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Guide to Credit Card Processing and “High-Risk” Industr

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  • High risk businesses or industries face higher rates and additional terms and conditions from credit card processors.
  • Volatile revenue, poor cash reserves, bad credit, excessive chargebacks or industry-wide challenges can lead to a high-risk designation.
  • Higher rates, fees and rolling reserves are some of the impacts of a high-risk designation.
  • Reducing chargebacks and improving communication with the processor can mitigate risk factors that lead to a high-risk designation.

Credit card processing can be a risky business. There are plenty of businesses that experience excessive amounts of chargebacks. There are also entire industries where there is an inherent risk, which could lead to major difficulties for processors if businesses’ revenue is diminished or their doors are shut completely.

To manage clients with poor credit, negative processing histories or low cash flow, credit card processing companies have developed a “high risk” designation. High-risk merchants are generally subject to higher rates and fees, as well as additional terms and conditions. How can you know if you might be labeled high risk, and what can you do about it? This guide covers everything you need to know about credit card processing and high-risk industries.

What is credit card processing?

Credit card processing is the way by which businesses can accept customer payments via debit or credit card. Generally, doing so involves the use of both point-of-sale (POS) hardware and software in conjunction with the payment networks of a credit card processing company. Credit card processing service providers often charge percentage rates of each sale, as well as a per-transaction fee depending on the type of transaction.

Many processors provide the option to set up payment gateways for accepting debit and credit cards online. However, accepting payments when the physical credit card is not present, either through a gateway or over the phone, often comes with a higher rate due to the increased risk.

Risk, in general, is a key consideration in the credit card processing industry. In some cases, certain businesses or entire industries could be deemed “high risk,” which carries higher rates, additional fees, and added terms and conditions compared to the credit card processor’s other clients.

Editor’s note: Looking for the right credit card processor for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

 

 

What makes a business or industry “high risk?”

Credit card processing service providers each have their own definitions of what makes a business or industry high risk, but there are generally some commonalities. According to Douglas Keller, a writer for Finance Fox, there are several industries with different credit card processing needs that are likely subject to a high-risk consideration.

“[Credit card processing] is different for industries in travel, forex, gaming, gambling, antiques, debt collection services, electronics, life coaching, magazine sales, adult entertainment and even telemarketing,” Keller said. “They typically have higher chargeback cases, fraud rates, dubious products and services that need to be verified legally; questionable personal credit of the owner; expensive sales transacted through credit cards; and even those that deal with customers who have poor credit.”

In addition, businesses with cyclical sales or a high volume of recurring payments for subscription-based products can be considered high risk due to the potential volatility of their revenue. Ultimately, whether a business or industry is deemed high risk is at the discretion of the credit card processing service provider.

In other words: Businesses can be considered a high-risk merchant if they operate in an industry identified as high risk by the credit card processor, or if there is a significant risk of financial obstacles inherent to the business model.

In some cases, predatory credit card processing companies can use a high-risk designation to charge clients higher rates and additional fees. A high-risk designation could even result in a company’s credit card processing capability being revoked by the company, so it’s important to understand what goes into the decision to designate your business high risk to ensure it is a legitimate decision.

Credit card processing in high-risk industries

While most credit card processors maintain roughly the same list of high-risk businesses and industries, the terms and conditions attached to a high-risk designation can vary significantly depending on the provider. Typically, a high-risk designation means a business faces higher rates from credit card processors, as well as different rolling reserve targets, tiered pricing plans and a liquidated damages clause, Keller said.

If you’re deemed a high-risk business or industry, expect the following impacts to your transaction rates, fees and merchant accounts:

  • Fees: Generally, high-risk merchants are subject to elevated fees. Setup fees, payment gateway fees, chargeback fees and more are likely to be more expensive when you’ve been designated high risk, potentially eating into your profit margin.
  • Rolling reserve: A rolling reserve might be held for high-risk merchants. This is a portion of your daily transactions that the credit card processor holds and releases later. It acts as a guarantee to the processor in case your business fails, or some major development negatively impacts your industry. Often, credit card processors hold 10% of your transactions for 90 days before releasing it back to you.
  • Minimum reserve: Like a rolling reserve, a minimum reserve is a portion of your transactions you are always required to keep in your balance by the credit card processor. It is a preset number that must be met, either in one lump sum deposit or as a percentage of transactions over time. A minimum reserve must always be maintained.

