Connect with us

Bad Credit

Best credit cards in 2020: Travel rewards, cash back, intro APR & more



Business Insider recommends credit cards based on their overall value and ease of use. Sometimes, we receive a commission through The Points Guy affiliate network if you apply and are approved for a card, but our choices are always independent and objective.

These are the best credit cards by category:

Given the wide range of benefits, rewards, and annual fees available, it’s impossible to name one single best credit card. But if you’re looking to find the best credit card for you, breaking it down by category is a good way to approach your search.

For example, if you’re just getting started with credit, a student card or a card that doesn’t require a high credit score is an ideal pick. If you’re looking to earn travel rewards, on the other hand, you’ll want to look at cards like the Chase Sapphire Preferred and the Capital One® Venture® Rewards Credit Card.

This guide highlights the best credit card option for several different types of users. If you want a to-the-point recommendation for maximizing your spending and enjoying benefits like an intro APR period, this guide will help you find a quick answer. However, if you want to go deeper, check out our in-depth credit card guides for the following categories:

Keep in mind that we’re focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which will far outweigh the value of any points or miles. It’s important to practice financial discipline when using credit cards by paying your balances in full each month, making payments on time, and only spending what you can afford to pay back. 

Citi Simplicity Card Review 4x3

Business Insider

Annual fee: $0

Pros: Longest intro APR period on balance transfers

Cons: Balance transfer fee, no rewards (though rewards shouldn’t be a priority if you’re carrying credit card debt)

If you’re looking to transfer your existing credit card balance to a new card that offers a long introductory APR period, you can’t do better than the Citi Simplicity card. It offers 0% APR on balance transfers for 21 months from the date of your first transfer. (You must complete your balance transfers in the first four months from your account-opening date.) After the 21-month intro APR period on balance transfers ends, there’s a variable rate of 16.24% to 26.24%.  There’s a balance transfer fee of 5%, with a minimum charge of $5.

To get the full benefit out of the Simplicity card, you’ll want to make sure you pay off your balance before the 21-month introductory period is over. The key to using credit cards responsibly is to avoid carrying any debt, so the Simplicity card can be a useful tool in your strategy to get back on track with good financial habits.

In addition to the stellar introductory offer for balance transfers, the Simplicity card offers 0% intro APR on purchases for 12 months from your account-opening date. After that, it will be a variable rate of 16.24% to 26.24%

Click here to learn more about the Citi Simplicity card »

Read more about the Citi Simplicity card:

finance money bank banking banking credit card credit score investment payment chase freedom unlimited visa cox 1

Crystal Cox/Business Insider

Annual fee: $0

Pros: 15-month introductory APR period, strong cash-back rate on all purchases, you can combine rewards with premium Chase cards

Cons: Other cards earn more cash back

The Chase Freedom Unlimited card offers a long introductory 0% APR period of 15 months on both purchases and balance transfers, after which there’s a variable rate of 16.49% to 25.24%.

Not only does this card help you pay down credit card debt with a generous introductory APR period, but it also offers solid ongoing rewards. You’ll earn 1.5% cash back on every purchase, and if you have a Chase card that earns Ultimate Rewards points, such as the Chase Sapphire Preferred or the Chase Sapphire Reserve, you can combine your rewards balances and gain the option to redeem your earnings from the Freedom Unlimited as points that can be used to book travel. 

Click here to learn more about the Chase Freedom Unlimited »

Read more about the Chase Freedom Unlimited:

wells fargo propel credit card lifestyle 22

The Points Guy

Annual fee: $0

Pros: No foreign transaction fee, several bonus categories

Cons: It’s essentially a cash-back card, so you won’t get higher-than-average value using rewards points for travel

The Wells Fargo Propel card packs in a lot of benefits for a card without an annual fee. We love that it doesn’t charge a foreign transaction fee (that’s relatively rare for no-annual-fee cards), and it offers several bonus categories for earning more points.

You’ll earn 3x points on eating out and ordering in, and on travel (including flights, hotels, homestays, and car rentals), gas stations, rideshares, transit, and popular streaming services, and 1 point per dollar on everything else. 

You can redeem points from the Wells Fargo Propel for cash back or for travel through the Go Far Rewards program. Each point is worth 1 cent, so there’s no opportunity to maximize your redemptions, like you can with rewards programs such as Amex Membership Rewards and Chase Ultimate Rewards. But if simplicity and avoiding an annual fee are your priorities, this card is a great option.

Click here to learn more about the Wells Fargo Propel card »

Read more about the Wells Fargo Propel card:

Citi Double Cash 4x3

Alyssa Powell/Business Insider

Annual fee: $0

Pros: No bonus categories to keep track of, no annual fee, you can combine rewards with other Citi cards

Cons: Some cash-back cards with bonus categories earn you more

Not only does the Citi Double cash card offer one of the longest introductory APR periods, but it’s also a great option for earning cash back. In fact, it’s one of our top picks for the best cash-back cards thanks to its straightforward earning structure — you get 1% cash back when you make a purchase, and 1% back when you pay your bill. 

