified financial planners who now use credit cards regularly to their advantage.

Here is what these pros wish they had known earlier:

Credit cards aren’t inherently bad

Tracy, a CFP in Durham, North Carolina, and founder of Fortitude Financial Planning, grew up as the oldest child in a single-parent household. “My mom always got in trouble with credit card debt, so in my mind, it seemed like a bad idea,” he says. That’s why he waited until he was 23 before he got his first credit card, which he only applied for because he was moving and needed to finance some purchases.

He carefully paid off his debt, and as his comfort level with credit cards increased, he started using rewards cards to earn cash back. Now, at age 31, he earns cash back on his everyday purchases and makes sure to pay off the balance each month to avoid interest. “My biggest lesson was how important credit cards are to your overall financial purchasing power,” he says.

They can help you build your credit

“I was always hesitant; there were stories about people trying to sign you up for credit cards, and I was told, ‘Don’t do it,’” recalls Bovard, now a CFP in Cincinnati and owner of Incline Wealth Advisors. “In Cincinnati, cash is king, and credit cards are bad. My parents emphasized that message, too.” He also remembers being told that credit cards could lead to a lot of debt.

As a result, Bovard stuck with debit cards until his early 20s. That’s when he realized that if he wanted to get approved for a mortgage at some point, he would need to build his credit history. “I was nervous about it, especially around the fear of forgetting to make a payment,” he says. He avoided that risk by checking his balance frequently and eventually setting up automatic payments.

Now 32, he says he wishes he had opened a credit card sooner, as soon as he started earning income, so he could have started building his credit earlier. “That could have led to a better credit history,” he says, which he now knows can translate to lower mortgage rates when you apply for a loan.

Credit cards offer fraud protection

After college, Ron Strobel, CFP and founder of Retire Sensibly in Nampa, Idaho, opted to use a debit card instead of credit card because he grew up hearing credit cards could lead to debt. Then, when he was 22, his debit card was compromised with fraudulent charges, and the $900 in his checking account instantly disappeared. It took months to get the money back. After that, Strobel switched to using credit cards for the additional fraud protection.

“You should use a credit card for the fraud protection aspect. Every time you buy something, it feels different to swipe that credit card instead of a debit card, because you know you’re protected,” says Strobel, now 32.

They can help you in an emergency

When Cheng, a CFP based in Gaithersburg, Maryland, studied abroad in Japan in her early 20s, her host family’s smoking and cats aggravated her asthma. She had to quickly find new housing and buy a futon. That $300 purchase was made possible by her credit card.

“It would have been hard for me to get out of that home without the credit card. It taught me that having credit was important for emergencies,” she says. Her dad, who came to the United States in the 1960s with $17, had taught her that credit was powerful but also risky. “He would always say, ‘Don’t spend money in the dark,’ meaning fees and fines — that’s just wasting money,” she recalls.

“My dad did teach me well,” she adds. “I didn’t abuse credit. I used it wisely.” And her father was so proud of her (and concerned about her health) that he ended up paying her credit card bill for her.

You can keep your credit limit low

Blanchard, CFP and founder of Focal Point Financial Planning in Pleasant Grove, Utah, says he took out his first credit card at age 19 while serving in the Marine Corps, but then quickly closed it after hearing horror stories about credit card debt. “I didn’t really understand how it worked, how you build credit, or anything,” he recalls.

After he had a similar experience to Strobel in which his debit card information was stolen and his bank account was drained, he finally took out his next credit card. Now in his mid-20s, he was no less nervous about overspending and building up debt. “I didn’t really understand that if you pay it off, the interest rate doesn’t matter,” says Blanchard, now 30.

He says he wishes he knew that if you’re worried about overspending, you can keep your credit limit low on the card, which will cap the amount you are able to spend.

While that’s true, there is a major downside to this approach: A lower credit limit means you have less available credit. This can lead to a higher credit utilization ratio, which is the portion of your credit that you’re using, and can hurt your credit score. (Using much more than 30% of your overall available credit can have a major negative impact.) That said, once credit bureaus report that you have paid the balance down or off, the damage should disappear.

“I look back and think, ‘Dang it, I would have been better if I’d kept that first card open. My credit score would have gone from good to great,” he says.

‘Never spend what you don’t have’

“I grew up in a lower-income family, so credit wasn’t something that crossed my mind until I learned I had unpaid medical debt,” says Justin Green, CFP and founder of Assist FP, a virtual financial planning firm based in the Boston area. Then, around age 22, he took out a credit card with a relatively low credit limit of $300 and paid it off each month so he could slowly rebuild his credit.

“The main thing to consider with a credit card is that you should never spend what you don’t have in cash on the card, because it can easily rack up and get you in trouble,” Green says. “Even as someone who is personal-finance oriented, I can see how it’s very easy to spend more using a credit card, and you do have to be careful,” he adds.

Now, at age 29, Green uses multiple cards, which he pays off each month, and maximizes his travel rewards. He and his fiancé are planning to use those accumulated points to pay for their upcoming honeymoon, which will be to a yet-undetermined location. The only requirement? “Blue water,” he says.

Kimberly Palmer writes for NerdWallet. Email: kpalmer@nerdwallet.com. Twitter: @kimberlypalmer.

