Best Checking Accounts (The 2019 Edition)

When you’re searching for the perfect checking account, it’s easy to get overwhelmed with all the options that are available to you. Some banks offer stellar bonuses to new account holders while others allow you to earn generous rewards for every dollar spent. You also have to consider the fees that accompany select bank accounts, along with the location and if it’s convenient for you. And the list goes on.

So, to make your life easier, we’ve compiled a list of the best checking accounts on the market. Read on to explore these options that will hopefully help you narrow down your search.

Brick-and-Mortar Banks

Prefer to do banking the traditional way? If online banks just aren’t your cup of tea, these brick-and-mortar banks offer checking solutions that are a step above the rest.

Chase Total Checking

Account Overview:

With Chase Total Checking, you can enjoy a new account holder bonus of up to $350. You’ll earn $200 when you open your account and enroll in direct deposit, and $150 more if you choose to open a savings account and meet the qualification criteria.

Key Features:

  • Minimum Opening Deposit- $25
  • Monthly Service Fees- $12 (if you don’t meet the monthly balance or activity requirements)
  • ATM Network- Over 16,000 fee-free ATMs and 5,100 branches
  • Rewards- n/a

PNC Standard Checking

Account Overview:

The PNC Standard Checking account is a straightforward, low-fee solution to meet your checking needs. But it stands out above the rest because of its generous rewards program.

Key Features:

  • Minimum Opening Deposit- $25
  • Monthly Service Fees- $7 (waived if you meet the balance or direct deposit criteria, or are at least 62 years of age)
  • ATM Network- Over 9,000 fee-free ATMs
  • Rewards- PNC Purchase Payback allows you to earn cash back on everyday purchases at your favorite retailers or dining establishments.

Fifth Third Bank Essential Checking

Account Overview:

The Fifth Third Bank Essential Checking grants you the standard services you’d expect in an account of this type, and they make it easy to avoid monthly maintenance fees. They also offer a unique Roundup feature that helps you pay your student loans down faster.

Key Features:

  • Minimum Opening Deposit- $0 (but you have up to 45 days to make your first deposit)
  • Monthly Service Fee- $11 (can be avoided with qualifying account activity)
  • ATM Network- Over 50,000 fee-free ATMs
  • Rewards-n/a
  • Other Perks- Account holders have access to discounted Identity Theft Protection coverage, Roundup on purchases via Fifth Third Momentum app (funds are directly applied to student loans)

Credit Unions

There are many perks to having a checking account with a credit union. From reduced fees and more competitive interest rates on loan products to the ability to own a share of the institution, credit unions may be the perfect fit for you. Some checking account products from credit unions to consider:

Consumers Credit Union Simple Checking

Account Overview:

Consumers Credit Union Simple Checking is a fee-free product that is free of monthly service fees. They have a vast ATM network and allow you to earn cash back on everyday purchases made using your debit card.

Key Features:

  • Minimum Opening Deposit- $25
  • Monthly Service Fees- $10 (unless you maintain a daily balance of at least $1,000)
  • ATM Network- Over 30,000 fee-free ATMs
  • Rewards- Cashback rewards on purchases

Connexus Credit Union Checking Account

Account Overview:

As a Connexus Checking Account holder, you’ll earn a yield of up to 1.75 percent on your money. Even better, there are no minimum balance requirements and ATM fees for out of network transactions are reimbursable by up to $25.

Key Features:

  • Minimum Opening Deposit- $5.00
  • Monthly Service Fees- $0
  • ATM Network- Over 54,000 fee-free ATMs (monthly surcharges of up to $25 qualify for reimbursement)
  • Rewards- MyRewards allows you to earn up to $25 in rebates for ATM surcharges and up to 1.35 percent in yields
  • Other Perks- no minimum monthly balance requirements

Penfed Credit Union Access America Checking

Account Overview:

Penfed Credit Union Access America Checking also allows members to earn a return between 0.20 and 0.5 percent APY on their funds. This account is also accompanied by Apple and Samsung digital wallet capabilities.

Key Features:

  • Minimum Opening Deposit- $25
  • Monthly Service Fees- $0
  • ATM Network- Over 68,000 fee-free ATMs
  • Rewards- n/a
  • Other Perks- Interfaces with Apple and Samsung digital wallets

Online Checking Accounts

If you’re always on the go or are delighted at the thought of handling all your banking needs at the tip of your fingertips, a checking account from an online bank may best suit your needs. Here are some options to consider:

Capital One 360 Checking Account

Account Overview:

Touted as one of the best online checking account products on the market, the Capital One 360 Checking Account offers a generous APY of up to 1.00 percent. There are no minimum balance requirements or monthly service fees, and you’ll have access to over 39,000 fee-free ATMs. You should also know that you have the option to open an account online or at a Capital One branch.

Key Features:

  • Minimum Opening Deposit- $0
  • Monthly Service Fees- $0
  • ATM Network- Over 39,000 fee-free ATMs
  • Rewards- n/a
  • Other Perks- first order of checks available free of charge

Ally Bank Interest Checking Account

Account Overview:

As an Ally Bank Interest Checking Account holder, you’ll earn an APY between 0.1 and 0.60 percent. You’ll also enjoy a vast ATM network and fee-free checking as the account does not incur monthly service charges.

Key Features:

  • Minimum Opening Deposit-
  • Monthly Service Fees- $0
  • ATM Network- Free access to thousands of Allpoint ATMs nationwide
  • Rewards- n/a
  • Other Perks- ATM fees of up to $10 reversible per month

Radius Checking

Account Overview:

Although the Radius Checking account does require a somewhat hefty opening deposit of $100, you’ll be able to earn one percent in cash back for each purchase made with your debit cards. Even better, there are no monthly service fees, and the first box of checks ordered is on the bank.

Key Features:

Minimum Opening Deposit- $100

Monthly Service Fees- $0

ATM Network- a Vast network of fee-free ATMs worldwide

Rewards- one percent cash back for every dollar spent

Other Perks- Unlimited transfers, bill pay, and mobile wallet with Apple Pay, Google Pay, and Samsung Pay, the initial order of checks covered

USAA Cashback Rewards Checking

Account Overview:

Not only will you enjoy zero service charges with this account, but you will also earn 10 cents back each time you use your debit card. There are no earning maximums and cash back can be redeemed once you’ve earned a dollar or more. And you can do so at any time (as long as your account is current and in good standing).

Key Features:

  • Minimum Opening Deposit- $25
  • Monthly Service Fees- $0
  • ATM Network- Over 60,000 fee-free ATMs
  • Rewards- 10 cent cash back when you use your debit card

Best High-Interest Checking

Is earning top dollar on your money at the top of your list? These high-interest checking accounts will help you get the job done:

Alliant High-Rate Checking

Account Overview:

Alliant Credit Union offers a high-rate checking account that allows you to earn 0.65 percent APY, which is 7.2 times the national average for checking account yields. However, you must enroll in eStatements and make one monthly electronic deposit to earn interest. They also have a large fee-free ATM network and reimburse up to $20 on out-of-network fees.

Key Features:

  • Minimum Opening Deposit- $5 support payment made by Alliant on your behalf to a charity they are partnered with (you can bypass this by meeting another one of their eligibility requirements)
  • Monthly Service Fees- $0
  • ATM Network- Over 80,000 fee-free ATMs
  • Rewards- n/a
  • Other Perks- first order of checks covered, Up to $20 in ATM surcharges reimbursable each month, free unlimited transfers between in-house and outside accounts

Bank5 Connect High-Interest Checking Account

Account Overview:

With a minimum opening deposit of only $10, you can become a Bank5 Connect High-Interest Checking Account holder and earn up to 0.76 APY on your money. What’s even more enticing is that you only have to maintain a minimum balance of $100 to take advantage of this perk.

This account also offers the UChoose Rewards program where you’ll earn 1 point for every $2 spent. Points can be exchanged for points for travel, electronics, gift cards, and so much more.

Key Features:

  • Minimum Opening Deposit- $10
  • Monthly Service Fees- $0
  • ATM Network- Bank5 Connect will reimburse up to $15 in surcharges per statement cycle incurred from using other banks’ ATMs
  • Rewards- Earn 1 point for every $2 spent on your debit card through the UChoose Rewards program
  • Other Perks- first box of checks free, up to $15 in out-of-network ATM fees reimbursable

Simple Checking Account

Account Overview:

Housed under the BBVA Compass Bank umbrella, the Simple Checking Account is designed to help you earn a large return on your money in record time. There are no minimum opening deposit or monthly balance requirements, and you’ll never pay account maintenance fees.

