Money Management

It’s a situation you generally don’t want to be in. 

The money in your checking account is something you might access almost every day, whether in the form of a debit card swipe or an ATM withdrawal. As such, a freeze on your checking account could be really bad news. Here’s what you need to know.

What happens during a checking account freeze?

When your checking account is frozen, your access to your money is effectively cut off. With a frozen account, your debit card is apt to get rejected when you try to swipe it to pay for purchases. You won’t be able to withdraw cash from your checking account, and you won’t be able to transfer money out of that account and into another one, like a savings account.

Why might your checking account have a freeze put on it?

Banks don’t freeze checking accounts on a whim. Generally, your account will get frozen when you owe money you haven’t paid.

Let’s say you took out a loan and have fallen behind on payments. In that case, your lender might be able to go to court and get a judgment entered against you. From there, your bank may be instructed to freeze your checking account so your lender can get repaid. Similarly, you might have your checking account frozen if you’re overdue on child support payments.

Another common reason for checking account freezes? Not paying your taxes.

When you owe the IRS money and you can’t pay in full, the agency will generally give you an opportunity to pay off that debt in installments. And if you stick to one of these agreements, the IRS won’t go after your wages or assets.

But if you ignore an overdue tax bill, the IRS will have the right to put a levy on your checking account. Before that happens, though, you’ll get a heads-up from the agency in the mail and an opportunity to arrange for the payment of your overdue taxes.

How to avoid a checking account freeze

Generally speaking, a checking account freeze happens when you fall behind on a financial obligation. So if you don’t want your account frozen, pay all of your debts in a timely manner, and keep up with things like child support.

If you’ve fallen on hard times, reach out to the parties you owe money to and aim to work out an arrangement. A lender, for example, might agree to pause your loan payments for a period of time if you can show proof that you’re out of work. And, as mentioned, the IRS is generally pretty flexible about getting repaid. But you do need to reach out about getting on an installment plan.

Of course, in rare cases, your checking account might be frozen due to an error by your bank. But for the most part, a freeze is the result of your actions — or, more accurately, your inaction. But if you know you’re current on all of your bills and have no idea why your checking account might be frozen, dig deeper with your bank to get to the bottom of things — and regain access to your money.

These savings accounts are FDIC insured and could earn you 13x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 13x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

If you’re in Maryland or Vermont, you may have a limited window to reclaim stolen food benefits. 

One of the more upsetting trends that emerged in all the chaos of 2022 was a spike in food benefit theft. Thieves used a mix of tricks to steal millions of dollars in Supplemental Nutrition Assistance Program (SNAP) assistance — money that was intended to help low-income families keep food on the table.

It isn’t clear exactly how much money was stolen as the USDA doesn’t have data on the number of incidents. However, in Massachusetts and Maryland alone — two of the states that have released figures — criminals made off with millions of dollars.

How states are helping victims of SNAP theft

The two main ways that criminals are stealing people’s benefits are skimming and phishing. Skimming essentially involves copying card information when you swipe to pay or withdraw cash. It can happen with debit or credit cards as well. The difference is that your bank or card issuer will usually refund fraudulent transactions.

That’s part of the reason that Congress passed a law at the end of last year to let states use federal funds to replace the stolen money. If you were robbed of your food benefits between Oct. 1, 2022, and Sept. 30, 2024, you could be entitled to reimbursement. So far, four states have submitted their plans — and Maryland and Vermont are already implementing their payback schemes.

1. Maryland

Maryland was the first out of the gate. The state submitted a plan on Feb. 10, got it approved in less than two weeks, and began implementation on March 6.

If your benefits were stolen between Oct. 1, 2022 and Feb. 28, 2023, you have until May 31 to file a claim. For money stolen after March 1, 2023, you’ll have 45 days after you discover the stolen benefits to file. Visit the Maryland stolen benefits page for more information.

2. Vermont

Not far behind, Vermont launched its benefits recovery scheme on March 14. Victims in Vermont don’t have a lot of time to report the stolen money.

If you had benefits stolen between Oct. 1, 2022 and March 14, 2023, you have until April 12 to file a claim. For money stolen after March 14, you have 30 days after you discover the theft to file. Visit the Vermont stolen benefits page for more information.

3. Alabama

Alabama and Iowa both submitted plans on Feb. 24, but Alabama is due to start implementation slightly sooner. Alabama SNAP recipients who’ve had funds stolen should be able to apply for reimbursement from May 30. Pay attention to the Alabama human resources page for deadlines and information as it becomes available.

