When it comes to cold hard cash, are you a Penny or a Leonard? Or somewhere in between? The Nerds are gearing up for the season premiere of “The Big Bang Theory” in typical fashion: by evaluating each character’s financial style. Take our quiz to see which one you are.
When it comes to cold hard cash, are you a Penny or a Leonard? Or somewhere in between? The Nerds are gearing up for the season premiere of “The Big Bang Theory” in typical fashion: by evaluating each character’s financial style. Take our quiz to see which one you are.
Apple took the wraps off its iPhone 6 and the iPhone 6 Plus today, including a new mobile payment and digital wallet system called Apple Pay. Here’s how it may change the way owners of the smartphones handle their money.
Apple Pay will use near field communication (NFC) technology to make a wireless connection with a merchant’s cash register that’s in close proximity, letting customers pay with just a touch of their phone. This will remove from the transaction traditional card features that can make consumers vulnerable to fraud: exposed card numbers, security codes and the magnetic strips that hold the information. Apple Pay will generate a security code specific to each transaction for authentication purposes.
Owners can store their cards in Apple’s Passbook application by using the phone’s camera to take a picture of each one and verify account information with the issuing banks. The data are secured with TouchID, an Apple feature that lets phone owners use a fingerprint for authentication.
A consumer that loses a phone can use Apple’s Find My iPhone service to track down the device and avoid having to cancel cards stored on the handset. The company also introduced Apple Watch, which also can be used to buy things in stores with the mobile payments app.
Transactions made through Apple Pay reveal very little information to merchants. Cashiers don’t see your name, card number or security code, and Apple doesn’t get information about where you shopped, what you bought or how much you paid. To authorize a transaction, a consumer only needs to press the right finger to the phone screen using the TouchID system.
Apple Pay is supported by the three major U.S. credit card companies: MasterCard, Visa and American Express. These agreements may make it more likely to catch on than previously introduced mobile payment systems such as Google Wallet.
The biggest banks and card handlers – Bank of America, Wells Fargo, Citigroup, U.S. Bank, JPMorgan Chase, Capital One, United Services Automobile Association (USAA), Barclays, PNC Financial Services Group (PNC) and Navy Federal Credit Union – are all on board to handle transactions made with the Apple Pay. Between them, Apple says they handle 83% of credit card purchase volume.
Apple says 220,000 merchants accept mobile payment system transactions, including Macy’s, Bloomingdales, Walgreen’s, Staples, PetCo, Toys `R’ Us, Subway, Whole Foods, Disney, McDonald’s, Nike and more. Also signed up are Starbucks, Major League Baseball, Tickets.com, Instacart, Sephora and OpenTable.
Apple Pay will pair with e-commerce applications such as those used by Target, GroupOn, Uber and Panera. Users can make purchases through the apps and pay with one touch – no credit card number needed.
It’s too soon to tell how Apple Pay will be received by consumers and merchants. The new phones begin arriving Sept. 19, while consumers can start using Apple Pay at stores starting in October.
Apple logo via Shutterstock
Apple took the wraps off its iPhone 6 and the iPhone 6 Plus today, including a new mobile payment and digital wallet system called Apple Pay. Here’s how it may change the way owners of the smartphones handle their money.
Apple Pay will use near field communication (NFC) technology to make a wireless connection with a merchant’s cash register that’s in close proximity, letting customers pay with just a touch of their phone. This will remove from the transaction traditional card features that can make consumers vulnerable to fraud: exposed card numbers, security codes and the magnetic strips that hold the information. Apple Pay will generate a security code specific to each transaction for authentication purposes.
Owners can store their cards in Apple’s Passbook application by using the phone’s camera to take a picture of each one and verify account information with the issuing banks. The data are secured with TouchID, an Apple feature that lets phone owners use a fingerprint for authentication.
A consumer that loses a phone can use Apple’s Find My iPhone service to track down the device and avoid having to cancel cards stored on the handset. The company also introduced Apple Watch, which also can be used to buy things in stores with the mobile payments app.
Transactions made through Apple Pay reveal very little information to merchants. Cashiers don’t see your name, card number or security code, and Apple doesn’t get information about where you shopped, what you bought or how much you paid. To authorize a transaction, a consumer only needs to press the right finger to the phone screen using the TouchID system.
