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How To Achieve Financial Freedom and Pay Off Debt

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Debt can be overwhelming, especially if it’s in the double or triple-digits. Just ask Tiffany “The Budgetnista” Aliche who had around $300,000 in debt after the last recession.

“The first step really is forgiving yourself because almost everyone who has a lot of debt is already beating themselves up. We underestimate how important the emotional component of debt is. It weighs a heavy burden,” Aliche says.

After the last recession, Aliche accrued triple-digit debt from a $220,000 mortgage, $52,000 in student loans and $35,000 from credit cards. While she didn’t pay her mortgage and foreclosed on the home, she did pay off her student loans and credit card debt in full.

CNBC Select spoke with Aliche, financial educator and founder of The Budgetista, who shares how she paid off roughly $87,000 in debt and gives her advice on getting out of debt.

How to approach paying off debt

While there isn’t a best way to tackle debt, there are some guidelines you can follow to make paying off debt less expensive.

Aliche considers the number-one mistake people make as obsessing over the wrong debt, such as student loans, since they typically have single-digit interest rates. In fact, federal student loan interest rates are 2.75% for undergraduates for the 2020-21 school year and unsubsidized graduate student loans are slightly more at 4.30%. Those rates are significantly less than the double-digit average 15.78% credit card APR.

“Focus on that credit card debt. That’s the one that’s costing you an arm, a leg, a toe and a foot,” Aliche says.

She recommends you get aggressive with your double-digit credit card debt since it’s so costly. Then once you pay off your card debt and get to single-digit debt, like student loans, divide your money up between savings, earning/investing and paying off debt.

While it may seem strange to not focus on debt repayment 100%, Aliche urges people to see the bigger picture: “Debt-free is a goal, not the goal,” she says. “The goal is financial freedom.”

Focus on that credit card debt. That’s the one that’s costing you an arm, a leg, a toe and a foot.

Tiffany “The Budgetnista” Aliche

For Aliche, financial freedom included leaning into her business, The Budgetnista, so she could grow her wealth while also making consistent payments toward her student loans. After all, Aliche says being debt-free doesn’t equal wealth.

“If you just focus on being debt-free, that’s all you get. If you focus on learning to grow wealth, you get that freedom and the money,” Aliche says.

Debt payoff options

There are numerous ways to pay off debt, yet no one-size-fits-all answer. Here are a few options that may be right for you.

Use a balance transfer credit card

Completing a balance transfer can help you move debt from a high interest card to a card with an introductory 0% APR period up to 20 months. Balance transfer credit cards, like the U.S. Bank Visa® Platinum Card, allow you to save on interest payments and use what you would’ve paid on interest toward paying off your debt.

Be aware that good or excellent credit (a FICO score of 670 and greater) is often required for a balance transfer card, and lenders set limits on how much debt you can transfer. Plus many balance transfers are hard to get right now as lenders are trying to minimize the amount of debt and risk they take on.

Consolidate debt with a personal loan

Personal loans are a good alternative to balance transfers if you have a large amount of debt that won’t be transferable to a credit card. Through a personal loan, you receive a fixed amount of money that you can use to pay off your cards. 

You’ll repay it over a term ranging from about 12 to 72 months, and at a fixed interest rate (currently the average for a 24-month loan is 9.50%). This can help you consolidate debt that’s spread out across several credit cards.

However, Aliche warns that studies have shown people who pay off their credit card debt with a personal loan often wind up overspending on their card again. She recommends you cut up your cards to avoid falling into that pitfall.

Borrow money from family 

If you have bad credit (scores below 580) or simply struggle to be approved for a new or affordable financial product, you may want to consider asking a family member or close friend for a loan. This option isn’t possible for everyone, but may be an alternative for you.

You can save money on interest by borrowing money from someone close to you. Before you accept any money, set up a repayment plan and stick to it so you don’t risk damaging your relationship.

Consider new ways to make money

Since balance transfer offers are currently hard to find and lenders are making it harder to qualify for low-interest financial products, you should consider alternative ways to increase your income.

