The post How Your Tax Refund Could Improve Your Credit Score appeared first on Experian's Official Credit Advice Blog.
]]>The average tax refund so far during the 2024 filing season is $3,145, according to the most recently available data from the IRS. A windfall like this is a golden opportunity to give your finances a boost, and one of the most effective strategies is to focus on your credit score.
Here's how to improve your credit using a tax refund.
Making extra payments toward revolving credit balances is one of the best ways to boost your credit scores in a flash. As you knock out debt, your credit utilization ratio—the percentage of available credit you're using—drops too. This ratio plays a major role in determining your credit scores. In fact, "amounts owed" accounts for 30% of your FICO Score.
Experts recommend keeping your credit utilization ratio below 30%, but those with the highest credit scores tend to keep their utilization in the low single digits. To help improve credit, use at least a portion of your refund to make a dent in outstanding credit card or home equity line of credit (HELOC) debt, and keep your utilization low going forward.
If you recently missed a credit card or loan bill, you may be able to use your tax refund to catch up and avoid a hit to your credit scores.
Credit card issuers typically don't report late payments to the credit bureaus until a full billing cycle, or about 30 days, has elapsed. Use your tax refund to make a payment before those 30 days are up, and you may avoid a late payment appearing on your credit report. That's crucial, because payment history is the most important factor in your credit scores. A late payment will stay on your credit report for seven years.
Additionally, your issuer can charge a late fee if your payment arrives even one day past the due date. But if you don't regularly miss payments and you can catch up right away, the card issuer may waive the late fee if you ask.
A tax refund can give you the flexibility to open a secured credit card. That can help you establish credit history—or bounce back from a reduction in your credit scores—with regular, on-time payments.
Secured cards work similarly to traditional credit cards, but they require a refundable security deposit that may also become your credit limit. This deposit acts as collateral for the card issuer, protecting it in case you don't keep up with payments.
You don't even have to use your full tax refund to open up a secured card. You can usually choose your deposit amount, which for many cards starts at $200.
Secured card issuers typically report your payment history to one or more of the three major credit bureaus (Experian, TransUnion and Equifax), so responsible use can help you build a positive credit history. That means making all payments on time, using as little of your available credit as possible and paying off your charges in full every month.
You can also use your tax refund to improve credit with a credit-builder loan, which operates as a savings account that you make regular payments toward.
Here's how it works: When you apply for a credit-builder loan, a credit union, bank or online lender sets aside a certain amount in an account for you. As you put your own money each month towards that account, you'll pay off the "loan"—and the money you've paid will be there for you as savings at the end of the term. Since your payments are reported to the credit bureaus, you'll also have a new series of on-time payments on your credit report.
Compared with a secured credit card, a credit-builder loan is best for those who want to use their tax refund to make payments in installments, rather than as an upfront deposit. A credit-builder loan may also be better for those who don't already have existing debt, since you'll have to add a monthly payment to your budget.
Starting or growing a savings account for emergencies won't have an immediate effect on your credit scores. But it will safeguard your scores from the effects of going into debt to cover an unforeseen expense, like a medical bill or car repair.
The ideal amount to save depends on the predictability of your income and expenses, and on your individual lifestyle. A healthy emergency fund generally covers three to six months of basic expenses, but you might decide you'd feel secure with more or less. Your tax refund can give you a jump start on your savings account, and you can contribute a small amount monthly thereafter to hit your goal.
Apart from using your tax refund, you can improve your credit score in the following ways:
While it's a good idea to treat yourself and spend at least part of your tax refund on something you enjoy, a refund has the potential to help you make progress on financial goals that would have been difficult to achieve otherwise.
If you're not sure where to put your tax refund, consider the Experian Smart Money Digital Checking Account & Debit Card. It can help you build credit without debt by linking to Experian Boost, which gives you credit for eligible bill payments after three months of payments. You'll also pay no monthly fees¶ and have access to more than 55,000 fee-free ATMs worldwide**. See terms at experian.com/legal.
Strong credit is one of the most powerful financial tools at your disposal. Make improving it your focus at tax time.
The post How Your Tax Refund Could Improve Your Credit Score appeared first on Experian's Official Credit Advice Blog.
]]>The post What Is a Convenience Check? appeared first on Experian's Official Credit Advice Blog.