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6 Steps for Financial Spring Cleaning, Pandemic-Style

Given the challenges of pandemic life, many financial tasks may have stayed on the back burner this year as we all tried to just make it through each day. At the same time, the pandemic had a big impact on our financial lives, and some money-related to-do’s are likely in order.

Now that it’s spring, it’s a good time to conduct a thorough review of your finances and address any neglected areas. Here’s how to spring clean your finances after a year of pandemic living.

1. Update your budget

Your spending patterns might have totally changed over the last year: According to the Federal Reserve Bank of St. Louis, travel, hotel, restaurant and bar spending fell during the pandemic, while grocery and beverage store spending went up.

So it may be time to create a new budget that reflects current expenses, says Curtis Bailey, certified financial planner and founder of Quiet Wealth Management in Cincinnati. “Covid changed spending patterns last year, and potentially going forward,” he says. He suggests anticipating what habits you plan to continue beyond the pandemic and avoiding any drastic changes, such as buying a second home, until you’ve done a thorough analysis of your needs going forward.

Shea Newton, CFP and president of Financial Journey in Leesburg, Virginia, recommends redirecting some of that previous spending into an emergency savings account. Some people, she says, may want to replenish their emergency fund after dipping into it over the last year, or boost it to a higher level, given the income uncertainty many people continue to experience.

2. Set new financial goals

Looking forward to beyond the pandemic, you might want to set new financial goals, such as finally taking a big vacation or finding a job that allows you to continue working from home. “You may be reeling, trying to figure out your direction again. Ask yourself what is truly important” and whether your current spending reflects that, suggests Andrew Mitchell, CFP and financial advisor at Fiduciary Financial Advisors in Grand Rapids, Michigan. If you want to go on a big trip but much of your spending currently goes to daily expenses, then you may need to adjust your budget.

Mitchell also suggests asking yourself if you’re prepared for the next catastrophe. Looking back, do you wish you had had a larger savings fund going into 2020 or more diversified investments? Reflecting on those questions can help you set new goals that will help you get through the next challenge, he says, whenever it may arrive.

3. Review your insurance coverage

The pandemic has had a big impact on our homes: Not only are we spending more time inside them, often with more expensive technology and other items to help us work or attend school from home, but housing prices have also increased. According to the Federal Housing Finance Agency, home prices rose 10.8% between the fourth quarters of 2019 and 2020. You might need more insurance coverage than you currently have, says Noah Damsky, principal of Marina Wealth Advisors in Los Angeles.

The cost of building materials has also gone up, which means it would cost more to replace a damaged home, he adds. His firm recently helped one of its clients increase their dwelling coverage by 40% to better reflect how much it would cost to rebuild the home today.

Damsky also recommends increasing coverage for water damage. “Since we’re spending more time at home, we’re likely using water more frequently, and the potential for plumbing issues increases.” If you rent, then renter’s insurance is crucial. Apartments carry a higher risk for flood damage with so many people at home straining the shared infrastructure, he says.

4. Streamline subscriptions

Because of all the time spent at home, many families increased their spending on subscription services such as Disney+, Netflix and HBO. As we all start to leave the house more, it might be time to scale back, suggests Jason Dall’Acqua, CFP and president of Crest Wealth Advisors in Annapolis, Maryland. “Cancel the subscription services that you will no longer be using as much and realign your budget with more normal circumstances,” he says.

5. Update your credit card

If your spending patterns have changed, you might also want to consider a new credit card that better maximizes your current lifestyle. Bailey suggests first logging into your credit card accounts and pulling up a summary of last year’s spending, as well as the rewards that you earned.

Did you maximize your reward earning potential and redeem those rewards in valuable ways? If you spend a lot on takeout or restaurants but your current credit cards don’t reward you for that spending, then it might be time to apply for a new card that does, he says.

6. Zero out mobile app balances

Given the rising popularity of payment apps like Venmo, PayPal and Cash App, it’s a good idea to check your balances: NerdWallet found that about two-thirds of mobile payment app users say they have maintained a balance in their accounts, which means they aren’t earning interest on that money. Instead, consider transferring your cash into a high-yield savings account.

“Interest rates are low right now, but if you get into the habit now of moving money into your savings account, when interest rates rise, you will see a bigger impact,” says Newton.

Kimberly Palmer writes for NerdWallet. Email: kpalmer@nerdwallet.com. Twitter: @kimberlypalmer.

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5 Pandemic-Driven Financial Habits Worth Keeping

As the pandemic shut down the world around her, Ashli Smith, an Atlanta resident and mom to a newborn, says she set up autopay for her recurring bills to help her stay organized and avoid late payments. “With everything going on, plus being a mom, I don’t want to forget to pay something or someone,” she says.

While the pandemic caused incredible financial stress and uncertainty, it also led many consumers like Smith to form new financial habits worth keeping, including saving more and spending less. A NerdWallet survey found that most people who formed new financial habits plan to continue them into 2021.

Here are five habits to consider sticking with even as life starts to return to normal:

1. Spend less, save more

For many Americans, spending less amid the COVID-19 pandemic came naturally because of income loss or fewer spending options after restaurants and travel largely shut down. NerdWallet’s survey found that among those who said they picked up new financial habits during the pandemic that they plan to carry into 2021, 58% said they were cutting back spending on “wants” and 36% said they were cutting back spending on “needs.”

