Financial Topics Archives | Page 726 of 788

Aug

2022

Compulsive or Impulsive Shopping: How to Combat It

By Marcy Lovitch | Budgeting & Goals, Financial Independence, money | Comments Off

Spending money on purchases is a part of daily life (groceries, for instance) and can be a pleasure (those cool new boots you’ve been eying for weeks). But for some people, shopping gets out of hand and becomes impulsive or compulsive shopping. They literally “can’t resist” buying and find themselves purchasing often and when they don’t really need anything.

Both compulsive and impulsive shopping can negatively impact your finances and personal life, though they are not the same thing. If you feel as if you can’t control your spending and your money management is suffering from it (such as debt is piling up), know that you can take steps to regain control.

Here, you’ll learn:

• What compulsive shopping is

• Causes of compulsive shopping

• What impulsive shopping is

• Causes of impulsive shopping

• How to take control of compulsive or impulsive shopping

What Is Compulsive Shopping?

Compulsive shopping is defined as an uncontrollable desire to shop, resulting in a person investing large amounts of time and money in the activity. People who shop compulsively tend to make purchases regardless of whether they need or want an item — or can actually afford it.

Compulsive shopping, or compulsive buying behavior (CBB), is considered a mental health condition that can have negative consequences financially and personally. It can become a preoccupation and involve the loss of self-control. Compulsive shoppers may use excessive spending as a coping method to mask feelings of low self-esteem, stress, and anxiety. They may feel a high when buying something but often experience disappointment and guilt afterwards.

Characteristics of compulsive shopping include:

• Obsessive research over coveted items

• Making unnecessary purchases

• Potentially dire financial issues as a result, such as bankruptcy, credit card debt, and foreclosure

Causes of Compulsive Shopping

Approximately 6% of adults experience compulsive shopping, which can express a variety of emotional needs and wants, such as:

• Perfectionism. The shopper may be focused on finding the perfect item, which brings them feelings of satisfaction once discovered.

• Desire to be in control. Purchasing items can make them feel as if they have achieved something when other aspects of their life are not well managed.

• Childhood trauma, neglect, or abuse. If a person has endured this kind of pain, buying items may feel like a reward that offsets this negativity.

• Feelings of loneliness and depression. Buying items can be an exciting mood-lifter; a kind of high.

• Mood, anxiety, or personality disorders. Compulsive shopping can be a self-soothing behavior.

What Is Impulsive Shopping?

Impulsive shopping is somewhat different from compulsive shopping, though some mental-health professionals consider them to be aspects of the same issue. Impulsive shopping tends to happen when a person gets caught up in the moment and spontaneously buys something. It’s a purchase without any forethought, planning, and it’s often not within a person’s budget.

People who impulse-shop are usually influenced by external triggers, such as seeing an item on sale or positively responding to a store’s atmosphere. Everyone indulges in some impulse-fueled retail therapy now and then. However, when these immediate gratification purchases become habitual, the behavior can morph into something uncontrollable and financially damaging. When it has this kind of negative impact, it nudges into the realm of a disorder.

Causes of Impulsive Shopping

Impulsive shopping can have a variety of causes, including:

• Wanting to ease negative feelings or improve one’s mood with a “pick-me-up”

• A need for fun or entertainment

• Lower levels of self-control

• Fear of missing out (FOMO) on items or experiences other people have

• Materialism; placing value on owning possessions

Compulsive vs Impulsive Shopping: What’s the Difference?

While these two behaviors’ names may sound similar, they are actually distinct. Here are the key differences when one compares impulsive vs. compulsive shopping:

Compulsive	Impulsive
Resembles addictive behavior	Can develop into addictive-like behavior if left unchecked
Buying things regularly	Buying is more occasional and situational
Shopping is planned and premeditated	Shopping is unplanned and spontaneous
More internally motivated by uncomfortable emotions	More externally motivated and influenced by shopping environments and marketing

Tips for Combating Compulsive or Impulsive Shopping

Impulsive and compulsive shopping can tip into the danger zone and ruin your budget and financial fitness. They can also take up too much mental space. If you have entered that realm and perhaps are carrying a hefty amount of debt, taking control of the situation can feel overwhelming. But there is help. Consider these suggestions on how to get started if you think you’re a shopaholic:

Seeking Some Professional Help

Individual counseling with a mental health professional can help you get to the emotional root of your buying issues. Psychotherapy, such as cognitive behavioral therapy (CBT), can effectively treat these shopping behaviors. Medication may also help manage unwanted or intrusive thoughts about shopping. Group therapy can also be beneficial.

Paying Close Attention to Spending Habits

Figuring out your particular shopping triggers can help you avoid or eliminate them. For instance, when buying, do you use credit cards instead of paying with cash or a debit card? Make shopping a priority over paying bills? Grocery shop without making a list? Being honest about how and why you may engage in certain overspending behaviors is vital to understanding the issue. Changing spending habits can then help you manage your finances better.

Having an Accountability Mentor

Get some support: A financial counselor, advisor, partner, family member, or friend can assist you on your journey to curb compulsive or impulsive spending. Try taking a trusted, non-judgmental confidant with you when you go shopping. Ask them to help rein you in if you start overbuying. You can also consider having them hold onto your credit cards to eliminate access, chat regularly with you to keep tabs on your progress, and be a sympathetic listener when you need to talk through your feelings.

National 12-step program support groups such as Debtors Anonymous (especially if you’ve racked up credit card debt) and Spenders Anonymous are also an option. They can connect you with others who are dealing with similar issues.