]]>A convenience check is a type of blank check that's sent to you by your credit card company. They allow easy access to your available credit line and may be sent periodically to encourage spending. If you're tight on cash, you can write a convenience check to yourself as a cash advance. Convenience checks can also be used instead of your credit card to make purchases, pay bills or transfer balances to your credit card.
Charges from convenience check purchases show up on your credit card statement as cash advances. This means that you'll likely pay a higher interest rate than you would with a standard credit card purchase. Most credit card companies begin charging interest as soon as the check clears, meaning you'll need to start paying interest right away, rather than at the end of your billing cycle like you do with regular purchases.
Your credit card company will also likely charge a transaction fee when you use a convenience check. Typically this is calculated as a percentage of each check. For example, if your credit card issuer charges 5% for using a convenience check and you write a check for $2,000, the fee would be $100.
Before using a convenience check, it's a good idea to check the terms, interest rates and cash advance limit with your credit card company.
Credit card companies typically send convenience checks in the mail. You may receive a convenience check when you first open a new credit card or periodically from your credit card issuer. If you have paperless billing, your credit card company may still send you convenience checks in the mail from time to time. Be sure to open any mail you receive from credit card issuers so you don't accidentally toss a convenience check in the trash.
Convenience checks you decide to keep should be stored securely to keep them from getting into the wrong hands. And to help protect your credit card account and prevent fraud, it's important to destroy any unused checks before tossing them in the trash.
If you no longer want to receive convenience checks, you can contact your credit issuer and ask them to stop sending the checks. This saves you from the risk of convenience checks being stolen from your mailbox or trash.
Before using a convenience check to give yourself a cash advance or make a purchase, it's important to understand the advantages and disadvantages. Here's a closer look at some of the pros and cons of convenience checks.
While using convenience checks may seem like a simple way to pay for purchases or give yourself a quick cash advance, here are some alternatives you may want to consider.
Credit card convenience checks can be cashed at your bank, a check-cashing business or any other place that cashes personal checks. You can also deposit a convenience check into your bank account, but it may take a few days for the funds to be available, depending on your bank.
Simply using a convenience check doesn't generally hurt your credit. But using convenience checks can increase your credit utilization, which can affect your credit. And if you write out a check for more than your available credit or you can't keep up with payments to your credit card company, you could face steep interest, penalty fees and damage to your credit score.
If you have a rewards credit card, you'll only be able to earn points for credit card purchases. Convenience checks are considered cash advances so you won't be able to earn rewards.
Although convenience checks may seem like an easy option when you need cash fast or can't use a credit card, it's important to understand that they can come with some unexpected costs and possible consequences to your credit when not used responsibly.
Before using a convenience check be sure to do your homework to be sure you understand the terms and fees. And if you find yourself using convenience checks often, especially for cash advances, it could be a good idea to take a closer look at your budget.
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]]>The post What to Know About the CFPB’s Cap on Credit Card Late Fees appeared first on Experian's Official Credit Advice Blog.
]]>With credit card debt in the U.S. surpassing $1 trillion at the end of 2023, according to Experian data, and delinquency rates rising, the new rule could provide significant relief to credit card users struggling to keep up with their payments.
The Credit CARD Act of 2009 created broad consumer protections for credit card issuers, one of which was a cap on late fees. In particular, the law prohibited credit card issuers from charging fees in excess of the cost associated with the late payment.
That said, there was a loophole that allowed credit card companies to have immunity from the provision if they limited their first late payment fee to $25 or less and subsequent late fees to $35 or less.
These thresholds were adjusted for inflation, resulting in the average late fee ballooning from $23 in 2010 to $32 in 2022. As a result, Americans paid more than $14 billion in late fees in 2022 alone, according to the CFPB.
The new rule applies only to credit card issuers with more than 1 million open accounts, which represent 95% of the total outstanding credit card balances in the U.S. Here are the main changes:
The rule will be effective 60 days after its publication in the Federal Register.
While the new cap on credit card late fees applies to the vast majority of credit card users, there are two exceptions that could impact you:
According to the CFPB, 45 million consumers are charged late fees each year. With the new rule, the federal agency forecasts that consumers will save an average of $220 per year. Overall, the CFPB expects card users to collectively save more than $10 billion each year.