In some cases, little can be done to avoid the high-risk label. For example, businesses that operate in the cannabis industry are automatically considered high risk due to the ongoing federal prohibition of cannabis and the potential legal volatility associated with the industry. It is easier for businesses in other industries to avoid the high-risk designation by ensuring there are mitigating factors that put credit card processors at ease.

What can you do if you are labeled a high-risk business?

If you find yourself labeled a high-risk business when signing up with a credit card processor, taking steps to mitigate perceived risks could improve your situation.

“They [businesses] should establish clear communication with their customers to avoid transaction issues. In addition, they should ensure that enough fraud prevention systems are in place,” Keller said. “Keeping a lower chargeback ratio below 1% is also a great mitigation factor.”

Also, you should maintain a significant amount of liquid cash on hand. Well-capitalized businesses, whether they are considered high-risk merchants or not, are better positioned to handle losses or shortfalls in revenue. Credit card processing service providers can view hefty cash reserves as a mitigating factor.

Finally, working to reduce chargebacks is a major way to improve your standing with a credit card processor. Typically, if you reduce your chargeback rate to less than 1% of transactions, processors look upon you favorably, said Keller.

Of course, once you have been deemed high risk or had a merchant account shut down, it will be harder to convince credit card processors to remove the designation. If possible, set up a credit card processing account only when you have good credit, substantial cash reserves and a fraud prevention system in place.

If you are already operating as a high-risk merchant, however, it might be a good idea to open a second merchant account elsewhere. That way, in the event your account is shut down by your credit card processing partner, you have another one ready to go and can continue accepting your customers’ card-based payments uninterrupted.

What is the best high-risk credit card processing provider?

When choosing a credit card processor, it can be hard to tell which is best for a high-risk merchant. Everyone’s situation is different, and certain high-risk designations might carry different rates, fees and terms even from the same processor. For example, a company with a bad credit history might face different restrictions than a company in a high-risk industry.

If you’re looking to partner with a credit card processor to open a merchant account, see our best picks and credit card processing reviews, along with a guide of what to look for when researching companies.

Here’s a quick look at some of our best picks.

Flagship Merchant Services – Best Contract

Flagship Merchant Services is a full-service credit card processor with the best contract, because it offers its services to all its customers on a month-to-month basis and doesn’t charge a cancellation fee. By contrast, standard credit card processing contracts have lengthy three-year terms with a short cancellation window of 30 to 90 days before automatically renewing for an additional one- or two-year term. They also have early termination fees to discourage you from exiting your contract before the term expires, some with liquidated damages clauses that make it very expensive to cancel.

Additionally, Flagship offers a choice of interchange-plus or tiered rates, allowing you to select the better pricing model for your business. If you’re already processing, Flagship will negotiate with you to see if it can meet or beat your current pricing. It charges a monthly fee, a monthly payment gateway fee and has a monthly minimum. It also charges an annual PCI compliance fee. It doesn’t charge application, setup or payment gateway setup fees, though.

Helcim – Best for Small Business Overall

Helcim is the best credit card processor for small businesses. It’s very transparent with its pricing, posting its complete rates and fees online. This full-service account provider offers interchange-plus pricing to all its merchants, its retail rates are lower than average, and it has a rate-lock guarantee that promises not to raise its markup for the life of your account.

Also, instead of charging a handful of standard fees like most full-service processors, it charges a single monthly fee, which includes statements, customer service, PCI compliance and access to Helcim Commerce, the company’s all-in-one payment platform. Like other top processors, Helcim provides its services on a month-to-month basis, so there are no early termination fees to pay if you close your account.

Square – Best Low-Fee Credit Card Processor

Square is the best low-fee credit card processing company – the only fee it charges for its basic processing service is a flat rate for each transaction. There are no monthly, gateway, setup, annual, PCI compliance or early termination fees. It doesn’t even have a chargeback fee, which is unusual. Square’s lack of fees makes it an affordable option for small businesses and individuals that don’t process enough transactions to justify paying regular account fees each month.