Setting a Budget

Creating and sticking to a budget allows you to gain control over your spending. A well-thought out budget will help with personal accountability and achieving financial discipline. Since life needs to be about balance and we all need to spend money on something fun here and there, try to set yourself up with the flexibility to splurge sometimes. This will help keep you from feeling completely deprived.

One suggestion is to consider incorporating the 50/30/20 budget rule. This guideline recommends spending up to 50% of your after-tax income on must-haves (say, housing, car payments, utilities, healthcare, and groceries). Then, take 30% of your money and reserve it for wants such as dinners out, vacations, concert tickets, electronics, and clothing. The remaining 20% should be allocated for investments, an emergency fund, debt repayment, or savings.

Recommended: 10 Personal Finance Basics

Minimizing Temptation

Many stores are carefully designed to get you to shop and spend, perhaps to an extreme. If a store’s atmosphere — the design, the scents, the music — tends to get you buying, avoid it. Don’t walk down the streets filled with your favorite shops; try to escape the triggers that make you shop too much. If you often spend free time at the mall or online shopping, sign yourself up for a class, take up a new sport, volunteer, or find other ways to fill the hours.

Online promotional discounts, coupon codes, and the ease of electronic transactions can make compulsive or impulsive shopping easier and more appealing. Go ahead and unsubscribe from retailer emails.

Curbing social media exposure can help, too. Research suggests ads and posts from social media influencers and seeing purchases from people in your social networks may encourage a “keeping up with the Joneses” mentality, often leading to impulsive and compulsive buying.

Starting a No-Spend or 30-Day Savings Rule

A quick way to stop spending money is to freeze any non-essential spending for an entire month. Commit to a 30-day shopping ban on things such as clothing, make-up, tech gadgets, or take-out, and see how much extra money you have at the end of the month. The difference may be eye-opening and help you break the cycle.

Successfully controlling your spending can provide a feeling of accomplishment and a confidence boost. Participating in a no-spend challenge can even become a fun game; you can involve other budget-conscious friends and know you’re all in it together.

The Takeaway

Although there are differences between compulsive and impulsive shopping, both can seriously affect your financial and personal life. Facing your impulsive or compulsive shopping habits can be daunting, but taking positive, concrete steps is likely to help conquer the problem. Getting past this spending issue, whether by shifting your behaviors or seeking professional help, can be a positive step, both for you personally and for your finances.

Want to get a better handle on your spending? Get started today by signing up for a SoFi Checking and Savings account. You can easily track your weekly spending on our dashboard. What’s more, when you open a SoFi online bank account with direct deposit, you’ll earn a competitive APY and pay no fees, so your money could grow that much faster.

Discover the benefits of banking with SoFi today.

FAQ

Is breaking a budget a sign of compulsive shopping?

Breaking your budget is not necessarily a sign of compulsive shopping. However, if you regularly deviate from your budget, spend money allocated for needs on wants, and find yourself saddled with credit card debt, you may need to rein in your compulsive spending. Analyze your shopping habits and budget to understand your behavior better.

Is making an impulse purchase a bad thing?

The reality is, most of us make occasional impulse buys, and they are not always such a bad thing. However, if this kind of shopping becomes habitual and leaves you with debt, pay attention and take steps to improve the situation.

How do I limit impulse purchases?

One way to limit impulse purchases is to avoid stores or websites where you know you tend to overspend. Also, ask yourself, “Do I need this or do I just want it?” when tempted to make a purchase. If the answer is the latter, wait 24 hours, and see if you still really want it. Your desire may dwindle during that cooling-off period.

Photo credit: iStock/jacoblund

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Aug

2022

Guide to Buying Stocks With a Credit Card

By Dan Miller | Credit, Growing Wealth, Investing | Comments Off

It is (sometimes) possible to buy stocks with a credit card, but it’s rarely a good idea for most people. Most brokerages do not allow you to directly fund your account with a credit card, and even if you find a brokerage that does, the fees associated with buying stocks with a credit card can outweigh any advantages.

Before you buy stocks with a credit card, make sure you understand the risks as well as the benefits. Investing in the stock market always comes with a degree of risk. If your investments lose money, you may not be able to pay off your credit card statement, which will mean that you’ll have to pay additional interest.

Using Your Credit Card to Buy Stocks

Most brokerages do not allow you to use your credit card to buy stocks. For example, SoFi’s online trading platform does not permit you to fund your account with a credit card. Brokerages generally don’t allow you to buy stocks with a credit card to help comply with the federal regulations governing financial products, such as stocks.

However, while you can’t purchase stocks directly with a credit card, there are still ways you can use your credit card to fund your purchase of stocks. This includes using cash back rewards to fund investments as well as taking out cash advances. Another option is to use a credit card that allows you to transfer funds to a checking account, which you can then move over to your brokerage account.

Benefits of Buying Stocks With a Credit Card

You generally aren’t able to buy shares of stock with a credit card, and even if you find a workaround to do so, the risks mostly outweigh the potential benefits.

Perhaps the main benefit if you’re investing with credit card rewards is that it can offer a way to put the rewards you get from your everyday purchases toward your financial future. While there’s no guarantee of success in investing, it’s possible the rewards points or cash you invest could grow in the stock market.

Risks of Buying Stocks With a Credit Card

Just like buying crypto with a credit card, buying stocks with a credit card comes with considerable risk. If you attempt to do so, take note of the following potential downsides:

• Investments in the stock market may lose value. If this happens, you may have a hard time paying off your monthly credit card statement in full.