As a new cardholder, you get the first 18 months with 0% APR on balance transfers — after that, there’s a variable rate of 15.49% to 25.49%. 

While the Citi Double Cash is a cash-back card, if you also have a premium Citi card like the Citi Premier℠ Card or the Citi Prestige® Card, you can combine your cash-back rewards with one of those accounts for the opportunity to redeem them as ThankYou points toward travel. 

Click here to learn more about the Citi Double Cash card »

Read more about the Citi Double Cash card: 

finance money bank banking banking credit card credit score investment payment chase sapphire preffered food dining restaurant cox 3

Crystal Cox/Business Insider

Annual fee: $95

Pros: Great sign-up bonus, multiple options for redeeming points for travel, valuable travel protections

Cons: Other cards offer more competitive bonus categories

If you want to earn travel rewards, you’ll find that Chase Ultimate Rewards points are the most user-friendly of the various bank currencies, which are also referred to as transferable points because you can transfer them over to various airline and hotel partners. In the case of Chase points, you can redeem them with partners like British Airways, Hyatt, United Airlines, and Singapore Airlines, or you can choose to book travel directly through Chase. If you choose the latter, your points are worth 1.25 cents apiece — a 25% bonus.

The Chase Sapphire Preferred starts you off with a sign-up bonus of 60,000 points after you spend $4,000 in the first three months. Those points are worth $750 in travel booked through Chase, or potentially even more if you decide to redeem with the program’s transfer partners. 

You’ll earn 2 points per dollar on all travel and dining purchases, and 1 point per dollar on everything else. Beyond the rewards, the Sapphire Preferred offers some valuable coverage benefits, including primary car rental insurance, trip delay insurance, and baggage delay insurance.

Click here to learn more about the Chase Sapphire Preferred »

Read more about the Chase Sapphire Preferred card:

Students_Discover it Secured

Alyssa Powell/Business Insider

Annual fee: $0

Pros: It’s an attainable option even if you have bad credit, and it earns rewards — which is rare for a secured card

Cons: Some secured cards have lower minimum deposit requirements

If you have a very limited credit history or are looking to repair bad credit, many of the cards on this list won’t be available to you. Most of the top rewards cards require credit scores in the 600s or higher — if that’s not where your credit is, you may need to consider a secured card to repair your credit. 

Secured credit cards are easy to get approved for because they require a cash deposit up front, which minimizes the issuer’s risk. Your credit limit is equal to the cash deposit you put down. 

If a secured card seems like the right option for you, the Discover it Secured is an especially good option, because it’s the rare secured card to offer rewards. You’ll earn 2% cash back at gas stations and restaurants on up to $1,000 in purchases each quarter (then 1%), and 1% cash back on all other purchases. Plus, Discover will match all the cash back you’ve earned at the end of the first year.

Capital One Quicksilver card

The Points Guy

Annual fee: $0

Pros: Earns 1.5% cash back on every purchase, no foreign transaction fees

Cons: Other cards offer better rewards

If you have a credit score in the “fair” range (580-669, according to FICO), you have a good chance for being approved for this card. It offers a respectable 1.5% cash back on all purchases, and there are no foreign transaction fees. 

The Capital One Quicksilver card also offers 0% intro APR for 15 months on both purchases and balance transfers (then a variable rate of 15.49% to 25.49%). 

Click here to learn more about the Capital One Quicksilver card »

Spark Business computer office_146

The Points Guy

Annual fee: $95 (waived the first year)

Pros: No bonus categories to keep track of, solid earning rate

Cons: Other business cards offer higher rewards and more benefits — but they come with higher annual fees

There are lots of great business credit cards, and if you travel constantly, it could be worth paying the high annual fee for a more premium option like the Business Platinum® Card from American Express. But if you just want a card that maximizes your cash back on spending, the Capital One Spark Cash for Business is a great choice. 

You’ll earn an unlimited 2% cash back on all your spending, and you can get free employee cards that earn 2% back as well. It’s a simple card, but for users who want to put money back into their business it’s a great option.

Click here to learn more about the Capital One Spark Cash for Business »

Read more about the Capital One Spark Miles for Business:

Annual fee: $0

Pros: Cash-back reward for good grades, earns up to 5% cash back, no foreign transaction fee

Cons: Other cards offer a higher cash-back rate on non-bonus spending

The Discover it Student Cash Back is a pretty rewarding card, with a neat Good Grades Reward benefit targeted to those in school. Each year your GPA is 3.0 or higher, you’ll get a $20 statement credit. 

Beyond that, the card offers 5% cash back on up to $1,500 of purchases in rotating bonus categories each quarter when you activate, and 1% back on everything else. Discover will even match your cash-back earnings after your first cardmember year. Overall, this card is a great entry point into the world of cash-back rewards.