Square also has the best mobile credit card processing app. Not only can you accept payments, Square includes full-featured POS software that tracks inventory, manages customer information and runs sales reports. The app is free to use – all you pay for is processing. It works on both Apple and Android phones and tablets, and you can add more business features by subscribing to paid services like payroll and email marketing, or by integrating with third-party applications you already use, such as accounting software.

Fiserv – Best Credit Card Processor for Retail

Fiserv, formerly known as First Data, is one of the world’s largest payment processors. It’s also the best retail credit card processor because established merchants can negotiate competitive pricing and favorable terms, it offers Clover processing equipment and veteran perks, and it allows merchants to accept Alipay, a popular Chinese payment app.

The company provides a full range of processing solutions, so you can accept payments every way your customers want to pay: in store, online, on the go and over the phone. You can accept every type of payment: magnetic stripe and chip credit and debit cards, mobile wallets like Apple Pay and Google Pay, paper checks, ACH transfers, and gift cards. Fiserv has a program to offer loyalty rewards to your regular customers as well.

PayPal – Best Low-Volume Credit Card Processor

PayPal is the best low-volume credit card processor because anyone can sign up for an account, making it an ideal choice for freelancers, solopreneurs, startups, and businesses that typically accept cash or checks and only rarely accept credit card payments. It has flat rates, with no monthly processing minimum or lengthy contract, and you only pay for the processing you use. You can accept credit, debit and PayPal payments from customers online and in person.

It’s also the best Android mobile credit card processor. Its mobile payment app, PayPal Here, works equally well on Android and Apple phones and tablets, and both versions have all the same features. With this app and a card reader, you can use your phone or tablet to accept payments, manage your product list, send receipts by email or text, and generate sales reports. You can add multiple users to your account and control what features they can access. You can also transfer money from your PayPal balance to your PayPal Business Debit Mastercard or your bank account.

TSYS – Best Credit Card Processor for Professional Service Providers

TSYS has been in business for more than 35 years and recently merged with Global Payments, making it one of the country’s largest payment processors. It works with large and small businesses in many industries, providing reliable and comprehensive credit card processing services.

We selected TSYS as the best processor for professional service providers, specifically those in healthcare-related industries, because it offers competitive pricing, charges few fees, has in-house customer service agents trained in healthcare services and partners with the American Medical Association to offer discounts to medical practitioners.

Fattmerchant – Credit Card Processor with the Best Rates

Fattmerchant is the credit card processing company with the best rates. It uses the interchange-plus pricing model but doesn’t charge a markup percentage. Rather, it only adds a per-transaction fee to the published interchange fee – the rate set by the credit card companies (Visa, Mastercard, Discover and American Express) that everyone pays.

For account fees, it charges a single monthly membership, or subscription, fee. There are no separate fees for statements, PCI compliance, customer support or account maintenance. Though the monthly membership fee is higher than what some of its competitors charge, its processing limits are less restrictive. The company notes that businesses need to process at least $7,000 per month for this to be a cost-effective processing solution. Small businesses that process a high volume of transactions each month will see the most savings on their overall costs.

Worldpay – Best Direct Processor for Small Businesses

Worldpay, known as Vantiv before last year’s merger, is one of the world’s biggest credit card processing companies, processing more than 40 billion transactions worth over $1.5 trillion annually. It recently announced a merger with FIS and will be known by that name once the deal closes. It’s also our pick as the best direct processor for small businesses. It works with businesses of all sizes, provides a full range of processing services, has more than 1,000 software integrations, and offers competitive rates and favorable terms to small businesses.

Although Worldpay doesn’t post its pricing online, the sales rep we spoke with in our testing offered competitive interchange-plus pricing and a one-year contract that can be canceled anytime without penalty if you provide 30 days’ written notice. The monthly fee includes PCI compliance, and there’s no application fee, setup fee, annual fee or batch fees.