Keep in mind, though, that this rule doesn't impact other actions card issuers can take against delinquent card users, such as charging a penalty annual percentage rate (APR), revoking the account's grace period or reducing the credit limit.
While late fees are going down, it's still a good idea to make it a priority to pay your credit card bill on time every month to avoid other consequences. Here are a few steps you can take to avoid late fees:
The CFPB's new rule for credit card late fees can save credit card users hundreds of dollars each year, easing some of the financial burden of falling behind on payments. That said, there are still several other consequences for missing a credit card payment, including potential damage to your credit score.
As such, it's crucial to make it a goal to pay your credit cards on time every month, preferably in full, to avoid interest charges. Consider Experian's free credit monitoring to know where your credit stands and steps you can take to improve it if necessary.
The post What to Know About the CFPB’s Cap on Credit Card Late Fees appeared first on Experian's Official Credit Advice Blog.
]]>The post How to Pay for Home Improvements appeared first on Experian's Official Credit Advice Blog.
]]>Costs vary widely depending on the scope of the project. Whether it sets you back $100 or $10,000, you'll want to prepare your finances. Here are five of the best ways to pay for home improvements.
The average cost of a home renovation is $14,192, according to HomeAdvisor, but what you ultimately pay could be much higher or lower. The size of the project and the cost of materials and labor will determine your total.
Minor repairs and updates also vary from one home project to the next. Before getting started, be sure to:
From there, you can review your budget and start comparing the best ways to pay for home improvements.
There are multiple ways to pay for home renovations—and each option has its own benefits and drawbacks. The right path forward for you will depend on your renovation costs and financial situation.
If you have sufficient funds in your savings account, you could draw on that money to cover home improvement costs.
A personal loan can provide funding for home improvement projects. After you receive the money, you'll repay it—with interest—over a predetermined amount of time.
This is a line of credit you can draw on as needed. Whenever you add a charge, that amount is tacked onto your balance. You'll be charged interest if you carry a balance from one billing cycle to the next.
Home equity is the amount of your home's value you actually own based on your home's value and outstanding mortgage balance. A home equity loan uses your home as collateral and allows you to borrow up to 75% to 85% of your equity. You'll then repay it with fixed monthly payments.
Like a home equity loan, a HELOC is secured by the equity in your home. But instead of receiving a lump sum of cash, you'll have access to a credit line you can borrow against during your HELOC's draw period. You can usually borrow anywhere from 60% to 85% of your home's assessed value (minus your remaining mortgage balance).
Financing home improvements can enable you to get the job done, but there are some important things to think about.
Also consider how new debt could impact your credit score. For example, using more than 30% of a credit card limit could work against you, but making on-time payments could actually improve your credit score. What matters most is demonstrating that you know how to use credit responsibly.
Home improvements can get pricey, especially if you're doing substantial work. One way to pay for home renovations is to finance some or all of your costs. If you take this route, make sure you can financially handle a new debt payment. Falling behind on your payments could hurt your credit—and potentially put your home at risk.
Making debt payments as promised is an important part of maintaining healthy credit. It can help improve your credit score and show future lenders that you're a creditworthy borrower. You can check your credit score and credit report for free with Experian.
The post How to Pay for Home Improvements appeared first on Experian's Official Credit Advice Blog.
]]>The post Where Is American Express Accepted? appeared first on Experian's Official Credit Advice Blog.
]]>If you're planning to travel to a different country, however, you may want to bring a backup payment method. Here's what you need to know.
American Express offers several credit cards for consumers and small business owners and, in many places, you'll likely have no problem using your Amex credit card to make purchases.
However, the payment network isn't as widely accepted as Visa and Mastercard, especially if you're traveling abroad. Knowing where you can and can't use American Express can help you determine whether you need a backup payment method.
Within the U.S., American Express touts a 99% acceptance rate among merchants that accept credit cards. That generally includes most major retailers and restaurant chains, as well as several small businesses.
American Express is also accepted by merchants in several other countries, though acceptance rates can vary depending on where you travel. If you're traveling to a large city in one of the following countries, for instance, you may have an easier time finding places to use your card:
While Amex is generally accepted by all major retailers in the U.S., there's one notable exception. While American Express used to have an exclusive partnership with Costco, the wholesale club currently only accepts Visa credit cards at its warehouses and gas stations. For online Costco purchases, you can use a Visa or Mastercard credit card.