“If your job was eliminated or your pay was reduced, then you’ve probably decreased spending and gotten used to a lower monthly budget,” says Eric Simonson, certified financial planner and owner of Minneapolis firm Abundo Wealth. “As soon as that income returns, it would be an amazing opportunity to keep expenses the same but save all of that new income.”

Natalie Slagle, founding partner at Fyooz Financial Planning and a CFP based in Rochester, Minnesota says, “For those who were furloughed or laid off, the No. 1 priority is replenishing savings.” For those who got used to spending less, she says, “we encourage them to sustain that habit so their cash flow can go toward building up their emergency fund at a higher rate than what was possible before the pandemic.” That way, it’s easier to handle the next crisis, whether it’s income loss or an unexpected expense, without taking on more debt.

2. Stick with a budget

In the NerdWallet survey, 39% of those who adopted new habits that they plan to carry into 2021 said that one of those habits was sticking to a budget.

“So many people have looked at their budgeting and spending during [the pandemic], often for the first time,” Simonson says. “It’s important to stick with this post-pandemic, since keeping a budget is part of a healthy financial plan.”

Many people turned to budgeting to help regain a sense of control that the pandemic took from them, he adds. “The financial habits you’ve been forced to learn and adopt have the power to create huge, positive, lasting change if you stick with them,” Simonson adds. Continuing to budget makes it easier to generate long-term savings and avoid debt, for example.

3. Minimize travel expenses

Among survey respondents, 40% said one of the new habits they plan to continue in 2021 was cutting back on travel spending.

“One reason we saw our clients enjoy lower expenses [during the pandemic] is because they didn’t go on their planned vacations,” Slagle says. “Not only did that cut expenses, but they also have flight vouchers and unused travel miles to spend.”

As travel begins to start again, Slagle says she’s helping clients plan on using some of those savings and credits on their next trip to avoid overspending.

4. Earn extra income

Based on the study, among those who developed new financial habits, just over a quarter said they picked up a side hustle or extra work to make money. Kevin Mahoney — a CFP and founder of Illumint, a financial planning firm for millennials based in Washington, D.C. — says earning a side income can help provide financial stability during uncertain times, which is why he encourages his clients to consider it.

“Supplemental income mimics an emergency savings fund. People who can consistently generate self-income are better prepared to withstand financial volatility,” he says.

5. Use autopay for bills

As for Smith, who tweets about personal finance from the handle @badgirlfinances, she says she plans to continue using autopay for bills, even when the pandemic is long over. In some cases, autopay comes with a small discount, too.

“It helps me stay organized because I know on a certain date, money has to come out to pay the bills,” she says.

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

Kimberly Palmer writes for NerdWallet. Email: kpalmer@nerdwallet.com. Twitter: @kimberlypalmer.

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How to Get Started on a Post-Pandemic Budget Recovery Plan

Many Americans are hoping to get their finances back on track in 2021 after a rough year. Increasing savings, paying off debt and improving credit scores were the most popular goals cited by Americans in a recent NerdWallet survey.

At the same time, many Americans also said they want to keep some of the good habits they developed earlier in the COVID-19 pandemic, like spending less on wants and travel.

The challenge is how to do this amid so much continued uncertainty as we head into the new year. To help you design your own budget recovery plan, we asked financial planners about the advice they’re giving their clients. Of course, recovery plans depend on individuals’ experiences in 2020.

“For those whose lives have been relatively unaffected, we’ve been working on replenishing emergency funds and paying off high-interest debt. …. For those who have been furloughed or laid off, we’re helping them take advantage of all the programs they are eligible for to help make ends meet,” says Dana Menard, certified financial planner and founder of Twin Cities Wealth Strategies in Maple Grove, Minnesota.

Whether you’re in the first or second group, here are five steps to get started setting up a post-pandemic budget recovery plan:

Refine your budget

Before creating a budget for the new year, Jovan Johnson, CFP and owner of Piece of Wealth Planning in Atlanta, says it’s important to look back on how you spent money over the past year — and chances are, it was a little different than in past years.

“We spend less on gas and entertainment but more on groceries and utilities,” Johnson says. Those who lost their job were forced to make even bigger cuts in spending as they scrambled to cover expenses like rent and food.

As 2021 unfolds, spending patterns will shift again, which means you might be tempted to start spending more. Using a tool like the 50/30/20 budget calculator can help you stay on track. It allocates 50% of your take-home income to needs, 30% to wants, and 20% to savings and debt payments.

“Make sure you reallocate your spending categories” as schools and businesses reopen, Johnson says. In other words, if you start spending more on travel, gas and restaurants, try to scale back on groceries, utilities and at-home entertainment. And if you have gotten used to spending less in general, try to continue that habit so you can increase your savings.

Crank up savings

Johnson suggests putting savings into an FDIC-insured, high-yield savings account through a regular direct deposit from your paycheck. That way, those short-term savings will continue to grow even when you aren’t actively managing them.

If you get a tax refund or any other additional income, that can also help grow your savings account. If you have longer-term savings that you don’t need in the near future, then you might also want to consider investing in the stock market.

Unload high-interest debt

A recovery plan for 2021 also includes paying off debt as soon as possible, whether it’s new debt acquired in the past year or older debt that’s lingering.