Other credit cards that we considered that just missed the cut

  • Capital One Venture card: You get a lot of perks, and solid rewards, in exchange for a $95 annual fee that’s waived the first year, but your options for redeeming miles for travel aren’t the most competitive due to confusing transfer ratios and only one US airline partner.
  • The Platinum Card® from American Express: While this premium card has a long list of travel benefits like airport lounge access, Uber credits, and complimentary hotel elite status that can cancel out the $550 annual fee if you put them to use, not everyone will be able to justify that cost.
  • Chase Sapphire Reserve: The higher-end sibling of the Chase Sapphire Preferred is another card that offers some great high-end travel perks — like up to $300 in statement credits each year — but with a $550 annual fee it’s not the best travel card for everyone.
  • Capital One® Savor® Cash Rewards Credit Card — It earns 4% cash back on dining and entertainment, plus 2% at grocery stores and 1% back on everything else, but many people prefer earning a higher rate of cash back on all their purchases without any bonus categories.
  • Chase Freedom — The Freedom can help you earn 5% cash back/5x points on rotating quarterly bonus categories (on up to $1,500 each quarter when you activate), but again not everyone wants to keep track of bonus categories, especially when they change several times throughout the year.
  • Blue Cash Preferred® Card from American Express — It earns 6% back on select US streaming subscriptions and 6% back on up to $6,000 spent at US supermarkets each year (then 1%), so it’s another solid option for those who want maximum cash back on select purchases rather than a higher rate of cash back on all purchases.
  • Capital One® Spark® Miles for Business — It earns miles instead of cash back, but if you prefer travel rewards this card is a great option.
  • Business Platinum Amex card — With a $595 annual fee, it has lots of travel benefits that could be worth it if you’re constantly on the road.
  • Ink Business Preferred Credit Card — Chase’s premium business credit card has solid bonus categories, a great sign-up bonus, and a reasonable annual fee of $95, but it’s best for those who want to redeem rewards for travel.

Methodology: How we chose the best credit cards for 2020

Our list of the best credit cards is the result of an in-depth comparison between credit cards in each sub-category. We looked at America’s largest credit card issuers, as well as cards frequently recommended by blogs, forums, and travel communities.

The values we prioritized when coming up with this list were:

  • Simplicity — not everyone wants to invest lots of time and energy into maximizing their credit cards, so we focused on cards that make things as straightforward as possible
  • Affordability — while there’s a case to be made for paying a high annual fee when you’re getting high value in return, most credit card users aren’t looking for a card that costs $450 or more
  • Value — whether we’re talking about a credit card with or without an annual fee, it’s important that the benefits and features are worth it

Frequently asked questions

Why should I get a credit card?

Credit cards can be powerful tools for improving your credit score and earning rewards — if you use them responsibly.  It’s important to only spend what you can afford to pay off each month so you don’t end up in debt and start amassing steep interest fees.

Provided you’re in a position to pay off your credit card statements and spend within your means, there are several reasons opening a credit card could be a good idea. For one, credit cards offer better fraud protection than debit cards or cash — if an unauthorized purchase is made with your card, you won’t be on the hook. Using a credit card responsibly can also help you build and repair your credit, since your on-time payments will be reported to the credit bureaus. Finally, a credit card can help you maximize every dollar you spend, by earning you cash back, points, or miles. 

What is the best credit card?

It’s impossible to name just one best credit card, because there are so many options for so many different types of users. A credit card that earns travel rewards could be the best option for one person, but if you’re looking to earn cash back, you’ll be better served by another pick.

How do I choose a credit card?

Focus on your priorities, and be realistic about what cards you’re able to get approved for. Most of the top rewards cards require credit scores in the high 600s at a bare minimum, so if your credit score isn’t there yet, you’ll want to look at options for bad to fair credit scores so you can focus on building your credit back up. 

Beyond that, decide what annual fee you’re comfortable paying. Some people avoid paying credit card annual fees completely, and there are several great cards in the no-annual-fee category, but it could be worth paying a modest annual fee of $95 to $99 for a travel or cash-back card that earns you higher rewards. Also decide whether you want to earn cash back or travel rewards. Keep in mind that redeeming rewards for travel is more work than simply getting cash back in your account – the payoff can be big, but focus on what is the best option for you.

How do I build credit with a credit card?

Your credit card use is a huge factor in determining your credit score — every on-time payment you make is reported to the credit bureaus and shows potential lenders that you’re able to use credit responsibly. The key to building credit with a credit card is to only spend what you can afford to pay off each month. 

Source link

Continue Reading

Bad Credit

Inside the Highly Profitable and Secretive World of Payday Lenders



Illustration by Sarah Maxwell, Folio Art

When Bridget Davis got started in the family’s payday lending business in 1996, there was just one Check ’n Go store in Cincinnati. She says she did it all: customer service, banking duties, even painting walls.