There are also many small businesses, such as local restaurants and boutique shops, that may not accept Amex credit cards.
If you're unsure about a merchant, look for the American Express symbol on the door of the business or near the cashier. Alternatively, you can use the card issuer's map to search for a specific merchant or even find all merchants within a specific area.
For international travel, American Express acceptance can be spotty. Even in countries where you can find merchants in larger cities, you may have a harder time outside of those metropolitan areas.
In other countries outlined above, you may have a hard time finding merchants who will accept your Amex credit card, so it's best to bring a Visa or Mastercard as a backup.
American Express charges higher merchant fees compared to other payment networks, which can be a deal breaker for many small businesses. While merchant fees can vary depending on the card type, American Express merchant fees tend to be higher than those that other payment networks charge.
That said, American Express boasts that transaction sizes for its cardholders are 65% higher than non-Amex cardholders, and the company has made a significant push in recent years to improve its acceptance rate with smaller businesses.
If you have an American Express credit card, you likely won't run into many businesses in the U.S. that won't accept your card as a payment method. That said, it's still a good idea to have a Visa or Mastercard credit card or debit card, just in case.
If you're planning a trip to another country, you'll likely want to bring a Visa or Mastercard credit card or debit card with you, even if the country has a higher acceptance rate for Amex than others. Also, be sure to have a card that doesn't charge a foreign transaction fee, which can be as much as 3% of each international purchase.
The post Where Is American Express Accepted? appeared first on Experian's Official Credit Advice Blog.
]]>The post How Does Credit Card Lounge Access Work? appeared first on Experian's Official Credit Advice Blog.
]]>Many credit cards offer airport lounge access as a valuable perk for primary cardholders or even authorized users. However, the specifics of lounge access can vary depending on the card issuer and type of card you have. As a cardholder of an eligible card, you may be able to enroll in a lounge access program or gain access to a specific airline lounge network on a limited or unlimited basis.
Travel rewards credit cards typically offer access to a network of lounges, while airline-specific credit cards grant access to lounges offered by the affiliated airline or its partners. Lounge access may be complimentary or there may be a fee, depending on the card and the lounge program.
If your credit card offers lounge access, you're eligible to enter if you have a same-day departing flight with a departure time within three hours. While some lounges apply the three-hour entry requirement to connecting flights, others do not. You must be 18 to enter, or be accompanied by an adult.
You need to present your physical credit card, government-issued ID and boarding pass showing a same-day flight. The credit card you present for entry must offer airport lounge access and must be open, active and in good standing.
Some lounge programs require prior enrollment before you can enter the lounge and you may enter by showing your physical or digital membership card (a separate card from the credit card you use to access lounge benefits).
If you're accessing a lounge within an airline lounge network, your boarding pass must show that you're flying on that airline or one of its partners. Note that certain ticket types, like economy, may not give you access.
Lounge access is a standard benefit with certain types of credit cards, generally falling into two categories: premium co-branded airline credit cards and travel rewards credit cards. Some card issuers have their own network of lounges accessible to you if you have one of their eligible travel credit cards.
The level of lounge access varies for each credit card. Some cards offer unlimited access, while others restrict the number of visits you can make each year. You may be able to upgrade your lounge access by meeting a minimum spending threshold during the calendar year. To keep your upgraded access, you'll have to continue to meet the spending requirement each year.
Make sure you read the terms and conditions to understand the lounge access benefits offered. Note that lounge access may change periodically, generally becoming more restrictive to prevent overcrowding. It won't hurt to check lounge access guidelines before traveling so you won't run into any surprises.
Spending time in the airport lounge can eliminate some of the stress of traveling by providing a relaxing place to wait for your next flight.
The specific amenities available in airport lounges can vary significantly depending on the lounge's location and size. Amenities can even differ between airline lounges within the same airport. This means travelers have a range of options that offer a variety of benefits.
The specific lounges you can access depend on the type of credit card you have and the lounge access program affiliated with it. You can generally access lounges in two ways:
If you're looking for a lounge, check the airline or lounge network's mobile app or website. There, you can find information about location, amenities and operating hours.