You can also earn as much as 2.02 percent APY on your money. However, the balance must be at least $2,000 to take advantage of this benefit. And once you’ve reached this amount, a Savings Goal account will be opened on your behalf that allows you to earn $100.93 in interest after a 12-month period.

(Making purchases by check is not an available option, but they do offer a free bill pay service and treasurer’s checks.)

Key Features:

  • Minimum Opening Deposit- $0
  • Monthly Service Fees- no fees ever! (includes account maintenance, overdraft, ACH transfers, and card replacement)
  • ATM Network- Over 40,000 fee-free ATMs
  • Rewards- n/a

The Bottom Line

Choosing the best checking account for your financial needs doesn’t have to be an arduous task. By figuring out what features are most important and prioritizing them before you start, you’ll save yourself a ton of overwhelm before you start your search.

How to Get Out of Debt

You started using debt as a means to build your credit and the plan backfired. Simply put, you want to get out of debt and don’t know how.

Even worse, you have more debt payments that you can comfortably afford and your balances have skyrocketed. And that credit score you worked so hard to build is not so useful after all because you can barely make ends meet.

Debt is relatively easy to get into to but can seem practically impossible to get out of. As the balances rise and interest accrue on those credit cards, the burden becomes more and more strenuous. And if you couple that with all the other installment debt you have on your plate, you can find yourself struggling to pay back what you owe.

The good news is debt is not the end of the world. And by taking the proper steps, you can start knocking down those balances and ultimately get out of debt once and for all.

How to Demolish Debt

Before you get started with the process, you have to ask yourself if you’re willing to do what it takes to get out of debt. While it sounds good to tell yourself that there’s a light at the end of the debt tunnel, your actions are ultimately what will determine your fate.

Simply put, demolishing debt isn’t necessarily a walk in the park and there will be times when you want to give up but you have to be committed to the cause and remember why you started.

And in case you’re wondering if it’s even worthwhile to get out of debt, think about your financial future. Every dollar wasted today will have serious implications for your finances later on down the line. So, if you reach retirement age and are still buried in debt, chances are you’ll have to scale back your lifestyle drastically to stay afloat.

You should also consider the impact a heavy debt load has on your retirement. If you continue to settle for making minimum payments and not getting aggressive with your installment debts, the amount you’ll be able to contribute to your nest egg could be substantially lower. And this prevents you from taking total advantage of the power of compounding interest.

With that being said, are you up for the challenge? If so, read on for a list of steps to take to get started:

Step 1: Take a snapshot of your debt

Do you know what you owe? Before you can get out of debt, you need to take a snapshot to see where you stand. You’ll want to grab a notebook or open a spreadsheet and note the following about each debt you owe:

  • Creditor’s name and contact information
  • Type of debt; revolving (credit card) or installment (loans)
  • Current Balance
  • Credit line (if applicable)
  • Minimum payment
  • Due date
  • Interest rate
  • Status (current or delinquent; if the latter applies, note the past due balance)

Step 2: Create a debt-payoff fund

The next step is to create a debt-payoff fund to start placing a dent in those balances. You’ll continue to make minimum payments on all your debts, but use the money from this fund to execute your debt-payoff strategy.

Wondering where the money will come from? Oftentimes, it’s as easy as taking a long and hard look at your budget and cutting out those variable expenses, or wants, to free up funds. You may also want to consider finding a side gig, taking on a part-time job, working overtime, or using your creative talents to bring in extra money. Financial windfalls are another great way to boost your debt-payoff fund.

Quick note: if you are delinquent on any of your debts, be sure to get caught up before you begin allocating extra funds on other accounts. Try reaching out to your creditor to determine if they have a financial hardship program to help you get back on track. Or look to your budget and make some serious sacrifices to make this happen.

Otherwise, you’ll continue to damage your credit rating and could be hit with a charge-off or repossession, which will severely impact your credit and could have harsh legal consequences for years to come.

Step 3: Select a debt-payoff strategy

It’s difficult to reach the finish line if you have no idea how you’ll get there. But now that you’ve figured out how much money you’ll have at your disposal every month to accelerate debt-repayment, it’s time to select a debt-payoff strategy and execute your plan.

Most consumers start with credit card debts since they are usually the most draining to their wallet. The two most common strategies for dealing with credit card debt are the:

  • Debt snowball method: Make the minimum payment on all your outstanding debts, but allocate any extra funds to the credit card with the lowest balance.
  • Debt avalanche method: Make the minimum payment on all your outstanding debts, but allocate any extra funds to the credit card with the highest balance or that’s costing you the most (in interest).

If you don’t have any credit cards but are looking to find relief from installment debt, the debt snowball, and debt avalanche can surely assist. But if you’re the situation is out of hand and you need more options or rapid relief, keep reading.

Explore Debt Relief Options

What do you do if you can’t afford debt payments and are considering bankruptcy? Is there any hope for your situation? Fortunately, there is, and the options may provide you with the relief you need in a jiffy without pounding away at debt payments for months on end.

Debt Consolidation

You can streamline the debt repayment process by rolling all of your smaller debts into a single loan. This may be a viable option to pay off debt faster if the new loan product has more favorable terms because you’ll pay substantially less in interest. Furthermore, your monthly payment may be lower, which means you’ll be able to pay over and above that amount to reach the finish line faster.

To consolidate your debt, it will be necessary to take out a debt consolidation or home equity loan. The next step is to pay off all your outstanding debts using the proceeds and make a single monthly payment to the new creditor until the balance is paid in full.

Another option is to open a balance transfer credit card. They are accompanied by a promotional period where APR is not assessed. To derive the greatest benefit, you’ll need to transfer all your outstanding balances to this card and pay it in full before the promotional period ends. But you must also refrain from using the cards you’ve paid off or your plan will backfire.

Debt Settlement

If you’re in dire financial straits and debt consolidation doesn’t seem like a good fit, you have the option to explore debt settlement. It may have serious implications for your credit, but you may be able to get out of the debt hole faster.

In essence, you’re communicating to the creditor that you’re willing to pay an amount (usually substantially less than you owe) in exchange for relief. This means that they can’t file a lawsuit against you later on the down the line. However, they can report the debt to the credit bureaus as settled, which negatively impacts your credit report.

When you begin working with a debt settlement company, you’ll more than likely be told to stop making monthly payments to demonstrate to creditors that you are unable to keep up with your debt obligations. But you will be making payments to a savings account that the debt settlement company will use when negotiations commence.

You should also know that debt settlement only works for unsecured debt products, like personal loans not backed by collateral (with the exception of student loans) and unsecured credit cards.

Consumer Credit Counseling

Unsure of which path is best for you when dealing with a large debt loan? Speak with a consumer credit counselor to help you navigate the murky waters and devise a plan that best suits your needs. They are employed by nonprofit agencies and offer their services free of charge, so you won’t have to spend even more of your hard earned money to find a solution. l

An Important Tip

Are there any debts on your credit report that are untimely, inaccurate, or questionable? You have the right to validate the debts by sending letters to the credit bureaus requesting that they are verified. This forces the creditor to respond with proof that the debt is accurate, update the details in your credit report, or delete the debt from your file. But if they don’t respond within the allotted 30-day window, the debt will be removed from your credit report and they may be legally unable to collect from you.

How to Deal with Debt Collectors

Until you break free from debt bondage, you may find that the debt collectors to be an extreme nuisance, particularly if you have quite a few past-due debts. But you have rights, and the debt collectors must adhere to the federal law or could face consequences.

Debt collectors are prohibited from:

  • Contacting you before 8 am and after 9 pm
  • Contacting you at work if you request that they stop because your employer doesn’t approve
  • Harassing you during phone calls
  • Reaching out to you once a Cease and Desist Letter has been issued. (Note that they can follow-up one additional time with their intended next course of action).

If you determine your rights have been violated by a debt collector, file a formal complaint with the Consumer Financial Protection Bureau, the Federal Trade Commission, or the attorney general’s office in your state.

The Bottom Line

Paying off your debt can be a marathon, not a sprint. But what matters most is that you’re making progress towards your goals. And by assessing your situation and doing a cost-benefit analysis of all your options, you’ll be in the best position to get out of debt once and for all.

Debt Settlement 101: A Comprehensive Guide

Debt settlement entails paying creditors less than you owe to cover your outstanding debts. In exchange, you’ll be off the hook with debt collectors. Even better, they will release you from all liability and won’t be able to file a lawsuit against you in the court of law.

It can offer a peace of mind if you’re buried in debt and can’t seem to find a way out because your finances are in shambles. But it takes some time to legwork to pull it off whether you hire a debt settlement company or take the DIY route. And there are some negative implications you should consider.

