Categories
Economy

Stock Market Crash Prediction

We will discuss the next stock market crash prediction as well as the history of stock market crashes. There have been at least 6 great stock market crashes in the past 100 years. We will also discuss the lessons learned from each crash.

Current Economic Crisis in the United States

Debt and Unemployment are High, Interest Rates Low and COVID-19 Strikes; The Stock Market is Soaring – Something is Wrong!

According to Experian data, consumer debt has grown to well over $14 Trillion. Debt for Americans has been increasing steadily since at least 2009. This debt includes things like credit cards, home loans, vehicle loans and student loans.

In addition, Americans are struggling financially right now because of COVID-19 shutdowns. Many people live paycheck-to-paycheck and have no savings. As a result, a sudden loss of employment caused them to face economic ruin or bankruptcy.

According to the Bureau of Labor Statistics, 13% of Americans were unemployed in May 2020. In addition, 30 Million Americans filed for unemployment benefits in June 2020, approximately 10% of the entire US population (Source: CNBC News).

The coronavirus outbreak of 2020 has had big impacts on the US economy. Big layoffs and job losses have occurred continuously in 2020. For example, Disney and MGM have laid off thousands of workers. These layoffs mean that these former employees will be struggling to make ends meet and will not be buying new homes.

In the past, crises hit the United States, but we recovered. However, this time it may be different. Using the aforementioned data will assist us in making the next stock market crash prediction.

History of Market Crashes and The Next Stock Market Crash Prediction

The Wall Street Crash of 1929

On Black Tuesday, October 29, 1929, the New York Stock Exchange collapsed. Ultimately, this led to the Great Depression that occurred beginning in the 1930s. It was one of the most severe financial events ever in the United States. Wall Street stock prices did not recover for years. As a result, many businesses and individuals were financially ruined. In addition, the depression lasted for more than a decade and changed a generation forever.

1973-1974 Stock Market Crash

Between 1973 and 1974, the Dow-Jones Industrial Average fell 46%. In addition, unemployment in the United States was at 8.5%, doubling from just a few years prior. The gross domestic product for the U.S. declined by more than 2%. The crisis was related to the 1973 oil embargo crisis, which caused a spike in prices from lower supply. As a result, consumers suffered greatly from price shocks. This era was known for its recession and stagflation (when unemployment and inflation are high). In addition, this was the climax of a decade where the stock market returns were negative or nominal for most investors.

Black Monday 1987

October 19, 1987 was the day when stock markets worldwide declined to levels that had never been experienced. As a result, this day was known as Black Monday. First, the crash occurred in Asia. Next market numbers began to drop in London. Finally, the crash came home to America where the Dow Jones Industrial Average fell 22% for the day. It was known as the worst day in Dow history. In addition, the situation was apparently made worse by rapid computer trading.

The Dotcom Bubble

In 2000, Investors Lost 50% of Investments When the Dot Com Bubble Burst

In the 1990s there was a surge of new, online companies who went public on wall street. The world was filled with excitement for internet development and adoption. As a result, a kind of mania formed where people were wildly investing in any company with an internet presence. For example, Pets.com went public with a stock offering in an initial public offering (IPO). Ultimately the company failed and people lost money who invested.

Most of the companies that went public with an IPO of stock were severely overvalued. A bubble subsequently formed in the stock market. And on March 10, 2000, the NASDAQ reached its zenith. As a result, the bubble experienced a price correction.

The Dot Com Bubble that began in March 2000 caused the S&P 500 Index to drop almost 50%. This bubble bursting lasted until 2007. That means that if you were planning to retire in 2000, and many of your investments were locked into a Wall Street 401(k) that fell 50%, you couldn’t retire. Many people at this time were forced to return to work because they couldn’t afford to retire.

Currently, Wall Street stock prices are at record-breaking levels. Prices are high, interest rates are low, and everyone is cheering the mania. Many are questioning whether this will end badly like in 2000 and 2008. Clearly purchasing power risk is a big factor when markets are at all-time highs. It seems clear that the next stock market crash prediction will be worse than in 2000.

The Subprime Mortgage Crisis of 2007-2008

“The United States subprime mortgage crisis was a nationwide financial crisis that occurred between 2007 and 2010 and contributed to the U.S. financial crisis. It was triggered by a large decline in home prices after the collapse of a housing bubble, leading to mortgage delinquencies, foreclosures, and the devaluation of housing-related securities.”

-Wikipedia.com

The subprime mortgage crisis led to the Great Recession of 2007-2009. Extensive de-regulation of the financial industry beginning in the 1990s led to risky bets on Wall Street. Standards for lending and investing were lowered so that anyone could borrow money to buy homes. In addition, Wall Street began trading financial instruments such as derivatives that were very risky.