Make sure you understand your lounge access benefits before heading to the airport. Check the terms and conditions so you know which lounges you can access, whether there's a cost and any exclusions that apply.
Airport lounges can get overcrowded, especially during peak travel time, so guest access may be restricted. Whether you can bring guests and the entry requirements for them depends on the credit card and lounge rules.
As a cardholder, you may receive a limited number of complimentary passes for guests each year. After using the complimentary passes—or if your credit card doesn't provide this perk—guests may have to pay a fee to enter and there may be a cap on the number of non-family guests you can bring. If there's a fee for guest entry, you'll likely need to use your card to pay it, since lounge access is tied to your credit card account.
Guests are generally required to enter with the cardholder and need to show their ID and boarding pass for access. For airline lounges, guests must also be flying on the airline to gain access.
Some lounges even allow you to bring pets—though your furry friends may need to remain in a carrier unless they're service animals.
Lounge access can improve your travel experience whether you're a frequent flier or an occasional traveler looking for a more relaxed place to wait and work before your flight. Cards that also allow guest access offer a great place for your group to relax.
Amenities like complimentary food and drinks, Wi-Fi access and business facilities are a good perk if you plan to use them.
There are definitely tiers when it comes to lounges—some are basic and others premium. Many credit cards with lounge access have an annual fee. Consider whether the cost is worth the convenience. If you only plan to use lounge access occasionally, the card's other benefits may help justify the annual fee.
Credit cards with lounge access are typically higher-tier credit cards that require excellent credit. Before shopping for a credit card, check your free credit score to see whether you're likely to qualify.
When you're ready to start looking for a credit card, compare and evaluate cards based on annual fee, rewards and other perks you may use. Once you've chosen a card and you're approved, be sure to read lounge access guidelines and enroll right away if that's a requirement. That way, you'll have what you need to enjoy the lounge before your next flight.
The post How Does Credit Card Lounge Access Work? appeared first on Experian's Official Credit Advice Blog.
]]>The post How to Read a Bank Statement appeared first on Experian's Official Credit Advice Blog.
]]>These statements can be invaluable in helping you understand what's going on with your money. But the abundance of information in your statement can be overwhelming for some. Not sure how to read your bank statement? You can read your bank statement by understanding its different sections, as outlined below.
Your bank statement usually displays everything that happened with your account during the statement period, including deposits, withdrawals, transactions and fees. In most cases, your statement is broken down into several sections to make the report more easily digestible. Typically, your report should include the following information:
Near the top of your statement, you should see the statement cycle listed, which shows the period the statement covers. Look for words like "statement ending" followed by a date, such as "Statement Ending April 27, 2024" or simply "March 28, 2024, through April 27, 2024."
Next, you should see the bank's logo and vital customer service contact details. This information should include the website URL, customer service numbers and the physical address for payments sent through the mail.
Your name, address, phone number and other personal information also appear near the top of your bank statement. Quickly review this information to make sure it's correct and up to date. Incorrect information could be a red flag for fraudulent activity on your account. In that case, contact customer service immediately to resolve the matter and ensure your bank account is secure.
Your account summary is a macro view of your account, listing your beginning and ending account balances, along with totals for deposits, withdrawals, purchases, fees and other relevant information.
Statements for savings, certificates of deposit or other deposit accounts should include a summary of the interest your account is earning. This breakdown usually includes your interest earned during the statement period and your total interest earned year-to-date.
Reviewing your account activity can give you a complete picture of what is going on with your account funds. Whether your activity is listed in separate sections or included all together, it should include the following in chronological order:
As a rule of thumb, you should review your bank statement at least once a month when your new statement is issued. With online access allowing for quick review, many account holders reconcile their bank statements more frequently, such as once every week or even daily.
Regularly reconciling your bank statement can help you gain more control over your finances by helping you:
Financial experts often recommend keeping your bank statements for one year to prepare for filing income taxes, proving your income or other purposes. Similarly, it's wise to hold on to your statements for at least seven years if you need them to support information contained in your tax returns. Many banks allow you to access statements for up to seven years when you opt for paperless statements.
In most cases, you should notify your bank immediately after noticing an unauthorized transaction, missing money or other inaccuracies on your bank statement. In addition, if your debit card becomes lost or stolen, you must notify your financial institution within two business days of noticing the problem. If you do, you'll only be responsible for the lesser of the unauthorized transaction amount or $50.