“These days, I feel like people have to really be open to side-hustles,” Aliche says. “Everyone’s not going to start a business, but ask yourself ‘Are there ways to monetize some of my skill sets? Are there things that I can do to bring income?”

For instance, Aliche brought in roughly $5,000 to $6,000 extra a year by tutoring and babysitting when she was teaching preschool. She explains that a side-hustle can be a temporary way to make additional income that can help you pay down your debt faster.

Additionally, if your company is doing well you can consider asking for a raise or jumping back into the job market to negotiate a higher salary somewhere else. Try to use judgement before making either move so you don’t put your current job at risk.

Remember you’re not alone

It’s easy to psych yourself out and get hung up on the amount of debt you have. But Aliche encourages you to remember that you’re not the only one in debt.

“There are people who make a ton of money who have a ton of debt. There are people who make a little bit of money who have a ton of debt,” she says. “What you’re experiencing is something millions of people are experiencing. Focus on the solution, not what you did wrong.”

If you find yourself in debt, take a moment to reflect on what caused it, then start working toward paying it off.

Information about the U.S. Bank Visa® Platinum Card has been collected independently by CNBC and has not been reviewed or provided by the issuer prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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Bad Credit

If You Want Consumers to Lose, Network Regulation is a Must – Digital Transactions

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After the current U.S. Congress was sworn in, a predictable chorus of merchants, lobbyists, and lawmakers demanded new interchange price caps and other government mandates to decrease credit card interchange fees for merchants. The tired attacks on credit cards are an easy narrative that focuses almost exclusively on the cost side of the ledger, while completely ignoring the cards’ important role in the economy and the regressive effects of interchange regulation. 

To lawmakers blindly acting on behalf of retailers, regulation is a brilliant idea—regardless of how it affects their constituents. For decades, they have promised these interventions would eventually benefit consumers. But the lessons from the Durbin Amendment in the United States and price cap regulation in Australia is clear. Although some policymakers bemoan the current economic model, arbitrarily “cutting” rates for the sake of cuts completely ignores the economic reality that as billions of dollars move to merchants, billions are lost by consumers. 

For the uninitiated, let’s break down what credit interchange funds: 1) the cost of fraud; 2) more than $40 billion in consumers rewards; 3) the cost of nonpayment by consumers, which is typically 4% of revolving credit; 4) more than $300 billion in credit floats to U.S. consumers; and 5) drastically higher “ticket lift” for merchants. 

Johnson: “To lawmakers blindly acting on behalf of retailers, regulation is a brilliant idea—regardless of how it affects their constituents.”

These are just some of the benefits. If costs were all that mattered, American Express wouldn’t exist. Until recently, it was by far the most expensive U.S. network. Yet, merchants still took AmEx because they knew the average AmEx “swipe” was around $140, far more than Visa and Mastercard. 

Put simply, for a few basis points, interchange functions as a small insurance policy to safeguard retailers from the threat of fraud and nonpayment by consumers. Consider the amount of ink spilled on interchange when no one mentions that the chargeoff rate for issuing banks on bad credit card debt exceeds credit interchange.

Looking abroad, interchange opponents cite Australia, which halved interchange fees nearly 20 years ago, as a glowing example of how to regulate credit cards. In truth, Australia’s regulations have harmed consumers, reduced their options, and forced Australians to pay more for less appealing credit card products. 

First, the cost of a basic credit card is $60 USD in many Australian banks. How many millions of Americans would lose access to credit if the annual cost went from $0 to $60? Can you imagine the consumer outrage? 

In a two-sided market like credit cards, any regulated shift to one side acts a massive tax on the other. For Australians, the new tax fell on cardholders. There, annual fees for standard cards rose by nearly 25%, according to an analysis by global consulting firm CRA International. Fees for rewards cards skyrocketed by as much as 77%.

Many no-fee credit cards were no longer financially viable. As a result, they were pulled from the market, leaving lower income Australians, as well as young people working to establish credit, with few viable options in the credit card market.