• There are fees associated with buying stocks with a credit card. If you can find a brokerage that allows the purchase of stocks with a credit card, you’ll generally pay a fee to do so. Additionally, if you opt for a cash advance to use to buy stocks, you’ll also run into fees, not to mention a higher interest rate. There’s always a chance your investment returns won’t offset these costs.

• High credit utilization could affect your credit score. Making stock purchases with your credit card, taking out sizable cash advances, or racking up spending in order to earn rewards could all drive up your credit utilization, a major factor in determining your credit score. Having a high credit utilization — meaning the percentage of your total credit you’re using — could cause your credit score drop.

• You could get scammed. If you’re getting offers to buy certain shares with your credit card, there’s a chance it’s a scam. Do your own research before making any moves, and be wary before providing any personal information.

Recommended: Can You Buy Crypto With a Credit Card

Factors to Consider Before Buying Stocks With a Credit Card

There are a variety of different factors that you should keep in mind before buying stocks with a credit card.

Investment Fees

If you do find a brokerage that allows you to buy stocks with a credit card, they will likely charge a credit card convenience fee. This fee, which helps the brokerage to offset their costs for credit card processing, usually runs around 3% of the total price of your investment. Starting 3% in the hole makes it very difficult to make profitable investments.

Recommended: What is a Charge Card

Cash Advance Fees

If your brokerage does not support buying stocks with a credit card, you might consider taking out a cash advance from your credit card. Then, you could use the cash to fund your brokerage account.

However, this transfer will often involve a cash advance fee, which typically will run anywhere from 3% to 5% of the amount transferred. Additionally, interest on cash advances starts to accrue immediately, which is different than how credit cards work usually, and often at a higher rate than the standard purchase APR.

Transfer Fees

Another way to use your credit card to purchase stocks is by making a balance transfer. You can transfer funds from your credit card to your checking account, and then move that money again to your brokerage account. In addition to the hassle of moving money around, you’ll likely pay a balance transfer fee, which is often 3% or 5%. Plus, interest will start accruing on balance transfers right away unless you have a 0% APR introductory offer.

Interest

If you’re not able to pay your credit card statement in full (because your investments have decreased in value), your credit card company will charge you interest. With many credit card interest rates often approaching or even exceeding 20% APR, this will very likely swallow up any profits from your short-term investments.

You’ll also want to look out for interest getting charged at a higher rate and starting to accrue immediately if you opt for a cash advance or a balance transfer.

Recommended: How to Avoid Interest On a Credit Card

Avoiding Scams When Buying Stocks With a Credit Card

Because most reputable brokerages don’t allow you to buy stocks with a credit card, there are occasionally scams that you need to be on the lookout for.

Watch out for individuals or lesser-known companies that say you can buy stocks with a credit card through them. Do your own research to make sure it is a legitimate brokerage and offer before using these other companies.

Does Buying Stock With Your Credit Card Affect Your Credit Score?

The act of just buying stock with your credit card won’t affect your credit score any more than any other purchase on a credit card. However, your credit score might be affected if you aren’t able to pay your monthly balance off in full. One of the best ways to improve your credit score is to always make sure that you have the financial ability and discipline to pay off your credit card statement in full, each and every month.

Additionally, your credit score could take a hit if you use too much of your available balance or even max out your credit card with your stock purchases, as this would increase your credit utilization. Also, you might see an impact on your credit if you open a new account to fund your stock purchases. This is because credit card applications trigger a hard inquiry, which will temporarily cause a dip in your score.

Alternatives to Buying Stocks With a Credit Card

As you can see, buying stocks with a credit card generally isn’t a great option — or even possible with most brokerages. If you want to start investing in stocks, you might consider these other ways to do so:

• Cash back rewards: Then, you can take your cash back rewards that you earn and use them to invest in stocks or other investments.

• Employer-sponsored 401(k): A great way to invest is through an employer-sponsored retirement plan like a 401(k). By using a 401(k), you’ll get to invest with pre-tax dollars and defer paying taxes until you make withdrawals in retirement.

• Brokerage margin loans: If you’re looking to borrow money to invest, one option could be a brokerage margin loan. These allow you to borrow money directly from the brokerage, often at a lower rate than what’s offered by most credit cards. Be aware of the risk involved here though — even if your investments don’t pan out, you’ll still have to repay your loan.

The Takeaway

Very few (if any) brokerages allow you to directly buy stocks with a credit card. If you do find a brokerage that allows you to buy stocks with a credit card, note the fees involved, not to mention the risk of loss in investing and the possibility of damaging your credit score. This is why even if you do find a way to do it, it’s rarely a good idea to buy stocks with a credit card for most people.

One alternative is to get a cash back rewards credit card and then use rewards you earn to fund your stock investments.

FAQ

What is credit card arbitrage?

Credit card arbitrage is usually defined as borrowing money at a low interest rate using a credit card and then investing that money, hoping to earn a higher return on investment. This is often done with cards that offer 0% introductory APRs.

What are the risks of credit card arbitrage?

The biggest risk of credit card arbitrage is that your investments will lose money, or they won’t make enough money to repay your credit card balance. This can cost you a significant amount of interest and/or credit card fees. You should also be aware that having a large balance on your credit card (even if it’s at 0% interest) can have a negative effect on your credit score.

Does buying stock with a credit card affect my tax?

Buying and selling stocks does often come with tax consequences, and you should be aware of how your investments affect your tax liability. How you buy stocks (with cash, credit card ,or in other ways) doesn’t affect the amount of taxes you might owe on your stock purchase.

Should I buy stocks with my credit card?