4. Iowa

Iowa’s reimbursement plan was approved on March 22, but it will take a few months for implementation to begin. SNAP fraud victims can start applying to get their money back from June 15. Watch the Iowa SNAP website for more details about when and how to apply and other information as it becomes available.

What you need to know about reclaiming stolen food benefits

While each state will have different processes in place for you to reclaim funds, you’ll likely need to provide documentation to show what was stolen. There is also a limit on how much you can claim. The law won’t allow states to pay more than two months worth of benefits — even if more money was stolen.

If your state doesn’t have yet any information about reimbursement, talk to your local SNAP office and keep an eye on the USDA’s stolen SNAP benefit page. It will list each plan as and when it gets approved. Be prepared to move quickly — Vermont victims had less than a month from the date it launched its scheme to the deadline for making claims.

If you’ve been the victim of food benefit fraud, change your EBT PIN and password immediately. You’ll also need to report the theft and get a new card as quickly as possible. More widely, try to use a PIN and password that are difficult to guess, as this makes it harder for thieves to steal your benefits.

Bottom line

SNAP benefits have become a lifeline for millions of American households. If they are stolen, it may mean a family has to go hungry, take on debt, or turn to help from charities or friends and family. It’s great that some states have moved quickly to reimburse stolen funds — though it is sad that they have to do so.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

In 2022, Americans had $841 billion in credit card debt. 

Unfortunately, it’s not uncommon for Americans to have credit card debt. This type of debt can create financial hardship because it’s high-interest debt. As a credit card balance rises and interest charges pile up, tackling the debt can be more challenging. How much credit card debt does the average American have? It may be more than you realize.

The average U.S. household has $6,473 in credit card debt

Many Americans use credit cards to pay for purchases, and it turns out many have outstanding account balances. According to data from Experian, the average American’s credit card balance in the third quarter of 2021 was $5,221.

The Ascent examined research on American credit card debt and found that Americans had $841 billion in credit card debt in 2022. When considering the most recent U.S. credit card debt statistics and household data, the average American household has about $6,473 in credit card debt.

While it can be convenient to use credit cards, it’s risky to carry a balance. Unless you have a 0% APR credit card, you’ll be charged interest on your unpaid debt, and your debt will continue to grow until you pay it off. Plus having significant debt can hurt your credit score.

Three tips to pay off your credit card debt

If you’re among the masses of Americans struggling with credit card debt, you’re not alone. Even if you have a lot of it, you can get out of credit card debt. Here are a few tips that may help you pay off your credit card debt faster:

1. Figure out how much debt you have

If you have credit card debt, it’s best to be honest with yourself. While it can be upsetting realizing that you’re in a difficult financial situation, it doesn’t benefit you to ignore your debt. It will only continue to grow as you ignore it.

To pay off your debt, you’ll need to be aware of how much debt you have. Now is a great time to sit down and calculate your total debt. Take note of each card’s balance and interest rate. Doing this will make it easier for you to create a debt payoff plan.

2. Focus on the highest-interest debt first

The debt avalanche method can help you save on interest charges when paying down debt. With this debt payoff method, you’ll focus on putting more money toward the highest-interest debt. While following this strategy, you’ll want to continue making at least the minimum payment amount on all of your credit cards. By putting extra money toward the highest-interest credit card, you will save money in the long run.

3. Consider using a balance transfer card to save on interest

If you have a lot of outstanding debt and it feels overwhelming, you may consider applying for a balance transfer credit card. Many of the best balance transfer credit cards offer a 0% interest rate on balance transfers for 18 months or more, which gives you time to pay off the entire balance without paying additional interest charges.

You’ll be charged a balance transfer fee to transfer your existing balance. These fees typically range from 3% to 5%. If you’re transferring $7,200 in debt and are charged a 5% balance transfer fee, you’ll pay $360 in fees. But that’s not a bad price to pay for 0% interest. With the transferred balance plus the balance transfer fee, you’ll have $7,560 in debt to pay off. If you pay $420 monthly for 18 months, you can pay the entire debt off in a year and a half.

Don’t ignore your debt

Don’t be embarrassed about your credit card debt. But make a plan to pay it down as quickly as possible so you don’t continue to pay expensive credit card interest. You’ll be more able to focus on other financial goals once you eliminate your credit card debt. For additional money management tips, check out our personal finance resources.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More