Apple Pay is supported by the three major U.S. credit card companies: MasterCard, Visa and American Express. These agreements may make it more likely to catch on than previously introduced mobile payment systems such as Google Wallet.
The biggest banks and card handlers – Bank of America, Wells Fargo, Citigroup, U.S. Bank, JPMorgan Chase, Capital One, United Services Automobile Association (USAA), Barclays, PNC Financial Services Group (PNC) and Navy Federal Credit Union – are all on board to handle transactions made with the Apple Pay. Between them, Apple says they handle 83% of credit card purchase volume.
Apple says 220,000 merchants accept mobile payment system transactions, including Macy’s, Bloomingdales, Walgreen’s, Staples, PetCo, Toys `R’ Us, Subway, Whole Foods, Disney, McDonald’s, Nike and more. Also signed up are Starbucks, Major League Baseball, Tickets.com, Instacart, Sephora and OpenTable.
Apple Pay will pair with e-commerce applications such as those used by Target, GroupOn, Uber and Panera. Users can make purchases through the apps and pay with one touch – no credit card number needed.
It’s too soon to tell how Apple Pay will be received by consumers and merchants. The new phones begin arriving Sept. 19, while consumers can start using Apple Pay at stores starting in October.
Apple logo via Shutterstock
If you’re coping with a mountain of student debt, you have a lot on your mind. Aside from how you’re going to make the payments, you’re probably also worried about how your loans are affecting your credit score.
Don’t worry, the Nerds are here to explain all the important details about the relationship between student loans and your credit. Let’s dive in!
First, take a moment to let out a sigh of relief: A huge amount of student loan debt won’t necessarily hurt your credit score.
If you’ve done some preliminary research about the factors that affect your credit, you probably noticed that “amounts owed” accounts for 30% of your score. But this is most heavily influenced by your credit utilization ratio on revolving credit accounts, like credit cards. Since student loans are installment loans, they don’t have a big impact on this portion of your score.
In fact, your student loans could potentially help your credit. If you pay your loans on time and in full, you’re going to bolster the part of your score that’s determined by payment history. Since this makes up 35% of your overall score, you could get a boost from handling your student loans responsibly.
Plus, having an open installment loan may also improve the 10% of your score that comes from the types of credit you have in use. Lenders like to see that you’re good at managing different varieties of borrowed money, so having both revolving and installment accounts on your credit report is beneficial.
Although making your student loan payments on time is a good way to keep your credit score humming, it’s worth noting that a heavy student debt burden could still interfere with your ability to get other loans.
This might seem counterintuitive, because you probably know that good credit is key to qualifying for financing on competitive terms. But your student loans will have an impact on another key variable lenders look at when they’re deciding whether to extend you credit: your debt-to-income ratio (commonly abbreviated DTI).
Your DTI is the ratio of your monthly obligations to your gross monthly income. We’ll use an example to illustrate this point: Let’s say you’re making an annual income of $50,000 in your first job out of college. In this case, your gross monthly income would be $4,166.67 ($50,000/12).
Let’s assume you’re paying $800 per month in rent, $250 on your car payment, and $650 toward your student loans. Your total monthly obligations would be $1,700 ($800+$250+$650).
To figure out your DTI, you’d do a simple division problem:
$1,700 (your total monthly obligations)/
$4,166.67 (your gross monthly income) =
40.8% (your DTI)
Most lenders like to see a DTI of 36% or less; if your student loans are pushing your DTI above that mark, you might have trouble getting another loan.
So it turns out that student loans can be helpful or hurtful when you’re trying to get financing for a car or a home after college. They could boost your credit score, but there’s also the possibility that they’ll drive up your DTI.
Luckily, the Nerds have a few tips for successfully managing your student debt so that you’ll be well-positioned for a bright financial future:
The takeaway: A huge student loan bill won’t necessarily hurt your credit score, but it could make getting other loans more difficult. Use the Nerds’ tips above to manage your student debt effectively!
Student loans image via Shutterstock
If you’re coping with a mountain of student debt, you have a lot on your mind. Aside from how you’re going to make the payments, you’re probably also worried about how your loans are affecting your credit score.
Don’t worry, the Nerds are here to explain all the important details about the relationship between student loans and your credit. Let’s dive in!
First, take a moment to let out a sigh of relief: A huge amount of student loan debt won’t necessarily hurt your credit score.
