Oct
10
2023

Guide to Automated Credit Card Payments

By | Credit, credit card, Family Finances | Comments Off on Guide to Automated Credit Card Payments

If you’re like many cardholders, you will likely want to take advantage of any opportunities to streamline your finances. A commonly used credit card feature that can make life more convenient is automated credit card payments, or credit card autopay. It’s a way to have your bill paid seamlessly on time so you don’t have to wonder, “Is my credit card payment due around now? Have I already paid it for this month?”

Understanding what autopay is and how it works can help you decide if enrolling in automatic payments is right for you. There are definite benefits to setting up autopay, but there are downsides to take into account as well. You’ll also need to consider how you’d like to configure credit card autopay, as there are a few different options.

In this guide, you’ll learn about all this topic and gain the insight you need to decide if autopay for your credit card is a good fit for you.

What Is an Automated Credit Card Payment and How Does It Work?

An automated credit card payment, or autopay, is a recurring payment that’s scheduled for the same day each month. The automatic payment is typically made on a date that’s either before or on the statement due date.

Autopay allows cardholders the convenience of making credit card payments on a periodic basis without having to manually set up payments. This also helps with avoiding late or missed payments.

When you enroll in automated credit card payments through your credit card issuer, you’re authorizing the issuer to request a certain payment amount on a specific date from your banking institution. When the autopay date arrives, your card issuer’s bank will send your bank an electronic request for the payment amount you’ve set up.

Your bank then will fulfill the payment request and send it to the merchant’s bank (i.e., your card issuer).

Credit Card Autopay Options

There are a few ways to approach automatic bill payments through your card issuer. Each has its benefits and caveats, so assess your own financial situation before choosing an autopay strategy for your credit card.

Paying the Minimum

One option is establishing automated credit card payments for the minimum amount that’s due on your billing statement. The minimum payment is the smaller amount due that’s shown on your statement or online account, and the amount varies based on your total charges at the close of your card’s billing cycle.

Selecting to pay the minimum can be useful if you don’t have enough money to repay the entire statement in one fell swoop. By paying the minimum, you’ll fulfill the issuer’s minimum requested payment and keep your account in good standing — which, in turn, helps keep your credit score in good standing.

However, this means you’ll roll over the remaining statement balance into the next billing period, which will lead to incurring interest charges. That’s one aspect of how credit cards work.

Recommended: What is a Charge Card?

Paying the Full Balance

You also can choose to pay the full balance as shown on the billing statement for each recurring payment. Paying the full balance is beneficial, because it allows you to avoid rolling a balance into the next billing cycle. This, in turn, means you can avoid interest on a credit card.

However, since your balance will likely vary month to month, you need to be sure you have enough cash in your bank account to cover it. Otherwise, you could wind up overdrafting.

Paying a Fixed Amount

Another option is to set up automated credit card payments for a specific, fixed amount. For example, if you exclusively use your card to pay your fixed monthly cell phone bill of $50, you can establish an autopay for $50 toward your account on a recurring schedule. You can also use this option if you’d like to make extra credit card payments throughout the month.

Benefits of Automatic Credit Card Payments

Choosing a credit card that allows autopay can be helpful for various reasons. These are a few of the major upsides to enrolling in automated credit card payments:

•   You won’t risk forgetting about a credit card payment due date.

•   You’ll avoid penalty fees and penalty annual percentage rates (APRs) for making a late payment.

•   Your positive payment history is maintained.

Drawbacks of Automatic Credit Card Payments

There are also some caveats to consider before you set up autopay. This includes the following:

•   You might face other fees if you have insufficient funds when using autopay.

•   You might slack on reviewing your monthly credit card statement for red flags.

•   You might inadvertently overspend on your card because you feel as if you’ve got the payment covered.

Factors to Consider Before Setting up Automatic Credit Card Payments

Before setting up automated credit card payments, honestly assess your finances and habits. Verify that you have sufficient deposits into your checking or savings account to cover the autopay amount you’ve set up.

And if you do set up automatic credit card payments, make sure you continue to check your monthly billing statements. Confirm that all transactions are yours and are accurate, and that your total spending is still manageable.

Setting up Automatic Credit Card Payments

The exact process for how to set up automatic credit card payments can vary somewhat from issuer to issuer, but in general, it’s pretty easy to do.

•   You will need to first log on to your credit card account either online or through the mobile app. It’s also possible to call the number listed on the back of your card to have someone talk you through it.

•   Pull up the section labeled payments, and you should then be able to find an option to manage or set up autopay. You’ll need to connect a bank account where the payments will get pulled from and select the date and frequency at which you’d like the payment to occur.

•   You should also be able to select which payment option you’d like (minimum due, the full balance, or another amount).


💡 Quick Tip: When using your credit card, make sure you’re spending within your means. Ideally, you won’t charge more to your card in any given month than you can afford to pay off that month.

Tips for Stopping Automatic Payments on Credit Card

What if you have credit card autopay activated on your account but need to halt automated payments moving forward? Federal law protects your right to rescind authorization for automatic payments. Here are a few ways to go about it:

•   Turn off autopay through your card issuer. Many credit card issuers give cardholders the ability to turn autopay on or off through the app or via their online account’s payment settings. Just make sure you do so before the next automated payment is processed.

•   Revoke authorization from your card issuer. Call your credit card issuer to revoke authorization for autopay. Then follow up the call with a written letter revoking authorization, and requesting a stop to automatic payments on your account.