Even the benefits that lead many people to sign up for credit cards in the first place have been substantially diluted in Australia because of the reduction of interchange fees. In fact, the value of rewards points fell by approximately 23% after the country cut interchange fees.

Efforts to add interchange price caps would have a similar effect here in the U.S. A 50% cut would amount to a $40 billion to $50 billion wealth transfer from consumers and issuers to merchants. For the 20 million or so financially marginalized Americans, what will their access to credit be when issuers find a $50 billion hole in their balance sheets? 

The average American generates $167 per year in rewards, according to the Consumer Financial Protection Bureau. Perks like airline miles, hotel points, and cashback rewards would be decimated and would likely be just the province of the rich after regulation. Many middle-class consumers could say goodbye to family vacations booked at almost no cost thanks to credit card rewards.

As the travel industry and retailers fight to bounce back from the impact of the pandemic, slashing consumer rewards and reducing the attractiveness of already-fragile businesses is the last thing lawmakers and regulators in Washington should undertake.

Proposals to follow Australia’s misguided lead in capping interchange may allow retailers to snatch a few extra basis points, but the consequences would be disastrous for consumers. Cards would simply be less valuable and more expensive for Americans, and millions of consumers would lose access to credit. University of Pennsylvania Professor Natasha Sarin estimates debit price caps alone cost consumers $3 billion. How much more would consumers have to pay under Durbin 2.0?

Members of Congress and other leaders should learn from Australia and Durbin 1.0 to avoid making the same mistake twice.

—Drew Johnson is a senior fellow at the National Center for Public Policy Research, Washington, D.C.

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Increase Your Credit Score With Michael Carrington

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More than ever before, your debt and credit records can negatively impact you or your family’s life if left unmanaged. Sadly, many Americans feel entirely helpless about their credit score’s present state and the steps they need to take to fix a less-than-perfect score. This is where Michael Carrington, founder of Tier 1 Credit Specialist, comes in. Michael is determined to offer thousands of Americans an educated, informed approach towards credit restoration.

Michael understands the plight that having a bad credit score can bring into your life. His first financial industry job was working as a home mortgage loan analyst for one of the nation’s largest lenders. Early on, he had to work a grueling schedule which included several jobs seven days a week while putting in almost 12-hour days to make $5,000 monthly to get by barely.

“I was tired of living a mediocre life and was determined to increase the value that I can offer others through my knowledge of the finance industry – I started reading all of the necessary books, networking with industry professionals, and investing in mentorship,” shares Michael Carrington. “I got my break when I was able to grow a seven-figure credit repair and funding organization that is flexible enough to address the financial needs of thousands of Americans.”

With his vast experience in the business world, establishing himself as a well-respected business leader, Michael Carrington felt he had the power to help millions of Americas in restoring their credit. Michael learned the FICO system, stayed up to date on the Fair Credit Reporting Act (FCRA), found ways to improve his credit score, and started showing others.

The Tier 1 Credit Specialist uses a tested and proven approach to educate their clients on everything credit scores. Michael is leveraging his experience as a home mortgage professional, marketing executive, and global business coach to inform his clients. He and his team take their time to carefully go through their client’s credit records as they try to find the root of their problem and find suitable financial solutions.

The company is changing lives all over America as it helps families and individuals to repair their credit scores, gain access to lower interest rates on loans and get better jobs. What Tier 1 Credit Specialists is offering many Americans is a chance at financial freedom.

Michael Carrington has repaired over $8 million in debt write-ups and has helped fund American’s with over $4 million through thousands of fixed reports. “I credit our success to being people-focused,” he often says. “The amount of success that we create is going to be in direct proportion to the amount of value that we provide people – not just our customers – people.”

Because of its ‘people-focused goals, the Tier 1 Credit Specialist is determined to help millions of Americans achieve financial literacy. It is currently receiving raving reviews from clients who are completely happy with the credit repair solutions that the company has provided them.