If you’ve done some preliminary research about the factors that affect your credit, you probably noticed that “amounts owed” accounts for 30% of your score. But this is most heavily influenced by your credit utilization ratio on revolving credit accounts, like credit cards. Since student loans are installment loans, they don’t have a big impact on this portion of your score.
In fact, your student loans could potentially help your credit. If you pay your loans on time and in full, you’re going to bolster the part of your score that’s determined by payment history. Since this makes up 35% of your overall score, you could get a boost from handling your student loans responsibly.
Plus, having an open installment loan may also improve the 10% of your score that comes from the types of credit you have in use. Lenders like to see that you’re good at managing different varieties of borrowed money, so having both revolving and installment accounts on your credit report is beneficial.
Although making your student loan payments on time is a good way to keep your credit score humming, it’s worth noting that a heavy student debt burden could still interfere with your ability to get other loans.
This might seem counterintuitive, because you probably know that good credit is key to qualifying for financing on competitive terms. But your student loans will have an impact on another key variable lenders look at when they’re deciding whether to extend you credit: your debt-to-income ratio (commonly abbreviated DTI).
Your DTI is the ratio of your monthly obligations to your gross monthly income. We’ll use an example to illustrate this point: Let’s say you’re making an annual income of $50,000 in your first job out of college. In this case, your gross monthly income would be $4,166.67 ($50,000/12).
Let’s assume you’re paying $800 per month in rent, $250 on your car payment, and $650 toward your student loans. Your total monthly obligations would be $1,700 ($800+$250+$650).
To figure out your DTI, you’d do a simple division problem:
$1,700 (your total monthly obligations)/
$4,166.67 (your gross monthly income) =
40.8% (your DTI)
Most lenders like to see a DTI of 36% or less; if your student loans are pushing your DTI above that mark, you might have trouble getting another loan.
So it turns out that student loans can be helpful or hurtful when you’re trying to get financing for a car or a home after college. They could boost your credit score, but there’s also the possibility that they’ll drive up your DTI.
Luckily, the Nerds have a few tips for successfully managing your student debt so that you’ll be well-positioned for a bright financial future:
The takeaway: A huge student loan bill won’t necessarily hurt your credit score, but it could make getting other loans more difficult. Use the Nerds’ tips above to manage your student debt effectively!
Student loans image via Shutterstock
One of the most confusing concepts regarding credit of any kind is the difference between APR and interest rate. Most people use these terms interchangeably, but technically they mean different things. So does the difference matter when it comes to your credit card?
Let’s first sort out the technical differences of the terms when it comes to credit in general.
The interest rate is the actual interest you pay on a given credit balance, expressed in percentage terms. This is sometimes referred to as the “nominal interest rate.”
So if you go to the bank and take out a mortgage loan, and you only consider the actual interest you are paying on that mortgage, that’s the nominal interest rate. If you are paying 5% per year on a $100,000, 50-month term loan, you would pay $5,000 in interest.
APR stands for Annual Percentage Rate. The Truth in Lending Act, as well as Regulation Z and a host of individual state laws, requires that all loans be expressed as APR. That’s because APR will also factor in all fees, closing costs and anything else associated with the loan.
Let’s go back to that mortgage. Suppose there were $5,000 in fees on top of that $100,000 mortgage, bringing the total amount you are actually financing to $105,000. Let’s say that $5,000 in fees is spread across the 50-month loan equally. That would mean you would pay an extra $100 per month, for a total of $5,100.
Your APR would be 5.1%.
Regulations require that APR be disclosed to us borrowers so that we can make an apples-to-apples comparison on loans. That way, since different lenders offer different interest rates and fees on loans, we can boil it all down to a single number to see what the best APR is.
Now, let’s look at APR vs. interest rate and see if the difference matters for your credit card.
The same concepts apply, but the names are different. “Nominal interest rate” in the world of credit cards is called “nominal APR.” “APR” is referred to as “effective APR,” and, like other loans, it includes fees.
However, when it comes to credit cards, there generally are few or no fees. In fact, if your credit card is charging you fees other than an annual fee for having the card, you probably have a lousy deal.
The only other fees generally seen are late fees or over-the-limit fees. These may not even show up as effective APR rates. They may simply get tacked on to whatever minimum payment you have that month. Some cards may fold these fees into your nominal APR, which will create a very slightly higher effective APR.
Businessman image via Shutterstock.