Read on to learn more.

Potential Benefits of Debt Settlement

You’ll have peace of mind.

No more ducking and dodging debt collectors or tossing and turning at night worrying about your debt. By settling your debt, you’ll be able to put your dark financial past behind you, move on with your life, and focus on fresh financial goals.

You’ll reduce the financial blow to your wallet.

Assuming your attempt at debt settlement is successful, you’ll save a wad of cash by only paying a portion of what you owe to the creditor. This will free up funds to work on accomplishing other key financial objectives on your list, like building an emergency fund or contributing to your retirement account.

Risk Factors

There’s a 50:50 chance it won’t work out.

Creditors aren’t obligated to accept your debt settlement offer. In fact, they can do the opposite and choose to pursue you in the court of law, especially if they sense that you have the wherewithal to pay.

And there’s also a chance that the creditor is willing to settle, but for an amount that’s too high or doesn’t quite work for you. Either way, you’ll have to deal with damage to your credit profile and find a way to take care of your outstanding debts, plus additional interest, fees, and penalties incurred from withholding payment.

Does Debt Settlement Impact Your Credit Rating?

While debt settlement does negatively impact your credit score, the damage starts far before an agreement is reached (if at all). How so? Well, debt settlement companies advise consumers to cease payments on their outstanding debt obligations during the process and divert the funds to a savings account, instead. When the account reaches a certain amount, they will commence negotiations on your behalf. And if an agreement is reached, the funds from this account will be used to settle the debt.

This is done for a few reasons. For starters, most creditors will only agree to the terms and conditions of a settlement offer if the amount can be paid in full. So if you don’t have the funds available and they say yes, you’ll be out of luck. Furthermore, creditors are less likely to accept a settlement offer if they suspect you’re able to repay what you owe. And by continuing to make monthly payments, you’ll lower your chances of them biting the bait.

The problem is that by forgoing monthly payments in an effort to save up, your credit rating will take a hit once the payment is late by 30 days or more. And depending on how severe the delinquency gets, the account could be written off by the creditor and converted to a collection item.

But what if you reach a settlement before the account is written off as a collection item? The creditor will note that it has been settled for less than the total amount owed and the entry on your credit report will still ding your credit rating.

Other Important Considerations

Costs

When you hire a debt settlement company to negotiate a reduced payoff on your behalf, you may not incur any out of pocket costs right away. On the other hand, they may assess an administrative fee that is withdrawn monthly from the savings account that contains the funds that will be used to pay off the debt.

And when they do reach a settlement that works for both parties, they will usually deduct a percentage of the settlement amount or the total amount eliminated by the settlement.

To illustrate, assume you initially owed $16,000 and the debt settlement company you hired negotiated a settlement for $7,500.

  • If the company charges 20 percent of the settlement amount, you’ll pay $1,500 ($7,500 * 20%) in fees and $7,500 to the creditor.
  • If the company charges 20 percent of the total amount eliminated by the settlement, you’ll pay $1,700 ($8,500 * 20%) in fees and $7,500 to the creditor.

Tax Implications

The creditor may appear to be generous by accepting your offer, but Uncle Sam isn’t always as forgiving. In fact, you may be on the hook for additional income tax with the Internal Revenue Service (IRS) because the amount that’s forgiven may be classified as taxable income. If you’re unsure of if you fall into this category, it’s best to solicit guidance from a reputable tax professional.

How to Find a Debt Settlement Company

Are you ready to bring a debt settlement company on board to go to work on your behalf? Don’t settle for the first company you find on the internet. Here are some key factors to look for along with some of the top options in the debt settlement industry.

Evaluating your options

When shopping around for debt settlement companies, you want to consider companies that:

  • Are licensed in your state of residence, which can be confirmed by contacting the Attorney General’s office in your state.
  • Are accredited by the Better Business Bureau (BBB). An A+ or A rating is also ideal.
  • Are affiliated with professional organizations in the industry.
  • Offer free consultations so you can gauge which companies are best suited to fit your needs.
  • Only assess fees once they’ve negotiated and executed a settlement on your behalf. (Note: some companies charge setup and administrative fees over the course of your time as a client).
  • Have minimal complaints on file with the BBB, State Attorney General, or the consumer protection agency in your local area of residence.

Don’t know where to start? Key industry players, like Freedom Debt Relief and National Debt Relief, can analyze your situation and get you moving in the right direction. You can view our comprehensive list of top debt settlement companies here (insert hyperlink once the article is published).

DIY Debt Settlement

Do you think you have what it takes to settle your own debts without bringing a company on board? It’s worth a shot if your debts are already severely past due, around 90 days or more, and you the funds at your disposal to make a lump-sum payment.

By settling your own debts, you’ll always save money as you won’t be required to pay a fee to a service provider to set up an account or once a settlement is reached.

Ready to get started? Take the following steps:

  • Step 1: Assess your finances to determine if you have the funds on hand to make a lump-sum payment. Oftentimes, the creditor will request that you settle the debt at once at not over time with multiple payments. And if you reach a deal but are unable to follow-through, they may be reluctant to work with you again on reaching a deal.
  • Step 2: Draft up your game plan. While you could just call up the creditor and ask to pay less than what you owe with no specific reasoning, you may find it harder for them to accept your offer. A better idea: compose a pitch that explains your financial hardships and point to the fact that you’ve already missed a few payments. That way, they’ll know that the chances of you paying off the balance in full are slim to none. Also, decide on the starting point of your negotiations. You want to give yourself wiggle room just in case they reject the first few offers. So, if you can comfortably by 60 percent, start at 30 percent and work your way up.
  • Step 3: Contact the creditor once you have the funds in hand and are ready to negotiate a settlement amount. There’s a high possibility that you may not be successful the first or even second time around, but the key is persistence. It may also be necessary to move up the management ladder to get the results you’re looking for.
  • Step 4: Seal the deal. Before you hand over your hard earned cash, be sure to get the final agreement in writing from the creditor. That way, you’ll be covered and can rest assured that the creditor is playing by the rules. But keep in mind that the creditor will also expect you to uphold your end of the deal.

The Bottom Line

Whether you decide to hire a debt settlement company or work out deals with creditors on your own, you may be able to find the relief you’ve been searching for. But before deciding on a course of action, be sure to explore all your options to decide if debt settlement is the best fit for your financial situation.

How to Handle Medical Debt

One minute you’re healthy and the next minute you’re burdened with medical bills. It happens more often than you may think, and it doesn’t take a debilitating illness to get to this point. In fact, if you head to the emergency room and they take a slew of labs or require an overnight stay to diagnose your issue, you could easily rack up thousands in medical bills. And if you’re uninsured, that only adds to the bill.

The good news is there are several ways to handle medical debt without emptying your bank account or pulling your hair out. Keep reading to learn more.

Review your bill in its entirety.

Before you give the medical provider a dime towards the bill, review it from top to bottom. Confirm that the line items accurately reflect the treatment you received and that there aren’t any inconsistencies if pricing. If you spot issues, notify the billing office right away to have them resolved.

Compare your bill to the explanation of benefits.

Assuming you’re insured, the next step is to compare your bill to the explanation of benefits sent out by your insurance company. (Didn’t have insurance coverage at the time of the visit? You can skip this step).

If you haven’t yet received this document, reach out and request that it be sent promptly. You may also be able to login to your insurance provider’s online portal and view an electronic copy there.

When comparing the two, you want to make sure that the insurance company took care of the portion of the expenses that they were supposed to, as outlined in your policy. It’s not unusual for billing and coding errors to happen, so you may find that the insurance company only covered 70 percent of a service when they were supposed to cover 80 percent. Or maybe they assessed the full amount for a particular procedure when it was supposed to be covered at 100 percent because it was coded incorrectly by the medical provider’s billing office.

Either way, it won’t take a ton of effort to reach out to both the insurance company and medical provider to have the bill updated so it can be processed correctly. And you’ll often find that by taking just a few minutes of your time, you can save hundreds if not thousands in medical costs.

Request a payment plan.

Medical providers are aware that most consumers don’t have thousands of dollars lying around waiting to be spent on healthcare expenses. For this reason, they offer payment plans designed to fit every budget.

Oftentimes, they are not accompanied by interest and allow you to make a monthly payment that is comfortable and doesn’t stretch finances to thin. Another added benefit of payment plans is the ability to protect your credit rating and avoid debt collectors as the medical provider will know you’re committed to doing your part to handle your outstanding debt.