The company had been established two years earlier by her husband, Jared Davis, and was growing rapidly. There were 100 Check ’n Go locations by 1997, when Jared and Bridget (née Byrne) married and traveled the country together looking for more locations to open storefront outlets. They launched another 400 stores in 1998, mostly in strip malls and abandoned gas stations in low-income minority neighborhoods where the payday lending target market abounds. Bridget drove the supply truck and helped select locations and design the store layouts.

But Jared soon fired his wife for committing what may be the ultimate sin in the payday lending business: She forgave a customer’s debt. “A young woman came to pay her $20 interest payment,” Bridget wrote in court documents last year during divorce proceedings from Jared. “I pulled her file, calculated that she had already paid $320 to date on a principle [sic] loan of $100. I told her she was paid in full. [Jared] fired me, stating, ‘We are here to make money, not help customers manage theirs. If you can’t do that, you can’t work here.’ ”

Photograph by Brittany Dexter

It’s a business philosophy that pays well, especially if you’re charging fees and interest rates of 400 percent that can more than triple the amount of the loan in just five months—the typical time most payday borrowers need to repay their debt, says the Pew Charitable Trusts, a nonprofit organization focused on public policy. Cincinnati-based Check ’n Go now operates more than 1,100 locations in 25 states as well as an internet lending service with 24/7 access from the comfort of your own home, according to its website. Since its founding, the company has conducted more than 50 million transactions.

What the website doesn’t say is that many, if not most, of those transactions were for small loans of $50 to $500 to working people trying to scrape by and pay their bills. In most states—including Ohio, until it reformed its payday lending laws in 2019—borrowers typically fork over more than one-third of their paycheck to meet the deadline for repayment, usually in two weeks. To help guarantee repayment, borrowers turn over access to their checking account or deposit a check with the lender. In states that don’t offer protection, customers go back again and again to borrow more money from the same payday lender, typically up to 10 times, driving themselves into a debt trap that can lead to bankruptcy.

Jared and Bridget Davis are embroiled in a nasty court battle related to his 2019 divorce filing in Hamilton County Domestic Relations Court. Thousands of pages of filings and 433 docket entries by April 26 offer the public a rare glimpse into the business operations of Check ’n Go, one of Cincinnati’s largest privately-owned companies, as well as personal lifestyles funded by payday lending.

The company cleared $77 million in profit in 2018, a figure that dipped the following year to $55 million, according to an audit by Deloitte. That drop in revenue may have something to do with the payday lending reform laws and interest rate caps passed recently in Ohio as well as a growing number of other states.

The day-to-day business transactions that provide such profit are a depressing window into how those who live on the edge of financial security are often stuck with few options for improving their situations. If a borrower doesn’t repay or refinance his or her original loan, a lender like Check ’n Go deposits the guarantee check and lets it bounce, causing the borrower to incur charges for the bounced check and eventually lose his or her checking account, says Nick DiNardo, an attorney for the Legal Aid Society of Greater Cincinnati. After two missed payments, payday lenders usually turn over the debt to a collection agency. If the collection agency fails to collect the full amount of the original loan as well as all fees and interest, it goes to court to garnish the borrower’s wages.

That devastating experience is all too familiar to Anthony Smith, a 60-year-old Wyoming resident who says he was laid off from several management positions over a 20-year period. He turned to payday lenders as his credit rating dropped and soon found himself caught in a debt trap that took him years to escape.

Two things happened in 2019, Smith says, that turned around his financial fortunes. First, he found a stable manufacturing job with the Formica Company locally, and then he took his mother’s advice and opened a credit union account. GE Credit Union not only gave him a reasonable loan to pay off his $2,500 debt but also issued him his first credit card in a decade. “I had been a member [of the credit union] for just two months, and I had a credit rating of 520. Can you imagine?” he says. Smith says he is now debt-free for the first time in 10 years.

Consumer advocates say Check ’n Go is one of the biggest payday lending operations in the nation. But knowing its exact ranking is difficult because most payday lending companies, including Check ’n Go and its parent company CNG Holdings, are privately held and reluctant to disclose their finances.

Brothers Jared and David Davis own the majority of the company’s privately held stock. David bought into the company in 1995, but CNG got its game-changing infusion of capital from the brothers’ father, Allen Davis, who retired as CEO of then-Provident Bank in 1998. Allen sold off $37 million in stock options and essentially became CNG’s bank and consultant.

By 2005, however, the sons were part of a public court battle against their father. Allen accused Jared and David of treating his millions in CNG stock as compensation instead of a transfer from his ex-wife (and the brothers’ mother), sticking him with a $13 million tax bill. In turn, the brothers accused Allen of putting his mistress and his yacht captain on the company payroll, taking $1.2 million in fees without board approval, and leading the company into ventures that lost Check ’n Go a lot of money. Several years of legal fighting later, the IRS was still demanding its $13 million. CNG officials did not respond to requests for comment for this story.