•   Request a stop payment order from your bank. You can also contact your bank to place a stop payment order on any automated payment transactions requested by the card issuer.

Regardless of how you stop automated payments from occurring, continue reviewing your monthly statement and account activity to ensure that the autopay has ceased.

What Happens if You Overpay Your Credit Card Balance?

Let’s say you inadvertently set up autopay to higher than the balance — what could you do then? Typically, credit card overpayments are processed as a negative balance. A credit for the overpaid amount should be reflected on the next billing statement, assuming your new transactions bring your account above a zero balance.

However, you do have the right to request a refund from the card issuer, instead of having it applied as a credit. The Federal Deposit Insurance Corporation (FDIC) has in place regulatory credit card rules for card issuers when it comes to an overpayment on your card account. It states that upon receipt of a consumer’s written refund request for an overpayment, an issuer must provide the refund within seven business days.

The Takeaway

Automated credit card payments are a convenient option and can mean one less thing to remember. In addition to helping you keep your card account in good standing, autopay can provide peace of mind. By automating payments, you’ll more easily avoid credit card late payments, penalty fees, and penalty APRs for late payments.

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

Is it a good idea to automate monthly credit card payments?

Whether enrolling in automated credit card payments is a good idea depends on your current financial situation. You must reliably have the payment amount in your checking or savings account each month and not be at risk of overdrawing or having insufficient funds. Also consider your other financial responsibilities and personal money management habits to decide if automated payments are right for you.

Do automatic payments affect your credit score?

Thirty-five percent of your FICO® credit score calculation is based on your payment history. Automatic payments can help you make on-time payments for at least the minimum balance due so your payment history builds or remains positive. As long as the deposit account that automatic payment is drawn from has adequate funds, the credit card autopay transaction can be advantageous to your credit profile.

Do banks charge for automated credit card payments?

No, banks and credit card issuers don’t typically charge an additional fee to make automated credit card payments. Autopay is intended as a payment convenience for cardholders. But ultimately, it helps card issuers and banks better secure repayment from customers, thereby lessening the risk of a late payment or delinquent account.

Photo credit: iStock/PeopleImages

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.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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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Oct
10
2023
What Is the Yield Curve? How It's Used As a Market Indicator

What Is the Yield Curve? How It’s Used as a Market Indicator

By | Growing Wealth, invest, Investing | Comments Off on What Is the Yield Curve? How It’s Used as a Market Indicator

The yield curve itself is a basic graph of the interest rates paid by bonds at different maturities (e.g., two-year, five-year, 10-year bonds). But many investors interpret the slope of the yield curve as a harbinger of what might lie ahead for the U.S. economy.

The yield curve can be an indicator of economic expectations, but not a reliable predictor of events. That said, analysis of historical data patterns shows that understanding the yield curve can be useful for investors.

4 Types of Yield Curves and What They Mean

The yield curve is published by the Treasury every trading day. It reflects the yield or interest rates paid by Treasury securities for one-month through 30-year maturities. The Treasury’s figures also help to set the rates for other debt securities on the market, as well as mortgages and other loan rates offered by banks.

💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.


What is a yield curve, and what does it look like? Here are four common yield-curve patterns and what each might mean for investors.

1. Normal Yield Curve

Under ordinary conditions, longer-maturity bonds will offer a higher yield to maturity than shorter-term bonds. For that reason, the “normal” yield curve shape has an upward slope, with longer-maturity debt providing investors with higher interest rates.

For example, imagine that a two-year bond offers a yield of 0.5%, a five-year bond offers 1.0%, a 10-year offers 1.8%, and a 30-year offers a yield of 2.5%. When these points are connected on a graph, they exhibit a shape of a normal yield curve. It is the most common type of curve, and tends to indicate a positive economic outlook.

2. Steep Yield Curve

Just as a normal upward-sloping bond yield curve is associated with periods of economic expansion, a steep yield curve is seen by investors as an even stronger sign of economic growth on the horizon — as future yields rise higher to take possible inflation into account.

Another reason that a steep yield curve might indicate periods of stronger growth is that lenders are willing to make short-term loans for relatively low interest rates, which tends to stimulate economic activity and growth.

In late 2008, the yield curve became notably steeper, as the Federal Reserve eased the money supply in response to the financial crisis. A bull market followed that lasted over a decade, from 2009 to 2020.

3. Inverted Yield Curve

Bond yield curves aren’t always normal or upward-sloping. With an inverted yield curve, for instance, the yields for shorter-term debt are higher than the yields for longer-term debt. A quick look at an inverted yield curve will show it curving downward as bond maturities lengthen, which can be a sign of economic contraction.

Since 1955, an inverted yield curve has preceded most, if not all U.S. recessions that have occurred. Usually, the curve inverts about two years before a recession hits, so it can be an early warning sign.

The reason is that, historically, an inverted yield curve can reflect significant shifts in the economy or financial markets. The yield curve might invert because investors expect longer-maturity bonds to offer lower rates in the future, for example. One reason for those lower yields is that often during an economic downturn investors will seek out safe investments in the form of longer-duration bonds, which has the effect of bidding down the yields that those bonds offer.

Inverted yield curves are uncommon, and sometimes decades will pass between them. In October 2007, the yield curve flattened (which can precede an inverted yield curve) precipitating the global financial crisis.

4. Flat and Humped Yield Curves

There are also flat or humped bond yield curves, in which the yields of shorter- and longer-term bonds are very similar. While a flat yield curve is self-explanatory, a humped yield curve is one in which bonds with intermediate maturities may offer slightly higher yields. Those higher yields in the middle give the curve its hump.