But you have to be willing to call in and set up a payment plan to get the ball rolling. And when you do so, be sure to only commit to an amount you can afford to pay each month or you run the risk of the account being turned over to collections.

Negotiate a discounted settlement.

Have you tried calling the medical provider’s billing office to inquire about discounts or settlement options? You may be able to have your medical debt balance steeply reduced or off the strength of a financial hardship. This is also common if you were uninsured at the time services were rendered.

And in more extreme cases, you may qualify to have the debt written-off completely if you’re in dire financial straits. But you may have to provide financial documentation and meet with an in-house representative to review your situation and determine if this option is available to you.

Explore financial hardship programs.

Still no luck? You can also try exploring federal or nonprofit programs and organizations that may be able to assist. Most of these programs are income-based, and your local health department or hospital may have information on hand to point you in the right direction.

Also, visit Benefits.gov and use their comprehensive search tool to find health and medical assistance programs that you may qualify for. Results can be filtered by state and subcategory.

Hire a medical bill advocate to negotiate on your behalf.

Prefer to let a third-party to the legwork for you? Consider hiring a medical bill advocate to negotiate the balances and work out the details with your medical providers. They will also analyze all of your bills to determine if there are issues with the coding, if you haven’t been assessed the proper rates for services, or if the insurance provider should cover a higher portion of the expenses.

This option is ideal if you’re medical expenses are steep as a result of a serious medical condition or long-term stay in the hospital.

If you’d like to explore this option, you can ask around for recommendations or contact the Medical Billing Advocates of America to learn more. But keep in mind that medical bill advocates typically charge a fee for their services.

Borrow the funds.

As a last resort, you can apply for a personal loan or use a credit card to pay back what you owe. You can also apply for a medical credit card, like CareCredit, to help alleviate the financial burden and stop the collection calls.

But before you go this route, be sure to conduct a cost-benefit analysis to make sure it’s worthwhile. If you’re able to find a loan with a low-interest rate and affordable payments or a credit card that offers an extended zero-interest promotional period, it may not be such a bad idea. However, a higher interest loan or credit card that starts accruing interest right away could land you into a mountain of debt and even more financial trouble.

How to Deal with Medical Debt Collectors

What if the debt is already in collections and none of these options are available to you? There are still ways to resolve your medical debts.

For starters, you should know that the three credit bureaus – Equifax, Experian, and TransUnion – have to wait at least 180 days before they can place outstanding medical debt on your credit profile. So, this gives you an ample amount of time to work towards reaching a resolution.

But if you’ve already passed this point, here are some additional suggestions:

Dispute the debt.

Collection agencies buy debt for pennies on the dollar, so it’s not uncommon for the balances to get passed from one company to another and documentation sometimes slips through the cracks. This could be good news for you as the burden of proof is on the debt collector to prove that you actually owe the debt should you decide to file a dispute.

So, you can take your chances by filing a formal dispute with each of the credit bureaus. And if the collection agency is unable to provide ample documentation or doesn’t bother to respond because they don’t feel it’s worthwhile, the debt will be removed from your credit report and you’ll be off the hook for the balance. (Quick note: if they decide to sell the debt to someone else, you’ll have to restart the process all over again).

Negotiate a pay-for-deletion agreement.

If the debt collector is able to provide proof that you owe, you can try negotiating a pay for deletion. In essence, you’re requesting that they accept a portion of the balance owed to settle the debt. It also means that they will remove it from your credit report and stop pursuing you.

It may take some time to get the debt collector on board. But when they do bite the bait, be sure to get the agreement in writing and uphold your end of the bargain.

The Bottom Line

Dealing with medical debt can be stressful and downright overwhelming. But by taking the time to address the issue and either working to find a solution or hiring someone to do it for you, you’ll find the relief you’re seeking sooner than later.

How to Deal with Collection Agencies

Are you worn down by the constant letters and calls from collection agencies? Maybe you’re drowning in debt, strapped for cash, and don’t which way to turn for help. Regardless of your situation, there are ways to find relief from those pesky debt collectors.

But it’s important to understand what types of collection agencies exist, their role in the debt collection process, and your rights when dealing with them.

The Role of Collection Agencies

In a nutshell, collection agencies are entities that work on behalf of creditors to collect amounts owed on delinquent accounts. There are two types of collection agencies to be aware of.

In-House Collection Departments

Before an account is turned over to a third-party debt collector, most companies will attempt to collect what is owed through their in-house collection department. Doing so gives them a better chance of recouping most or all of the outstanding balance. Furthermore, they won’t take a substantial loss by writing off the debt and selling it to an outside agency since they’ll only get pennies on the dollar.

In-house collection departments may be willing to negotiate a settlement agreement, but the chances are highly unlikely. Instead, you’ll usually find that they’re open to working out some sort of payment arrangement to help you pay back what you owe over time without spreading yourself too thin. They may also agree to refrain from reporting additional late payments on your credit report so you can preserve your credit rating.

Outside or Third-Party Debt Collection Agencies

If the account sits on the books for too long in an unpaid status, usually between 90 and 180 days, the company will write it off and sell to a third-party debt collection agency. At this point, the debt collector will reach out in writing with a notice that indicates you have 30 days to respond regarding the validity of the debt. If you don’t, it will be reported to the credit bureaus as a collection item and the collection texts, calls, and letters demanding payment will commence.

They may be willing to work with you to get the debt handled, but paying it in full won’t necessarily improve your credit score. In fact, the debt will still linger for seven years from the initial date the delinquency was reported, but they will update the account status to settled or paid in full. However, you may be able to negotiate a pay-for-deletion to make them remove the negative entry from your credit report and go away.

But if you ignore them altogether, they may sue you in the court of law to collect the amount owed. This could result in a judgment and more severe consequences, like wage garnishments.

What Do Debt Collection Agencies Do?

Ultimately, their goal is to get you to pay up, even if it’s for a portion of what you owe. But they can’t just go about collecting on the debt in any manner that they please. Instead, they must follow the rules outlined in the Fair Debt Collection Practices Act (FDCPA) or they could face harsh consequences.

Your Rights Under the Fair Debt Collection Practices Act

According to the Federal Trade Commission, it’s “illegal for debt collectors to use abusive, unfair, or deceptive practices when they collect debts.” And if they do so, the debt collector will be in direct violation of your rights under the FDCPA.

Below is a summary of your rights under the FDCPA:

  • Debt collectors cannot call you before 8 am or after 9 pm. However, they can reach out if you agree to be contacted outside of these hours.
  • Debt collectors cannot call you at your place of employment if you notify them that these types of calls are not permissible or that you do not wish to be contacted there.
  • Debt collectors cannot divulge the details of the debt to anyone outside of your spouse or parents (if you’re a minor).
  • Debt collectors are obligated to mail you a written validation notice detailing the applicable balance, creditor’s information, and how to handle the debt if it doesn’t belong to you. They have five days from the initial date of contact to do so or they are in violation of the law.
  • Debt collectors cannot use language that is abusive, make false threats, or harass you regarding the debt.
  • Debt collectors must stop contacting you if you send a letter requesting that they do so. It’s called a Cease and Desist Letter should be sent via certified mail with a return receipt so you’ll know when it’s in their possession. Upon receipt of the letter, the debt collection agency is permitted to reach out one more time notifying you of their next course of action. (Quick note: by sending out a Cease and Desist Letter, you may be putting yourself at an increased risk for a lawsuit since the debt collector will no longer be able to communicate directly with you to find a resolution).

Are Business Debts Covered Under the FDCPA

Unfortunately, business debts are not covered under the FDCPA. The rules only apply to revolving and installment personal debts, including credit cards, personal loans, auto loans, home loans, student loans, and mortgage loans.

What To Do If Your Rights Are Violated

If you feel as if a debt collection agency has violated your rights under the FDCPA, you can reach out to the Federal Trade Commission (FTC) or the Attorney General’s office in your state of residence. You can also file a formal complaint online using the tool offered by the Consumer Financial Protection Bureau.

You also have the option to file a lawsuit. And if you win, you could be awarded damages or fines of up to $1,000 in addition to any legal fees incurred. The latter includes court costs and expenses associated with hiring an attorney.

But keep in mind that even if one of these agencies rule in your favor, you’re still on the hook for the debt.

Debt Collection Scams

Not all collection agencies are created equal. In fact, some are scam artists looking to prey on consumers that are already in dire financial straits.

The first sign of a scam artist is one that is calling about a debt you have no knowledge of and are certain that you don’t owe or doesn’t exist. Other signs to be on the lookout for, per the FTC, are companies that do not have a mailing address or phone or request information that is highly sensitive. They may also be a scam artist if they threaten to turn you over to the local authorities.