The way that credit cards work is that you borrow money and, if you don’t pay the full amount each month, you’re charged interest. Some brokerages may also charge credit card processing or convenience fees if they allow you to purchase stocks with a credit card. Because of the interest and fees potentially involved, it’s very difficult to come out ahead buying stocks with a credit card. Plus, there’s no guarantee of success when investing.

Is it safe to buy stocks with a credit card?

Because most reputable stockbrokers do not accept credit card payments to fund your account or buy stocks, you’ll want to be careful with any site that says that it will let you buy stocks with a credit card. Follow best practices for internet safety when trying to buy stocks with a credit card, just like you would before making any purchase online.

Do stockbrokers accept credit card payments?

Most stockbrokers do not accept credit card payments to fund your account or to buy stocks. If you want to buy stocks with a credit card, you will need to find a workaround such as taking a cash advance from your credit card and using that to fund your brokerage account. Just be sure that you understand any cash advance fees and the interest rate that come with that type of financial transaction.

Photo credit: iStock/katleho Seisa

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Aug

2022

How Do Credit Card Miles Work? Earning, Redeeming, and More

By Jackie Lam | Credit, Financial Independence | Comments Off

The world of earning and burning credit card miles has an undeniable appeal. However, figuring out how credit card miles work can have you falling into a rabbit hole of bonus offers and travel portals.

Before you go click-happy with applying for travel credit cards, it’s important to know how miles work on credit cards. That way, you can make a solid choice in your travel cards, and make the most of your miles. We’ll share the ins and outs of credit card miles, including how they work, how much they’re worth, how to earn miles with a credit card, and how to use credit card miles.

What Are Credit Card Miles?

So, what are miles on a credit card? In short, they’re a way for credit card issuers to reward you for using their card to make purchases.

Typically, the more you spend, the more miles you rack up. Depending on the card, you can rack up a higher number of points when booking travel on certain airlines or in certain categories.

Aside from redeeming miles to cover the cost of flights, you might be able to use credit card miles for hotel reservations, ride shares, or car rentals. Many credit cards also allow you to redeem your miles for cash back, gift cards, or online purchases with partnering retailers. If it’s an airline-branded credit card, you might also be able to use your miles for upgrades, free checked bags, and in-flight purchases.

Credit Card Miles vs Frequent Flyer Miles

Credit card miles and frequent flyer miles are customer loyalty incentives that both offer ways to earn miles to redeem for free flights.

Most major airlines have a frequent flyer program. Signing up for a frequent flyer account is usually free, and it allows you to earn miles when you book with that particular airline. Depending on the program, you can also use those miles for travel perks, such as seat upgrades, priority boarding, and free in-flight purchases.

With credit card miles, on the other hand, you earn miles when you make purchases on your credit card. Unlike with frequent flyer miles, you don’t have to make these purchases with a particular airline in order to earn credit card miles. However, you will have to apply for a credit card and get approved to get those miles.

Recommended: Can You Buy Crypto With a Credit Card

How Do Miles Work on Credit Cards?

A credit card will reward you with miles when you spend a certain amount on the credit card. Often, cards will offer one mile per dollar spent, though this can vary depending on how a credit card works. In turn, you can redeem these miles for a free flight or other perks.

Some credit cards offer bonus miles for spending in different categories, allowing you to earn more than the standard mile per dollar. For instance, if you use your credit card at restaurants during certain months of the year, you could receive three miles per dollar spent, instead of the usual one mile per dollar.

As for the redemption value (or how much a point is worth in booking flights), that’s worked out between the airline and the credit card issuer. If the redemption value is 1 cent per mile, for instance, you’d need 40,000 miles to cover a $400 flight.

How Much Are Credit Card Miles Worth?

How much credit card miles are worth depends on several factors, including the redemption value, whether you’re booking through a travel portal, and the particular credit card. But typically, each mile is worth 1 cent apiece.

The number of points that you’ll need to book a free flight varies. It largely boils down to the redemption value, or how much a point is worth in dollars. As mentioned before, this value is determined between the airline and the card card company. Additionally, the cost of the flight itself will influence how many points are needed.

Some of the major credit card issuers, airlines, and hotels have travel portals where you can redeem your credit card miles for flights, hotel stays, and car rentals. An incentive might be offered to use these travel portals. For instance, your miles might stretch further if you redeem them through the portal. Or, there might be a featured, limited time offer where your miles are worth more if you travel to certain cities or regions.

How to Earn Airline Miles With a Credit Card

Now, we’ll dig into the fun part: how to earn credit card miles. There are a bunch of ways to rack up airline miles. Let’s take a look at the most common avenues.

Spend on the Card

The more you spend on your credit card card, the more miles you’ll earn. Plus, a credit card might offer the opportunity to earn more miles in certain categories (i.e., 5 times more on flights booked through a portal) or in rotating bonus categories.

While it might be tempting to keep spending in order to earn more miles, remain mindful of your credit card limit and avoid racking up too much debt (not to scare you, but here’s a look at what happens to credit card debt when you die).

Sign Up for a New Card

A credit card might feature a generous sign-up offer. If you hit the minimum on the sign-up offer, you could rack up a slew of credit card miles (just make sure you can afford to still pay off at least your credit card minimum payment).

Typically, you’ll need to spend a certain amount within a particular period after opening your account. For instance, if you spend $4,000 on transactions within the first three months of being a new cardholder, you could net 75,000 credit card miles.

Sign-up bonus offers are constantly changing, so it’s a good idea to check what a card’s intro bonus is currently before you apply. Also make sure to weigh factors aside from just a welcome bonus, like whether there’s a good APR for a credit card.