Jared and David split $22 million in profit from CNG in 2018 and, according to the Deloitte audit, CNG’s balance sheet showed another $42 million that could be split between the two brothers in 2019. Jared, however, elected not to receive his $21 million distribution “in order to create this artificial financial crisis and shelter millions of dollars from an equitable split between us,” according to Bridget’s divorce filing.

Worse, she claims, Jared said they would be responsible for paying taxes out of their personal accounts rather than from CNG’s company earnings, making her personally responsible for half of the $5.5 million in taxes for 2019. She believes it wasn’t happenstance that $5.5 million was wired to Jared’s private bank account in December of that same year. Bridget has refused to sign the joint tax return, and Jared filed a complaint with the court saying a late tax filing would cost them $1 million in penalties and missed tax opportunities.

“For the duration of our marriage and to the present, Jared has full and complete control of all money paid to us from various investments we have made in addition to our main source of income, CNG,” Bridget wrote in her motion. She suspects that Jared, without her knowledge or consent, plowed the money for their taxes and from other sources of income into Black Diamond Group, the fund that invests in the Agave & Rye restaurant chain. Beyond the original restaurant opened in Covington in 2018, “they have opened four other locations in one year,” she wrote, including Louisville and Lexington. (The ninth location opened in Hamilton this spring.) Agave & Rye’s website touts its Mexican fare as “a chef-inspired take on the standard taco, elevating this simple food into something epic!”

In his response, Jared wrote, “We have very limited regular sources of income.” He says he isn’t receiving any additional distributions from CNG, the couple’s primary source of income, “and this is not within my control. The company has declared that we would not make any further distributions in 2020 given economic circumstances. This decision is based on a formula and is not discretionary.” Agave & Rye helped produce $645,000 in income for Black Diamond in 2020 but has paid out $890,000 in loans, he says. Through August 31, 2020, he wrote, the couple’s “expenses have exceeded income from all sources.”

The divorce case filings start slinging mud when the couple accuses each other of breaking up their 22-year marriage and finding new partners. Jared claims Bridget began an affair during their marriage with Brian Duncan, a contractor she employed through her house flipping business. Bridget, he says, paid Duncan’s company $75,000 in 2018 as well as giving him a personal gift of $70,000 that same year. Jared says she also bought Duncan at least one car and purchased a house for him near hers on Shawnee Run Road for $289,000, then loaned money to Duncan. Jared says Duncan has been late in repaying the note.

While Bridget says Duncan has been drug-free for several years, he has a rap sheet with Hamilton County courts from 2000 to 2017 that runs five pages long. It lists a half-dozen counts of drug abuse and drug possession, including heroin and possession of illegal drug paraphernalia; assaulting a police officer; stealing a Taser from a police officer; criminal damaging while being treated at UC Health; more than a dozen speeding and traffic violations; a half-dozen counts of driving with a suspended license; receiving stolen property; twice fleeing and resisting arrest; three counts of theft; two counts of forgery; and one count for passing bad checks.

Bridget has fired back that Jared not only is hiding his money from her but spending it lavishly on vacations, resorts, and high-end restaurants with his new girlfriend, Susanne Warner. Bridget says Jared gifted Warner with $40,000 without Bridget’s knowledge, then declared it on their joint tax return as a “contribution.” Bridget’s court filings include photocopies of social media posts of Jared and Warner globetrotting from summer 2019 to summer 2020: vacation at Beaver Creek Village in Avon, Colorado; cocktails at High Cotton in Charleston, South Carolina, and dinner at Melvyn’s Restaurant and Lounge in Palm Springs, California; getaways at resorts in Nashville and at a lakefront rental on Norris Lake ($600 per night); in the Bahamas at a Musha Cay private residence ($57,000 per night), at South Beach in Miami, and at a private beach at Fisher Island; in Mexico at Cabo San Lucas; in the U.S. Virgin Islands at Magen’s Bay and on a private yacht ($4,500 per night); in California at Desert Hot Springs, the Ritz-Carlton in Rancho Mirage, and Montage at Laguna Beach; and in the Bahamas at South Cottage ($2,175 per night).

For her part, Bridget has gone through some of the top lawyers in town faster than President Trump during an impeachment—six in all, two of whom she’s sued for malpractice. She sent four binders of evidence to the Ohio Supreme Court, asking for the recusal of Hamilton County Judge Amy Searcy and claiming Searcy was biased because of campaign donations from Jared and his companies. Rather than deal with the list of questions sent to her by Chief Justice Maureen O’Connor, Searcy stepped down. Two other judges have since stepped into the fray, and in March Bridget filed for a change of venue outside of Hamilton County, arguing she can’t get a fair trial in her hometown. At press time, a trial date had been set for June 28 in Hamilton County.