Today, Michael Carrington is continuing with a new initiative to serve more Americans who suffer from bad credit due to little or no access to affordable resources for repair.

The Tier 1 Credit Socialist brand is changing the outlook of many families across America. To do this, the company has created an affiliate system that will provide more people with ways of earning during these tough economic times.

As a well-respected international business leader and entrepreneur with numerous achievements to his name Michael Carrington aims to help millions of Americans achieve the financial freedom, he is experiencing today. Tier 1 Credit Socialist is one of the most effective credit repair brands on the market right now, and they have no plans for slowing down in 2021!

Learn more about Michael Carrington by visiting his Instagram account or checking out the Tier 1 Credit Specialist website.

Published April 17th, 2021



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Does Having a Bank Account With an Issuer Make Credit Card Approval Easier?

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Better the risk you know than the one you don’t.

When it comes to personal finance, nothing is guaranteed. That goes double for credit. That’s why, no matter how perfect your credit or how many times you’ve applied for a new credit card, there’s always that moment of doubt while you wait for a decision.

Issuing banks look at a wide range of factors when making a decision — and your credit score is only one of them. They look at your entire credit history, and consider things like your income and even your history with the bank itself.

For example, if you defaulted on a credit card with a given bank 15 years ago, that mistake is likely long gone from your credit reports. To you and the three major credit bureaus, it is ancient history. But banks are like elephants — they never forget. And that mistake could be enough to stop your approval.

But does it go the other way, too? Does having a bank account that’s in good standing with an issuer make you more likely to get approved? While there’s no clear-cut answer, there are a few cases when it could help.

A good relationship may weigh in your favor

Credit card issuers rarely come right out and say much about their approval processes, so we often have to rely on anecdotal evidence to get an idea of what works. That said, you can find a number of stories of folks who have been approved for a credit card they were previously denied for after they opened a savings or checking account with the issuer.

These types of stories are more common at the extreme ends of the card range. If you have a borderline bad credit score, for instance, having a long, positive banking history with the issuer — like no overdrafts or other problems — may weigh in your favor when applying for a credit card. That’s because the bank is able to see that you have regular income and don’t overspend.

Similarly, a healthy savings or investment account with a bank could be a helpful factor when applying for a high-end rewards credit card. This allows the bank to see that you can afford its product and that you have the type of funds required to put some serious spend on it.

Having a good banking relationship with an issuer can be particularly helpful when the economy is questionable and banks are tightening their proverbial pursestrings. When trying to minimize risk, going with applicants you’ve known for years simply makes more sense than starting fresh with a stranger.

Some banks provide targeted offers

Another way having a previous banking relationship with an issuer can help is when you can receive targeted credit card offers. These are sort of like invitations to apply for a card that the bank thinks will be a good fit for you. While approval for targeted offers is still not guaranteed, some types of targeted offers can be almost as good.

For example, the only confirmed way to get around Chase’s 5/24 rule (which is that any card application will be automatically denied if you’ve opened five or more cards in the last 24 months) is to receive a special “just for you” offer through your online Chase account. When these offers show up — they’re marked with a special black star — they will generally lead to an approval, no matter what your current 5/24 status.

Credit unions require membership

For the most part, you aren’t usually required to have a bank account with a particular issuer to get a credit card with that bank. However, there is one big exception: credit unions. Due to the different structure of a credit union vs. a bank, credit unions only offer their products to current members of the credit union.

To become a member, you need to actually have a stake in that credit union. In most cases, this is done by opening a savings account and maintaining a small balance — $5 is a common minimum.

You can only apply for a credit union credit card once you’ve joined, so a bank account is an actual requirement in this case. That said, your chances of being approved once you’re a member aren’t necessarily impacted by how much money you have in the account.

In general, while having a bank account with an issuer may be helpful in some cases, it’s not a cure-all for bad credit. Your credit history will always have more impact than your banking history when it comes to getting approved for a credit card.

For more information on bad credit, check out our guide to learn how to rebuild your credit.

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