Recommended: When Are Credit Card Payments Due

Refer Friends

As a cardholder, you also can earn credit card miles when you refer friends. Often, there’s an affiliate link that you can send to your friends and family members. If they decide to apply and get approved for the card, you’ll earn a referral bonus.

Credit card referral bonuses often have limits though. For instance, a credit card might offer a 20,000 bonus miles per referral, but with a 100,000 limit per year. That breaks down to a maximum of five referrals per year.

How to Redeem Credit Card Miles

Once you’ve racked up credit card miles, you’ll need to redeem them. Let’s take a look at how to do so.

• Credit card’s travel portal: Travel portals usually give you the option to redeem your credit card miles in a number of different ways, such as flights, car rentals, or hotel stays. You might even get a better deal than you would purchasing tickets outside of the portal. Typically you won’t need to provide information, such as your CVV number on a credit card, to redeem your miles.

• Travel-related platform: Besides redeeming credit card miles through a credit card network’s travel portal, some hotel chains offer their own online platforms. You can choose to redeem credit card miles there as well.

• Bundling with a partner loyalty program or frequent flyer program: Some credit cards give you the option to transfer your credit card miles to a hotel, airline, or car rental transfer partner.

How to Use Credit Card Miles

Perhaps the most obvious way to use your credit card miles is for free flights. However, you may also be able to redeem them for the following benefits as well:

• Seat upgrades

• Priority boarding

• In-flight purchases

• In-airport purchases

• Purchases with specific retailers

• Gift cards

• Events

Do your homework and look for ways to get the most out of your miles. For instance, some travel portals give you a higher redemption value. In other words, your credit miles will be worth more and go further, and you’ll get more bang for your buck.

How to Check Your Credit Card Miles Balance

Wondering how many credit card miles you’ve racked up? Here are a couple easy ways to check your balance:

• On your credit card app: You can easily check your credit card miles through the credit card app. Usually, it will also direct you to ways that you can spend your miles.

• On your online credit card account: Once you log onto your cardholder account, you’ll typically find the number of credit card miles you’ve racked up on the dashboard. You can also see a breakdown of how many miles each transaction yielded. This is important to check regularly anyways, in case you need to dispute a credit card charge or request a credit card chargeback.

• By contacting your credit card issuer: You can also reach out to your card issuer over the phone to learn your credit card miles balance. Simply call the number listed on the back of your credit card to speak to a representative.

Recommended: What is a Charge Card

Other Types of Credit Card Rewards

Credit card miles aren’t the only reward you can earn from using your credit card. Here are other types of credit card rewards you can swoop in on:

Cash Back

With cash back, you earn back a percentage of eligible purchases made with your card in cash. For example, you might earn 3% cash back, which means you’d get 3 cents back for every dollar you spend.

You can redeem the cash-back rewards you earn in a number of ways, such as a statement credit or as straight cash. However, you might not snag great travel deals like you would with more travel-oriented credit card rewards.

Points

Credit card points offer you a certain number of points for your spending on the credit card. You could get two points for every dollar you spend, for instance. You’ll then be able to redeem those points for a wide range of purposes, though the value of the points can vary depending on the card and how you opt to use your points.

The Takeaway

Credit card miles allow you to get rewarded for your spending with your card. You’ll earn miles whenever you make a purchase on your card, and you can then use those miles to cover the cost of flights and enjoy other travel-related perks.

Beyond looking at a credit card’s miles-earning potential, you’ll also want to look at the APR on a credit card, as well as its fees, terms and conditions, and other featured perks. With the SoFi Credit Card, for instance, you can earn cash-back rewards. Plus, travelers will be happy to hear that the card charges no foreign transaction fees.

FAQ

Is earning credit card miles worth it?

As long as you’re using your credit card responsibly, earning credit card miles to use toward free flights, car rentals, travel perks, and other rewards can potentially help you save.

Which types of credit cards offer airline miles?

Many different credit cards offer airline miles. Usually, travel credit cards or credit cards co-branded with an airline offer additional perks or a greater number of miles earned per dollar.

What are the different types of credit card rewards?

The main types of credit card rewards are miles points, and cash back. Each type of reward has its pros and cons, but they all allow you to earn rewards for your spending on your credit card.

What is the difference between credit card miles and points?

Typically, miles can be used for travel, and they may be tied to a specific airline’s frequent flyer program. Points, however, can be used toward a slew of non-travel related rewards.

Photo credit: iStock/Prostock-Studio

Aug

2022

Guide to Changing the Name on Your Credit Card

By Jackie Lam | Credit | Comments Off

If you’re going through a life transition or identity shift, you’ll need to change your legal name. And beyond making the update on government-issued IDs and your social media account, you’ll need to change your name on your credit cards as well.

If you have multiple cards, this might be a tad trickier — and more time-consuming. To avoid the process turning into a stressful, hair-pulling endeavor, we’ll go over the process of how to change your name on credit cards.

Reasons for Changing Your Name on a Credit Card

Here are the most common reasons for undergoing a legal name change:

• Getting married

• Getting divorced

• Changing your name to one that’s a better fit for you

• Changing to mother’s or father’s last name as an adult

• Undergoing a gender transition (i.e., male-to-female [MTF] or female-to-male [MTF]) and adopting a moniker that’s more representative of your new identity

Steps to Get a Name Change on a Credit Card

Are you asking yourself, “Can I put a different name on my credit card?” The answer is yes — canceling your credit card won’t be necessary. Here’s how to change your name on credit cards.

Update Your Name on Government-Issued ID Cards

Before you reach out to your credit card issuer to change your name, you’ll need to update your alias on government-issued ID cards, such as your Social Security card, driver’s license, and passport.