Dan Herron, CFP and co-founder of Elemental Wealth Advisors in San Luis Obispo, California, suggests first reviewing outstanding debts and checking interest rates, fees and status of any payments that fell under COVID-19 relief programs. If possible, he says, ask for lower interest rates on outstanding credit card debt and consider refinancing your mortgage if it would save you money.

Taking those steps can help free up much-needed cash flow, which you can direct toward paying off debts. The two main strategies to do so are focusing first on the highest-interest rate debts (aka the “debt avalanche” method) or starting with the smallest debts (aka the “snowball method”).

Plan for the next emergency …

As bad as 2020 was for so many people, it’s always a good idea to look ahead and prepare for the next possible crisis, too.

“COVID tested people’s financial plans, which makes it the perfect opportunity to review any weaknesses,” Herron says. If you still have your job, for example, he suggests running through what you would do if you were to lose it.

In a world of so much uncertainty, Herron urges people to pad their emergency funds even more than normal, ideally saving up one year’s worth of expenses. While that may not be realistic for many, you can start with a smaller goal, like $500, and grow it from here.

 … As well as a more promising future

Looking even further into the future includes planning for retirement, college savings for children, and even estate planning. If you temporarily stopped retirement contributions to free up more cash in the past year, for example, try to return to contributing at least enough to get a company match, Herron says.

“If your job is secure and you have adequate savings, I would encourage individuals to go back to your original allocation percentage,” he says. When it comes to estate planning, he suggests reviewing your beneficiaries, will and life insurance and making any necessary updates. “Make sure you have an adequate policy to provide for your loved ones,” he adds.

Embracing that level of preparation is another lesson from 2020 that can help us make better money decisions long after the pandemic ends.

Kimberly Palmer writes for NerdWallet. Email: kpalmer@nerdwallet.com. Twitter: @kimberlypalmer.

The article How to Get Started on a Post-Pandemic Budget Recovery Plan originally appeared on NerdWallet.

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How to Make a Debt-Free Switch to Cashless Payments

Before the pandemic, Steffen Kaplan, a social media and visual consultant in the New York area, preferred using cash to credit cards. He says cash helped him avoid overspending.

But now, with the coronavirus still potentially lurking around every corner, his habits have changed.

“I don’t carry cash around with me anymore,” Kaplan says. “Given that we have to remember to wear a mask, not touch anything, and go home and wash our hands every two minutes, it just seems easier to have a credit card rather than be fumbling around with cash,” he adds.

Like Kaplan, more Americans are shifting to digital payments amid the pandemic. Among small to medium-sized businesses that accept debit and credit card payments, almost half reported an increase in customers using or asking for contactless payments, according to a June 2020 report from the Electronic Transactions Association, an industry group, and The Strawhecker Group, an analytics and consulting firm.

But for some consumers, contactless payments also come with added overspending risks. “When you are used to a cash-based spending system, it’s extremely easy to overspend when you don’t physically ‘see’ yourself spending the money,” says Eric Simonson, certified financial planner and owner of Minneapolis-based firm Abundo Wealth.

If you’re increasingly turning to digital payments because of the pandemic but you also want to make sure to avoid debt, here are some strategies:

Try to pay off your credit card balance each month

Paying off your credit card balance each month isn’t always possible. In fact, among those who carry a balance, the average for households is around $6,124, as of June 2020, according to NerdWallet research.

But avoiding such rotating balances is a good goal because credit card debt is so expensive.

“It’s important for those making a transition to credit cards to understand the Sisyphean challenge of getting out of credit card debt,” says Sam Boyd, a certified financial planner and senior vice president of Capital Asset Management Group, a financial planning firm, citing the generally high interest rates on credit cards. They’re typically 16% or higher.

Treat your credit card like a debit card, and try not to charge more than you can afford to fully pay off in one billing cycle. One way to guard against it is to pay off purchases immediately after you make them, rather than waiting until the end of the month and having to pay one lump sum.

Give yourself limits

Simonson suggests setting a low credit limit on your credit card if you’re worried about overspending. “Set your credit limit for just above what you normally spend each month on groceries,” he advises.

The downside to doing that is that using more than 30% of your credit limit can hurt your credit score, and it also means you can’t rely on the card in an emergency if you need to purchase more than normal. But the strategy does help keep you from overspending.

He also notes that many credit card companies offer a service where you can be texted as you are approaching your credit limit. “It’s a good idea to turn this on if you are new to using a credit card, to keep track of where you are with your spending throughout the month,” he says.

Jodie Kelley, CEO of the Electronic Transactions Association, says consumers can also stick with debit cards or prepaid cards. They can upload them onto smartphones and use contactless payment methods while still avoiding the risks of credit cards.

Review your spending regularly

AnnaMarie Mock, a CFP based in Wayne, New Jersey, says there’s nothing wrong with primarily using credit cards as long as you are aware of your spending. “Regularly monitoring and comparing your actual purchases with your budget is critical to identifying any areas where you may be unknowingly overspending,” she says.

Monitoring can be done through apps that track transactions, through your account’s web portal, or on pen and paper. “Find a method that works for you,” she urges.