Investors see flat or humped yield curves as a sign of a coming shift in the broader economy. They often occur at the end of a period of strong economic growth, as it begins to spur inflation and slow down. But these yield curves don’t always portend a downturn.

Sometimes a flat or humped bond yield curve may appear when the markets expect a central bank, such as the Federal Reserve, to increase interest rates. Flat and humped markets can also emerge during periods of extreme uncertainty, when investors and lenders want similar yields regardless of the duration of the debt.

What Is the Current Yield Curve?

2y10y treasury spread 1977-2022

When investors ask, What is the yield curve?, it’s important to remember that it’s not a fixed market factor, but one that changes daily.

Here’s an example: On October 5, 2021, the three-month Treasury bill paid an interest rate of 0.04%, while the two-year bond paid an interest rate of 0.28%, the five-year bond paid an interest rate of 0.98%, the 10-year bond paid an interest rate of 1.54%, and the 30-year bond paid an interest rate of 2.10%.

The yield curve on that day, with lower short-term yields that rise as the duration of the debt security grows longer, is a good example of a “normal” yield curve.

The difference between the 0.04% yield offered by the three-month T-bill and the 2.10% yield offered by the 30-year bond on Oct. 5, 2021, was 2.06%. At the beginning of August, the three-month Treasury bill paid an interest rate of 0.05%, while the 30-year Treasury bill paid an interest rate of 1.86%. The difference at that time was 1.81%. So it would be accurate to say that the yield curve is normal, and grew somewhat steeper over the course of about two months.

Recommended: What Are Treasury Bills (T-Bills) and How Can You Buy Them?

How Investors Can Interpret the Yield Curve

The yield curve has value for investors as an indicator of a host of economic factors, including inflation, growth, and investor sentiment. While it can’t be used to make exact predictions, the yield curve can help investors anticipate potential economic changes, and weigh their financial choices in light of this. The yield curve can’t necessarily help investors choose individual stocks, but it can be of use when formulating broad investment strategies.

For example, if a flat or inverted yield curve indicates the possibility of an economic slowdown, then it might be a good time to purchase the stocks of companies that have historically done well during economic downturns, such as providers of consumer staples.

But if the yield curve is steep – indicating economic growth and higher interest rates – it may be worth considering adding more luxury-goods makers and entertainment companies to your portfolio.

The yield curve also has ramifications for real estate investors. A flat or inverted curve could warn of a slowdown and a drop for current real estate prices. But a steepening of the yield curve can mean just the opposite for real estate.

Changes to the yield curve have the most profound implications for fixed-income investors, however, as steep yield curves indicate that inflation is on the way. And inflation has the effect of eroding the yields on existing bonds, as the purchasing power of those yields goes down.


💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.


Fixed-income investors also face unique challenges in the rare event of a yield curve inversion. Many investors are accustomed to earning a higher yield in exchange for longer debt maturities, but in an inverted curve, they can no longer find that premium. As a result, many of these investors will opt for shorter-term debt instruments, which offer competitive rates, instead of getting locked into the low rates offered by longer-term bonds.

Recommended: Short-Term vs. Long-Term Investments

The Takeaway

The yield curve may be just a basic graph of the interest rates paid by bonds of different maturities, but historical data shows that the yield curve can also be a useful economic indicator for investors. You don’t want to take it too far and assume the yield curve can predict economic events, but since the yield curve is published every day by the U.S. Treasury, it can capture certain economic shifts in real time.

With a normal yield curve, short-term bond rates are lower than long-term bond rates, and the curve swoops upward — which is a positive economic indicator, suggesting steady economic growth and investor sentiment. When short- and longer-term bond rates are similar, and the yield curve flattens, that can indicate that some economic changes may be afoot. Historically, when the yield curve inverts and short-term bond rates are higher than long-term rates, that can signal a recession might be down the road.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

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SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

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.

Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

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Oct
10
2023

What Is a Closed-End Fund?

By | Growing Wealth, invest, Investing | Comments Off on What Is a Closed-End Fund?

Closed-end funds, or CEFs, are a lesser-known type of investment fund that may benefit income investors who are looking to build a portfolio that provides both diversification and passive income. Similar to other funds such as index funds, mutual funds and exchange-traded funds (ETFs), CEFs pool together funds to purchase a basket of different types of assets, including stocks, bonds, and more.

By investing in them individuals gain exposure to a variety of investments through a single portfolio asset. Many retirees’ investment strategies include CEFs because of their high yields.

What Makes CEFs Unique?

The main difference between CEFs and other funds is that they are “closed,” meaning that investors can’t buy into them at any time they want. Instead, CEFs hold an initial public offering (IPO), similar to a stock IPO, when investors can buy into them and then close sales once the offering ends.

It’s useful to evaluate CEFs based on their Net Asset Value (NAV), which is the sum of the assets in the fund’s portfolio. Brokerage firms post CEF Net asset values on a daily basis. The NAV differs from the CEF’s market price. CEF shares may sell for a discount to their market value, making it beneficial to buy them through the market rather than in their initial offering.


💡 Quick Tip: When people talk about investment risk, they mean the risk of losing money. Some investments are higher risk, some are lower. Be sure to bear this in mind when investing online.

CEFs vs ETFs: How They Compare

CEFs and ETFs (which have their own pros and cons) have some obvious similarities, and some key differences that investors should be aware of.