Not taking this initial step will leave you at a standstill with changing your name on a credit card. That’s because your credit card company will most likely request a legitimate form of ID that verifies that your name has already been legally changed.

To change your name on your Social Security card, you’ll need to submit an application. You’ll also need to provide proper documents verifying your name and identity change. Then, you must submit everything via snail mail or by dropping it off at a nearby Social Security office.

As for changing your name on your driver’s license, each state has slightly different steps. For more information, start by sleuthing around your state’s DMV website.

To learn how to update your name on your passport, visit the U.S. Department of State’s website , where it lays out the process.

Contact Your Credit Card Issuer for Necessary Information

Next, you’ll want to check your credit card issuer’s website for details on how to go about making a legal name change on your credit card. Credit card requirements and procedures for each card issuer can differ.

A time-saving tactic: If you need to change your name across all of your credit cards, block out a few hours and research the steps and necessary information and documents you’ll need to execute the name change. Jot down the main steps and what information and documentation is needed.

Depending on the credit card company, you may have to go to a physical location to make the change, or you may be able to do it over the phone or online. An issuer might ask that you fill out a form through its online portal, while another may have you talk to someone via chat or phone first.

Collect Documents and Information Requested by Your Issuer

If you’ve done your research ahead of time by looking on a credit card issuer’s website, then you might have handled this step before reaching out to the issuer.

Either way, depending on the reason for the name change, here are some documents and information that you might need to gather:

• Photo ID

• Government-issued ID like a driver’s license or other legal document showing the name change

• Signed W-9 with your new name

• Social Security number

• Marriage certificate

• Divorce decree

• Birth certificate

• Court order approving the name change

Some credit card issuers will ask for a driver’s license and ID, while others might need more substantial proof, such as a marriage license. Similarly to if you were getting a credit card for the first time, it’s worth investigating in advance.

Submit Your Documentation

As previously mentioned, how you can submit documentation will depend on the requirements and process of the credit card issuer. Some issuers allow you to do everything online or over the phone, while others require you to step foot inside a physical office and speak with a representative. Issuers may have a handy form that you can easily access online, or they might require that you give them a call.

One thing to keep in mind: When making the name change across your cards, or when applying for new cards, make sure to be consistent in how your name appears. Otherwise, this could cause issues later on, given what a credit card is and how it works.

Follow Up If the Name Change Doesn’t Take Effect After Some Time

After the name change is approved by the credit card issuer, you’ll need to wait to receive a new card in the mail. How long you’ll wait before you have a new card in your hands can vary, but expect to wait at least five days.

If it’s been more than 10 days after the change was given the green light, follow up by reaching out to the credit card issuer and asking for a status update. If there’s been a snag, they can look into this further.

Changing Your Name on Your Credit Report

Once you change the name on your credit card accounts, you don’t need to take any action to have this change reflected on your credit reports.

Your credit card issuers will automatically let each of the three credit bureaus know. This usually happens at the end of the billing cycle. And should you open a credit card with your new name, this will also be reflected on your credit report.

If you notice that something went awry while changing your name — for instance, the new name shows up incorrectly — make sure to reach out to the credit bureau where the error appears and file a dispute. Once your dispute is received, the credit bureau usually has 30 days to look into it and get back to you.

How Long Will a Name Change Take to Update?

As mentioned before, how long a name change takes to update will largely depend on the credit card company. Each card issuer has different time frames for when the name change will get approved and processed.

For instance, one credit card issuer number may be able to approve the change over the phone and drop a card in the mail right away. Another issuer might require you to talk to them over the phone, then pay them an in-person visit to drop off your forms and required documentation.

What to Expect After a Name Change

Once your name is updated on your credit cards, you can go out into the world under your new moniker. The transition is usually pretty seamless, though you’ll want to look out for any typos or errors.

You’ll be able to use your credit cards in all the ways you had before — online, in-person, and through your digital wallet. If you’re still waiting for your new card with your updated name to arrive in the mail, you might consider carrying an unexpired government-issued ID with your old name on it just in case.

Does Changing Your Name Affect Credit?

Changing your name doesn’t not affect your credit in any way, shape, or form. While your new name will be reported to the three major credit bureaus on both existing and new cards, it won’t impact your credit history.

Keeping an Eye on your Credit

After you’ve updated your name on all your credit cards, stay on the lookout for any potential snags, such as a typo in your name. Certain mistakes can create confusion and further errors given how credit cards work. If you see anything amiss on your credit report, make sure to report it immediately.

Otherwise, the same basic credit card rules and practices apply once you’ve submitted your request for your name change.

The Takeaway

Making a name change on a credit card doesn’t have to be an overwhelming process. While there are certain steps to take, doing your homework and learning what those steps are and how they differ between different credit card issuers will help ensure smooth sailing. If you’re applying for a credit card, remember you’ll need to open it under your updated name as well.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How can I change the name on my credit card after marriage?

You’ll need to make the change directly with each credit card issuer. Before you reach out, poke around the credit card issuer’s website and look into the specific steps involved. From there, gather the information and required documents. Depending on the issuer, you’ll need to submit an application either online or in person.

Does changing my name impact my credit score?

Changing the name on your credit cards to match your legal name will not impact your credit score in any way. Once the name is updated, the credit card companies will report the change automatically to the credit bureaus.

Does the name on a credit card matter?

Yes, the name on a credit card needs to match legal documents, such as your Social Security number and driver’s license. So if you’re undergoing a name change, you’ll need to update your cards to reflect this.

Should I leave my credit cards in my old name?

No, your credit cards need to match your legal name. If you’re changing your name due to a marriage, divorce, gender transition, or some other reason, you’ll need to update the name on your credit cards so everything is the same.