This crisis resulted in a huge purchasing power risk for everyday consumers. Although some people lost jobs, the effects were mostly felt by lower housing prices in the real estate market. The markets quickly recovered within a few years. However, it is evident that the next stock market crash prediction will be worse.

The 2010 Flash Crash

On May 6th, 2010, a rapid decline in the US stock market occurred. For 36 minutes, billions of dollars were lost from prices of some American companies. Although the drop in prices was rapid and severe, the long-term effect on the US economy was minimal.

The explanations for the crisis included fall out from Greek debt crisis and the UK general election. In addition, some pointed to a ‘fat-fingered’ trading and an illegal cyberattack. However, a joint report by the SEC and CFTC (American regulatory agencies) gave the opinion that the price movement could have been caused by the combination of existing market conditions and a huge automated sell order.

2020: Another Economic Crisis

Debt, Mortgages and Home Foreclosures in the United States

  • Total Debt to GDP for the United states is over 150%
  • The Federal Reserve currently owns approximately 30% of all mortgages in the U.S. today (over $2 Trillion)
  • US National Debt is now over $26 Trillion
  • Home foreclosures are beginning to increase

Alarming Trends at the Federal Reserve and Debt-to-GDP Ratio

Two alarming trends are that the debt to GDP ratio is at 150% and that the Federal Reserve Bank owns 30% of US mortgage securities. First, most experts agree that when the debt-to-GDP ratio climbs higher than 100%, you are in the economic danger zone. Historically, high debt-to-GDP ratios have ended badly.

Unfortunately, this is bad news for the United States economy. As a result, people’s investments and retirements could be badly damaged. Moreover, purchasing power risk will be astronomical if the US economy descends into hyperinflation. Prices of goods and services may go much higher as wages stay the same. For example, hyperinflation has occurred recently in places like Venezuela, Zimbabwe and Argentina. Furthermore, it could easily happen in the USA. However, the next stock market crash prediction would clearly overshadow these crises.

Stock Market Peak of 2020

The Current State of Wall Street, Stocks at All-time Highs and Unemployment

On December 29, 2020 the S&P 500 Index, hit 3,739, the highest it has ever been. The S&P 500 is a measure of some of the largest traded stocks on Wall Street. As a result, the U.S. stock market is literally at its peak right now. In addition, real estate prices are at record highs in many places in the United States. Despite official statistics posted by the US Government, many experts are concerned about inflation, which equates to higher asset prices. As a result, the next stock market crash prediction could be the worst in history.

However, juxtaposed to the Wall Street high are the U.S. unemployment numbers. Unemployment is at a record high as well. According to the Bureau of Labor Statistics, 13% of Americans were unemployed in May 2020. In addition, 30 Million Americans filed for unemployment benefits in June 2020. This is approximately 10% of the entire US population (Source: CNBC News).

Next, here are basic statistics that we can use to help with stock market predictions for 2021:

  • US National Debt is now over $26 Trillion
  • Total Debt to GDP for the United states is over 150%
  • The Federal Reserve currently owns approximately 20% of all mortgages in the U.S. today (approximately $2 Trillion)
  • Home foreclosures are beginning to increase
  • Interest rates are at an all-time low and can’t go much lower

The COVID-19 Pandemic and Federal Reserve Money Printing

In 2021, money managers have to make tough decisions about re-balancing portfolios with stocks, bonds, precious metals and even cryptocurrencies. They will have to determine if the stock market is in a bubble and if so, where to safely store investor’s money. In reality, the stock market cannot continue to rise when people are losing jobs, real inflation is increasing and the US National Debt grows out of control.

In reaction to the COVID-19 pandemic, The U.S. Government borrowed more than $3 Trillion to pay for stimulus. This included payments to governments for supplies, individual payments to citizens and loans and grants for businesses affected by the pandemic.

At the same time, the U.S. Treasury and the Federal Reserve Bank have been working overtime to print money. As a result, the next stock market crash prediction will likely arrive quicker.

“It works like magic. With a few strokes on a computer, the Federal Reserve can create dollars out of nothing, virtually “printing” money and injecting it into the commercial banking system, much like an electronic deposit.By the end of the year, the Fed is projected to have purchased $3.5 trillion in government securities with these newly created dollars…”

USA Today Article, May 13, 2020

Why the Stock Market May Be Overvalued

Stock Buybacks and FAANG Stocks Tilt Market Balance

One other economic concern in the stock market is stock buybacks or “share buybacks.” Stock buybacks are when a company uses cash to repurchase their own stocks. Stock buybacks typically occur when a company has extra cash to spend or when the company can borrow money at a low rate of interest. The result of buybacks is usually an artificially high price for their stocks. When many companies on Wall Street conduct stock buybacks, it can appear as if we’re in a “bull market” and prices are climbing higher.