Stripe – Best Credit Card Processor for Online Businesses

Stripe is the best online credit card processor because it’s very versatile. Its integrations, prebuilt forms, UI elements and built-in payment gateway make it easy for even very small businesses to use it, and its APIs allow larger businesses to create custom checkout forms and payment flows. There’s no extra charge for its integrations, prebuilt forms and developer tools; for its basic payment services, all you pay are transaction fees.

As we announced last November, Stripe has partnered with WordPress.com to make it easy for the platform’s users to sign up for Stripe, and add its recurring payment buttons to their WordPress.com and Jetpack-powered sites. WordPress.com says there are just three steps to set it up, and it doesn’t require the user to have any technical know-how to do so. Using Stripe, WordPress.com users can offer different subscription tiers and frequencies to their audience, which could be used to offer exclusive content through site memberships or ongoing subscriptions, or simply to accept recurring donations.

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Bad Credit

Swimming Pool Loans: Finance with a Personal Loan

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Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders, all opinions are our own.

The average cost of installing a pool in the U.S. is about $35,000, according to HomeGuide. If you’d like to get a pool but don’t have the cash, a personal loan could help you cover the cost.

Here’s what you should know about swimming pool loans:

Personal loans for swimming pools

A personal loan can be used for a wide variety of reasons — including swimming pool installation. Here are Credible’s partner lenders that offer personal loans for swimming pools:

Avant

Avant offers personal loans for up to $35,000, as well as fast loan funding. If you have fair credit and would like to finance a pool installation, Avant could be a good choice.

  • Rates: 9.95% – 35.99% APR
  • Loan terms (years): 2, 3, 4, 5*
  • Loan amount: $2,000 to $35,000**
  • Fees: Origination fee
  • Discounts: Autopay
  • Eligibility: Available in all states except CO, CT, HI, IA, LA, NV, NY, SC, VT, and WV
  • Min. income: $24,000
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. credit score: 580
  • Time to get funds: As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
  • Loan uses: Debt consolidation, emergency expense, life event, home improvement, and other purposes

Avant personal loans review

*If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.

**Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.

Axos

Axos personal loans range from $5,000 to $35,000 and can be used for home improvement and more. Keep in mind that you’ll likely need very good credit to qualify for an Axos loan.

  • Rates: 9.95% – 35.99% APR
  • Loan terms (years): 2, 3, 4, 5*
  • Loan amount: $2,000 to $35,000**
  • Fees: Origination fee
  • Discounts: Autopay
  • Eligibility: Available in all states except CO, CT, HI, IA, LA, NV, NY, SC, VT, and WV
  • Min. income: $24,000
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. credit score: 580
  • Time to get funds: As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
  • Loan uses: Debt consolidation, emergency expense, life event, home improvement, and other purposes

Avant personal loans review

*If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.

**Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.

Best Egg

Best Egg offers personal loans up to $35,000, with highly competitive fixed interest rates. Just remember that you’ll need good credit to qualify for the lower end of these rates.

  • Rates: 5.99% – 29.99% APR
  • Loan terms (years): 3, 5
  • Loan amount: $5,000 – $35,000
  • Fees: Origination fee
  • Discounts: None
  • Eligibility: Available in all states except DC, IA, VT, and WV
  • Min. income: None
  • Customer service: Phone
  • Soft credit check: Yes
  • Min. credit score: 640
  • Time to get funds: As soon as 1 – 3 business days after successful verification
  • Loan uses: Credit card refinancing, debt consolidation, home improvement, and other purposes

Best Egg personal loans review

Discover

If you have good to excellent credit and are looking for a longer repayment term, a personal loan from Discover might be a good option. Discover offers loans ranging from $2,500 to $35,000, with terms from three to seven years.

  • Rates: 6.99% – 24.99% APR
  • Loan terms (years): 3, 4, 5, 6, 7
  • Loan amount: $2,500 – $35,000
  • Fees: None as long as you pay on time
  • Discounts: None
  • Eligibility: Available in all 50 states
  • Customer service: Phone
  • Soft credit check: Yes
  • Min. credit score: 660
  • Time to get funds: Funds can be sent as soon as the next business day after acceptance
  • Loan uses: Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding

Discover personal loans review

LendingPoint

You don’t need excellent credit to get a loan from LendingPoint. If you’re looking for bad credit personal loans, LendingPoint might be a good option.