Photo credit: iStock/BongkarnThanyakij

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Aug

2022

13 Online Shopping Trends for 2023

By Brandon Lee | Budgeting & Goals | Comments Off

The Covid-19 pandemic has changed the way people shop. While ecommerce sales have been on the rise for years, the need to stay home accelerated the growth of online shopping in the U.S.

To learn more about today’s online shopping trends, we used a multi-pronged approach that included:

• A Survey: We surveyed over 1,000 people who regularly shop online (meaning at least once a week) to gain insights into current trends, especially as they relate to the new shopping landscape post-pandemic.

• Social listening data: We analyzed 30,000 Twitter posts from March 2021 to March 2022, and leveraged customized research from Meltwater to gain further insights about online shopping while drunk, online shopping regrets, and online grocery delivery.

Read on for the 13 most compelling online shopping trends we’re seeing today.

1. Social influence: People buy what they see on social media.

The power of social media as a purchasing tool can’t be overstated.

According to our research, 74% of respondents say they’ve bought something they’ve seen on social media platforms like TikTok, Instagram, and Facebook. In 2017, only 40% of adults said they’d bought something after seeing it on social media.

What’s more, men are more likely to make these purchases than women: 78% of men say they’ve purchased something they’d seen on social media, compared to 70% of women who say the same.

2. Buy now, think later: Most online purchases are impulse buys.

What percentage of people's online purchases are impulse buys?

If you’ve bought something on the spot while browsing online, you’re not alone: 56% of people say that more than half of their online purchases are impulse buys.

Comparing age groups, millennials are the most impulsive online shoppers, with 63% of respondents saying their online purchases are not planned.

Gen Z may be the most prudent online shoppers. Of all the age groups, they had the highest percentage of respondents who said none of their online purchases are impulse buys (12%). Boomers, at 10%, were a close second.

3. At some point, most people shop online while not totally sober.

One interesting finding from our research: A majority (53%) of respondents admit they haven’t been sober when making an online purchase.

What percentage of people have shopped online while not totally sober?

Men are more likely to shop while intoxicated than women, with 60% saying they’d shopped online while not sober, compared to 40% of women who said the same. When looking at age groups, millennials (60%) are most likely to shop while not sober, and Boomers (37%) are the least likely to do so.

Online shopping while drunk isn’t necessarily a private activity. Some shoppers have shared their intoxicated online shopping adventures on social media.

According to Meltwater data, there was a 496% increase in the number of Tweets about drunk online shopping from 2020 to 2022.

While our survey found men to be more likely to engage in drunk online shopping, women were more likely to post about their intoxicated online shopping experiences on social media. According to our social listening data, millennial moms and wives made up the largest cohort of Twitter users who posted about drunk online shopping.

What drunken online purchases are people most likely to discuss?

Clothing was the most discussed shopping category in the social posts we analyzed. About 10% of people who mentioned drinking and online shopping discussed buying items for their children.

Amazon was by far the most mentioned shopping source (83%) in posts about drunk online shopping in which the name of the store was included.

People are most likely to talk about drunk online shopping on Saturday between 9am and 10am, and Sunday from 6am to 7am (possibly recounting the night before). Interestingly, Thursday morning between 10 and 11 is also a popular time to discuss drunk online shopping.

4. Beer is the top drink of choice for intoxicated online shopping experiences.

What is people's drink of choice for drunk online shopping?

Beer is the top drink for drunk online shoppers, with 54% of respondents saying they typically consume it before an intoxicated shopping experience. Wine (52%) was a close second, followed by cocktails (47%), and seltzers (42%).

The drinks of choice vary by age group. The most popular drinks for each generation are:

• Boomers: Cocktails (30%)

• Gen X: Beer (30%)

• Millennials: Beer (28%)

• Gen Z: Wine (31%)

5. Shoppers may not remember purchasing something online until it arrives.

Have you ever forgotten you ordered something online until it was delivered to you?

Have you ever forgotten ordering an item until it arrived on your doorstep? A full 65% of our survey respondents say they have.

Of all the age groups, millennials were the most likely to order something and forget about it, with seven out of 10 respondents saying that’s happened to them. Boomers were the least likely to forget making an online purchase.

6. Just because stores have reopened doesn’t mean people are coming back.

How has the reopening of stores affected people's online shopping habits?

The pandemic caused a massive ripple in worldwide markets due to government shutdowns. Apparently, the reopening of stores hasn’t done much to convince consumers to return.

The percentage of Americans who have recently visited a mall is less than half of what it was pre-Covid. Before the pandemic, about 56% of Americans said they visited a mall within the last 30 days. Now, just 26% of respondents say they’ve shopped at a mall in the last month.

Even with stores reopening, 39% of consumers say they will continue shopping online the same amount, and 37% say they plan to shop online even more. In other words, a majority of people will maintain or increase the online shopping habit they picked up during the pandemic.

7. Men spend more online shopping now than they did pre-pandemic, compared to women.

How much money do people spend on online shopping now compared to pre-pandemic days?

The pandemic has changed all kinds of consumer shopping habits, including the amount of money people spend online now versus what they spent before the pandemic. When comparing men and women, we found that:

• 25% of men are spending over $500 more on online shopping now than they did pre-pandemic

• 17% of women are spending over $500 more on online shopping now than they did pre-pandemic

• 37% of women are spending $100 or less on online shopping now compared to pre-pandemic days

• 29% of men are spending $100 or less on online shopping now compared to pre-pandemic days

8. People tend to order from Amazon at least three times per month.

How often are people shopping on Amazon?