Kaplan does that by carefully tracking all of his receipts. “If I come home with anything I bought, [my wife] reminds me or I remember that receipts go right on the desk and then she logs them. There has to be a system in place,” he says, “or you risk being surprised by an extra $200 on your credit card bill.”

If it helps, keep using cash

David Tente, executive director at the ATM Industry Association, says cash is made out of fabric so it tends to transmit viruses and bacteria less than plastic or metal credit cards.

“It’s nothing to worry about, as long as you wash your hands,” Tente says.

For some people, he says, cash is a good budgeting tool because “you can’t spend what you don’t have. Once you run out of cash, that’s the end of spending for the month.”

When you’re using credit cards, on the other hand, you can keep spending up to your credit limit — but then you’re on the hook to pay it back.

The article How to Make a Debt-Free Switch to Cashless Payments originally appeared on NerdWallet.

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5 Credit Card Trends to Watch in 2019

Credit card users enjoyed a bounty of rewards in 2018: Thanks to a relatively healthy economy and competition for consumers, issuers launched new products with attractive incentives.

But there was a downside: Rising interest rates made carrying credit card debt more expensive. NerdWallet found that the average U.S. household with credit card debt carries almost $7,000 of it. Given current rates, that means paying over $1,100 a year in interest charges alone.

Card issuers last year also cut back on some of the ancillary perks, citing low levels of use. Discover eliminated several benefits, including extended product warranty, purchase protection and auto rental coverage. Citi and Chase also trimmed their price protection benefits.

Some credit card experts say 2019 might usher in a more austere period for credit card rewards, especially if interest rates continue to rise and the economy struggles.

“If there is an economic slowdown, or even a strong belief that one is coming, consumers are likely to start looking more strongly at card rates and fees, 0% [APR] offers and their length, and less at rewards,” says Mike Berinato, vice president of research and consulting for Market Strategies International, a financial services research and consulting company.

For now, consumers can continue to enjoy rich credit card rewards, as long as they take care to avoid high-interest debt.

Here are five credit card trends to look for in 2019:

1. More dining and entertainment rewards

In 2018, Wells Fargo launched the Wells Fargo Propel American Express® Card, which offers triple points on things like dining out, ordering in, travel, transit and streaming services. Other non-bonus-category spending earns one point per dollar. Terms apply.

Also last year, the Capital One® Savor® Cash Rewards Credit Card began offering additional rewards in the dining and entertainment categories. Plus, the issuer launched the no-annual-fee Capital One® SavorOne℠ Cash Rewards Credit Card, which also offers bonus rewards on dining and entertainment.

All three cards target consumers looking to offset the expense of some splurges, and we can expect to see more issuers try to get in on that action as long as the strong economy continues.

2. More co-branded retail cards

If your favorite store still doesn’t have its own co-branded credit card, there’s a good chance it will before 2019 is over.

Over the past 12 months, we saw even more retailers offering co-branded credit cards, including Ikea and Starbucks. Such cards can be lucrative for the merchant and can also encourage greater shopper loyalty. What’s more, store cards have greatly improved their reward offerings recently, making them more useful for everyday spending.

Consumers should be mindful of the fees and high interest rates associated with many store-branded cards.

3. More credit card spending

As more merchants eliminate cash as a payment option, consumers will continue to increase their credit card usage as a proportion of their overall spending. Some businesses, especially restaurants that cater to lunch crowds, say going cashless can save them time and money. They don’t need to count cash at the end of the day, and transactions at the register often move more quickly.

Given the cashless trend, 2019 will likely see more merchants joining the likes of salad chain Sweetgreen and Dos Toros, a taqueria, which have already opted to eschew cash in favor of plastic. This isn’t ideal news for those who can’t qualify for rewards credit cards, or those who find that cash works better for their budgeting. But for rewards-chasing consumers, it can mean opportunities.

4. More contactless options

Paying with your credit card without swiping or inserting it might sound futuristic if you’re not already a convert, but a growing number of consumers are using contactless cards, and even more will do so this year.

More card issuers are adding such options to their cards: Chase says it will offer contactless payment on all of its Visa credit and debit cards by the end of the year, and others, such as Capital One, already do so on many cards.

For consumers who enjoy convenience and speed, that’s something to look forward to.

5. Higher interest rates

If you’re carrying credit card debt, make a plan to pay it off as soon as possible in 2019. Interest rates are expected to continue to rise this year, meaning debt could become more expensive to carry as the year goes on.

If credit card debt is a concern, focus less on the flashy rewards your cards may offer and more on ways to pay down your balances.

Offers for 0% introductory APRs could get harder to find, which makes it a good idea to lock one in while you can. A credit card with a 0% introductory APR can help you pay off credit card debt without accruing additional interest, as long as you pay it off before that introductory period ends and make all minimum payments along the way.

This article was written by NerdWallet and was originally published by Forbes.

Kimberly Palmer is a personal finance writer at NerdWallet. 

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5 Reasons for Flyers to Love the Middle Seat

For some people, the middle seat isn’t a curse to avoid, but a perk to covet.

Ralphiee Esperas, a 30-year-old Phoenix resident who works in marketing, says his love affair with middle seats started a couple of years ago on a flight from Phoenix to Iowa, when he found himself in the middle seat on an evening flight. After striking up a conversation with the woman on his right, whom he recalls as being in her 60s, he offered to buy her a drink.