  • Rates: 15.49% – 35.99% APR
  • Loan terms (years): 2, 3, 4
  • Loan amount: $2,000 to $25,000
  • Fees: Origination fee
  • Discounts: Autopay
  • Eligibility: Available in all states except CO, CT, HI, MA, MD, NV, NY, VT, WV, and WY
  • Min. income: $35,000
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. credit score: 585
  • Time to get funds: As soon as the next business day
  • Loan uses: Home improvement, consolidate debt, credit card refinancing, relocate, make a large purchase, and other purposes

LendingPoint personal loans review

LightStream

A division of SunTrust Bank, LightStream offers loans up to $100,000, plus repayment terms ranging from two to 12 years for home improvement. This gives you more time to pay off your pool compared to other personal loan lenders.

  • Rates: 3.99% – 19.99% APR
  • Loan terms (years): 2, 3, 4, 5, 6, 7 (up to 12 years for home improvement loans)
  • Loan amount: $5,000 to $100,000
  • Fees: None
  • Discounts: Autopay
  • Eligibility: Available in all states except RI and VT
  • Min. income: Does not disclose
  • Customer service: Phone, email
  • Soft credit check: No
  • Min. credit score: 660
  • Time to get funds: As soon as the same business day
  • Loan uses: Credit card refinancing, debt consolidation, home improvement, and other purposes

LightStream personal loans review

LightStream disclosure

Marcus

Marcus personal loans come with absolutely no fees — no origination fees, prepayment penalties, or even late fees. And if you make your payments on time and in full for a year, you have the option of skipping a payment with no interest accruing.

  • Rates: 6.99% – 19.99% APR1
  • Loan terms (years): 3, 4, 5, 6, 7
  • Loan amount: $3,500 to $40,0002
  • Fees: None
  • Discounts: None
  • Eligibility: Available in all states except MD
  • Min. income: $30,000
  • Customer service: Phone
  • Soft credit check: Yes
  • Min. credit score: 680
  • Time to get funds: Many Marcus customers receive funds in as little as five days
  • Loan uses: Credit card refinancing, debt consolidation, home improvement, and other purposes

Marcus personal loans review

1Rate reduction available for AutoPay.

2You may be required to have some of your funds sent directly to pay off outstanding unsecured debt.

3After making 12 or more consecutive monthly payments, you can defer one payment as long as you have made all your prior payments in full and on time. Marcus will waive any interest incurred during the deferral and extend your loan by one month (you will pay interest during this extra month). Your payments resume as usual after your deferral. Advance notice is required. See loan agreement for details.

PenFed

If you only need to borrow a small amount, PenFed could be a good choice. With PenFed, you could get anywhere from a $600 up to $20,000 personal loan with loan terms from one to five years.

  • Rates: 6.49% – 17.99% APR
  • Loan terms (years): 3, 4, 5
  • Loan amount: $600 to $20,000 (depending on loan term)
  • Fees: None
  • Discounts: None
  • Eligibility: Does not disclose
  • Min. income: Does not disclose
  • Customer service: Phone, email
  • Soft credit check: No
  • Min. credit score: 650
  • Time to get funds: 2 to 4 business days after verification
  • Loan uses: Debt consolidation, home improvement, transportation, medical, dental, life events

PenFed personal loans review

Prosper

Prosper is a lending marketplace where loans are funded by individual investors. Prosper loans come with three- or five-year terms and are available for up to $40,000.

  • Rates: 6.95% – 35.99% APR
  • Loan terms (years): 3, 5
  • Loan amount: $2,000 to $40,000
  • Fees: Origination fee
  • Discounts: None
  • Eligibility: Available in all states except IA, ND, WV
  • Min. income: None
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. credit score: 640
  • Time to get funds: On average, within 5 days of accepting your offer
  • Loan uses: Debt consolidation, home improvement, vehicles, small business, new baby expenses, and other purposes

Prosper personal loans review

SoFi

SoFi offers $5,000 up to $100,000 personal loans that come with no origination fees, closing costs, or prepayment penalties. SoFi also offers unemployment protection, free financial planning sessions, and career coaching.