If you’ve been contacted or have fallen victim to debt collection a scam, report the incident to the FTC right away. You should also call your state Attorney General’s office and request assistance regarding what your next course of action should be.

Best Practices When Dealing with Collection Agencies

Validate the debt first.

There’s no way to know if the debt collection agency is legally able to collect on the debt without validating it first. By sending a letter to the credit bureaus disputing the accuracy of the debt or communicating that you have no knowledge of it, you’ll force the debt collector to provide documentation showing that you actually owe and that they can legally collect on it. If they’re unable to do so, the collection efforts stop right there.

But if you recently received a written validation notice and still in the 30-day window, all collection activities must come to a halt until the debt collector sends over proof that you owe. This could be in the form of a bill from the creditor or a copy of the original contract.

Ask the collection agency to only communicate in writing.

Debt collection agencies can make one deal on the phone and act as if they have no idea what you’re referring to when it comes up later on down the line. That’s why it’s best to only communicate with debt collectors in writing.

Record all telephone correspondence.

If they do insist on calling, don’t answer right away. Instead, allow them to leave a message and only return the call once you’re able to record it via a handheld recorder or your mobile device. During the call, reiterate that you’d like to receive written correspondence. And if you reside in a state that requires you to disclose that conversation is being recorded, be sure to let them know.

Take detailed notes from phone conversations.

Request the name of the representative that you are speaking to and not the date and time. And simply listen to what they are saying. Refrain from divulging any information or it can be used against you later on in the court of law. As mentioned earlier, remind them that you’d prefer that they stop calling and forward all further communication to you in writing.

How to Remove Collection Accounts From Your Credit Report

Looking to remove collection accounts from your credit report? Follow the detailed instructions in our handy guide found right over here. (insert hyperlink to other article) Another option is to hire a reputable credit repair company to do the legwork for you.

The Bottom Line

By knowing how to deal with collection agencies, you’ll be able to alleviate the stress that comes with the letters, calls, and texts demanding payment. And if all else fails, you can always send a Cease and Desist Letter and hire an attorney to take it from there.

An Introduction to the Fair Debt Collection Practices Act

Are debt collectors wearing you down with the constant letters, calls, and texts? If their actions are borderline intrusive, it may be possible that they’re violating your rights under the Fair Debt Collection Practices Act (FDCPA).

But what is the FDCPA, how does it work, and how does it protect you when dealing with debt collectors? Keep reading to learn the answer to these questions and much more.

What is the Fair Debt Collection Practices Act?

Enacted by the federal government in 1978, the FDCPA regulates how debt collectors interact with consumers to collect on delinquent debts.

The rules set forth in the FDCPA are only applicable to personal unsecured and secured debts. These include personal loans, credit cards, mortgages, auto loans, and student loans. However, consumer protections do not extend to business debts.

Under the FDCPA, debt collectors are also given the ability to use legal channels to recoup the funds owed by debtors. And some instances, they may file a lawsuit to collect what they owe, obtain a judgment, or get a court order to garnish your wages from your paycheck. (Please note that federal benefits typically aren’t eligible for wage garnishments that are related to consumer debts).

What Are Your Rights Under the Fair Debt Collection Practices Act?

As a debtor, you are afforded many rights under the FDCPA when dealing with collection agencies. For starters, you have the right to receive a written verification of any debt you allegedly owe from the debt collector before you commence payment.

The debt collector must also send you a written notice that details key information about the debt, including the creditor’s name, the amount you owe, and instructions on how to move forward if the debt doesn’t belong to you. This should be done within five days of initial contact.

If you decide to start making payments towards the debt, you have the right to choose how those funds will be allocated. This is applicable in those situations where the debt collector is pursuing payment for more than one account.

And if you’re overwhelmed by debt and are seeking legal counsel or considering bankruptcy, you have the right to draft up a Cease and Desist Letter to halt all contact from the debt collection agency. You should send this document using certified mail and purchase a return receipt to ensure they receive it. At that point, the only further contact they can make is to notify you of their next intended course of action.

What Are Debt Collectors Prohibited From Doing Under the Fair Debt Collection Practices Act?

Debt collectors can’t just get fed up with you and call demanding that you pay up. They have to be respectful with their approach and refrain from threatening, harassing, or swearing at you. There are also some other actions that are prohibited from taking when attempting to collect a debt, including:

  • Attempting to collect on a debt without sending a validation notice in writing within five days of initiating contact with you.
  • Refusing to respond to your debt validation request but moving forward with collection efforts.
  • Demanding that you pay more than you actually owe. Some collection agencies tack on miscellaneous fees and penalties to the outstanding balance, but doing so is illegal under the FDCPA.
  • Contacting you before 8 am or after 9 pm. If they call you in the wee hours of the morning or late at night, they are in direct violation of the FDCPA.
  • Calling you on your job if calls from debt collectors are prohibited. That’s unless you give them permission to do so, and they must still only call within the allotted window of time as allowed by the federal law.
  • Sharing details about your debt with others, with the exception of your spouse or parents if you are a minor.
  • Using deceptive tactics, profanity or threatening you on the phone.
  • Ignoring Cease and Desist Letters that demand all contact be stopped right away. If they continue to call, send text messages, or email you, they are violating your rights. (As noted earlier, they can contact you one more time after receiving the letter to let you know what they plan to do next).
  • Reporting incorrect information regarding the debt to the credit bureaus. Debt collectors are required to report accurately and timely information.

How Do You Report Debt Collectors That Violate Your Rights?

Despite the potential negative consequences that collection agencies can face for violating the FDCPA, some are willing to test their luck.

You can use the following channels to report debt collectors that violate your rights:

  • The Consumer Financial Protection Bureau
  • The Federal Trade Commission
  • The State Attorney General’s office (in your state of residence)
  • The court of law (by filing a lawsuit)

Debt collection agencies found to be in violation of the FDCPA can face monetary fines. And should you decide to file a lawsuit in federal court and the judge rules in your favor, you could receive damages if the suit is filed within a one-year window of the original violation. But if you’re unable to prove that you incurred damages as a result of the violation, you could receive up to $1,000 in additional funds to reimburse you for applicable court cost and attorney fees.

The Bottom Line

By understanding the FDCPA, you’ll be better suited to deal with debt collectors and understand when your rights have been violated. But if you are uncertain, it doesn’t hurt to seek legal assistance to gain the clarity you need.

Best Debt Settlement Companies

Tired of being harassed by debt collectors over a debt you can’t afford to pay? Debt settlement may be a viable option. But before you take this route, it’s important to understand how it works along with key benefits and drawbacks.

Read on to learn more about debt settlement and explore the top companies in the industry.

How Debt Settlement Works

When you settle your debts, you pay creditors a portion of what you owe and they agree to release you from your contractual obligation to pay the remaining balance. But in order for debt settlement to be legally binding, both parties must agree on the amount.

There are many perks to debt settlement, including a peace of mind because debt collectors are no longer hounding you or a financial burden removed from your plate. However, there are also some major drawbacks to consider. More on that shortly.

You should also know that debt settlement can only be used for unsecured and revolving debts, or credit cards, and unsecured loan products that are not backed by collateral (with the exception of federal student loans).

While you have the option to call up the creditors and settle your own debts, it’s more sensible to have a reputable company do the legwork for you.

If you choose the latter, the company will instruct you to forgo monthly payments and place the proceeds in a savings account. This routine will continue until you’ve managed to stack up enough cash to start the negotiation process with the creditors.

Top Debt Settlement Companies

A few of the best debt settlement companies in the industry:

Company Highlights
Accredited Debt Relief A+ Rating by the BBB

Free consultations

Accredited member of the American Fair Credit Council (AFCC)

12 to 48-month program term

Negotiations on your behalf commence 1 to 2 weeks following your enrollment in the program

CuraDebt Over 18 years of experience in the debt settlement industry

Licensed and bonded in multiple states through the US

Accredited member of the AFCC

Brick-and-mortar location in Hollywood, FL

Free face-to-face consultations

No upfront fees required to sign up the debt settlement program

Average fees are 20 percent of the total debt at enrollment

Freedom Debt Relief More than 15 years of experience in the debt settlement industry

Over $9 billion in debt settled

600,000+ clients currently enrolled in debt relief services

Around 43,891 accounts settled on a monthly basis

Client dashboard available to monitor the status of your case at any time directly from your computer, laptop, or mobile device

Founding member of the AFCC

Debts can be settled in as little as 24 to 48 months

No upfront fees to use their services

National Debt Relief One of the largest debt settlement companies in the US

BBB Accredited with an A+ rating

Member of the AFCC and IAPDA (International Association of Professional Debt Arbitrators)

Provides financial education to customers

Most clients are able to have their debts settled within 24 to 48 months

Average client incurs cost savings of 50% (30% including debt settlement fees assessed by the National Debt Relief)

New Era Debt Solutions Accredited by the BBB with a rating of A+

Over 18 years of experience

Over $200,000 in debt settled on their client’s behalf

Debts can be settled in as little as 90 days

Benefits of Debt Settlement

Could help avoid legal proceedings.