“I felt good about the situation, so I said, ‘I’m gonna get a drink; the first round’s on me,’” he says. Then, the woman on his left, whom Esperas says was in her early 20s, joined in after sharing that it was her birthday.

“We talked, the drinks were flowing, and we kept buying each other rounds,” he says. The conversation covered “just life,” Esperas says, including what they did for a living and the reason for their trip.

If, unlike Esperas, you’re someone who usually dreads the middle seat, here are five reasons you might want to consider giving it a chance:

1. More networking opportunities

Carolyn Clancy, an executive vice president at Fidelity, found a new job because she sat in a middle seat back in 1999.

After striking up a conversation with the person seated next to her, she ended up exchanging business cards and interviewing for a job at Fidelity, where she remains to this day.

2. New friends

As Esperas’ experience shows, a middle seat offers a prime opportunity for unexpected connections.

“I want to hear other people’s stories. It’s the best education about life, instead of just reading it on the internet. I get a lot of energy from that,” he says. He acknowledges, though, that he is the definition of an extrovert, and that introverts might have a different perspective on long conversations with seatmates.

Race car driver Kenny Wallace, who has a large social media following, says he often opts for the middle seat as a way of paying it forward. “I choose the middle seat sometimes to help people under stress,” he says.

For example, he will volunteer to trade his aisle or window seat with someone separated from their family so they can sit together.

Occasionally, his generosity has led to more tangible benefits, such as one time last summer when he received free beer in exchange for moving to a middle seat in a different aisle so two sisters could sit together.

3. A faster exit

If you don’t have assigned seating and can take your pick, often middle seats are the last to fill up — which means if you want to sit near the front of the plane, your best chance of finding an available seat is often choosing a middle one.

If you know you’ll be rushing to make a connection or just eager to get off the plane, sitting closer to the front could be considered a major plus.

4. Both armrests (in theory)

According to widely acknowledged traveler etiquette, the person occupying the middle seat deserves access to both armrests. However, not everyone respects this custom.

“It seems I usually end up sharing with the person sitting next to me that I don’t know. I actually just educated a teenager sitting next to me on my last flight about the armrest rules,” says Christina Saull, a travel blogger based in Washington, D.C., who writes at the aptly named website My View from the Middle Seat.

5. A possible row to yourself

If you are traveling solo and you suspect that your flight won’t be a full one — for example, if it’s scheduled at an unpopular time such as early in the morning — then the economists who blog at the website Cheap Talk calculate that you increase your chances of getting a row to yourself by selecting the middle seat.

Here’s how they reach that conclusion: If you select the middle seat on a relatively empty flight, then the next person to select a seat will choose a different row, because they prefer not to sit directly next to someone. If the flight fills up, you might get seatmates, of course. But otherwise, you could wind up enjoying the row to yourself.

And as travel blogger Catherine Smith notes, “I love the middle seat … when the aisle and the window are also empty.”

The article 5 Reasons for Flyers to Love the Middle Seat originally appeared on NerdWallet.

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5 Credit Card Habits to Take to College and Beyond

Before Janene Tompkins’ son, 21, left home to move to New York this summer, he asked his mom, a certified financial planner in Durham, North Carolina, for money advice.

“He asked me if he should be establishing credit and how to get his own credit card,” Tompkins says. She explained to him how credit scores work, how to maintain good credit and how to responsibly use credit cards, including the importance of paying off the balance each month.

Talking to kids about using credit cards can be challenging, especially for parents who never received the same financial literacy lessons from their family or who have struggled with credit card debt. But financial experts say it’s an essential conversation to have — especially before your child goes away to college or moves out to live on their own — to head off mistakes that hurt their finances over the long run.

Here are five habits to instill in your children as they start using credit cards:

1. Track spending

“Have your children write down every purchase and keep a running total of everything they bought throughout each credit card payment period,” says Jared Tanimoto, founder of Ascent Wealth Advisors in Newport Beach, California.

Manually recording spending might sound extreme, especially when apps or websites can show the statement at any time. But Tanimoto says it’s an important step to take for credit card newbies to establish a solid habit of knowing exactly where the money is going and to avoid surprises at the end of the month. Then, your child can review the monthly statements to check for errors (and report any possible fraud to the card issuer).

In fact, it might even help to share your own credit card statements with your children, says Angie Furubotten-LaRosee, a certified financial planner in Richland, Washington. That can help spur a conversation about how you avoid credit card debt or reasons you’ve carried a balance.

2. Embrace budgeting

Another financial habit to encourage a young adult to embrace: sticking to a budget, such as the 50/30/20 method, which is spending 50% of take-home pay on needs, 30% on wants and 20% on savings and debt payments.

“Think of your credit card purchases as using cash,” says Kelly Reddy-Heffner, a financial planner in Pennsylvania. “If you don’t have the cash already available, wait 24 hours to decide if the purchase is necessary.”

3. Avoid fees and interest

“You’re not ready to use credit cards unless you’re ready to pay for it,” says Jaime Quiros, certified financial planner and portfolio manager at FBB Capital Partners in Bethesda, Maryland.

In other words, it’s important for those just starting their financial lives to know that paying off the balance in full each month is critical to avoiding interest and fees.

Making on-time payments will also help build their credit score, which they’ll need in the future when they are ready to take out other loans, such as a mortgage or auto loan.