  • Rates: 5.99% – 18.83% APR
  • Loan terms (years): 2, 3, 4, 5, 6, 7
  • Loan amount: $5,000 to $100,000
  • Fees: None
  • Discounts: Autopay
  • Eligibility: Available in all states except MS
  • Min. income: Does not disclose
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. credit score: Does not disclose
  • Time to get funds: 3 business days
  • Loan uses: Solely for personal, family, or household uses

SoFi personal loans review

Upgrade

An Upgrade personal loan could be a good choice if you’re building credit or looking for fast loan approval. Upgrade offers loans up to $35,000.

  • Rates: 7.99% – 35.97% APR
  • Loan terms (years): 3, 5
  • Loan amount: $1,000 to $35,000 ($3,005 minimum in GA; $6,005 minimum in MA)
  • Fees: Origination fee
  • Discounts: Autopay
  • Eligibility: Available in all states except DC, IA, WV
  • Min. income: Does not disclose
  • Customer service: Email
  • Soft credit check: Yes
  • Min. credit score: 580
  • Time to get funds: Within a day of clearing necessary verifications
  • Loan uses: Debt consolidation, credit card refinancing, home improvement, and other purposes

Upgrade personal loans review

Upstart

With Upstart, you could get a $1,000 up to a $50,000 personal loan. In addition to your credit, Upstart looks at over 1,000 non-traditional credit indicators to help get you approved for a personal loan — which means those with less-than-stellar credit might still qualify for a loan.

  • Rates: 8.13% – 35.99% APR4
  • Loan terms (years): 3 to 5 years4
  • Loan amount: $1,000 to $50,0005
  • Fees: Origination fee
  • Discounts: None
  • Eligibility: Available in all states except IA and WV
  • Min. income: $12,000
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. credit score: 600

    (in most states)
  • Time to get funds: As soon as 1 – 3 business days6
  • Loan uses: Payoff credit cards, consolidate debt, take a course or bootcamp, relocate, make a large purchase, and other purposes

Upstart personal loans review

4The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 15% and 36 monthly payments of $33 per $1,000 borrowed. There is no down payment and no prepayment penalty. Average APR is calculated based on 3-year rates offered in the last 1 month. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.

5This offer is conditioned on final approval based on our consideration and verification of financial and non-financial information. Rate and loan amount are subject to change based upon information received in your full application. This offer may be accepted only by the person identified in this offer, who is old enough to legally enter into contract for the extension of credit, a US citizen or permanent resident, and a current resident of the US. Duplicate offers received are void. Closing your loan is contingent on your meeting our eligibility requirements, our verification of your information, and your agreement to the terms and conditions on the www.upstart.com website.

6If you accept your loan by 5pm EST (not including weekends or holidays), loan funds will be sent to your designated bank account on the next business day, provided that such funds are not being used to directly pay off credit cards. Loans used to fund education related expenses are subject to a 3 business day wait period between loan acceptance and funding in accordance with federal law.

See: What You Can Use a Personal Loan For

How to calculate the total cost of your swimming pool loan

How much you’ll need to borrow to cover your swimming pool will depend on the type of pool you choose.

Here are some common price points to consider before estimating the overall cost of a swimming pool loan:

  • Above-ground swimming pool: $1,500 to $16,000 on average
  • In-ground swimming pool: $3,000 to $100,000
Tip: The total cost of your loan will also be driven by the interest rate and any fees charged by the lender.

Having a good credit score could also help you qualify for a lower interest rate, so it’s a good idea to make sure your credit is as good as it can be before applying.

Before you borrow, estimate how much you’ll pay for a swimming pool loan using our personal loan calculator below:

Enter your loan information to calculate how much you could pay

Total Payment
$

Total Interest
$

Monthly Payment
$

With a
$
loan, you will pay
$
monthly and a total of
$
in interest over the life of your loan. You will pay a total of
$
over the life of the
loan.