In addition, the FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) have had an oversized impact on Wall Street. These tech companies are enormous in size and their movements on the stock market can sway whether the market, as a whole, is up or down. For example, Apple has a valuation now of approximately $2 Trillion, higher than any other publicly traded company.

Investors may get the impression that the market is doing well overall, when in fact, only the FAANG stocks may be up in price. This gives the impression that prices for the market are higher, even though many other much smaller industries may be in decline. Finally, the next stock market crash prediction will be a surprise to those who do not understand this concept.

What It All Means: Asset Bubble

It is impossible to predict what will happen in the stock market. Is it a good time to buy stocks? Information and data shared above seems to indicate that prices are at all-time highs and we may be in a bubble. A bubble occurs when prices go up much faster than other indicators in the economy. As a result, this may be a dangerous time to be buying stocks.

Next Stock Market Crash Prediction

The past is never a good indicator for what may occur in the future. However, in this case there are clues that point to where we may be headed economically. We can expect more inflation in the United States and expect the US Dollar to be weaker in purchasing power over time.

What we know is that real estate and the US stock market has been in a bubble for years because of low interest rates. Money printing by the Federal Reserve Bank has also contributed to the problem. Prices have gone too high, too fast. As a result, what goes up, must come down. Our next stock market crash prediction will materialize as an economic crisis. It is likely that sometime in 2021, there will be a severe stock market correction. The question is how long it will last.

Unfortunately, the United States began a recession in late 2020. Home foreclosures, unemployment and GDP all have growing negative sentiment for 2021. In addition, it appears likely that the recession will degrade into full-blown depression in 2021. It seems that we will have to navigate a depression for a few years before things begin to improve in the next 5 years or so.

Read More:

Real Estate Market Predictions

Questions for a Financial Advisor

Financial Planning Process

Wealth Building Cornerstones

Value Investing Books

How Much Savings You Should Have at 40

Why Saving Money is Important

The Best Budget App

10 Things to Know Before Starting a Budget

Debt Elimination

Disclaimer:

It is important to note that Piggy Bank Coins does not provide financial advice. We do not endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.

In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, to help you make the best choice for you.

Categories
Loans

2nd Chance Banking

We will discuss 2nd chance banking for individuals with bad credit or with no credit. In addition, we will explain how credit works, improve your credit score and better understand money.

In the modern banking era, it is easy for individuals to fall behind or make mistakes with money. For example, if a person misses a payment on a loan or over-drafts their bank account, there can be serious consequences. Furthermore, your credit and ability to borrow money can be damaged. As a result, it is important to understand how to avoid the negative consequences that lead to 2nd chance banking.

However, for those that need a helping hand to get back on their fiscal feet, many banks and lenders are now offering 2nd chance banking. Historically, lenders were hesitant to work with individuals who had bad credit or a history of bad financial decisions, like charge offs or loan defaults. However, today the financial world is changing rapidly. Furthermore, lending is becoming less decentralized and more competitive. As a result, bank customers who are searching for 2nd chance banking have more options.

What is 2nd Chance Banking?

Offering credit and banking options to those who may have made some financial mistakes in the past is what 2nd chance banking is all about. If your credit is bad or you have bankruptcy in your past, 2nd chance banking is an option for you. Moreover, if you are willing to do the work, 2nd chance banking is your opportunity to improve your credit and move up in life.

Lenders and Borrowers Have Different Ideas of How Much to Borrow; Easy Credit and Low Interest Rates Have Made Borrowing Easy

Often, families struggle to pay off debt or even make minimum payments on their debt. People lose jobs, get divorced or encounter other financial hardships that make it difficult to continue debt payments. Not being able to make payments can make you feel like you are drowning in debt. However, 2nd chance banking may be an option for you in this situation.

When a person initially borrows money for a house or a car, they make an estimation of what they can afford. For example, if you make $35,000/year and you have other bills, you know that you probably shouldn’t borrow $120,000 for a new Ferrari sports car. This amount of debt would be beyond your ability to re-pay.

However, in the 21st century, lenders have made borrowing larger sums of money much simpler and easier. Record low interest rates and low barriers to credit have made borrowing money a dicey game. On the one hand, sales people who work for lenders frequently benefit from making more loans to clients, whether the client can re-pay the debt or not. Yet, clients may be unaware of the difficulty of repaying the loans because of the loan terms or changing circumstances.