While there’s no way to guarantee that the creditor won’t sure you in the court of law, having a debt relief company propose a settlement on your behalf could minimize the chances. Not only does it demonstrate that you’re not blowing them off, but it also shows that you’re taking responsibility for what you owe and are committed to finding a solution to at least take care of what you can actually afford to repay.

You can save a ton of money.

Credit cards and loan products with less than favorable terms usually cause loads of trouble for cash-strapped consumers because the amount of interest accrued is excessive. In some instances, this amount could exceed the amount you initially borrowed on credit. And when you tack on the late payment fees and penalties, the balance spirals out of control even more.

But if the creditor will agree on the settlement offer, you could save a slew of cash. In some instances, you may be able to cut the balance in half, if not lower. Even better, you’ll more than likely accomplish this task in a fraction of the time that it would have taken you to pay the debt in full to the creditor.

Streamlines repayment.

Instead of mulling over which creditors to pay and which to leave out each month, you’ll make one monthly payment to the debt settlement company. While the collections calls may not stop, this gives you a better chance of eventually getting out of the hole if the company is able to successfully settle the accounts on your half once enough funds have been accrued.

Drawbacks of Debt Settlement

The process could take awhile.

Creditors are interested in recouping the total amount you owe, plus any applicable interest, penalties, and fees. So, even if you are certain that you won’t be able to remit timely or any payments at all, the creditor will need proof before they will entertain your debt settlement offer.

This means that it’s not enough to call up your creditor and tell them you’re going through a rough financial patch that you’re anticipating will last for a while. Instead, you’ll need to provide tangible proof, like a series of missed payments or across the board. Charged off or collection accounts are another surefire way to get their attention as they indicate the likelihood of collecting what they owe is slim to none.

Your credit will take a hit during and after the negotiation phase.

Each month that goes by during the negotiation phase means more bad news for your credit score. Why so? Well, payment history accounts for 35 percent of your credit score, and just a single late payment could tank your score by up to 110 points.

And because debt settlement agreements aren’t usually reached right away, your credit score will continue to sustain more and more damage with each month that passes.

If the company is able to settle the debt on your behalf, the creditor will note the account as “Settled” on your credit report and this negative mark will remain for up to seven years (with the negative impact diminishing over time).

Your creditors may not budge.

According to the Consumer Financial Protection Bureau (CFPB), “debt settlement [companies may] be unable to settle all of your debts.” So by signing up for their services, you’re taking a huge risk without knowing if there’s any chance you’ll actually find the debt relief you’re desperately searching for.

You will have to pay for the service.

Success on the debt settlement companies behalf equals more out of pocket expenses for you. Simply put, they will deduct a fee from the account used to fund the settlement. The percentage varies by settlement, but it is usually determined by the original amount of debt owed or a percentage of the settlement agreement.

You may also be assessed setup and administration fees on a monthly basis. If the company is unable to reach an agreement with the creditor on your behalf, they will not be able to return the service fees to you.

You may have an outstanding tax liability.

Debt forgiveness could trigger a tax liability payable to Uncle Sam’s Headquarters since this amount is classified as taxable income. So before moving forward, it’s best to consult with a tax professional to determine how settling your debts could impact your tax liability.

How to Evaluate Debt Settlement Companies

Don’t settle for the first debt settlement company that piques your interest. Instead, explore at least three options and be on the lookout for the following:

  • Current status of their licensure. This information can be retrieved from the state Attorney General’s office.
  • Methodology. If they use deceptive tactics to bring customers on board and settlement debts, that’s your queue to move on.
  • Consumer reviews. You want to see more positive than negative, but if a bulk of what you see seems fishy, it probably is.
  • Status with the Better Business Bureau (BBB). Are they accredited with the BBB? If so, what rating did they receive and are there any major complaints on file?
  • Excessive fees. Per federal law, debt settlement companies can’t charge to settle your debts until they seal the deal. However, they may assess administration fees. And if so, you want to avoid companies that charge fees that are higher than normal.
  • Consumer complaints filed with the state Attorney General or your local consumer protection agency.
  • Professional Associations. Are they members of any industry-wide professional organizations?
  • Free consultations. By giving the company a call and taking advantage of their free consultation, you’ll have a better idea of what types of fees you’ll be assessed and if the program is a good fit for your financial situation.

Debt Settlement vs. Debt Consolidation

If you’re not quite at the point where you can no longer pay your outstanding debts but are hanging on by a thread, debt consolidation may be a more viable option. Unlike debt settlement, it helps you to protect the credit you’ve worked so hard to build by securing more competitive interest rates designed to lower your monthly payments and help you pay off your debts faster.

The Bottom Line

Debt settlement may be the best option if you’re drowning in debt and have reached the point where it may be necessary to file for bankruptcy if you can’t find relief. But before moving forward, it may be best to speak with a credit counselor to determine if it’s the right decision for you.

Best Debt Consolidation Loan Companies

If you’re overwhelmed by debt and are desperately seeking relief, debt consolidation may be a viable option. But how exactly does it work, and how do you go about finding a loan that best suits your needs? Read on to learn the answer to these questions and much more.

How Debt Consolidation Works

In a nutshell, debt consolidation refers to the practice of rolling small debts into a single debt product. By doing so, you’ll streamline the repayment process since all the other creditors will be paid in full by the loan process. It’s also designed to save you money if you’re able to secure a loan interest rate.

You can consolidate your debts by taking out a personal or home equity loan, opening a balance transfer credit card, or borrowing from your 401(k).

Benefits of Debt Consolidation

Scores of consumers who are drowning in debt turn to debt consolidation for the benefits they can derive from it, including:

  • Lower interest rates; perhaps the most attractive part about debt consolidation is the ability to pay a ton less in interest than what you were paying before, which could be hundreds if not thousands over the life of the loan (assuming you qualify for a debt product with a lower rate or secure a balance transfer credit card). If money was tight but you were keeping up with the monthly payments, a lower interest rate will not only give you a lower combined monthly payment, but free up funds that can be used to get the total amount owed down even faster. But if you were struggling to make timely payments, a lower interest rate could mean you’re now able to silence the collection calls by paying those balances and full using loan proceeds and taking care of the loan balance that remains without feeling overextended each month.
  • Peace of mind: instead of spending hours each month mulling over your debts figuring out if a creditor has been paid and how to knock down the outstanding balances faster, you can rest assured that a loan payment has you covered. This is also a major bonus if you’re tired of dealing with fees from late payments or creditors breathing down your neck.
  • Potential credit boost: if you’re consolidating credit card debt, paying off the balances will automatically decrease your credit utilization ratio, which accounts for 30 percent of your FICO score and is comprised of revolving credit. This is a win-win for your wallet and your credit score.

Drawbacks of Debt Consolidation

While there are several benefits to consolidating your debt, there are also a few drawbacks to keep in mind.

For starters, debt consolidation is not without risk and could set you back even further financially if not executed properly. To illustrate,

You should also consider the fees associated with debt consolidation. Personal and home equity loans are usually accompanied by origination fees, which account for one to three percent of the total loan amount. Furthermore, you could incur a prepayment penalty should you decide to pay the loan off early.

With regards to balance transfer credit cards, your efforts could backfire if you’re unable to pay the amount owed in full prior to the promotion’s expiration date. Why so? The creditor will retroactively apply interest to the debt that remains.

Another important consideration is in regards to home equity loans. If you default on the payment, you could put your home at risk since it’s a secured loan product backed by your home (which is used as collateral).

Furthermore, balance transfer credit cards that aren’t managed properly could result in even more than you have beforehand. How so? Well, if you decide to use the other cards that have already been wiped clean, you’ll end up right back in the same spot that you were before with double the debt.

How to Evaluate Debt Consolidation Lenders

Ready to move forward with consolidating your debts? If you do a quick search for debt consolidation lenders, chances are you’ll quickly become overwhelmed as there are so many options out there.