CEF and ETF Similarities

•  Trade on exchanges during daily trading hours like stocks

•  Fund portfolios can be leveraged

•  Can offer capital gains and distributions to investors

•  Have fee schedules and expense ratios

•  Hold portfolios of investments that have a total value

•  Investors can trade shares like stocks using margins, shorting, and limit orders

•  Can focus on specific sectors or broad indexes

CEF and ETF Differences

•  ETFs usually track the performance of an index, whereas CEFs are actively managed

•  Investors are more likely to pay capital gains with CEFs than with ETFs

•  ETFs can’t issue debt or preferred shares, while CEFs can use these tools to create leverage

•  ETFs have features that ensure their share price doesn’t differ very much from their net asset value. In contrast, it’s common for a CEF’s net asset value and share price to be different.

Recommended: ETFs vs Index Funds

CEFs vs Mutual Funds: What’s the Difference?

Like CEFs vs ETFs, CEFs and mutual funds have similarities and differences, too.

CEF and Mutual Fund Similarities

•  Can pay out income and capital gains distributions to investors

•  Run by professional management teams

•  Have fee schedules and expense ratios

•  Have a net asset value and contain multiple investments

CEF and Mutual Fund Differences

•  Mutual funds issue and redeem shares daily, whereas CEFs trade on exchanges

•  CEFs can issue debt and preferred shares in order to leverage their net assets, which can increase the amount of their distributions as well as the fund’s volatility

Recommended: Mutual Funds vs ETFs

Types of CEFs

Like other types of funds, every CEF has a different investment strategy and asset size. Funds may hold millions of dollars in assets or billions. Each has its advantages and downsides.

The main issue with small CEFs is they generally don’t trade at high volumes. That means that if an investor holds a large position they can actually affect the price when they buy or sell.

CEF Distributions

CCEFs pay out distributions on a regular basis. These are similar to dividend payments but have some key differences.

Since CEFs include both stocks and bonds, distributions can include bond interest payments, equity dividends, return of capital, and realized capital gains. The tax on the investment income from those earnings may differ between funds since they each have a different asset makeup.

CEF distributions can change over time, so a fund that has a very high payout may make cuts to it. So while an investor may choose a CEF with a high yield, it’s important to keep in mind that it could change over time.

One way to find a fund with an ideal yield is using the distribution-to-NAV ratio. CEFs are actively managed, and the managers need to earn money in order to pay out distributions. So by looking at the net asset value of the CEF compared to its distributions, investors can see whether a CEF will be able to maintain its current yield rate. If the NAV isn’t high enough to maintain a high distribution, the manager may cut the distributions.

One main benefit of CEFs is since they are actively managed, the managers can redistribute investments to maximize returns. However, like any asset, CEFs don’t always perform well. Some CEFs focus on a particular industry, and if that industry isn’t doing well the CEF may not perform well either. The success of a CEF also depends on the management team.

Recommended: How Often Are Dividends Paid?

How to Buy and Sell CEFs

It’s simple to buy and sell CEFs on major stock exchanges, and both beginning investors and those with more experience can participate in the CEF market. Investors can trade them during regular trading hours just like ETFs and stocks, although there are far fewer CEFs available on the market and they have much smaller trading volumes.

CEF Fees

One major downside of investing in CEFs is the high fees. Annual CEF fees tend to top 2%. However, the fees are taken out of the fund so investors may not notice them immediately. Proponents of CEFs claim that they have high fees because they have high quality managers who help the fund earn more money.

Fees can also include the cost of leverage, which is a tool CEFs use to make the fund more profitable. CEFs have more borrowing ability than individuals, so they can greatly benefit from using leverage, making the high fees worth it for investors. Of course, using leverage for investing also brings on additional risk.

It’s important for investors to consider whether paying high fees is worth it based on the performance of any particular CEF.


💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.

The Takeaway

CEFs are a type of investment fund that typically offers diversification and passive income. CEFs have several similarities to exchange-traded funds and mutual funds, but they are closed investments that typically have higher fees and smaller trading volumes.

CEFs are also unique in that they have IPO-like market debuts. In effect, CEFs are something special on the market, and may be attractive to investors for a number of reasons. However, investors would do well to do their homework before investing – as always.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

Photo credit: JLco – Julia Amaral

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at https://sofi.app.link/investchat. Please read the prospectus carefully prior to investing.
Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
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.

Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

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10
2023

Defaulting on Student Loans: What You Should Know

By | Debt Payoff, Fresh Out of School, Student Loans, student_loan | No Comments

Defaulting on student loans is something that happens after you miss a series of payments on your loan. The number of loan payments missed before the loan enters default varies between federal and private student loans, but the consequences of defaulting on either type can be severe — including having the loans go to a collections agency and potential negative impacts on your credit score.

For a year following the resumption of federal student loan payments in October 2023, a temporary “on-ramp” transition period means that missing required monthly payments generally won’t lead to defaulted loan status. Below we discuss how this on-ramp works, as well as what typically happens if you miss your required federal student loan payments.

What Is Student Loan Default?

Student loan default is a term for when you completely stop paying student loans. This can occur if you fail to make required monthly payments on federal or private student loans. Millions of federal student loan borrowers, however, did not have to make any required payments during the Covid-19 forbearance.

Most federal student loan borrowers had a 0% federal student loan interest rate from March 13, 2020, until Sept. 1, 2023, under the pandemic-era payment pause. These borrowers, including those with defaulted and nondefaulted loans held by the U.S. Department of Education, did not have to make federal student loan payments over that three-year period.