List of Potential Second Chance Banks:

  • OneUnited Bank
  • BBVA
  • Chime
  • Axos
  • GoBank Online Checking
  • Bank of America
  • Wells Fargo
  • First American Bank
  • Radius Bank
  • Fifth Third Express Banking
  • Aspire Federal Credit Union

Many of these second chance banks offer reasonable fees, free perks and more. However, keep in mind that some of them have drawbacks, like high overdraft fees and monthly service charges. Do your research before signing up for an account.

Regarding 2nd Chance Banking, it is important to note that you still may have difficulty for some time if your credit is bad or you have a bankruptcy. Bad credit history tends to follow people around for years. In addition, 2nd chance banking won’t magically fix your problems; however, what 2nd chance banking can do is give you the opportunity to make better financial decisions. Also, if you are responsible and make payments on time while paying down debt, your credit score will improve.

How Credit Cards Work

A credit card looks just like a normal debit card. It is a thin, rectangular piece of plastic that has “Visa” or “Mastercard” stamped on it. It is normally embossed with your credit card number. The number is usually approximately 16-digits. In addition, it also has an expiration date and a 3-digit verification number on the back of the card. Furthermore, your credit card can have a PIN number assigned to it for purchases, or it can simply be swiped. Clearly, when you learn about credit you should understand the power of the credit card. If you lose it or it is stolen, someone else can pretty easily use it, so guard it when you can.

Also, it is important to know that using a credit card to spend is easy and fun. However, paying the bill at the end of the month is not necessarily easy or fun. Furthermore, it is also important to understand that each time you swipe your credit card, you are borrowing money from the bank. If you understand debt and credit, then you understand that you must pay the money back to the bank, with interest. If you damage your credit significantly, you may not be eligible for 2nd chance banking.

What is Credit?

Credit is simply a loan from a bank. It is easy to forget that you are borrowing money when all you have to do is swipe your card and purchase items. However, a credit card is just a line of credit extended to a credit card user for a loan. Moreover, in CREDIT you learn that credit card companies are in business to make money by collecting interest on your purchases. Finally, credit card companies love it when you have a revolving balance because you pay them interest each month, year after year.

Interest Rates and Compounding Interest

The second thing to know about CREDIT is that banks that issue credit cards make money from users by charging the users an interest rate. In addition, credit card users carry a revolving balance on their cards each month. Furthermore, this is simply the amount of money that users owe the bank at any given time during the month. The credit card issuer uses this revolving balance value to calculate your minimum payment. It also helps them determine how much interest you will pay. Finally, your interest rate determines exactly how much you are charged each month on the balance owed.

For this CREDIT example, let us say that you spent $100 on a credit card shopping spree. To simplify the example, we will assume that the interest rate charged on the card is 15%. Specifically, after the purchase, you will receive a bill from the credit card company indicating that your balance is $115 ($100 + $15 in interest). Obviously, this is an over-simplified example. But you get the picture.

Thirdly, another important concept to get when thinking about CREDIT is compounding interest. Consequently, compounding interest is when the interest on a balance begins to snowball and grow faster and faster over time. For example, in the above example, you accrued $15 in interest in the first month. In contrast, if you didn’t pay toward the balance, then in month number two, you would owe $115 plus 15% more interest ($115 + $17.25 = $132.25). Again, this is over-simplified to help you understand interest rates. If you miss a payment, there would also be a late fee and your interest rate might increase as well!

Monthly Payments, Minimum Payments and Fees

The third thing to know regarding CREDIT is payments and fees on credit cards. Each month, credit card users must make a payment to their credit card balance if they have a revolving balance. Moreover, this means that if you purchased something last month using your credit card, then you must pay towards that balance using real money from your bank account. Normally, the credit card company asks you to make a minimum payment. The minimum payment is usually around 2% of the revolving balance. However, in many cases, if your revolving balance is low, then a baseline minimum payment will apply. Normally, this is $25-45 each month.

When considering the basics of CREDIT, consider that fees usually apply to credit cards. It is common for some credit cards to charge an annual fee, especially if the card advertises member benefits, such as frequent flyer miles or cash back. In addition, there are fees to penalize you for not making payments, or being late on payments. As a result, getting late payment fees can really add up and hurt you by increasing your balance, driving up your interest rate and freezing your credit line.