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HELOCs vs. personal loans for pools

In some cases, a Home Equity Line of Credit (HELOC) might be a good choice to pay for pool installation. Here are some pros and cons of both HELOCs and personal loans to help you decide:

  HELOCs Personal loans
Pros
  • Often have lower interest rates
  • Can use credit line multiple times
  • Quick application
  • Typically unsecured (doesn’t require collateral)
  • Few or no fees (depending on the lender)
Cons
  • If you stop payments, you could lose your collateral (i.e., your home)
  • Can come with upfront costs
  • Typically higher interest rates
  • Generally need very good credit to qualify
Best for
  • Borrowers with a good amount of equity in their home
  • Borrowers with good credit who qualify for lower rates

Learn More: How to Decide Between a Personal Loan and a Personal Line of Credit

Things you should know before building a pool

On top of paying for a pool, there are a few points to keep in mind before you take the plunge. Here’s what to consider first:

Pools won’t necessarily boost your home value

Unlike a bathroom addition or kitchen remodel, adding a new pool won’t necessarily add value to your home. If you move, you’ll be leaving it behind and likely won’t recoup the full cost — if any.

Also keep in mind that if you sell your home, buyers might not be thrilled with the added costs and safety risks that come with a home swimming pool.

The typical pool builder will recoup about $20,000 to $32,000 in value compared to an average $50,000 expense, according to HGTV.

In addition to paying for the pool, there may be additional monthly costs

Pool costs don’t stop after building and filling it up for the first time. There are a handful of common, ongoing costs related to owning a pool. The cost is around $3,000 to $5,000 per year, according to HomeAdvisor. These costs include:

  • Heating-related electricity costs
  • Pool chemicals
  • Cleaning services
  • Ongoing maintenance
  • Winterizing
  • Filling and adding water
  • Additional home insurance costs

Learn More: Where to Get a $10,000 Personal Loan

Some pool dealers may offer their own financing — but you should compare your options

Some pool-building companies offer their own financing. However, it’s a good idea to compare this with other loan options you might qualify for since you might get a much lower interest rate with another lender.

If the pool dealer offers a better deal, it might be a good choice. Just remember that you’re under no obligation to finance through your pool company, especially if you can get better terms elsewhere.

If you decide to take out a personal loan to pay for your swimming pool, be sure to consider as many lenders as possible to find the right loan for you. Credible makes this easy — you can compare your rates from multiple lenders in two minutes.

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About the author

Eric Rosenberg

Eric Rosenberg

Eric Rosenberg is a Credible expert on personal finance. His work has been featured at Business Insider, Investopedia, The Balance, The Huffington Post, MSN Money, Yahoo Finance, Mint.com and more.

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Bad Credit

The case of the ugly-credit customer

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Thea Dudley

Dear Thea,

I recently had a customer apply for credit, and their commercial credit report was UGLY. They owe everyone, and they’re past due 90+ days. They have a few big orders pending with us and I feel they have been shut off everywhere else, which is why they are pushing so hard to get our orders shipped. I called the president of the company and told him we were opening his account COD so the orders pending would need to be paid prior to shipping them out. He blew up. He said he didn’t care about the information on the DNB report and it did not relate to them. Then he screamed at me, asking if we were going to send the materials. I am not interested in acquiring another slow paying account, so I need your thoughts.

Signed, Miffed in Michigan

Dear Miffed,

Control freaks, abusers of credit, and manipulators of people don’t ever question themselves. They never ask themselves if the problem is actually them, and they always say the problem is someone else. Such is the life of the slow-paying/no-paying account.

Yes, Mr. Crappy Credit Report, it is completely everyone else’s fault that your credit payment history looks like a piece of Swiss cheese: full of holes and slightly smelly. In fact, the Secret Society of Credit Managers got together last week and selected your company as THE ONE we were going to target for the month to make your professional life a nightmare. It has nothing to do with your inability to pay your invoices in a timely fashion. You, as always, are an innocent my dear customer.