The 2023 debt ceiling bill officially ended the Covid-19 forbearance, requiring federal student loan interest accrual to resume on Sept. 1 and payments to resume in October 2023. Any federal student loan borrower who received the Covid-19 forbearance relief will be eligible for the 12-month on-ramp protection automatically.

If you’re covered by the on-ramp, you’re protected from having your federal student loans reported as delinquent or placed in default from October 2023 through September 2024. But federal student loan interest will still accrue during the on-ramp, so failing to pay may increase your student debt burden.


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Student Loan Default vs. Delinquency

Student loan delinquency is the early stage of missing a required loan payment when due. If you fail to pay over an extended period, you could face greater consequences for reaching late-stage delinquency and carrying defaulted student loans.

Federal student loans are typically considered delinquent when you’re past due on a required payment by at least one day but less than nine months. Federal student loans are typically reported to the credit bureaus as delinquent if you are 90 or more days past due.

A delinquent federal student loan typically becomes defaulted if you fall at least 270 days past due on a required payment. The typical metrics of delinquency vs. default don’t apply during the on-ramp of October 2023 through September 2024 for eligible borrowers who miss payments during that 12-month period.

Lenders of private student loans can set their own parameters for delinquency vs. default. Banks, credit unions, fintech companies, and state-related nonprofits offer private student loans. Some may consider you in default if you are 60 or more days delinquent on a private student loan. Others may define default as falling 180 days past due after receiving a final demand letter.

Can You Default on Student Loans?

Yes, it’s possible for borrowers to default on student loans. If a borrower is struggling to make monthly payments on their student loans, default can be an option if they do not take any other action. If you are having issues making monthly payments on your federal student loans and just stop making payments, after a certain number of missed payments, the loan will enter default.

Private student loans can also go into default, though they may enter default more quickly than a federal student loan.

Recommended: What is the Student Loan Default Rate?

How to Default on Student Loans

To get more technical, defaulting on federal student loans is a process that takes place over a period of nonpayment. Typically when you first miss a payment, the loans are delinquent but not yet in default. At 90 days past due, your lender can report your missed payments to credit bureaus. And when you reach 270 days past due, your student loans are typically considered in default.

Keep in mind that most federal student loans are protected from entering default during the on-ramp period. (If you entered the Covid-19 pandemic with a defaulted federal student loan held by the U.S. Department of Education, the Education Department in December 2022 started reporting those loans as “current” rather than “in collections” to credit reporting agencies.)

Here’s what you can expect if you’re eligible for the on-ramp from Oct. 1, 2023, through Sept. 30, 2024:

•   You won’t be considered delinquent if you miss a required payment

•   Late payments or missed payments won’t be reported to the credit bureaus

•   Your loans won’t be placed in default

•   Debt collection agencies won’t contact you about your on-ramp eligible loans

For private student loans, the terms for defaulting can vary. Private student loan lenders may report an account as delinquent when it’s 30 days past due and consider you in default if you’re 60 days or more past due on a required payment.

Private lenders may also place student loans in default if the borrower declares bankruptcy, passes away, or defaults on another loan. Terms may vary by lender, so if you have private student loans, double-check how they define default.

Defaulting on your federal or private student loans can have serious consequences, but there are ways to avoid defaulting on your student loans or recover if your loans are currently in default. If you’re worried about student loan default, the most important thing you can do is educate yourself on what it is, and how to avoid it.

Below we highlight four potential consequences of what happens when your student loans default.

What Happens When Your Student Loans Default?

Here are four potential consequences of what can happen if you default on your federal or private student loans:

1. Collection Agencies Might Come Knocking

When a borrower defaults on student loans, the lender may eventually turn the debt over to a collection agency. The collection agency will then attempt to recover the payment, typically bombarding you with frequent letters and phone calls.

Collection agencies may also attempt to determine what other assets, including bank accounts or property, would allow you to pay your debt. On top of dealing with regular calls from debt collectors, you may also be responsible for paying any additional fees the collection agency charges on top of your student loan balance.

2. Loan Forgiveness and Forbearance Options Are No Longer on the Table

Student loan default on federal loans means that the federal government can revoke your access to programs that might make it easier for you to pay your loans, including loan forgiveness or forbearance. This means that even if you qualify for something like the Public Service Loan Forgiveness program, you could be rendered ineligible if you let your loans go into default.

Additionally, borrowers in default may lose eligibility for all future types of federal financial aid.

3. Your Credit Score Might Be Impacted

Once your student loans are in default, the lender or the collection agency will report your default to the three major credit bureaus. This means that your credit score could take a hit. A low credit score can make it harder for you to get a competitive interest rate when borrowing for other needs, like a car or home loan. In fact, having federal student loans in default can make it difficult to buy or sell real estate and other assets.

4. You Might Have to Give up Your Tax Refund, or a Portion of Your Wages

If your loan holder or a collection agency can’t recover the amount owed, they can request that the federal government garnish your tax refund and even some of your income. For example, if you filed your taxes and were eligible for a refund, the government would instead take that refund money and apply it toward your defaulted student loan balance. On top of that, the government can garnish your wages, which means that they can take up to 15% of each paycheck to pay back your loans.

Recommended: What Happens When Your Student Loans Go to Collections?

How Can You Get Student Loans Out of Default?

Defaulting on student loan debt is a serious matter, but the good news is that there are ways of getting out of default.