Credit Scores and Ratings

When discussing credit scores, there is a numerical range that most creditors use to rank borrowers. Moreover, the numerical range of credit scores is typically between 300 to 850. Specifically, a score of 300 is the lowest score and 850 is the highest credit score. Otherwise, if you have no credit history than you will not have a score. The FICO Credit Scoring model is the most common scoring system used by lenders. Obviously, if your score is low, then you will need the help of 2nd chance banking.

Where do Credit Scores Come From?

One thing to know when learning CREDIT is where credit scores come from. Namely, there are three primary credit bureaus that track credit information. The credit bureaus are Equifax, Experian and TransUnion. Consequently, these credit bureaus consolidate your credit information, such as each debt you have and the amount of money you owe. As a result, lenders use one or more of these credit bureaus to determine whether to lend money to borrowers.

There are 3 major things that you need to remember when learning how to build credit:

  • Always make payments on time
  • Never use more than approximately 30% of your available credit
  • Monitor your credit score closely each month

Always Make Loan Payments on Time

One of the most powerful things that you can do learning CREDIT is to make payments on time. The credit reporting agencies track whether each payment you make on your loans, credit card, etc. are on time. If your payments are reported as late to the credit reporting bureaus it can hurt your credit score significantly. So, always make payments on time. One simple trick to make sure that payments are made on time is to have the payments automatically drafted from your bank account each month.

Never Use More Than Approximately 30% of Your Available Credit

Second, when learning CREDIT, you should never utilize more than 30% of your available credit. For example, if you have a credit card with a $1,000 limit, then you should never allow the credit card balance to exceed $300. The credit reporting bureaus like to know that you have credit but you are not using too much. In many cases, if a person utilizes all or the majority of the credit limit that is allowed, it can be difficult to pay back. In addition, remember that you are trying to build a positive credit history. To do this requires discipline and will power.

Monitor Your Credit Score

Finally, throughout the process of learning CREDIT, you must monitor your personal credit score. There are businesses and credit cards that will provide this information for free. Moreover, there are also companies that specialize in monitoring and protecting your credit. In addition, the Federal Trade Commission (a government agency that regulated credit) can help you obtain resources for monitoring your credit.

How to Build Credit

When it comes to credit scores, you should know that building credit is slow. Accordingly, there are several things you should know about credit scores. First, you should know that it takes time to build good credit. Getting good credit can take many years. In addition, achieving an 800 or greater credit score typically takes many years.

Here are some additional tips for how to build and improve your credit along the way.

Establish a Credit History

Unfortunately, to have credit you must establish credit. When you have little or no money and you are just starting out, most lenders don’t want to lend to you. However, there are some options for you to consider. Specifically, here are some suggestions for how to build credit.

Get Started Building Credit with Small Debt like Credit Cards or Borrowing with a Cosigner

First, to start establishing a credit history you can have a friend or family member cosign a loan for you. Namely, a cosigner is someone who already has good credit and who will sign a lending contract with you. Moreover, the cosigner acts as a sort of backup or a supporter for you in the lending contract. Banks and lenders like cosigners because they have an established track record for borrowing. In addition, the lender will assess the cosigner’s credit prior to lending to you both. If, for some reason, you are unable to re-pay the loan to the lender, the cosigner is responsible for paying the remainder of the loan.

Second, you can apply for a credit card. Furthermore, many credit card companies will lend to those who have little or no credit history. Specifically, credit card companies are willing to take the risk of lending to new borrowers because the interest rates for these credit cards are typically pretty high. Of course, high credit card interest rates make lending very profitable for banks and credit card companies.

Although your first credit through a credit card or other debt will be minimal, you will have the opportunity to begin building your credit score. For example, your first debt will be like planting a seed; you must water it and take care of it for it to grow into something bigger.

Credit Card Hack: Authorized User

Another option is to become an authorized user on someone else’s credit card. For example, if you father, mother, sister, brother or other family member has a credit card, you can request for them to add you as an authorized user on the card. Most credit cards will report each month’s activity to the credit reporting bureaus. In turn, this reporting will include your name and begin establishing a positive credit history for you. However, it is important that if you become an authorized user on someone else’s card, that you choose someone with good credit and who will make on time payments. Otherwise, their bad behavior will negatively affect your credit history.

Finally, you may be able to secure a student loan if you are attending college. Some loans may allow you to sign for the loan by yourself. Other loans may require you to have a co-signer or co-borrower. If you are able to secure student loan debt it can boost your credit score in the long run and help you build up your credit. However, keep in mind that student loans must be paid back. Laws have changed in recent years and most student loans cannot be discharged in bankruptcy. As a result, you will pay back the loan whether you like it or not.