Even if you didn't lose your debit card, security code or PIN (or had them stolen), you still must inform your financial institution within 60 days of a fraudulent transaction appearing on your bank statement. You could be held financially responsible for the charge if you wait longer than 60 days.
You're responsible for reviewing your bank statements and advising the bank of any errors. Even if there's a bank error in your favor, don't touch the money and instead notify your bank immediately. If you use the money, not only could you be responsible for paying it back, you could even be criminally prosecuted.
Your bank isn't required to send you a monthly bank statement unless you make one or more electronic fund transactions in a month. But even if you don't make a qualifying transaction, most financial institutions send bank statements to their account holders each month.
It's a good idea to check your paper bank statement once a month when it arrives. Another good financial habit is to check your bank account activity regularly online to spot errors, confirm payments and ensure you have enough money for transactions.
As you keep tabs on your bank account activity, don't forget to monitor your credit health by using Experian's free mobile app. You can access your Experian credit report and FICO Score and receive real-time notifications about potential fraud.
The post How to Read a Bank Statement appeared first on Experian's Official Credit Advice Blog.
]]>The post How Much Money Should You Save Each Month? appeared first on Experian's Official Credit Advice Blog.
]]>Here are some strategies you can use to determine how much you should save each month, where to put your money and how to increase your savings over time.
Deciding on how much to save involves getting a better understanding of your financial situation and goals. Here are some approaches you can take to determine how much of your income you should set aside each month.
Take some time to think about your short-, mid- and long-term financial goals. In addition to building a robust emergency fund, this may include things like:
Once you've laid out your financial goals, determine when you want to accomplish each one and how much money you'll need. With that information, you can determine how much you'll need to save each month to get there.
For example, if you want to buy a car with a $5,000 down payment in two years, you'd need to set aside roughly $209 per month to achieve your objective.
For retirement and education savings, you can work with a financial advisor or use an online retirement calculator or college savings calculator to nail down your monthly savings goal.
If you want a simpler approach, you may consider the 50/30/20 budgeting method. With this approach, you'd allocate 50% of your take-home pay for needs, 30% for discretionary expenses and 20% for financial goals, including both savings and paying off debt.
While a 50/30/20 split is the standard rule of thumb, you can adjust the proportions based on your situation and priorities. For example, you could increase how much you save if your necessary expenses are low or you're willing to cut back on discretionary spending.
If you've been living paycheck to paycheck and don't have a handle on your budget yet, you may feel overwhelmed by more concrete strategies. While you take time to evaluate both your financial priorities and abilities, it's important to remember that saving a little is better than nothing at all.
If you have some money in your checking account that you can afford to set aside, moving that money to a high-yield savings account can be a great first step on your savings journey and help you develop some momentum.
You can also consider opening a checking account that offers innovative savings features, such as rounding up debit card purchases to the nearest dollar and saving the difference.
Financial institutions offer a wide variety of savings and investment vehicles you can use to make the most of your savings. Depending on your savings goals, here are some potential choices:
Depending on your situation, there may be several ways you can improve your ability to save over time. Here are some to consider:
As you evaluate your options, you can use an online savings calculator to get an idea of how your savings will grow over time.
While it may not seem related, having a good credit score can help you save more money. That's because good credit often helps you qualify for lower interest rates on loans—including consolidation and refinance loans—and can even keep your auto insurance and homeowners insurance premiums low.
As you consider ways to increase your savings, check your credit score and credit report to determine whether you can take steps to improve your credit and maximize your monthly savings.
The post How Much Money Should You Save Each Month? appeared first on Experian's Official Credit Advice Blog.
]]>The post What Is a Budget Surplus? appeared first on Experian's Official Credit Advice Blog.
]]>Often, when people talk about budget surpluses and deficits, they're referring to the national deficit or surplus. In the U.S., budget surpluses are fairly rare; there have been five budget surpluses in the past 50 years, and the most recent surplus was in 2001. Here's how budget surpluses happen and their potential impacts on the national economy.
A national budget surplus is when the government collects more in taxes than it spends in a given year. In other words, if the government's earnings are greater than its outlays (or spending) in a given year, there's a surplus.