4. Keep credit cards to yourself

While college students tend to share everything from textbooks to germs, credit cards shouldn’t be passed around. They need to know that they are responsible for whatever gets charged on the card, and if they let someone borrow their card, they could end up facing an unexpectedly big bill at the end of the month.

The same goes for parents and kids, Quiros says. Because students often aren’t able to take out a credit card in their name unless they earn income and have a credit history, parents sometimes offer to share a credit card with their children, either by adding them as an authorized user on their existing credit card or co-signing on a student credit card.

While this approach can work out if the student uses the card responsibly, it can also go wrong if overspending ends up hurting their parents’ finances.

Instead, Quiros recommends that parents take out a new credit card with a low credit limit, so even if the child overspends, the potential damage is reduced. Parents could also consider a secured credit card, which requires an upfront security deposit that is usually the credit limit.

5. Pick the right card

Once you’ve prepared your child for the potential pitfalls of credit cards, you can also help them discover the benefits of responsible use, including travel rewards or cash back.

Tompkins and her son spent time comparing different credit card offers and reward programs to find the one that will reward him for the spending he expects to do most, which is at grocery stores and restaurants. He plans to use the rewards to help offset some of the costs of his new life in New York.

This article was written by NerdWallet and was originally published by Forbes.

The article 5 Credit Card Habits to Take to College and Beyond originally appeared on NerdWallet.

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Prep for In-Flight Interviews and Land a Job

After a long morning of job interviews in Anderson, South Carolina, in 2007, Kevin Sherman prepared to board his airplane back to Michigan, where he was about to graduate from Michigan State with a mechanical engineering degree. He chatted with his fellow job interview candidates in the boarding area about other job opportunities.

As he got settled on the plane, his seatmate said he had overheard his conversation. “He said, ‘I’m an engineering manager,’” recalls Sherman, and the two struck up a conversation. “He interviewed me for two and a half hours,” Sherman says. Within weeks, Sherman, now 33, had accepted a formal job offer with the company, where he ended up working for four years — even meeting his wife there — before moving on for another opportunity.

As Sherman’s experience shows, the conversations you have on planes can change your life. Whether you’re traveling for business or pleasure, you can increase your chances of turning a casual conversation into a job interview by learning from people who have done just that. We spoke to three people who turned a plane ride into a networking session. Here are their tips.

Be on your best behavior, even when tested

When Sherman first sat down on the plane, he kept his backpack on his lap while he got settled. His seatmate — and future boss — made a comment that some might have taken to be rude: “He said, ‘I hope that’s not going to be on your lap the whole time,’” Sherman recalls.

Instead of responding snippily, Sherman calmly told him not to worry, he would soon be putting it away. A few minutes later, the conversation that turned into a job interview began. “If I would have said, ‘Don’t be a jerk,’ that wouldn’t have turned out well,” Sherman says.

Dress professionally and keep a resume handy

If you have a high chance of mingling with people who work in your industry — perhaps because the city you are visiting is hosting a conference — then dressing professionally on your plane ride can pay off. Since Sherman was coming from a job interview, he was wearing a suit, and he had extra resumes with him. That made it easy for him to make a good impression and hand his seatmate his resume, which included his contact information.

Practice your opener

For Carolyn Clancy, an executive vice president at Fidelity, the life-changing plane ride took place on her way home from a direct marketing association conference in 1999. She turned to the person next to her and asked, “Are you going home or are you on vacation?” — a line she frequently uses on airplanes as a conversation starter. “Every conversation is an opportunity to network,” she notes.

Clancy quickly discovered that her seatmate had been at a Fidelity sales conference, and they started talking about the future of marketing and the Internet, which was just starting to take off. After two hours of chatting, they exchanged business cards. The next morning, Clancy received a phone call from a Fidelity recruiter. Within two weeks, she had a new job at Fidelity, where she has been ever since.

Be curious

Even if you’re not job-hunting at the moment, Clancy says, plane conversations can be a chance to learn more about a new industry or company.

“Have a genuine curiosity and ask questions,” she says. “You could learn about where to take your next vacation, a great hotel, or how to do your job better.”

Resist the pull of your phone

If you’re staring at your phone or wearing headphones, it’s harder to start conversations that can lead to professional networking, Sherman says. After his morning of job interviews, he was ready to zone out to music, but he resisted the urge.

“Once he started talking and I realized the potential, I was excited, even though initially I didn’t want to have a conversation,” he says.

Try to book a seat near the front of the plane

Ryan Bonnici — chief marketing officer at the user review company G2 Crowd and a former flight attendant — says sitting near the front of the plane, even within coach, increases the chances that you will be seated next to frequent flyers, who tend to be business travelers. “They typically fly closer to the front of the plane,” he says.

Booking your flight early will help you nab one of these front seats. And if you can spring for a business- or first-class seat, then you have an even bigger chance of rubbing elbows with a business executive who might be able to boost your career, Bonnici says. You can also look for conversation opportunities while you’re in the waiting area or in airport lounges.

Don’t limit interactions to your seatmate

While you’re waiting for the lavatory, Bonnici says, you can introduce yourself to the person standing near you. As at your seat, though, steer clear of people sending signals that they don’t feel like chatting. He says lack of eye contact or super-short responses to your questions are all signs that you should turn your conversation elsewhere.