Take on Healthy Levels of Debt

Most people know that when you borrow money, there is a limit to how much you can borrow. Moreover, lenders make the decision to lend to a borrower based on credit score, credit history earning power (income) and debt-to-income ratio. However, one little secret that many people don’t know is that not only can you have too much debt, but you can also have too little debt!

When you are trying to achieve a tier 1 credit score, many creditors like to see that you have some debt. In addition, creditors want to see that you are consistently making payments towards that debt. The financial industry has the expectation that most people will carry debt. People buy homes, cars and even have credit card debt. However, if you pay your debt off two quickly, it may hurt your credit score.

Maintain Revolving Credit

When considering paying off debt completely, think again. Paying off debt is an admirable goal. However, consider that your credit score may go down if you pay off all your debt. In contrast, one option for you when debt is paid is to maintain revolving credit. For example, you can use a credit card each month for purchases. Furthermore, you can use the credit card to pay for normal expenses like groceries and gas. Then, at the end of each month, pay the balance owed. As a result, your credit report should respond positively to consistent, timely payments. And you will have the satisfaction of knowing you are staying debt free.

Pay Bills Consistently

As stated before, when you are figuring out how to build credit, you will need to consistently pay down debt over the length of the loan. For example, if you have a car payment set up for 60 months, then be sure to pay at least the minimum payment on time each month for the majority of the loan. Furthermore, don’t miss payments and be consistent. Finally, if you decide to pay off your loan a little early, that is ok too.

A Word of Warning

There are Inherent Risks with Borrowing and Debt Must be Repaid

It’s important to understand the potential repercussions of credit cards. In fact, borrowing money is always risky business, whether it’s through a credit card, loan or line of credit. Sometimes accepting the money seems harmless. Furthermore, you may be exacerbating your financial problems by taking on more debt. In short, heed the warning that debt must be paid back, including interest on a time schedule.

In addition, understand that borrowing money can place pressure on your assets with liens or other legal instruments. Consequently, in the event that you are unable to make your payments, the lender can take your asset, such as a home or car. When you borrow more money, you also take on more financial risk and stress.

2nd Chance Banking Wrap Up

Hopefully this article has helped you appreciate that 2nd chance banking may be an option for you. In addition, we have laid out some information about personal finance, banking and credit. Partnering with the right second chance bank can help you get back on the right financial track if you have the discipline to follow through.

Read More:

Drowning in Debt

What is Tier 1 Credit

10 Things to Know Before Starting a Budget

Debt Elimination

How Much Was a Dollar Worth in 1960?

The Best Budget App

Buyer’s Guide for Used Cars

The Best Budget App

Why Saving Money is Important

Financial Planning Services

Value Investing Books

Disclaimer:

It is important to note that Piggy Bank Coins does not provide financial advice. We do not endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals, and some equities.

In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, to help you make the best choice for you.

Categories
Debt

Macy’s Credit Card Payment

We will discuss your Macy’s credit card payment, the benefits of the Macy’s credit card and how to better manage your money and your credit score. We will also show you ways to get out of debt.

If you are searching for the Macy’s credit card payment login, click Here.

The Macy’s credit card offers a lot of perks and benefits for users. First, you may be eligible for up to 5% back in rewards on Macy’s purchases. To qualify for the maximum Platinum card, you must spend more than $1,200 annually. There’s also the Macy’s Gold Card and the Macy’s Silver and Bronze Cards as well. These cards offer lower rewards for purchases.

Here’s a breakdown of the benefits currently offered by the Macy’s credit cards:

Platinum (spend more than $1,200 annually at Macy’s)

  • 5% back in rewards on Macy’s purchases
  • Free Shipping, no minimum at Macy’s with Macy’s credit card
  • 25% Off any day w/ Star Passes
  • Star Money Bonus Days
  • Perks/Offers: special deals/offers based on your favorites
  • Birthday Surprise on your birthday
  • Earn rewards outside of Macy’s (3% at restaurants, 2% at gas/grocery, 1% everywhere else)
  • Easy online Macy’s credit card payment

Gold (spend $500-$1,199 annually at Macy’s)

  • 3% back in rewards on Macy’s purchases
  • Free Shipping, no minimum at Macy’s with Macy’s credit card
  • 25% Off any day w/ Star Passes
  • Star Money Bonus Days
  • Perks/Offers: special deals/offers based on your favorites
  • Birthday Surprise on your birthday
  • Earn rewards outside of Macy’s (3% at restaurants, 2% at gas/grocery, 1% everywhere else)
  • Easy online Macy’s credit card payment

Silver (spend $1 – $499 annually at Macy’s)