On the other hand, if it spends more than it earns, there's a budget deficit. For example, in 2023, the U.S. federal government spent $6.13 trillion and brought in $4.44 trillion in revenue. This resulted in a budget deficit of $1.70 trillion for the year 2023.
When government spending is equal to revenue, the budget is referred to as balanced; in other words, there's neither a deficit or a surplus.
The fundamental cause of a government budget surplus is when government spending is less than its revenue.
While a budget surplus could be linked to the strength of the economy, a period of economic expansion doesn't necessarily lead to a surplus. National fiscal policy—tax rates and government spending—each play a role.
Here's a breakdown of the factors that can lead to a budget surplus:
A budget surplus is typically considered a good thing because it can be an indication of a strong economy. Also, a surplus can be invested toward lowering the national debt or recirculated by increasing social spending or tax reform.
On the other hand, a surplus could be the result of fiscal policies with potential negative impacts, such as decreased spending on economic welfare programs.
Government deficits and surpluses are macroeconomic factors that influence and are influenced by the national economy and fiscal policy. For example, high budget deficits and a resulting high national debt can place a strain on the national budget and contribute to increased interest rates.
Staying up to date on the latest financial news is a good way to stay informed on macroeconomic trends. Beyond minding national trends, be sure to focus your attention on your personal household economy. For example, consider signing up for free credit monitoring through Experian and tracking your spending. You might be able to create your own budget surplus.
The post What Is a Budget Surplus? appeared first on Experian's Official Credit Advice Blog.
]]>The post What if My Credit Report Shows an Incorrect Social Security Number? appeared first on Experian's Official Credit Advice Blog.
]]>Incorrect SSNs in credit reports may be the result of an error that occurred when you were filling out a credit application or when the data was furnished to the credit bureaus. For example, this could happen when:
These types of errors won't affect your credit score—personal information never does. Credit bureaus can also use different types of information to match people to their credit accounts, including their name, date of birth and address. So, credit accounts that are reported with an incorrect SSN could still be matched to the rest of your credit profile.
However, incorrect SSNs could also be an indication of identity theft and credit fraud. For example, someone might have tried to use your personal information to apply for a credit account, but they guessed part of your SSN or intentionally changed a few digits.
If you check your credit report and don't see your correct SSN, that's not necessarily an error. Experian doesn't list the correct SSN in your credit report to help protect your identity. You'll only see incorrect SSNs that have been reported alongside your other personal information. Other credit bureaus might have different practices, such as only listing part of your correct SSN.
If you see an incorrect SSN, you can take several steps to make sure it's not the result of fraud, correct your credit report and protect yourself from credit fraud in the future.
Your credit reports are the basis for your credit scores, which can affect your eligibility and terms on new loans and credit cards. They also might affect your ability to rent a home or get a job, and how much you pay for insurance.
Although most people's credit reports are accurate, regularly monitoring your credit reports for errors and fraudulent accounts is still important. You can review your Experian credit report for free, and get free copies of your credit reports from all three bureaus weekly from AnnualCreditReport.com.
Similar to correcting an incorrect SSN, if you spot other errors, you might want to contact the company reporting the information or file disputes with the credit bureaus. You can send disputes to Experian online, by mail or over the phone.
You can take several steps to keep your SSN safe, such as shredding unneeded documents that have your SSN and avoiding carrying your Social Security card. However, your personal information, including your name and Social Security number, may have already been leaked online. You can do a free one-time dark web scan to see if your SSN, email or phone number appear in databases on the dark web. Experian's free credit report monitoring will also alert you if someone applies for or opens a credit account using your information.
The post What if My Credit Report Shows an Incorrect Social Security Number? appeared first on Experian's Official Credit Advice Blog.
]]>The post How to Avoid Peer-to-Peer Payment Fraud appeared first on Experian's Official Credit Advice Blog.
]]>Yes, unfortunately there are fake banking apps. These fake apps may appear to be from legitimate companies, but they are controlled by scammers who use them to gain access to your personal or financial information.
Due to the potential for fraud, it's vital to confirm you're downloading and using the official version of apps like Venmo, Zelle or Cash App. Be similarly cautious when installing and using banking apps from major financial institutions including banks and credit unions.