The poor-mouthing in the divorce case has reached heights of comic absurdity. Jared claims he’s “illiquid” because he didn’t get his distribution from CNG in 2019. Bridget has received debt collection notices for the nearly $21,000 owed on her American Express card and a $735 bill from Jewish Hospital. There’s no sign yet that anyone is coming to repossess her Porsche, which according to her filings has a $5,000 monthly payment. Each party has received $25,000 a month in living expenses, an amount later reduced to $15,000 under a temporary legal agreement while the divorce case is being sorted out. Court filings show that Jared’s net worth is almost $206 million and Bridget’s is $22.5 million.

In the early 1990s, Allen Davis was raising eyebrows at Provident Bank (later bought by National City), and not only because of his very unbanker-like look of beard, ponytail, and casual golf wear. He was leading the company into questionable subprime home loans for people with bad credit and a frequent-shopper program for merchants, though the bank’s charter barred him from getting involved in full-blown predatory lending practices. With guidance and funding from his father, Jared, at age 26, launched Check ’n Go in 1994 and became a pioneer in the payday lending industry. Jared and his family saw there were millions of Americans who didn’t have checking or savings accounts (“unbanked”) or an adequate credit rating (“underbanked”) but still needed loans to meet their everyday expenses. What those potential customers did have was a steady paycheck.

Conventional banks share a big part of the blame for the nation’s army of unbanked borrowers by imposing checking account fees and onerous penalties for bounced checks. In 2019, the Federal Deposit Insurance Corporation estimated there were 7.1 million U.S. households without a checking or savings account.

The Davises launched Check ’n Go on the pretext that it would “fill the gap” for people who occasionally needed to borrow money in a hurry—a service for those who couldn’t get a loan any other way. But consumer advocates say the real business model for payday lending isn’t a service at all. The majority of the industry’s revenue comes from repeat business by customers trapped in debt, not from borrowers looking for a quick, one-time fix for their financial troubles.

Ohio’s payday lending lobbyists got a strong hold on the state legislature in the late 1990s, and by 2018 Democratic gubernatorial candidate Richard Cordray could rightfully claim in a campaign ad that “Ohio’s [payday lending] laws are now the worst in the nation. Things have gotten so bad that it is legal to charge 594 percent interest on loans.” His statement was based on a 2014 study by the Pew Charitable Trusts.

The frustration for consumer advocates was that Ohioans had been trying to reform those laws since 2008, when voters overwhelmingly approved a ballot initiative placing a 28 percent cap on the interest of payday loans. But—surprise!—lenders simply registered as mortgage brokers, which enabled them to charge unlimited fees.

The Davis family and five other payday lending companies controlled 90 percent of the market back then, an express gravy train ripping through the poorest communities in Ohio. The predatory feeding frenzy, especially in Ohio’s hard-hit Rust Belt communities, prompted a 2017 column at The Daily Beast titled, “America’s Worst Subprime Lender: Jared Davis vs. Allan Jones?” (Jones is founder and CEO of Tennessee-based Check Into Cash.) In 2016 and 2017, consumer advocates mustered their forces again, and this time they weren’t allowing for loopholes. The Pew Charitable Trusts joined efforts with bipartisan lawmakers and Ohioans for Payday Loan Reform, a statewide coalition of faith, business, local government, and nonprofit organizations. Consumer advocates found a legislative champion in State Rep. Kyle Koehler, a Republican from Springfield.

It no doubt helped reform efforts that former Ohio Speaker of the House Cliff Rosenberger resigned in spring 2018 amid an FBI investigation into his cozy relationship with payday lenders. Rosenberger had taken frequent overseas trips—to destinations including France, Italy, Israel, and China—in the company of payday lending lobbyists. In April 2019, Ohio’s new lending law took effect and, since then, has been called a national model for payday lending reform that balances protections for borrowers, profits for lenders, and access to credit for the poor, according to the Pew Charitable Trusts. New prices in Ohio are three to four times lower for payday loans than before the law. Borrowers now have up to three months to repay their loans with no more than 6 percent of their paycheck. Pew estimates that the cost of borrowing $400 for three months dropped from $450 to $109, saving Ohioans at least $75 million a year. And despite claims that the reforms would eliminate access to credit, lenders currently operate in communities across the state and online. “The bipartisan success shows that if you set fair rules and enforce them, lenders play by them and there’s widespread access to credit,” says Gabe Kravitz, a consumer finance officer at the Pew Charitable Trusts.

Other states like Virginia, Kansas, and Michigan are following Ohio’s lead, Kravitz says. Some states, such as Nebraska, have even capped annual interest on payday loans. As a result, Pew researchers have seen a reduction in the number of storefront lending op­erations across the country. Even better, Kravitz says, there’s no evidence that borrowers are turning instead to online payday lending operations.