  • 2% back in rewards on Macy’s purchases
  • 25% Off any day w/ Star Passes
  • Star Money Bonus Days
  • Perks/Offers: special deals/offers based on your favorites
  • Birthday Surprise on your birthday
  • Earn rewards outside of Macy’s (3% at restaurants, 2% at gas/grocery, 1% everywhere else)
  • Easy online Macy’s credit card payment

Bronze (no spending minimum annually at Macy’s)

  • 1% back in rewards on Macy’s purchases
  • Star Money Bonus Days
  • Perks/Offers: special deals/offers based on your favorites
  • Birthday Surprise on your birthday
  • Earn rewards outside of Macy’s (3% at restaurants, 2% at gas/grocery, 1% everywhere else)
  • Easy online Macy’s credit card payment

Statistics on Debt

Mortgages, Credit Card Debt, Auto Loans and Student Debt Increased in 2019

Mortgage loans are by far the largest portion of debt for consumer loans. The majority of American families that buy a home need financing. According to the Federal Reserve, approximately 2/3 of families in 2019 held mortgage debt on their home. And many consumers are drowning in debt.

Debt from credit cards is the most widely held and most common debt among different groups of consumers. This group is also the one who are typically over their heads in debt. In 2019, the median balance for credit card debt was $2,700. According to Federal Reserve data from 2016-2019, credit card debt among families increased. Unfortunately, approximately 45% of all families carry a credit card balance of some kind.

Student debt is the greatest source of debt outside of mortgage debt. According to US News & World Report, the average total debt of graduates who took out loans exceeded $30,000 in 2019. This number has been increasing since at least 2019, when graduates only had approximately $23,700. According to Federal Reserve data, from 2016-2019 student loan debt among families increased by 10%.

Auto loan debt has been skyrocketing for consumers for years. According to Experian, approximately 85% of all new vehicles are financed. In addition, there was approximately $1.2 Trillion of outstanding auto loans in the United States in 2019, up approximately 15% in the past 3 years.

Debt and Loan Payment Challenges

Lenders and Borrowers Have Different Ideas of How Much to Borrow; Easy Credit and Low Interest Rates Have Made Borrowing Easy

Often, families struggle to pay off debt or even make minimum payments on their debt. People lose jobs, get divorced or encounter other financial hardships that make it difficult to continue debt payments. Not being able to make payments can make you feel like you are drowning in debt.

When a person initially borrows money for a house or a car, they make an estimation of what they can afford. For example, if you make $35,000/year and you have other bills, you know that you probably shouldn’t borrow $120,000 for a new Ferrari sports car. This amount of debt would be beyond your ability to re-pay.

However, in the 21st century, lenders have made borrowing larger sums of money much simpler and easier. Record low interest rates and low barriers to credit have made borrowing money a dicey game. On the one hand, sales people who work for lenders frequently benefit from making more loans to clients, whether the client can re-pay the debt or not. Yet, clients may be unaware of the difficulty of repaying the loans because of the loan terms or changing circumstances.

How Do I Get Out of Debt?

The first step to getting your head above water and paying down debt is to assess your financial situation. You must begin understanding what has brought you to large amounts of debt (hint: your Macy’s credit card payment is one of these things). Begin to look in detail at how you spend money and create a budget. You will also start making plans and setting goals. In addition, you will learn discipline and begin using proven methods for keeping more money.

Create a Budget Now

One of the best ways of paying down debt is to learn to budget. That is, it’s important to keep track of your money. And a budget helps you achieve that objective. Having a balanced budget means spending less of your paycheck. Preferably, you will have some money left over to pay off debt and save for the future. In short, everyone should budget, whether you are a large corporation or just one person.

Live below your means

Eliminate Unnecessary Expenses: Dining Out, New cars and Designer Clothing

In many cases, frugal living is the cornerstone of financial success. This simply means spending less than you make. Moreover, creating a simple monthly budget can assist you in determining whether you are meeting your goal. In addition, learning to be frugal can help you steer clear of debt in the future. For example, when you eliminate extra expenses that are unnecessary, you will have more disposable income available for saving. As a result, your savings from disposable income are how to save money from salary.

Cut Expenses and Control Spending

List Items to Remove from Your Budget: Memberships, Subscriptions, Etc.

No matter what kind of budget you have, it’s critically important that you cut expenses. Before you start your budget, begin finding areas in your life where you can make cuts. Cutting expenses will help you discover how to save money from salary.

It is helpful to make a list of what expenses are needs and wants. For example, paying for electricity is needed; having a spa membership is a want.