Stay alert to these tricks:
Here are some tips to protect yourself from P2P scams:
Here are the steps you should follow if a fake app results in fraud involving your bank account:
Keep in mind that if a fraudster steals enough of your personal or financial information, they may apply for or successfully open a credit card account or sign up for a loan in your name. If this happens, you have the right to file disputes with the major credit reporting agencies and request to have the fraudulent information removed.
It's critical these days to tread carefully when you're downloading and using Venmo, Zelle, Cash App and other banking apps. Why? Because cyberthieves are creating fake apps engineered to steal your information and money. As part of your cybersecurity efforts, consider signing up for Experian's identity theft protection service to monitor your credit report and get alerts when suspicious information appears on your report.
The post How to Avoid Peer-to-Peer Payment Fraud appeared first on Experian's Official Credit Advice Blog.
]]>The post 7 Tips for Spending Money Wisely appeared first on Experian's Official Credit Advice Blog.
]]>The following seven tips can help you spend wisely, including making a budget, spending on needs before wants and being smart with credit.
Having a budget is the key to keeping your spending in check. A budget is the master plan for how you're going to spend your money and ensures you don't spend more than you make. The basic steps of creating a budget are pretty straightforward.
The 50/30/20 budgeting method is relatively simple and a good place to start to keep your spending on track. There are other budgeting methods you can explore to find what works best for you. For instance, you may need a different budget if you're paid monthly. Your budget is meant to keep you on track, but it doesn't have to be restrictive. If you have enough room in your budget, build in a buffer for unplanned spending.
It may be tempting to splurge, but it's important to know the difference between what you need to survive and what you want in the moment. Spending so much on dining out, entertainment, clothes and the like that you're having a hard time paying your monthly bills and groceries could land you in debt. Focusing on your needs first is part of the foundation for financial security.
During your budgeting process, note expenses you should prioritize and those that should wait until you know you can afford them without going into debt. Essential living expenses like a mortgage, food costs and transportation costs are priorities, while things like vacations and hobbies can wait.
Using your credit card is a great way to build credit and earn lucrative rewards, as long as you can pay it off each month. Credit cards allow you to live beyond your means—a big mistake when trying to spend wisely, avoid debt, build wealth and ensure financial security. Use the two tips above to figure out how much you can safely spend on your cards each month. Then commit to paying off your credit card each month so you avoid paying interest and getting into debt.
Take time to identify what's truly important to you and allow your values to guide your spending. For instance, spending extra money on fitness classes makes sense if health and well-being are important to you.
Likewise, it's important to know what tempts you to overspend. By recognizing your spending triggers, you can eliminate temptation or find another outlet when you feel tempted to pull out your credit card.
Cutting costs is a good practice no matter how much you make. Every few months, review your spending and look for areas where you can cut back or eliminate expenses. Consider cheaper options, potential discounts and subscriptions that have raised prices or that you're no longer using.
For example, a quick phone call to your insurance company that saves you several hundred dollars a year is worth it. Eliminating unnecessary spending from your budget frees up money to save, invest or spend on things that really matter to you.
Some purchases come with ongoing costs that can raise your monthly spending. For instance, purchasing higher-quality clothes allows you to get more wear out of your wardrobe but may also increase your dry cleaning bill. Some smart electronics make your home more efficient but require a monthly subscription to take advantage of their features. Let your budget guide your buying decisions, considering how new ongoing spending will impact your financial goals.
Today we have more payment options than ever. Many of them make buying so effortless, you may not realize how much you're spending. Using several payment options like mobile wallets, one-click purchases and buy now, pay later can make it a challenge to budget and track your spending.
Instead, stick to just one or two credit or debit cards for all your purchases, including purchases through mobile apps. Track your account balances regularly so you know how closely you're following your budget.
Spending wisely comes down to making choices that improve your finances and your life. It starts with creating a budget, but requires you to make sure your actual spending aligns with your plan.
If you're disciplined with spending, using a rewards credit card for purchases allows you to earn rewards that you can later use for a splurge. Before you start shopping for a new card, check your credit score for free to see where you stand. That way, you can narrow your search to the credit cards you're most likely to qualify for.
The post 7 Tips for Spending Money Wisely appeared first on Experian's Official Credit Advice Blog.
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