First, stop avoiding those collection calls. If your student loan provider or a collection agency is calling, your best bet is to meet your lender or the agency head-on and take charge of the situation. The lender or the collection agency will be able to talk through the repayment options available to you based on your personal financial situation. They want you to pay, which means that they might be able to help find a payment plan that works for you.

The lender may be able to offer a variety of options tailored to your individual circumstances. Some of these options might include satisfying the debt by paying a discounted lump sum, setting up a monthly payment plan based on your income, consolidating your debts, or even student loan rehabilitation for federal loans (more to come on this). Don’t let your fear stop you from reaching out to your lender or the collection agency.

How to Avoid Defaulting on Student Loans

Of course, even if you can get yourself out of student loan default, the default can still impact your credit score and loan forgiveness options. That’s why it’s generally best to take action before falling into default. If the student loan payments are difficult for you to make each month, there are things you can do to change your situation before your loans go into default.

First, consider talking to your lender directly. The lender will be able to explain any alternate student loan repayment plans available to you.

For federal loans, borrowers may be able to enroll in an income-driven repayment (IDR) plan. These repayment plans aim to make student loan payments more manageable by tying them to the borrower’s income. This can make the loans more costly over the life of the loan, but the ability to make payments on time each month and avoid going into default are valuable.

The Saving on a Valuable Education (SAVE) Plan is one of the IDR options to consider if you’re a federal student loan borrower. The SAVE Plan is the most affordable repayment plan for federal student loans, according to the U.S. Department of Education. Borrowers who are single and make less than $32,800 a year won’t have to make any payments under the SAVE Plan. (If you are a family of four and make less than $67,500 annually, you also won’t have to make payments.)

Is Refinancing an Option?

Refinancing student loans could potentially help you avoid defaulting on your student loans by combining all your student loans into one, simplified new loan. When you refinance student loans, you might be able to secure a lower interest rate or loan terms that work better for your situation.

If a borrower is already in default, refinancing could be difficult. When a student loan is refinanced, a new loan is taken out with a private lender. As a part of the application and approval process, lenders will review factors including the borrower’s credit score and financial history among other factors.

Borrowers who are already in default may have already felt an impact on their credit score, which can influence their ability to get approved for a new loan. In some cases, adding a cosigner to the refinancing application could help improve a borrower’s chances of getting approved for a refinancing loan. Know that if federal student loans are refinanced they are no longer eligible for federal repayment plans or protections.


💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.

Help on Defaulted Student Loans

If you default on a federal student loan, here are some programs that can help you get them out of default:

Loan Rehabilitation

To apply for student loan rehabilitation, contact your loan servicer. In order to rehabilitate your federal student loan you must agree to make nine voluntary, reasonable, and affordable monthly payments within 20 days of the payment due date. This agreement must be completed in writing. All nine payments must be made within 10 consecutive months.

Private student loans do not qualify for federal student loan rehabilitation. Federal Direct Loans or loans made through the Federal Family Education Loan (FFEL) program qualify for student loan rehabilitation.

Loan Consolidation

Consolidating your federal student loans into a Direct Consolidation Loan is another option to get your defaulted federal student loans out of default. To consolidate defaulted federal student loans into a new Direct Consolidation Loan you have two options, which are:

•   Repaying the consolidated loan on an income-driven repayment plan.

•   Making three monthly payments on the defaulted loan before consolidating. These payments must be consecutive, voluntary, on-time, and account for the full monthly payment amount.

Again, private student loans are not eligible for consolidation through a Direct Consolidation Loan.

Recommended: Understanding How Student Loan Consolidation Works

Consumer Credit Counseling Services (CCCS)

Credit Consumer Counseling Services (CCCS) are usually non-profit organizations that offer free or low-cost counseling, education, and debt repayment services to help people facing financial difficulties.

If you’ve defaulted on a student loan, a credit counselor can help by looking at your entire financial situation along with your student debt, laying out your options, then working with you to come up with the best option for student loan debt relief.

If you’re struggling with multiple debts, a credit counselor may be able to set up a debt management plan in which you make one monthly payment to the credit counseling organization, and they then make all of the individual monthly payments to your creditors.

While counselors usually don’t negotiate down your debts, they may be able to lower your monthly payments by working with your creditors to increase your loan terms or lower interest rates.

Just keep in mind: Credit counseling agencies are not the same thing as debt settlement companies. Debt settlement companies are profit-driven businesses that often charge steep fees for results that are rarely guaranteed. Debt settlement can also do long-term damage to your credit.

To avoid debt settlement scams and ensure you find a reputable credit counselor, you might start your search using the U.S. Department of Justice’s list of approved credit counseling agencies.

The Takeaway

Student loan default can have serious negative effects on your credit score and financial stability. If you’re worried about defaulting on your student loans, or you have already defaulted, consider taking immediate steps to remedy the situation before it gets worse. Contact your lender or loan servicer to learn about options available, and consider refinancing your loans to secure a lower interest rate or monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.)

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.


With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Does a defaulted student loan ever go away?

It is possible to rehabilitate or consolidate a defaulted federal student loan to get it out of default. Some private lenders may offer programs or assistance to borrowers facing default, but they are not required to do so.

Will my student loans come out of default if I go back to school?

No, if you have student loans already in default, going back to school will not remove them from default. Students who have student loans in default will need to get the loans out of default before they will qualify to borrow any additional federal student loans.

Are defaulted student loans forgiven after 20 years?