But you can narrow down your list by only analyzing lenders that offer products that you need and keeping the following in mind:

  • Qualification criteria: is there a minimum credit score or monthly income that applicants must have to be considered for a loan? Also, does the lender require you to be employed for a set period of time in order to consider your loan application?
  • Loan terms: is the interest rate lower than what you were paying before? And is the loan term much lengthier or shorter? Higher interest rates defeat the purpose of consolidating your debt and significantly longer loan repayment periods could mean you’ll pay a lot more in interest over the life of the loan than you would have if you had not consolidated the debt.
  • Key benefits: does the lender offer any particular perks that make them stand out from the others? For example, some lenders offer pre-qualification screening tools to help you assess if their products are a good fit without dinging your credit score. You may also be able to customize your loan to best suit your needs.

Best Debt Consolidation Loan Companies

Lender Loan Amounts Loan Terms Key Benefits
Avant: online direct lender that’s helped over 600,000 secure the funds they need $2,000 to $35,000 APR: 9.95% to 35.99%

Repayment Period:

24 to 60 months

Administration Fee:

Up to 4.75 percent

-loan prequalification tool that does not impact your credit score

-next business day funding options available

-no prepayment penalties

Earnest: online direct lender that puts technology at the forefront to offer borrowers more competitive interest rates Up to $75,000 APR: starts at 6.99%

Repayment Period:

Varies by lender

Origination Fee: 1% to 6%

-savings patterns, asset portfolio, and work history considered by the lender during the loan application review process

-customizable repayment plans

Lending Club: peer to peer lending network that’s served over 2.5 million customers Up to $40,000 APR: 6.95% to 35.89%

Repayment Period:

-prequalification tools that allows you to check your rate with no impact to your credit score

-funding in as little as seven business days

-no prepayment penalties

Lightstream: a direct lender that’s a division of SunTrust Bank $5,000 to $100,000 APR: 6.14% (with AutoPay)

Repayment Period: 24 to 84 months

-competitive interest rates for well-qualified borrowers

-same business day funding options available

-no prepayment penalties

OneMain Financial: a direct lender with over 100 years experience $1,500 to $30,000 APR: varies by loan product

Repayment Period: varies by loan product

-check your offers without impacting your credit score

-over 1,600 brick and mortar locations available

-no prepayment penalties

Payoff: a direct lender that offers loan products designed to help you eliminate credit card debt faster $5,000 to $35,000 APR: 5.99% to 24.99%

Repayment Period:

2 to 5 years

Origination Fee: 0% to 5%

-view rates without hurting your credit score

-no late or returned check fees

Prosper: a direct lender that has loaned over $13 billion to consumers $2,000 to $40,000 APR: varies by loan product

Repayment Period:

3 or 5 years

Origination Fee: 2.4% to 5%

-no penalty to your credit score to check your rate

-no prepayment penalties

SoFi: Up to $100,000 APR: 6.99% to 15.49% (with AutoPay)

Repayment Period:

-no impact on your credit score to check your rate

-no origination, late, or prepayment penalties

UpStart: peer to peer lending network that connects borrowers with lenders $1,000 to $50,000 APR: 8.89% to 35.99%

Repayment Period:

36 months (on average)

-check your rate with no impact to your credit score

-lenders consider your educational background and work experience when evaluating your loan application

-next business day funding options available

-less than perfect credit OK

-no prepayment penalties

Debt Consolidation vs Debt Settlement

Maybe you’ve done some legwork and determined that debt settlement isn’t for you. The good news is all hope is not lost as debt settlement could still offer you the relief you’re seeking.

But how does it differ from debt consolidation? In a nutshell, you will settle your outstanding balances for a fraction of what you owe in lieu of paying them in full through debt consolidation.

While doing so could adversely your credit rating when the creditor when the creditor settles the accounts in their books, it also means the hounding debt collection calls and letters will stop. Furthermore, the creditor cannot come back at a later date to sue you in the court of law for the remaining portion that you owe.

You should also only consider using debt settlement as a last resort before filing for bankruptcy because it’s really only effective once you’ve missed a slew of payments and the creditor believes there’s a high possibility they won’t recoup the funds they’re owed. Unfortunately, this means you’ll have to stop making payments altogether for the debt settlement company to plead your case and have the greatest chance of success. But keep in mind that there are no guarantees that creditors will accept the offers presented to them, so there’s always the risk of failure.

If you believe debt settlement may be a good fit, be sure to only do business with a reputable company as there are tons of scam artists out there. A few options include Accredited Debt Relief, Freedom Debt Relief, National Debt Relief, and New Era Debt Solutions.

The Bottom Line

Debt consolidation may be worth a shot if you earn a consistent income each month and can comfortably afford to make payments each month on your debts. But if you’re completely overwhelmed and can’t seem to see the light at the end of the tunnel, debt settlement may be a more viable option.

Either way, by exploring these reputable companies and what they have to offer, there’s a high possibility you’ll be on the way to breaking the chains of debt in record time.

An Introduction to ChexSystems

If you’ve ever been denied an application for a checking or savings account due to your banking history, it’s probably the direct result of ChexSystems. But what is ChexSystems, how does it work, and what does it have to do with your banking history?

Read on for the answer to these questions and many more.

ChexSystems: An Overview

Governed by the federal Fair Credit Reporting Act (FCRA), ChexSystems is the “credit bureau” for financial institutions. They operate in the same manner as the credit reporting agencies, like Equifax, Experian, and TransUnion.

But instead of providing credit data, they offer consumer disclosure reports that include historical data for closed checking and savings accounts. These reports help financial institutions determine if the applicant meets the qualification standards for a new bank account or if they should be denied due to the high level of risk they pose.

What’s In Your ChexSystems Report?

ChexSystems or FACTA reports contain the following components:

  • Consumer identification number
  • Personal information
  • Identity theft security alerts reported by the consumer
  • Security freeze history
  • Reported information related to past accounts that were mismanaged or resulted in an outstanding debt balance
  • Inquiries initiated by financial institutions
  • Inquiries initiated by the consumer
  • Check-cashing inquiries
  • Retail information
  • Check-ordering history
  • Social security number validation
  • Additional information or supplementary data

You can view a sample consumer disclosure report here.

How to Retrieve Your Free ChexSystems Report

You can access your consumer report on an annual basis, free of charge, by following the instructions below:

  • Phone- Call 800-428-9623. You will be directed to an automated voice messaging system where you can initiate your request.
  • Mail- Download and print the Consumer Request for Disclosure Form and send it to Chex Systems, Inc.

Attn: Consumer Relations

7805 Hudson Road, Suite 100

Woodbury, MN 55125

  • Fax- Submit the Consumer Request for Disclosure Form to 602-659-2197.
  • Online- Complete and submit the Consumer Request for Disclosure found here.

Free ChexSystems reports are also available to consumers who’ve been denied for a bank account due to the information contained in the report.

Can Anyone Access Your ChexSystems Report?

The short answer is no. in order for a third party to access your FACTA report, they must:

  • Have written permission by you to do so. This is usually the case when you apply for a bank account and you sign an application granting the bank permission to access resources, like ChexSystems, to help evaluate your application and make a decision. Both business and personal transactions also fall under this umbrella.
  • Be ordered to do so by the courts through an order or federal subpoena issued by the grand jury. Child support rulings by the court of law may also warrant the release of your ChexSystems report.

What to Do If Your ChexSystems Report Contains Errors

If your ChexSystems report contains inaccuracies, you have the right to have them rectified. But in order to initiate the process, you’ll have to file a formal dispute. This can be done via the following methods:

  • Online by completing the digital form and uploading supporting documents
  • By mail at Chex Systems, Inc., Attn: Consumer Relations, 7805 Hudson Road, Suite 100, Woodbury, MN 55125
  • By fax at 602-659-2197

Should you decide to dispute your consumer report by mail or fax, be sure to include your full name, Social Security number, current and mailing address, and Consumer ID on all correspondence you send it. Your dispute letter should also clearly identify the item(s) in question and the reason it’s incorrect.

How to Contact ChexSystems

If you need more clarification about your ChexSystems report or the dispute process, you reach out via mail, fax, or phone. Their contact information is listed below:

Mail

ChexSystems, Inc.

Attn: Consumer Relations

7805 Hudson Road, Suite 100

Woodbury, MN 55125

*Phone

800-428-9623

Fax

602-659-2197

*(Please note that calling in will only route you to an automated menu that allows you to request your report or listen to responses to frequently asked questions. No representatives are available at the number to take your call).

ChexSystems: What It Means For Your Banking Options

Unfortunately, a shaky ChexSystems reports could spell big trouble when you apply for a checking or savings account. You could either be offered an account with less than favorable perks, like higher maintenance fees or minimum balance requirements or be denied for an account altogether.