In addition, you will also want to figure out ways to cut spending. This will help you save more money quickly. Ideas for Budget Items to Cut:

  • Memberships (Spa, Gym, Entertainment, etc.)
  • Subscriptions (Magazines, news, etc.)
  • Eating Out
  • Cable
  • New credit card spending
  • Traveling/vacations

Stop Using Credit Cards

If you are starting a budget, you probably have credit card debt. The problem with credit card debt is not the debt, it’s the interest. First, every day that you maintain a balance on your credit card, interest compounds. Compounding interest works against you when you’re trying to pay off debt. Finally, getting rid of credit card debt will keep you from having to make your Macy’s credit card payment each month. Furthermore, you will be out of debt.

Save Money Every Paycheck

Put Aside 10-15% of Your Regular Income as Savings

One of the habits that you want to form that will help you reach your savings goal is to start saving each paycheck. Make it a habit to take 10-15% of each paycheck and save it. After a short time, you will realize that you don’t even miss the money.

First, make saving 10-15% of each paycheck easy by setting up an automatic money transfer to your savings account. For example, each time your paycheck is deposited into your checking account, have an automatic transfer set up that moves money into your savings account. Some people even have a savings account that is in a different bank to reduce the temptation of borrowing from the account.

Finally, saving a small portion of your regular earnings is far from a new concept. Financially successful people have been doing it for hundreds or thousands of years. Read The Richest Man in Babylon to learn more.

Always Keep an Emergency Fund

Save $1,000 for Emergencies such as Car Repairs, Home Repairs or Medical Emergencies

Unfortunately, emergencies happen to all of us. Having money for an emergency is critical. Many investment and debt consultants recommend that you start with $1,000. However, it is difficult to save money if you have to pay your Macy’s credit card payment each month. First, pay off your debt.

Emergencies can come in many forms. Examples of emergencies you should be prepared for include medical issues, home repairs, car repairs, natural disasters, etc. Once you reach your goal of $1,000, start saving for the longer term. Some experts recommend having 3-6 months of salary saved for emergencies.

Saving for emergencies should probably be one of the first things that you do, even before saving for retirement. Make it a priority in your budget and you will rest better at night knowing you have prepared for the future.

Keeping Up with the Joneses

Don’t Pay Attention to What Others Are Doing: Focus on Budgeting

Don’t get caught up trying to keep up with the Joneses. Who are the Joneses? Mr. and Mrs. Jones are your neighbors who live in the big, two-story house. They just bought a new SUV and a new boat. The Joneses always seem to have flashy, new things. They have to pay their Macy’s credit card payment each month, along with many other unnecessary bills.

It takes some discipline and habit changes, but in order to be successful at your budget, you must forget about what the Jones family is buying. Remind yourself buying new things prevents you from getting ahead and puts you further behind in debt. Moreover, what’s important is sticking to your budget so that later you can have financial security. 

Increase Your Income

Great Ways to Earn Extra Money Include Seasonal Work, Side Hustles and Starting a Business

Some people who complete their budget may realize that they don’t have enough money to start saving. Perhaps all your money goes to bills each month, or you just have a lot of family and friends for which to buy gifts.

The best ways to make more money fast:

  • Sell Things You Don’t Need
  • Rent Out Your Room or Car
  • A Side Hustle job
  • Borrow Money (Last Resort)

One little secret that successful people don’t often share about their success is how hard they work. Successful people often work 2-3 jobs, work long hours and work to do things that no one else wanted to do. Working hard at a side hustle may be one of the best ways to save money on a tight budget.

It’s not glamorous to deliver pizzas or wash cars for money. However, sometimes to get ahead you have to swallow your pride and do what is necessary. I’m not suggesting that you do anything illegal to make money; on the contrary, there are plenty of legal jobs that will earn real money for you.

Hopefully, you find these suggestions and solutions helpful on getting out of debt. Many of the fixes for debt problems require sacrifice and discipline. But they are proven methods that work and will allow you to live a happier, more secure and freer lifestyle. Piggy Bank Coins encourages you to pay off your debt, make your final Macy’s credit card payment and begin living a life of freedom from debt.

Read More:

The Best Budget App

Why Saving Money is Important

Financial Planning Services

Value Investing Books

10 Things to Know Before Starting a Budget

Wealth Building Cornerstones

Best Investing Books of All Time

How to Become a Millionaire from Nothing

How Much Savings You Should Have at 40

Why Saving Money is Important

Debt Elimination

Disclaimer:

It is important to note that Piggy Bank Coins does not provide financial advice. We do not endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.

In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, to help you make the best choice for you.