Bonnici made a connection on a plane almost 10 years ago that changed his career while he was welcoming passengers as a flight attendant aboard a flight from Australia to the United States. He started talking with someone who worked in marketing at Microsoft, and that connection led Bonnici to shift careers and pursue marketing, a field in which he still works today.

Don’t say goodbye without trading information

Whether it’s by sharing email addresses or business cards, be sure you have a way to follow up with the person before leaving the plane. Then, send a short thank-you note within a day of your chat, and take any necessary next steps such as submitting your resume for an official job opening. Otherwise, that conversation at 30,000 feet could soon be forgotten.

The article Prep for In-Flight Interviews and Land a Job originally appeared on NerdWallet.

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Prevent Credit Card Photo-Bombs on Your Social Media

In anticipation of a romantic evening earlier this year, British DJ Tim Westwood Snapchatted an image of his credit card with a message encouraging his date to spend money on “nails, hair and a wax,” and possibly even new shoes and a bag. Later, he acknowledged that he did not intend to share his credit card details with the world.

Celebrities aren’t the only ones who share credit card numbers online, whether accidentally or on purpose, and there’s no shortage of examples. “People are sharing a moment and not realizing there is a debit or credit card they are now exposing,” says Eva Velasquez, CEO and president of the Identity Theft Resource Center, a nonprofit focused on identity theft issues.

Posting your card online can lead to major hassles, including the time and energy it takes to shut down and replace a compromised card, even though consumers are not generally responsible for fraudulent credit card purchases.

You might already know that sharing your card is a bad idea, but your credit card and other personal information could sneak into your social media accounts in less obvious ways. Here are six tips to make sure you keep your credit card numbers to yourself.

1. Celebrate big moments without oversharing

People are most likely to accidentally post a credit card number or other sensitive financial information when they are sharing a milestone moment, such as a first credit card, a new driver’s license or a final tuition payment, and not think about the ramifications of the post, Velasquez says.

“It’s about, ‘I’m celebrating this moment and I want to document that it’s real,’” she says. “We have to build more of a consciousness around the fact that even in these moments, you don’t want to share what you wouldn’t put on a billboard in front of your house.”

2. Review the background of photos carefully

You might be capturing a celebratory moment at the end of a meal, but the check with your credit card could be in the background. With the high-resolution cameras built into many phones, it could be easy for a thief to zoom in and grab the numbers.

“Look around and make sure no paperwork is on a desk and no credit cards on a table. Don’t have a window open on a computer where you might submit that information,” warns Sarah Granger, a digital media expert and author of “The Digital Mystique.”

“So much information can be gathered from selfies,” says Ted Claypoole, a partner and head of the FinTech team at law firm Womble Carlyle Sandridge & Rice in Atlanta. If you are going to take selfies, then he suggests sharing them only with family and friends and closely considering what information you are transmitting with the shot. “If you just got a new American Express, then all of the numbers are on the front,” he says. In other words, if the card is in the picture, anyone who sees it could steal your card numbers and use them.

3. Safeguard your personal details

Sharing seemingly innocuous images, such as a picture with your street number in the background or a driver’s license with a home address and other details listed, can also make it easier for someone to hack into your credit card (or other financial) account. The answers to security questions, such as your mother’s maiden name, may be easy to figure out through Facebook.

“Those things can be used to triangulate you and allow people to access an account or change things on your credit card,” warns Stephen Y. Chow, a partner at law firm Burns & Levinson in Boston who specializes in intellectual property and technology.

4. If you share card info, contact your issuer

Even if you share your credit card with all of your Twitter or Instagram followers, fraud protections still apply, Claypoole says. That means at the most, you are on the hook for $50, but many credit card issuers offer full fraud protection. He suggests calling your card issuer as soon as you realize your mistake to cut off the card.

“If you think you’ve done something stupid, go ahead and cancel the card,” he suggests. Still, even with the fraud protection, replacing a card can be a hassle. “If you do it enough, the card companies will say, ‘We might not give you another card.’”

5. Check your privacy settings

If you’re posting on Facebook, as opposed to other social media, you may be more likely to share personal photos that thieves could use to glean information, from the name of your high school to your wedding anniversary, in an attempt to access financial accounts.

Granger recommends sharing personal posts only with “friends” instead of making them public and to always default children’s social media accounts to “private,” since they may be more likely to over-share financial details in a celebratory moment. “After they turn 18, they can decide when and if to turn their accounts to public,” she says.

6. Talk to your children about the risks

“We have gotten into such a sharing age; especially younger people don’t stop to think about that,” says Jody Westby, co-chair of the American Bar Association’s Section of Science and Technology Privacy and Computer Crime Committee and CEO of the company Global Cyber Risk. “They’ll say, ‘Hey, I just got my first credit card,’ and they post it, or, ‘I just got my first paycheck,’ and they show it and it has their bank account information on it,” she says.

Children may think twice about those kinds of posts once parents start explaining how that information can be used by thieves, she adds.

Talking to children about social media risks — and about high-profile mistakes such as Westwood’s — can help them avoid making the same ones.

The article Prevent Credit Card Photo-Bombs on Your Social Media originally appeared on NerdWallet.

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