Do All Banks Use ChexSystems Reports?

Before you have a complete meltdown, you should know that you aren’t banned from the banking world forever if you have less than perfect banking history. In fact, information reported only lingers for five or so years. Even better, some banks ditch ChexSystems altogether while others offer second-chance bank accounts. More on that shortly.

What To Do If You’re Denied for a Bank Account

Alternative Banking Solutions (or Non-ChexSystems Banks)

Worried that you won’t find a bank account that suits your needs because you’ve been denied on every turn? Take a look at what the non-ChexSystems banks have to offer:

  • BBVA Compass ClearConnect Free Checking
  • Navy Federal Credit Union
  • Suntrust Bank
  • United Bank

Quick note: while select banks don’t use ChexSystems to screen applicants, it’s possible that they run credit checks or use another similar service called Early Warning Systems during the evaluation process. So, it’s best to inquire with a banker before moving forward with your application.

Second-Chance Banking

You may also want to give banks that offer consumers another chance a try. These include:

  • BBVA Compass ClearChoice Free Checking
  • Capital One
  • USAA Free Checking
  • Wells Fargo

As mentioned earlier, you may have to pay higher maintenance fees or fork over more than normal for your opening deposit, but the benefits of second-chance banking usually outweigh the costs.

You should also know that these options may not be advertised to the public. Instead, you’ll need to go into the branch and speak with a banker about your situation. That way, they’ll be able to provide you with your options based on your banking history.

Prepaid Debit Cards

It’s not uncommon for consumers to want a bank account solely for the purpose of direct deposit or online transactions that require you to use a debit card. The good news is even if you’re unable to find a bank account that works for you due to ChexSystems issues, you can always use a prepaid debit card to get the job done.

While they are sometimes accompanied by higher fees and pose a bit more risk than traditional debit cards issued by banks, they have similar capabilities. And some prepaid debit card issuers allow you to personalize your card and receive direct deposits.

Can You Remove Accurate Negative Data From ChexSystems?

Are you being haunted by a slew of banking missteps from the past? Whether they resulted from a rough financial patch, carelessness, or honest oversight, it’s possible to have negative data removed from your ChexSystems report.

However, it’s not necessarily a good idea to reach out to ChexSystems and demand that they remove any negative information from your report. Instead, call up the bank and request that they remove the account in exchange for payment. If they agree, request that they provide their response to you in writing so you’ll have proof of the arrangement.

But if this approach doesn’t quite work out and the negative entries are older, you can try your hand at a dispute to see if the bank responds. Depending on the severity of the issue and age of the account, they may not bother and the information will be removed from your report.

The Bottom Line

It’s a good idea to be aware of how ChexSystems works and what’s listed in your FACTA report. That way, you’ll know what to expect when applying for bank accounts. And should you spot errors in your report in the future, you’ll know exactly what to do to have them resolved in a timely manner.

Sample Goodwill Letter

You hit a rough financial patch and fell behind on your credit card or loan payments. Since then, you’ve managed to get your finances back on track and bring your accounts current. But there’s one major problem; your credit score is now in the trenches because of the late payments. What’s a consumer to do? Well, you can start by drafting up a goodwill letter to clean up your credit report and bring your credit score back to life. But what is a goodwill letter, and is it really effective?

Read on to learn the answers to these questions and view a sample template to help you write your own letter.

What Are Goodwill Letters?

A goodwill letter is a formal request written by a consumer to a creditor to have a late payment removed from their credit report.

Are Goodwill Letters Effective?

It depends on the creditor and the strength of your letter. Some creditors are more willing to respond and make remove late payments than others. If you have a valid reason for being late, your chances of having success are much higher.

But some creditors aren’t willing to consider goodwill letters at all. However, you won’t know how your creditor will respond if you don’t draft up a letter and send it up. Doing so won’t hurt considering you’re not disputing the item. You’re technically taking responsibility for the late payment and kindly requesting that it be removed out of generosity.

When to Use a Goodwill Letter

Here are some instances where it may be worthwhile to use a goodwill letter:

  • You only missed one or two payments but you’ve worked hard to get back on track and haven’t been late since.
  • The delinquency resulted from a major life-changing issue, like a major illness or death of a close relative that impacted your finances.
  • You’re trying to qualify or get a lower rate on a mortgage loan, and a late payment or two from past financial missteps are holding you back. (This approach only works if you reiterate that you’ve taken the proper steps to clean up your financial act and turn a new leaf).
  • You were overwhelmed with life and made an honest mistake by forgetting to remit your payment on time, which is very uncharacteristic of you.
  • You didn’t receive the bill in time due to a change of address or mail that wasn’t forwarded.
  • A late payment was reported as a technological glitch that you didn’t catch until it was too late.
  • Automatic bill-pay from your financial institution failed and the payment wasn’t submitted in a timely manner.

When Not to Use a Goodwill Letter

If the late payment(s) are connected to accounts that are currently delinquent, a goodwill letter isn’t the way to go. Instead, you should focus on working with the creditor to make payment arrangements so you can get the account current and stop the late payments from being reported each month. This will also minimize the damage being done to your credit report.

On the other hand, if the account is current but you have a chronic history of being late on your debt obligations, the creditor will more than likely be reluctant to remove the late payments from your credit report out of goodwill.

Remember, goodwill adjustments are reserved for occasional issues, and not repeat episodes of financial mismanagement that lead to late or missed payments. So, if you fit these criteria, take some time out of your busy schedule to create a spending plan that allows you to cover your expenses and take care of your debts in a timely manner each month.

Writing a Goodwill Letter

Ready to get started with drafting up your goodwill letter? Even if you’re angry about the entire ordeal, take a deep breath and force yourself to get into a good mood. You want the tone of your letter to reflect someone who’s made a mistake and would be grateful if the creditor would be forgiving and lend a helping hand. Otherwise, they will quickly toss your letter into the nearest trash bin and move on.

You also want to refrain from pointing the finger at the creditor. The idea is that you’re taking responsibility for your wrongdoing and trying to make things right.

It’s also a good idea to explain why it’s so important to have the negative payment(s) removed. Are you purchasing a new home? Searching for that dream car? Whatever the reason is behind the letter, be sure to communicate it.

When writing your goodwill letter, include the following:

  • Current date
  • Creditor’s name and address
  • Account number
  • Formal request to have the late payment removed
  • The reason for the delinquency and your commitment to not letting it happen again
  • Any other applicable information (i.e. how the late payment is holding you back from making a big-ticket purchase or achieving a particular financial goal)

What Happens When You Send a Goodwill Letter?

Best case scenario: the creditor agrees that you deserve a second chance and removes the late payment(s) from your credit report with no hesitation. Your credit score improves instantly and you’re back on track.

Worst case scenario: the creditor ignores your request. In this case, don’t lose hope. There’s a possibility that your goodwill letter got lost in the mail and they didn’t receive. Or perhaps they reviewed your letter but it wasn’t convincing enough for them to help you out. The good news is you can always return to the drawing board and beef up the letter that it’ll be more convincing the next time around. It may take several rounds of revisions to convince the creditor to remove the late payment, but your efforts won’t be in vain.

Sample Goodwill Letter

(Current Date)

(Creditor’s Name)

(Creditor’s Address)

Re: (Account Number)

Dear (Member of Upper Management),

My name is (your name) and I am a proud (customer or account holder) of (creditor’s name). The reason for this letter is to thank you for providing me with exceptional service over the years and express a concern regarding an entry in my credit profile related to my account.

Approximately (insert the number of years) years ago, I opened my (credit card or loan) account with your company and consistently made payments on-time each month. However, I experienced (insert detailed description of the major life-changing event) and was unable to do so during the month of (insert month) 20xx.

As a result, a past-due payment of 30-days was reported to the credit bureaus. Since that time, I have gotten back on track and made all subsequent payments on time. I’ve also taken extra precautions that include creating a detailed budget, minimizing expenses, and creating an emergency fund to ensure that this does not happen again.

Unfortunately, that one negative mark is hurting my credit score and making it extremely difficult to (insert a detailed description of why you would like the negative mark removed). As a result, I am asking that you forgive this financial misstep made by me and grant me the opportunity to get my credit score back on track by revising the late payment noted on my credit report.

It is my hope that you and your team at (insert creditor’s name) will give me a second chance by making this goodwill adjustment on my behalf.

I am extremely grateful that you took time out of your busy schedule to read this letter. Thanks in advance for your assistance concerning this matter.

Warmly,

(insert typewritten name here)