Cincinnati is one of five cities chosen for a grant to replicate the success of Boston Builds Credit, an ambitious effort that city launched in 2017 to provide credit counseling in poor and minority communities by training specialists at existing social service agencies. The program also encourages consumer partnerships with credit unions, banks, and insurance companies to offer small, manageable loans that can help the unbanked and underbanked improve their credit ratings. “Right now, local organizations are all kind of working in silos on the problem in Cincinnati,” says Todd Moore of the nonprofit credit counseling agency Trinity Debt Relief. Moore, who applied for the Boston grant, says he’s looking for an agency like United Way or Strive Cincinnati to lead the effort here.

Anthony Smith is thankful that he’s escaped the downward spiral of his payday loans, especially during the pandemic’s economic turmoil. “I’m blessed for every day I can get paid and have a job during these difficult times, just to be able to pay my bills and meet my responsibilities,” he says. “I’ve always kept a job, but until now I’ve had crappy credit. That doesn’t mean I’m a bad guy.”

Can others worth millions of dollars say the same?

Inside the Highly Profitable and Secretive World of Payday Lenders Source link Inside the Highly Profitable and Secretive World of Payday Lenders

Source link

Continue Reading

Bad Credit

What’s Questionable Credit and Can I Get a Car Loan With It?



Questionable’s definition means that something’s quality is up for debate. If a lender says that your credit score is questionable, it’s likely that they mean it’s poor, or at the very least, they’re hesitant to approve you for vehicle financing. Here’s what most lenders consider questionable credit, and what auto loan options you may have.

Questionable Credit and Auto Lenders

Many auto lenders may consider questionable credit as a borrower with a credit score below 660. The credit score tiers as sorted by Experian the national credit bureau, are:

  • Super prime: 850 to 781
  • Prime: 780 to 661
  • Nonprime: 660 to 601
  • Subprime: 600 to 501
  • Deep subprime: 500 to 300

The nonprime credit tiers and below is when you start to get into bad credit territory and may struggle to meet the credit score requirements of traditional auto lenders.

This is because lenders are looking at your creditworthiness – your perceived ability to repay loans based on the information in your credit reports. Besides your actual credit score, there may be situations where the items in your credit reports are what’s making a lender question whether you’re a good candidate for an auto loan. These can include:

  • A past or active bankruptcy
  • A past or recent vehicle repossession
  • Recent missed/late payments
  • High credit card balances
  • No credit history

There are ways to get into an auto loan with questionable credit. Your options can change depending on what’s making your credit history questionable, though.

Questionable Credit Auto Loans

If your credit score is less than stellar, it may be time to look at these two lending options:

  • What Is Questionable Credit and Can I Get a Car Loan With It?Subprime financing – Done through special finance dealerships by third-party subprime lenders. These lenders can often assist with many unique credit situations, provided you can meet their requirements. A great option for new borrowers with thin files, situational bad credit, or consumers with older negative marks.
  • In-house financing – May not require a credit check, and is done through buy here pay here (BHPH) dealers. Typically, your income and down payment amount are the most important parts of eligibility. Auto loans without a credit check may not allow for credit repair and may come with a higher-than-average interest rate.

Both of these car loan options are typically available to borrowers with credit challenges. However, if you have more recent, serious delinquencies on your credit reports, a BHPH dealer may be for you. Most traditional and subprime lenders typically don’t approve financing for borrowers with a dismissed bankruptcy, a repossession less than a year old, or borrowers with multiple, recent missed/late payments.

Requirements of Bad Credit Car Loans

In many cases, your income and down payment size are the biggest factors in your overall eligibility for bad credit auto loans. Expect to need:

  • 30 days of recent computer-generated check stubs to prove you have around $1,500 to $2,500 of monthly gross income. Borrowers without W-2 income may need two to three years of professionally prepared tax returns.
  • A down payment of at least $1,000 or 10% of the vehicle’s selling price. BHPH dealers may require up to 20% of the car’s selling price.
  • Proof of residency in the form of a recent utility bill in your name.
  • Proof of a working phone (no prepaid phones), proven with a recent phone bill in your name.
  • A list of five to eight personal references with name, phone number, and address.
  • Valid driver’s license with the correct address, can’t be revoked, expired, or suspended.

Depending on your individual situation, you may need fewer or more items to apply for a bad credit auto loan. However, preparing these documents before you head to a dealership can speed up the process!

Ready to Get on the Road?

With questionable credit, finding a dealership that’s able to assist you with an auto loan is easier said than done. Here at Auto Credit Express, we want to get that done for you with our coast-to-coast network of special finance dealerships.

Complete our free auto loan request form and we’ll get right to work looking for a dealer in your local area that can assist with many tough credit situations.

(function(d, s, id){ var js, fjs = d.getElementsByTagName(s)[0]; if (d.getElementById(id)) {return;} js = d.createElement(s); = id; js.src = ""; fjs.parentNode.insertBefore(js, fjs); }(document, 'script', 'facebook-jssdk'));

Source link

Continue Reading

Bad Credit

Entrepreneur Tae Lee Finds Her Fortune



By Jasmine Shaw
For The Birmingham Times

Birmingham native Tae Lee had plans last year to visit the continent of Africa, the South American country of Columbia, and the U.S. state of Texas.