Defaulted loans are not forgiven after 20 years. Students in default may consolidate or rehabilitate their loan and then enroll in an income-driven repayment plan, which could potentially qualify them for loan forgiveness at the end of their loan term, up to 25 years.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.


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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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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2023
Are Mutual Funds Good for Retirement?

Are Mutual Funds Good for Retirement?

By | invest, Investing, Preparing for Retirement | Comments Off on Are Mutual Funds Good for Retirement?

Mutual funds are one option investors may consider when building a retirement portfolio. A mutual fund represents a pooled investment that can hold a variety of different securities, including stocks and bonds. There are different types of mutual funds investors may choose from, including index funds, target date funds, and exchange-traded funds (ETFs).

But how do mutual funds work? Are mutual funds good for retirement or are there drawbacks to investing in them? What should be considered when choosing mutual funds for retirement planning?

Those are all important questions to ask when determining the best ways to build wealth for the long term.

Understanding Mutual Funds

A mutual fund pools money from multiple investors, then uses those funds to invest in a number of various securities. Mutual funds can hold stocks, bonds, short-term debt, and other types of securities.

How a mutual fund is classified or categorized can depend largely on what the fund invests in and what type of investment strategy it follows. For example, index funds follow a passive investment strategy, as these funds attempt to mimic the performance of a stock market benchmark. So a fund that tracks the S&P 500 index would attempt to replicate the returns of the companies included in that index.

Target-date funds utilize a different strategy. These funds automatically adjust their asset allocation based on a target retirement date. So a 2050 target-date fund, for example, may shift more of its asset allocation toward bonds or fixed-income and away from stocks as the year 2050 approaches.

Exchange-traded funds or ETFs trade on an exchange just like stocks. This is a departure from the way mutual funds are typically traded, with the price being set at the end of the trading day.

How Mutual Funds Work

Mutual funds work by allowing investors to purchase shares in the fund. Buying shares makes them part-owner of the fund and its underlying assets. As such, investors have the right to share in the profits of the fund. So if a mutual fund owns dividend-paying stocks, for example, any dividends received would be passed along to the fund’s investors.

Depending on how the fund is structured or what the brokerage selling the fund offers, investors may be able to receive any dividends or interest as cash payments or they may be able to reinvest them. With a dividend reinvestment plan or DRIP, investors can use dividends to purchase additional shares of stock, often bypassing brokerage commission fees in the process.

Investors pay an expense ratio to invest in mutual funds. This reflects the annual cost of owning the fund, expressed as a percentage. Passively managed mutual funds, including index funds and target date funds, tend to have lower expense ratios. Actively managed funds, on the other hand, tend to be more expensive, but the idea is that higher fees may seem justified if the fund produces above-average returns.

Investors can learn more about how a particular mutual fund works, what it invests in, and the fees involved by reading the fund’s prospectus.

💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.

Mutual Funds for Retirement Planning

Mutual funds are arguably one of the most popular investment options for retirement planning. According to the Investment Company Institute, 52.3% of U.S. households totaling approximately 115.3 million individual investors owned mutual funds in 2022. Older generations such as Baby Boomers and Gen Xers—those who may be planning for retirement—are more likely to have mutual funds, the research found.

So are mutual funds good for retirement? Here are some of the pros and cons to consider.

Pros of Using Mutual Funds for Retirement

Investing in mutual funds for retirement planning could be attractive for investors who want:

•   Convenience

•   Simplified diversification

•   Professional management

•   Reinvestment of dividends

Investing in a mutual fund can offer exposure to a wide range of securities, which can help with diversifying a portfolio. And it may be easier and less costly to purchase a single fund that holds 10 or 20 stocks than to purchase individual shares of each of those companies.

Mutual funds are professionally managed, so investors can rely on the fund manager’s expertise and knowledge. You don’t need to be as hands-on as you would need to be if you were day trading individual stocks. And if the fund includes dividend reinvestment, you can increase your holdings automatically which can make it easier to grow wealth.

Cons of Using Mutual Funds for Retirement

While there are some advantages to using mutual funds for retirement planning, there are also some possible disadvantages, including:

•   Potential for high fees

•   Overweighting risk

•   Under-performance

•   Tax inefficiency

As mentioned, mutual funds and ETFs carry expense ratios. While some index funds may charge as little as 0.15% in fees, there are some actively managed funds with expense ratios well above 1%. If those higher fees are not being offset by higher than expected returns (which is never a guarantee), the fund may not be worth it. Likewise, buying and selling mutual fund shares could get expensive if your brokerage charges steep trading fees.

While mutual funds make it easier to diversify, there’s the risk of overweighting one’s portfolio — owning the same holdings across different funds. For example, if you’re invested in five mutual funds that hold the same stock and the stock tanks, that could drag down your portfolio.

Something else to keep in mind is that a mutual fund is typically only as good as the fund manager behind it. Even the best fund managers don’t always get it right. So it’s possible that a fund’s returns may not live up to your expectations.

On the other hand, you may also have to contend with unexpected tax liability at the end of the year if the fund sells securities at a gain. Just like other investments, mutual funds and ETFs are subject to capital gains tax. Whether you pay short- or long-term capital gains tax rates depends on how long you held a fund before selling it.