People are ordering more from Amazon than ever before. The company’s profits increased 220% in 2021 from the previous year when the pandemic was in full effect.

A majority of respondents (65%) place three or more orders on Amazon each month. And 16% place more than five Amazon orders every month.

9. Shoppers are split on in-store vs. online clothes shopping.

Despite the convenience of online shopping, there was a near-even split between the percentage of people who prefer to shop for clothes online (52%) versus in-person (48%).

Boomers had the largest percentage of respondents (60%) who prefer to shop for clothes online. Gen Z had the largest percentage of respondents who prefer to shop for clothes in-person (55%).

in-store vs. online clothes shopping

While many online retailers have made it easier to return clothes, the inconvenience of having to ship items back may outweigh the inconvenience of having to drive to a store to try things on.

10. Items that look different online vs. in-person are a common source of purchase regret.

Why do people regret online purchases?

Buyer’s remorse is not new. However, with the rise of online shopping, we wanted to find out the most common reason people regret their online purchases specifically.

Apparently, it’s because items can look a lot better on-screen than in-person. The biggest reason our respondents regretted an online purchase was because they felt it looked different in real life compared to how it was presented online (26%). The second-most popular reason was overspending on an online purchase (22%).

Here’s a breakdown of the reasons people regret online purchases:

• It looked better on the screen than in real life – 26%

• I spent too much money on it – 22%

• I do not use or wear it – 14%

• It wasn’t what I wanted but I was too lazy to return it – 14%

• I meant to return it but missed the window for returns – 13%

• I don’t know what I was thinking when I bought it – 10%

When we analyzed social posts that discussed online shopping regrets, we found that the posters tended to be Gen Z women who are mothers, have dogs, and/or are writers or artists.

What purchases do people post about regretting the most?

According to the social listening data, people regret buying clothing the most, and they regret buying beauty and health products the least.

11. Buy Now Pay Later: Convenient or confusing?

When looking at social posts about shopping regrets from March 2021 to March 2022, we noticed a spike in negative sentiment in February 2022. The spike was caused by a viral Bloomberg article that discusses the dangers and confusion around buy-now-pay-later (BNPL) options while shopping online.

The article talked about how BNPL models can be misleading about how much they charge consumers, especially compared to credit cards. It discussed how using a buy-now-pay-later option can end up being more expensive than using a credit card.

Buy-now-pay-later is a relatively new concept for online shoppers, but it’s already gained popularity: More than one in 10 of our survey respondents (14%) say they prefer to use a BNPL service to finance their online purchases. If you choose to use buy now pay later, read all the terms carefully and make sure you fully understand how much you’re being charged. You may find that paying with a credit card is a more cost-effective option.

12. Haul videos are an influential source of shopping inspiration.

What's the main reason people watch haul videos?

Our data shows that haul videos are an influential source of shopping inspiration. In fact, one-third of our respondents said the main reason they watch haul videos is to discover new products they might want to buy.

More than half (53%) of our respondents say they’ve bought something they saw on a haul video. When comparing different age groups, younger people appear to be the most influenced by haul videos, with 70% of Gen Zers saying they’ve bought something after watching one. Looking at men versus women, men are more likely to have purchased something they saw on a haul video (60%) than women (46%).

13. Online grocery delivery is here to stay.

How often do people get groceries delivered?

While in-store grocery shopping continued during the pandemic, reluctance to be out in public opened the door for more options, such as grocery delivery apps and DIY meal kits.

In fact, 38% of respondents now use grocery delivery services but didn’t before the pandemic. And 48% of people have food or groceries delivered to their house at least once a week. Before the pandemic, only 3% of grocery spending occurred online!

We also found that 22% of people use meal kits such as Blue Apron and Hello Fresh currently, but did not use them before the pandemic.

And on days when people don’t feel like cooking, online food delivery comes to the rescue. In fact, 28% of respondents said they now order meals from services like UberEats and DoorDash but never used to pre-pandemic.

When we asked respondents what they get when ordering food or groceries online, the most common answers were:

• Sweet snacks (such as candy, cookies, ice cream): 45%

• Salty snacks (such as chips, jerky, nuts): 43%

• Vegetables and fruit: 42%

The Takeaway

Mass shutdowns and the reluctance to go out in public made consumers rely more on online shopping during the pandemic. And now that stores have reopened, people plan to continue shopping online at the same rate, or even more.

With so many consumers now embracing the convenience of online grocery and food delivery, leaving the house for necessities may become a thing of the past. One reason people might consider venturing out, however, is to buy new clothing. Nearly half of shoppers still want to try things on before they buy them.

A majority of people say most of their online purchases are impulse buys—and they’ve even forgotten they ordered something until it arrived at their door. Perhaps that has some correlation with the fact that more than half of our survey respondents say they haven’t been sober when shopping online.

There has also an increase in the use of the buy-now-pay-later model, which became popular during the pandemic. In fact, over 10% of our respondents say it’s their preferred payment method when shopping online. But buy-now-pay-later models can be misleading, and may ultimately end up costing buyers more than they expected.

Credit cards offer a similar type of financing, but are typically much clearer in their repayment terms and interest rates. They also often offer rewards.

Photo credit: iStock/AsiaVision

New and existing Checking and Savings members who have not previously enrolled in direct deposit with SoFi are eligible to earn a cash bonus when they set up direct deposits of at least $1,000 over a consecutive 25-day period. Cash bonus will be based on the total amount of direct deposit. The Program will be available through 12/31/23. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC.

SoFi members with direct deposit can earn up to 4.00% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 3/17/2023. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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