“I was going to stay in each place for like four to six weeks, and then COVID-19 happened,” she said. “So, I just was like, ‘You know what, I’m just gonna go to Mexico and stay for six months.’”

Once home from Playa Del Carmen, located on Mexico’s Yucatán Peninsula, the 33-year-old entrepreneur put the final touches on “Game of Fortune: Win in Wealth or Lose in Debt,” a financial literacy card game for ages 10 and up.

“We created ‘Game of Fortune’ because we realized there was a gap in learning the fundamentals of money,” said Lee. “We go through life not knowing anything about money and then—‘Bam!’—real life hits. Credit, debt, and bills come at us quick!”

Lee believes the game “gives players a glimpse of real life” by using everyday scenarios to teach them how to make wiser financial decisions without having to waste their own money.

“I feel like [financial literacy] can be learned in ways other than somebody standing up and preaching it to you over and over again,” she said. “You can learn it in ways that are considered fun, as well.”

Which is why “we want the schools to buy it, so we can give students a fun way to learn about financial literacy,” she added.

Lee, also called the “Money Maximizer,” is an international best-selling financial author, speaker, coach, and trainer who is known for her financial literacy books, including “Never Go Broke (NGB): An Entrepreneur’s Guide to Money and Freedom” and the “NGB Money Success Planner High School Edition.” The Birmingham-based financial guru focuses on creating diverse streams of income in the tax, real estate, insurance, and finance industries.

For Lee, it’s about building generational wealth, not debt.

Indispensable Lessons

Lee got her first glance at entrepreneurial life as a child watching her mother, Valeria Robinson, run her commercial cleaning company, V’s Cleaning. Robinson retired in 2019.

“My grandmother had a cleaning service, too,” said Lee. “So, even though I didn’t start out as an entrepreneur, watching my mom and grandma do it taught me a lot.”

Lee grew up in Birmingham and attended Riley Elementary School, Midfield Middle School, and Huffman High School. She then went on to Jacksonville State University, in Jacksonville, Alabama, where she earned bachelor’s degree in physical education. She struggled to find a career in her field and became overwhelmed by student loans.

“My credit and stuff didn’t get bad until after college,” she said. “I was going through school and taking money, but nobody told me, ‘Oh, you’re gonna have to pay all of this back.’”

Before embarking on her extensive career in money management, Lee had not learned the indispensable lessons that she now shares with clients.

“‘Don’t have bad credit.’ That’s all I learned,” she remembers. “Financial literacy just wasn’t taught much. I learned the majority of my lessons as I aged.”

In an effort to ward off collection calls and raise her credit score, Lee researched tactics to strategically eliminate her debt.

“I knew I had to pay bills on time, and I couldn’t be late with payments,” she said.

Lee eventually began helping friends revamp their finances and opened NGB Inc. in 2017 to share fun, educational methods to help her clients build solid financial foundations.

“People were always coming to me like, ‘How do I invest in this?’ and ‘How do I do that?’ So, I said to myself, ‘You know what, people should be paying to pick your brain.’”

Legacy Building

While Lee enjoyed watching her clients reach milestones, like buying a new car with cash or making their first stock market investment, she was also designing “Game of Fortune” to teach the value of legacy building.

“The game gives players the knowledge to build generational wealth, not generational debt,” she said. “It gives you a glimpse of life, money, and what can truly happen if you mismanage your coins.”

Using index cards to create her first “Game of Fortune” sample deck, Lee filled each card with pertinent terms related to debt elimination and credit and wealth building. She then called on a few friends to help her work through the kinks.

Three of her good friends—Barbara Bratton, Daña Brown, and Sha Cannon—were just a few of the people that gave feedback on the sample deck.

“From there I met with Brandon Brooks, [owner of the Birmingham-based Brooks Realty Investments LLC], and four other financial advisors to fine-tune the definitions and game logistics,” Lee said.

Though Lee was unable to land a job in physical education after graduating from college, she now sees her career with NGB Inc. as life’s unexpected opportunity to teach on her own terms.

“Bartending and waitressing taught me that working for someone else was not for me,” she replied. “In order to get the life I always wanted, I had to create my own business.”

In her entrepreneurial pursuits, Lee strives to be an open-minded leader who embraces the need for flexibility.

“COVID-19 has shown me that in entrepreneurship you have to maneuver,” she said. “When life changes, sometimes your business will, too. You may have to change the path, but your ending goal can be the same.”

“Game of Fortune: Win in Wealth or Lose in Debt” is available and sold only on the “Game of Fortune” website: To learn more about Tae Lee and Never Go Broke Inc., visit and or email; you also can follow her on Facebook ( and Instagram (@nevergobrokeinc).

Source link

Continue Reading