Let’s be real here: customers with negative or poor credit history ALWAYS know they have bad credit, but they always posture like it is brand new information, heard for the very first time. What? My credit is bad? No, who is reporting me that way? I want names, numbers, I dispute it. This is total BS! The list of objections goes on and on. One thing they do know, it is wrong, and you need to give them credit RIGHT NOW or they will take their business elsewhere (oh, the horror.)

Blowhards and bullies shout over the top of you and push their agenda because that’s what worked for them in the past. Their theory is “if you say it loud enough and angry enough with enough threats and forcefulness, it becomes true and others back down.”

Well, I like to throw caution to the wind and pet that kitty backwards. If you are going to come at me bro, don’t come empty-handed. You’re not the first guy to lose his stuffing at me. So, your credit report is junk. Ok, no problem. I will email you a copy and you can address it directly with the commercial credit bureau I pulled it from. Once you two have kissed and made up, I will pull a new one and if it is good, then welcome to the family!

In absence of that, let’s take a look at the trade references you listed on your credit application. I will personally call each and every one of them. Once I have made contact and have the information back, we can reevaluate. Just so we are on the same page, trade references are who you currently purchase like materials from. I do not want anyone you hire (so no sub-contractors, no contractors, no homeowners), no big box, no gas and sip, no personal testimonials.

How about some financials? I will take those. Show me what you have under the hood. Since this is a family publication, I cannot print what some of the reactions to those requests have been but most of you have pretty good imaginations and can fill in those blanks.

If someone truly believes their credit report is inaccurate, they have a normal conversation about it, in a normal tone. In this case the old adage, “the louder they are, the harder they fall” applies, so take heed.

With more than 30 years of credit management experience in the LBM industry, Thea Dudley consults with companies on a wide range of credit and financial management issues. Contact Thea at theadudley@charter.net.

 

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Bad Credit

Credit mistakes to avoid – It’s Your Money

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Small credit mistakes, like paying off your credit card a few days late, aren’t a big deal.

You pay a small penalty or a bit of interest and carry on as before. A slip up like that won’t come back to haunt you the next time you apply for a mortgage.

Other mistakes though can have a significant impact, even if they seem relatively minor at the time. They can stay on your credit record for years and potentially cause you to not qualify for a mortgage or loan or have to pay a higher interest rate.

Here’s a list of five credit mistakes that you definitely want to avoid:

Ignoring your financial details.

Not being aware of what interest rates you are paying or when a temporary or “teaser” rate ends can be very costly. Carrying debt on certain accounts harms your credit score far more (credit cards) than others (lines of credit).

You need to have a clear picture of all debts that you owe, how much they are costing you and review regularly to make improvements if necessary. 

Draining retirement funds to avoid bankruptcy.

While nobody wants to claim bankruptcy, sometimes it’s the right choice. RRSPs are generally exempt from bankruptcy proceedings (except for amounts deposited in the last 12 months in some provinces) and can be left there to help you rebuild on the other side of the bankruptcy proceedings.  

Not checking your credit.

You can check your credit report easily and for free in Canada through Equifax and TransUnion. Checking regularly (at least once per year if not twice) will allow you to become aware of any credit issues or fraud sooner so that they can be dealt with.

Having something unexpected appear on a credit report is common for Canadians and it’s up to you to watch for them.

Co-Signing a loan.

While this might make sense on a rare occasion, it should be avoided most of the time and only be considered with extreme caution.

I realize that it can be hard for young people to buy their first home these days but if they can’t qualify on their own, they likely shouldn’t be going ahead. Not only will your co-signing reduce your own borrowing capacity, if the loan isn’t repaid it can be disastrous to your own finances.  

Not carrying any credit at all.

With all the pitfalls of having access to credit, it is still a necessary evil for most people. If you elect to go without a credit card or any other credit vehicle, you won’t build up a credit score which means you won’t be able to qualify for a loan when you need one.

And don’t cancel your first credit card either. Longevity in your credit history is equally important! 

Having bad credit isn’t permanent and your score can be improved over time. But like many things in life, doing so takes a little bit of time and effort. But it’s not that hard.

Just put a semi-annual reminder in your calendar to sit down and review your credit and request a report.

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