Pros

 Cons

•   Mutual funds offer convenience for investors

•   It may be easier and more cost-effective to diversify using mutual funds vs. individual securities

•   Investors benefit from the fund manager’s experience and knowledge

•   Dividend reinvestment can make it easier to grow wealth

•   Some mutual funds may carry higher expense ratios than others

•   Overweighting can occur if investors own multiple funds with the same underlying assets

•   Fund performance may not always live up to the investor or fund manager’s expectations

•   Income distributions can result in unexpected tax liability for investors

Investing in Mutual Funds for Retirement Planning

The steps to invest in mutual funds for retirement are simple and straightforward.

1.    Start with an online brokerage account, individual retirement account (IRA) or 401(k). You can also buy a mutual fund directly from the company that created it, but a brokerage account or retirement account is usually the easier way to go.

2.    Set your budget. Decide how much money you can afford to invest in mutual funds. Keep in mind that the minimum investment for a particular fund can vary. One fund may allow you to invest with as little as $100 while another might require $1,000 to $3,000 to get started.

3.    Choose funds. If you already have a brokerage account, this may simply mean logging in, navigating to the section designated for buying funds, selecting the fund or funds and entering in the amount you want to invest.

4.    Submit your order. You may be asked to consent to electronic delivery of the fund’s prospectus when you place your order. If your brokerage charges a fee to purchase mutual funds, that amount will likely be added to the order total. Once you submit your order to purchase mutual funds, it can take a few business days to process.

Determining If Mutual Funds Are Right for You

Whether it makes sense to invest in mutual funds for retirement can depend on your time horizon, risk tolerance, and overall investment goals. If you’re leaning toward mutual funds for retirement planning, here are a few things to consider.

Investment Strategy

When comparing mutual funds, it’s important to understand the overall strategy the fund follows. Whether a fund is actively or passively managed may influence the level of returns generated. The fund’s investment strategy may also determine what level of risk investors are exposed to.

For example, index funds are designed to meet the market. Growth funds, on the other hand, typically have a goal of beating the market. Between the two, growth funds may produce higher returns — but they may also entail more risk for the investor and carry higher expense ratios.

Choosing funds that align with your preferred strategy, risk tolerance, and goals matters. Otherwise, you may be disappointed by your returns or be exposed to more risk than you’re comfortable with.

Cost

Cost is an important consideration when choosing mutual funds for one reason: Higher expense ratios can drain away more of your returns.

When comparing mutual fund expense ratios, it’s important to look at the amount you’ll pay to own the fund each year. But it’s also important to consider what kind of returns the fund has produced historically. A low-fee fund may look like a bargain but if it generates low returns then the cost savings may not be worth much.

It’s possible, however, to find plenty of low-cost index funds that produce solid returns year over year. Likewise, you shouldn’t assume that a fund with a higher expense ratio is guaranteed to outperform a less expensive one.

Fund Holdings

It’s critical to look under the hood, so to speak, to understand what a particular mutual fund owns and how often those assets turn over. This can help you to avoid overweighting your portfolio toward any one stock or sector.

Reading through the prospectus or looking up a stock’s profile online can help you to understand:

•   What individual securities a mutual fund owns

•   Asset allocation for each security in the fund

•   How often securities are bought and sold

If you’re interested in tech stocks, for example, you may want to avoid buying two funds that each have 10% of assets tied up in the same company. Or you may want to choose a fund that has a lower turnover rate to minimize your capital gains tax liability for the year.

💡 Quick Tip: Did you know that you must choose the investments in your IRA? Once you open a new IRA and start saving, you get to decide which mutual funds, ETFs, or other investments you want — it’s totally up to you.

Other Types of Funds for Retirement

Mutual funds, and target date funds in particular, are one of the ways to save for retirement. But there are other options you might consider. Here’s a brief rundown of other types of funds that can be used for retirement planning.

Real Estate Investment Trusts (REITs)

A real estate investment trust isn’t a mutual fund, per se. But it is a pooled investment that allows multiple investors to own a share in real estate. REITs pay out 90% of their income to investors as dividends. You may consider a REIT if you’d like to reap the benefits of real estate investing (i.e. diversification, inflationary hedge, etc.) without actually owning property.

Exchange-Traded Funds (ETFs)

Exchange-traded funds are another retirement savings option. Investing in ETFs can offer more flexibility compared to mutual funds. They may carry lower expense ratios than traditional funds and be more tax-efficient if they follow a passive investment strategy.

Income Funds

An income fund is a specific type of mutual fund that focuses on generating income for investors. This income can take the form of interest or dividend payments. Income funds can be an attractive option for retirement planning if you’re interested in creating multiple income streams or reinvesting dividends until you’re ready to retire.

Bond Funds

Bond funds focus exclusively on bond holdings. The type of bonds the fund holds can depend on its objective or strategy. For example, you may find bond funds or bond ETFs that only hold corporate bonds or municipal bonds while others offer a mix of different bond types. Bond funds are generally considered fairly safe, and they may help round out the fixed-income portion of your retirement portfolio.

IPO ETFs

An initial public offering or IPO represents the first time a company makes its shares available for trade on a public exchange. Investors can invest in individual IPOs or multiple IPOs through an ETF. IPO ETFs invest in companies that have recently gone public so they offer an opportunity to get in on the ground floor. IPO ETFs are generally considered safer than IPOs, but still, they are relatively risky.

The Takeaway

Mutual funds can be part of a diversified retirement planning strategy. Regardless of whether you choose to invest in mutual funds, ETFs or something else, the key is getting started sooner rather than later. Time can be one of your most valuable resources when investing for retirement.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).


Invest with as little as $5 with a SoFi Active Investing account.

Photo credit: iStock/kali9

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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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